<SUBMISSION>
<ACCESSION-NUMBER>0000950134-01-508369
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20010930
<FILING-DATE>20011113
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>RENT A CENTER INC DE
<CIK>0000933036
<ASSIGNED-SIC>7359
<IRS-NUMBER>481024367
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-25370
<FILM-NUMBER>1783322
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>5700 TENNYSON PARKWAY
<STREET2>THIRD FLOOR
<CITY>PLANO
<STATE>TX
<ZIP>75024
<PHONE>2144192613
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>13800 MONTFORT DRIVE
<STREET2>SUITE 300
<CITY>DALLAS
<STATE>TX
<ZIP>75240
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>RENTERS CHOICE INC
<DATE-CHANGED>19941128
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d92108e10-q.txt
<DESCRIPTION>FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 2001
<TEXT>
<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   ----------

                                    FORM 10-Q

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

                For the quarterly period ended September 30, 2001

                         Commission File Number 0-25370
                               RENT-A-CENTER, INC.
             (Exact name of registrant as specified in its charter)


           DELAWARE                                           48-1024367
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification No.)


                       5700 Tennyson Parkway, Third Floor
                               Plano, Texas 75024
                                 (972) 801-1100
                   (Address, including zip code, and telephone
                  number, including area code, of registrant's
                          principal executive offices)

                                      NONE
                     (Former name, former address and former
                   fiscal year, if changed since last report)


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 November 12, 2001:


                 Class                                            Outstanding
                 -----                                            -----------
Common stock, $.01 par value per share                             26,194,812

<PAGE>


                                TABLE OF CONTENTS

<Table>
<Caption>

PART I.  FINANCIAL INFORMATION                                                               PAGE NO.
                                                                                             --------
<S>                                                                                          <C>
Item 1.  Consolidated Financial Statements

         Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000              3

         Consolidated Statements of Earnings for the nine months ended                           4
               September 30, 2001 and 2000

         Consolidated Statements of Earnings for the three months ended                          5
               September 30, 2001 and 2000

         Consolidated Statements of Cash Flows for the nine months ended                         6
               September 30, 2001 and 2000

         Notes to Consolidated Financial Statements                                              7

Item 2.  Management's Discussion and Analysis of Financial Condition                            12
               and Results of Operations

Item 3.  Quantitative and Qualitative Disclosure About Market Risk                              22

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                                      23

Item 6.  Exhibits and Reports on Form 8-K                                                       24


SIGNATURES                                                                                      28

</Table>



                                       2
<PAGE>

                      RENT-A-CENTER, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


<Table>
<Caption>
(In thousands of dollars)                                                             September 30,       December 31,
                                                                                          2001                2000
                                                                                      -------------       -------------
                                                                                        Unaudited
<S>                                                                                   <C>                 <C>
ASSETS
     Cash and cash equivalents                                                        $      28,935       $      36,495
     Accounts receivable - trade                                                              2,817               3,254
     Prepaid expenses and other assets                                                       33,737              31,805
     Rental merchandise, net
        On rent                                                                             527,724             477,095
        Held for rent                                                                       116,670             110,137
     Property assets, net                                                                   101,383              87,168
     Deferred income taxes                                                                    4,233              32,628
     Intangible assets, net                                                                 714,845             708,328
                                                                                      -------------       -------------
                                                                                      $   1,530,344       $   1,486,910
                                                                                      =============       =============
LIABILITIES
     Accounts payable - trade                                                         $      63,027       $      65,696
     Accrued liabilities                                                                    116,702              89,560
     Senior debt                                                                            458,020             566,051
     Subordinated notes payable                                                             175,000             175,000
                                                                                      -------------       -------------
                                                                                            812,749             896,307

COMMITMENTS AND CONTINGENCIES                                                                    --                  --

PREFERRED STOCK
     Redeemable convertible voting preferred stock, net of placement costs, $.01
     par value; 5,000,000 shares authorized; 289,726 and 281,756 shares issued
     and outstanding in 2001 and 2000, respectively                                         289,201             281,232

STOCKHOLDERS' EQUITY
     Common stock, $.01 par value; 125,000,000 and 50,000,000 shares authorized
        in 2001 and 2000, respectively; 27,612,218 and 25,700,058 shares issued
        in 2001 and 2000, respectively                                                          276                 257
     Additional paid-in capital                                                             190,148             115,607
     Accumulated comprehensive loss                                                          (6,020)                 --
     Retained earnings                                                                      268,990             218,507
     Treasury stock, 990,099 shares at cost                                                 (25,000)            (25,000)
                                                                                      -------------       -------------
                                                                                            428,394             309,371
                                                                                      -------------       -------------
                                                                                      $   1,530,344       $   1,486,910
                                                                                      =============       =============
</Table>


        The accompanying notes are an integral part of these statements.

                                       3
<PAGE>
                      RENT-A-CENTER, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF EARNINGS

<Table>
<Caption>
(In thousands, except per share data)                    Nine months ended September 30,
                                                        ---------------------------------
                                                             2001                2000
                                                        -------------       -------------
                                                                    Unaudited
<S>                                                     <C>                 <C>
Revenues
   Store
      Rentals and fees                                  $   1,213,387       $   1,082,949
      Merchandise sales                                        72,440              63,906
      Other                                                     2,878               1,916
   Franchise
      Merchandise sales                                        36,346              36,355
      Royalty income and fees                                   4,484               4,613
                                                        -------------       -------------
                                                            1,329,535           1,189,739
Operating expenses
   Direct store expenses
      Depreciation of rental merchandise                      251,286             222,545
      Cost of merchandise sold                                 54,176              51,744
      Salaries and other expenses                             748,576             639,041
   Franchise cost of merchandise sold                          34,821              35,049
                                                        -------------       -------------
                                                            1,088,859             948,379

   General and administrative expenses                         40,777              36,189
   Amortization of intangibles                                 22,402              21,098
   Non-recurring litigation settlements                        16,000             (22,383)
                                                        -------------       -------------
           Total operating expenses                         1,168,038             983,283

           Operating profit                                   161,497             206,456

Interest expense                                               47,215              56,284
Interest income                                                  (870)             (1,094)
                                                        -------------       -------------
           Earnings before income taxes                       115,152             151,266

Income tax expense                                             52,635              71,852
                                                        -------------       -------------
           NET EARNINGS                                        62,517              79,414

Preferred dividends                                            12,087               7,764
                                                        -------------       -------------
Net earnings allocable to common stockholders           $      50,430       $      71,650
                                                        =============       =============
Basic earnings per common share                         $        1.96       $        2.94
                                                        =============       =============
Diluted earnings per common share                       $        1.68       $        2.30
                                                        =============       =============
</Table>

        The accompanying notes are an integral part of these statements.


                                       4

<PAGE>
                      RENT-A-CENTER, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF EARNINGS

<Table>
<Caption>
(In thousands, except per share data)                   Three months ended September 30,
                                                        ---------------------------------
                                                             2001                2000
                                                        -------------       -------------
                                                                    Unaudited
<S>                                                     <C>                 <C>
Revenues
   Store
      Rentals and fees                                  $     411,241       $     372,402
      Merchandise sales                                        21,569              18,887
      Other                                                       640                 922
   Franchise
      Merchandise sales                                        12,087              11,143
      Royalty income and fees                                   1,537               1,614
                                                        -------------       -------------
                                                              447,074             404,968
Operating expenses
   Direct store expenses
      Depreciation of rental merchandise                       86,198              77,014
      Cost of merchandise sold                                 17,176              14,348
      Salaries and other expenses                             261,992             219,195
   Franchise cost of merchandise sold                          11,624              10,815
                                                        -------------       -------------
                                                              376,990             321,372

    General and administrative expenses                        13,974              12,708
    Amortization of intangibles                                 7,738               7,168
    Non-recurring litigation settlements                       16,000                  --
                                                        -------------       -------------
           Total operating expenses                           414,702             341,248

           Operating profit                                    32,372              63,720

Interest expense                                               14,837              18,915
Interest income                                                  (282)               (720)
                                                        -------------       -------------
           Earnings before income taxes                        17,817              45,525

Income tax expense                                              7,843              21,624
                                                        -------------       -------------
           NET EARNINGS                                         9,974              23,901

Preferred dividends                                             2,709               2,631
                                                        -------------       -------------
Net earnings allocable to common stockholders           $       7,265       $      21,270
                                                        =============       =============
Basic earnings per common share                         $        0.27       $        0.87
                                                        =============       =============
Diluted earnings per common share                       $        0.26       $        0.68
                                                        =============       =============
</Table>


        The accompanying notes are an integral part of these statements.


                                       5
<PAGE>

                      RENT-A-CENTER, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                         Nine months ended September 30,
                                                                        ---------------------------------
(In thousands of dollars)                                                    2001                2000
                                                                        -------------       -------------
                                                                                    Unaudited
<S>                                                                     <C>                 <C>
Cash flows from operating activities
   Net earnings                                                         $      62,517       $      79,414
   Adjustments to reconcile net earnings to net cash provided by
      operating activities
      Depreciation of rental merchandise                                      251,286             222,545
      Depreciation of property assets                                          28,106              24,662
      Amortization of intangibles                                              22,402              21,098
      Amortization of financing fees                                            2,070               2,015
   Changes in operating assets and liabilities, net of effects of
     Acquisitions
      Rental merchandise                                                     (291,696)           (252,954)
      Accounts receivable - trade                                                 437                 588
      Prepaid expenses and other assets                                        (3,946)             (7,042)
      Deferred income taxes                                                    28,395              59,478
      Accounts payable - trade                                                 (2,669)              3,957
      Accrued liabilities                                                      19,903             (11,062)
                                                                        -------------       -------------
           Net cash provided by operating activities                          116,805             142,699

Cash flows from investing activities
   Purchase of property assets                                                (42,282)            (25,027)
   Proceeds from sale of property assets                                          395               1,071
   Acquisitions of businesses, net of cash acquired                           (44,943)            (39,955)
                                                                        -------------       -------------
           Net cash used in investing activities                              (86,830)            (63,911)

Cash flows from financing activities
   Exercise of stock options                                                   24,819               5,796
   Proceeds from debt                                                              --             229,985
   Proceeds from issuance of common stock                                      45,677                  --
   Repayments of debt                                                        (108,031)           (286,094)
                                                                        -------------       -------------
           Net cash used in financing activities                              (37,535)            (50,313)

           NET INCREASE (DECREASE) IN CASH AND CASH
             EQUIVALENTS                                                       (7,560)             28,475

Cash and cash equivalents at beginning of period                               36,495              21,679
                                                                        -------------       -------------
Cash and cash equivalents at end of period                              $      28,935       $      50,154
                                                                        =============       =============
</Table>

        The accompanying notes are an integral part of these statements.


                                       6
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   The interim financial statements of Rent-A-Center, Inc. included herein
     have been prepared by us pursuant to the rules and regulations of the
     Securities and Exchange Commission. Certain information and footnote
     disclosures normally included in financial statements prepared in
     accordance with accounting principles generally accepted in the United
     States of America have been condensed or omitted pursuant to the
     Commission's rules and regulations, although we believe that the
     disclosures are adequate to make the information presented not misleading.
     We suggest that these financial statements be read in conjunction with the
     financial statements and notes included in our Annual Report on Form 10-K
     for the year ended December 31, 2000, our Quarterly Report on Form 10-Q/A
     for the quarterly period ended March 31, 2001, and our Quarterly Report on
     Form 10-Q for the quarterly period ended June 30, 2001. In our opinion, the
     accompanying unaudited interim financial statements contain all
     adjustments, consisting only of those of a normal recurring nature,
     necessary to present fairly our results of operations and cash flows for
     the periods presented. The results of operations for the periods presented
     are not necessarily indicative of the results to be expected for the full
     year.

     SFAS 133. Effective January 1, 2001, we adopted Statement of Financial
     Accounting Standard No. 133, which establishes accounting and reporting
     standards for derivative instruments, including certain derivative
     instruments embedded in other contracts and hedging activities. All
     derivatives, whether designated in hedging relationships or not, are
     required to be recorded on the balance sheet at fair value. If the
     derivative is designated as a fair value hedge, the changes in the fair
     value of the derivative and of the hedged item attributable to the hedged
     risk are recognized in earnings. If the derivative is designated as a cash
     flow hedge, the effective portions of changes in the fair value of the
     derivative are recorded in other comprehensive income and ineffective
     portions of changes in the fair value of cash flow hedges are recognized in
     earnings.

     The adoption of SFAS 133 on January 1, 2001 resulted in a cumulative
     pre-tax increase to other comprehensive income of $2.6 million, or $1.4
     million after taxes. As a result of a decline in interest rates during the
     nine months ended September 30, 2001, accumulated other comprehensive loss
     for the nine months ended September 30, 2001 was $(6.0) million after
     taxes.

     We utilize our derivative instruments to manage our exposure to interest
     rate fluctuations. Our objective is to minimize the risk of fluctuations
     using the most effective methods to eliminate or reduce the impact of this
     exposure.

     SFAS 141 and SFAS 142. On July 20, 2001, the Financial Accounting Standards
     Board issued Statement of Financial Accounting Standards No. 141, Business
     Combinations and Statement of Financial Accounting Standards No. 142,
     Goodwill and Intangible Assets. SFAS 141 is effective for all business
     combinations completed after June 30, 2001. SFAS 142 is effective for
     fiscal years beginning after December 15, 2001; however, certain provisions
     of this Statement apply to goodwill and other intangible assets acquired
     between July 1, 2001 and the effective date of SFAS 142.

     Major provisions of these statements and their effective dates for us are
     as follows:

     o    all business combinations initiated after June 30, 2001 must use the
          purchase method of accounting;

     o    intangible assets acquired in a business combination must be recorded
          separately from goodwill if they arise from contractual or other legal
          rights or are separable from the acquired entity and can be sold,
          transferred, licensed, rented or exchanged, either individually or as
          part of a related contract, asset or liability;

     o    goodwill, as well as intangible assets with indefinite lives, acquired
          after June 30, 2001, will not be amortized;

     o    effective January 1, 2002, all previously recognized goodwill and
          intangible assets with indefinite lives will no longer be subject to
          amortization;

     o    effective January 1, 2002, goodwill and intangible assets with
          indefinite lives will be tested for impairment annually and whenever
          there is an impairment indicator; and

     o    all acquired goodwill must be assigned to reporting units for purposes
          of impairment testing and segment reporting.


                                       7
<PAGE>
     We will continue to amortize goodwill and intangible assets recognized
     prior to July 1, 2001 under the current method until January 1, 2002, at
     which time quarterly and annual goodwill amortization of approximately $7.1
     million and $28.4 million will no longer be recognized. We intend to
     complete a transitional impairment test of all intangible assets by March
     31, 2002 and a transitional fair value based impairment test of goodwill as
     of January 1, 2002 by June 30, 2002. Impairment losses, if any, resulting
     from the initial transitional impairment testing will be recognized in the
     quarter ended March 31, 2002, as a cumulative effect of a change in
     accounting principle.

     SFAS 144. On October 3, 2001, the Financial Accounting Standards Board
     issued Statement of Financial Accounting Standards No. 144 Accounting for
     Impairment or Disposal of Long-Lived Assets. SFAS 144 is effective for
     fiscal years beginning after December 15, 2001. We do not believe that the
     implementation of this standard will have a material effect on our
     financial position, results of operations, or cash flows.

2.   EARNINGS PER SHARE

     Basic and diluted earnings per common share is computed based on the
     following information:

<Table>
<Caption>
     (In thousands, except per share data)              Three months ended September 30, 2001
                                                   ------------------------------------------------
                                                   Net earnings           Shares         Per share
                                                   ------------        -----------      -----------
<S>                                                <C>                 <C>              <C>
          Basic earnings per common share          $     7,265              26,666      $      0.27
          Effect of dilutive stock options                  --                 742
          Assumed conversion of convertible
           Preferred stock                               2,709(1)           10,371
                                                   -----------         -----------
          Diluted earnings per common share        $     9,974              37,779      $      0.26
                                                   ===========         ===========      ===========
</Table>



<Table>
<Caption>
                                                        Three months ended September 30, 2000
                                                   ------------------------------------------------
                                                   Net earnings           Shares         Per share
                                                   ------------        -----------      -----------
<S>                                                <C>                 <C>             <C>
          Basic earnings per common share          $    21,270              24,404      $      0.87
          Effect of dilutive stock options                  --                 809
          Assumed conversion of convertible
           Preferred stock                               2,631(1)            9,900
                                                   -----------         -----------
          Diluted earnings per common share        $    23,901              35,113      $      0.68
                                                   ===========         ===========      ===========
</Table>



<Table>
<Caption>

                                                        Nine months ended September 30, 2001
                                                  -----------------------------------------------
                                                   Net earnings           Shares        Per share
                                                   ------------        -----------     -----------
<S>                                                <C>                 <C>             <C>
          Basic earnings per common share          $    50,430              25,766      $      1.96
          Effect of dilutive stock options                  --               1,074
          Assumed conversion of convertible
            Preferred stock                             12,087(1)           10,277
                                                   -----------         -----------
          Diluted earnings per common share        $    62,517              37,117      $      1.68
                                                   ===========         ===========      ===========
 </Table>



<Table>
<Caption>
                                                        Nine months ended September 30, 2000
                                                  -----------------------------------------------
                                                   Net earnings           Shares        Per share
                                                   ------------        -----------     -----------
<S>                                                <C>                 <C>             <C>
          Basic earnings per common share          $    71,650              24,347      $      2.94
          Effect of dilutive stock options                  --                 276
          Assumed conversion of convertible
            Preferred stock                              7,764(1)            9,978
                                                   -----------         -----------
          Diluted earnings per common share        $    79,414              34,601      $      2.30
                                                   ===========         ===========      ===========
 </Table>
----------
(1)  Dividends on our Series A preferred stock are payable quarterly at an
     annual rate of 3.75%. We account for shares of preferred stock distributed
     as dividends in-kind at the greater of the stated value or the value of the
     common stock obtainable upon conversion on the payment date.


                                       8
<PAGE>

For the three and nine months ended September 30, 2001, the number of stock
options that were outstanding but not included in the computation of diluted
earnings per common share because their exercise price was greater than the
average market price of our common stock, and therefore anti-dilutive, was
441,500 and 685,500, respectively. For the three and nine months ended September
30, 2000, the number of stock options that were outstanding but not included in
the computation of diluted earnings per common share because their exercise
price was greater than the average market price of our common stock, and
therefore anti-dilutive, was 362,750 and 362,750, respectively.

3. SUBSIDIARY GUARANTORS

During 1998, we issued $175.0 million of senior subordinated notes, maturing on
August 15, 2008. The notes require semi-annual interest-only payments at 11%,
and are guaranteed by our two principal subsidiaries. We may redeem the
subordinated notes after August 15, 2003, at our option, in whole or in part.

The subordinated notes also require that upon the occurrence of a change in
control (as defined in the indenture governing the subordinated notes), the
holders of the subordinated notes have the right to require us to repurchase the
subordinated notes at a price equal to 101% of the original principal amount,
together with accrued and unpaid interest, if any, to the date of repurchase.

The indenture governing our subordinated notes contains covenants that limit our
ability to:

     o    incur additional debt;

     o    sell assets or our subsidiaries;

     o    grant liens to third parties;

     o    pay dividends or repurchase stock; and

     o    engage in a merger or sell substantially all of our assets.

Our direct wholly-owned subsidiaries, consisting of ColorTyme, Inc. and
Advantage Companies, Inc., have fully, jointly and severally, and
unconditionally guaranteed our obligations under the subordinated notes. We have
one indirect subsidiary that is not a guarantor of the subordinated notes
because it is inconsequential. There are no restrictions on the ability of any
of the guarantors to transfer funds to us in the form of loans, advances or
dividends, except as provided by applicable law.

Set forth below is certain condensed consolidating financial information (within
the meaning of Rule 3-10 of Regulation S-X) as of September 30, 2001 and
December 31, 2000 and for the three and nine months ended September 30, 2001 and
2000. The financial information includes the guarantors from the dates they were
acquired or formed by us and is presented using the push-down basis of
accounting.


                                       9
<PAGE>


3. SUBSIDIARY GUARANTORS - (continued)

<Table>
<Caption>

                                                                 Parent          Subsidiary        Consolidating
                                                                 Company         Guarantors          Adjustments          Totals
                                                             -------------      -------------      -------------       -------------
                                                                                        (In thousands)
<S>                                                          <C>                <C>                <C>                 <C>
          Condensed consolidating balance sheets

          At September 30, 2001 (unaudited)

          Rental merchandise, net .....................      $     644,394      $          --      $          --       $     644,394
          Intangible assets, net ......................            367,768            347,077                 --             714,845
          Other assets ................................            498,003             18,008           (344,906)            171,105
                                                             -------------      -------------      -------------       -------------
                    Total assets ......................      $   1,510,165      $     365,085      $    (344,906)      $   1,530,344
                                                             =============      =============      =============       =============
          Senior debt .................................      $     458,020      $          --      $          --       $     458,020
          Other liabilities ...........................            349,100              5,629                 --             354,729
          Preferred stock .............................            289,201                 --                 --             289,201
          Stockholders' equity ........................            413,844            359,456           (344,906)            428,394
                                                             -------------      -------------      -------------       -------------
                    Total liabilities and equity ......      $   1,510,165      $     365,085      $    (344,906)      $   1,530,344
                                                             =============      =============      =============       =============
          At December 31, 2000

          Rental merchandise, net .....................      $     587,232      $          --      $          --       $     587,232
          Intangible assets, net ......................            351,498            356,830                 --             708,328
          Other assets ................................            531,992             13,754           (354,396)            191,350
                                                             -------------      -------------      -------------       -------------
                    Total assets ......................      $   1,470,722      $     370,584      $    (354,396)      $   1,486,910
                                                             =============      =============      =============       =============
          Senior debt .................................      $     566,051      $          --      $          --       $     566,051
          Other liabilities ...........................            325,995              4,261                 --             330,256
          Preferred stock .............................            281,232                 --                 --             281,232
          Stockholders' equity ........................            297,444            366,323           (354,396)            309,371
                                                             -------------      -------------      -------------       -------------
                    Total liabilities and equity ......      $   1,470,722      $     370,584      $    (354,396)      $   1,486,910
                                                             =============      =============      =============       =============
</Table>

<Table>
<Caption>
                                                                   Parent           Subsidiary
                                                                   Company          Guarantors             Total
                                                                -------------      -------------       -------------
                                                                                     (In thousands)
<S>                                                               <C>                <C>                 <C>
          Condensed consolidating statements of earnings

          Nine Months Ended September 30, 2001 (unaudited)

          Total revenues .................................      $   1,288,705      $      40,830       $   1,329,535
          Direct store expenses ..........................          1,054,038                 --           1,054,038
          Other  expenses ................................            168,667             44,313             212,980
                                                                -------------      -------------       -------------
          Net earnings (loss) ............................      $      66,000      $      (3,483)      $      62,517
                                                                =============      =============       =============

          Nine Months Ended September 30, 2000 (unaudited)

          Total revenues .................................      $   1,148,771      $      40,968       $   1,189,739
          Direct store expenses ..........................            913,330                 --             913,330
          Other expenses .................................            152,454             44,541             196,995
                                                                -------------      -------------       -------------
          Net earnings (loss) ............................      $      82,987      $      (3,573)      $      79,414
                                                                =============      =============       =============
</Table>


                                       10
<PAGE>

3. SUBSIDIARY GUARANTORS - (continued)

<Table>
<Caption>
                                                       Parent          Subsidiary
                                                      Company          Guarantors             Total
                                                   -------------      -------------       -------------
                                                                      (In thousands)
<S>                                                <C>                <C>                 <C>
Condensed consolidating statements of earnings

Three Months Ended September 30, 2001 (unaudited)

Total revenues ..............................      $     433,450      $      13,624       $     447,074
Direct store expenses .......................            365,366                 --             365,366
Other expenses ..............................             56,946             14,788              71,734
                                                   -------------      -------------       -------------
Net earnings (loss) .........................      $      11,138      $      (1,164)      $       9,974
                                                   =============      =============       =============

Three Months Ended September 30, 2000 (unaudited)

Total revenues ..............................      $     392,211      $      12,757       $     404,968
Direct store expenses .......................            310,557                 --             310,557
Other expenses ..............................             56,531             13,979              70,510
                                                   -------------      -------------       -------------
Net earnings (loss) .........................      $      25,123      $      (1,222)      $      23,901
                                                   =============      =============       =============
</Table>


<Table>
<Caption>
                                                            Parent            Subsidiary
                                                           Company            Guarantors             Total
                                                        -------------       -------------       -------------
                                                                           (In thousands)
<S>                                                     <C>                 <C>                 <C>
Condensed consolidated statement of cash flows

Nine months ended September 30, 2001 (unaudited)

Net cash provided by operating activities ........      $     111,905       $       4,900       $     116,805
                                                        -------------       -------------       -------------

Cash flows from investing activities
  Purchase of property assets ....................            (42,237)                (45)            (42,282)
  Acquisitions of businesses, net of cash acquired            (44,943)                 --             (44,943)
  Other ..........................................                395                  --                 395
                                                        -------------       -------------       -------------
Net cash used in investing activities ............            (86,785)                (45)            (86,830)

Cash flows from financing activities
  Exercise of stock options ......................             24,819                  --              24,819
  Repayments of debt .............................           (108,031)                 --            (108,031)
  Proceeds from the issuance of common stock .....             45,677                  --              45,677
  Intercompany advances ..........................              4,855              (4,855)                 --
                                                        -------------       -------------       -------------
Net cash used in financing activities ............            (32,680)             (4,855)            (37,535)
                                                        -------------       -------------       -------------
Net decrease in cash and cash equivalents ........             (7,560)                 --              (7,560)
                                                        -------------       -------------       -------------
Cash and cash equivalents at beginning of period .             36,495                  --              36,495
                                                        -------------       -------------       -------------
Cash and cash equivalents at end of period .......      $      28,935       $          --       $      28,935
                                                        =============       =============       =============
Nine months ended September 30, 2000 (unaudited)

Net cash provided by operating activities ........      $     137,910       $       4,789       $     142,699
                                                        -------------       -------------       -------------
Cash flows from investing activities
  Purchase of property assets ....................            (24,961)                (66)            (25,027)
  Acquisitions of businesses, net of cash acquired            (39,955)                 --             (39,955)
  Other ..........................................              1,071                  --               1,071
                                                        -------------       -------------       -------------
Net cash used in investing activities ............            (63,845)                (66)            (63,911)

Cash flows from financing activities
  Exercise of stock options ......................              5,796                  --               5,796
  Repayments of debt .............................           (286,094)                 --            (286,094)
  Proceeds from debt .............................            229,985                  --             229,985
  Intercompany advances ..........................              4,723              (4,723)                 --
                                                        -------------       -------------       -------------
Net cash used in financing activities ............            (45,590)             (4,723)            (50,313)
                                                        -------------       -------------       -------------


Net increase in cash and cash equivalents ........             28,475                  --              28,475
Cash and cash equivalents at beginning of period .             21,679                  --              21,679
                                                        -------------       -------------       -------------
Cash and cash equivalents at end of period .......      $      50,154       $          --       $      50,154
                                                        =============       =============       =============
</Table>


                                       11
<PAGE>


     4.   COMPREHENSIVE INCOME

     Comprehensive income includes net earnings and items of other comprehensive
     income or loss. The following table provides information regarding
     comprehensive income, net of tax:

<Table>
<Caption>
                                                                    Nine months ended Sept. 30,     Three months ended Sept. 30,
                                                                    ---------------------------     ---------------------------
                                                                          (in thousands)                  (in thousands)
                                                                      2001               2000         2001               2000
                                                                    --------           --------     --------           --------
      <S>                                                           <C>                <C>          <C>                <C>
           Net earnings                                             $ 62,517           $ 79,414     $  9,974           $ 23,901
           Other comprehensive (loss) income:
                Unrealized gain on derivatives held
                  As cash flow hedges:
                    Cumulative effect of adoption of SFAS 133          1,378                 --           --                 --
                    Change in unrealized loss during period           (9,449)                --       (5,256)                --
                    Reclassification adjustment for loss
                      included in net earnings                         2,051                 --        1,765                 --
                                                                    --------           --------     --------           --------
                        Other comprehensive (loss) income             (6,020)                --       (3,491)                --
                                                                    --------           --------     --------           --------
           Comprehensive income                                     $ 56,497           $ 79,414     $  6,483           $ 23,901
                                                                    ========           ========     ========           ========
</Table>

     5.   LITIGATION SETTLEMENTS

     On November 1, 2001, we announced that we reached an agreement in principle
     for the settlement of the Margaret Bunch, et al. v. Rent-A-Center, Inc.
     matter pending in federal court in Kansas City, Missouri. The settlement is
     subject to court approval. Under the terms of the proposed settlement,
     while not admitting liability, we agreed to pay an aggregate of $12,250,000
     to the agreed upon class, plus plaintiff's attorneys' fees as determined by
     the court, and costs to administer the settlement process. Accordingly, to
     account for the aforementioned costs, as well as our own attorneys' fees,
     we recorded a one time non-recurring charge of $16.0 million in the third
     quarter as a result of the settlement of this matter.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

GENERAL

This report contains forward-looking statements that involve risks and
uncertainties. Forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate" or "believe." We believe that the expectations
reflected in these forward-looking statements are accurate. However, we cannot
assure you that these expectations will occur. Our actual future performance
could differ materially from such statements. Factors that could cause or
contribute to these differences include, but are not limited to:

     o    uncertainties regarding the ability to open new stores;

     o    our ability to acquire additional rent-to-own stores on favorable
          terms;

     o    our ability to enhance the performance of these acquired stores;

     o    our ability to control store level costs;

     o    the results of our litigation;

     o    the passage of legislation adversely affecting the rent-to-own
          industry;

     o    interest rates;

     o    our ability to collect on our rental purchase agreements;

     o    our ability to effectively hedge interest rates on our outstanding
          debt;

     o    changes in our effective tax rate; and

     o    the other risks detailed from time to time in our SEC reports.


                                       12
<PAGE>


You should not unduly rely on these forward-looking statements, which speak only
as of the date of this report. Except as required by law, we are not obligated
to publicly release any revisions to these forward-looking statements to reflect
events or circumstances occurring after the date of this report or to reflect
the occurrence of unanticipated events. Additional important factors that could
cause our actual results to differ materially from our expectations are
discussed under Risk Factors in our Annual Report on Form 10-K for our fiscal
year ended December 31, 2000.

OUR BUSINESS

We are the largest rent-to-own operator in the United States with an approximate
27% market share based on store count. At September 30, 2001, we operated 2,288
company-owned stores in 50 states, the District of Columbia and Puerto Rico. Our
subsidiary, ColorTyme, is a national franchisor of rent-to-own stores. At
September 30, 2001, ColorTyme franchised 346 stores in 42 states, 333 of which
operated under the ColorTyme name and 13 stores which operated under the
Rent-A-Center name. Our stores offer high quality durable products such as home
electronics, appliances, computers, and furniture and accessories under flexible
rental purchase agreements that allow the customer to obtain ownership of the
merchandise at the conclusion of an agreed-upon rental period. These rental
purchase agreements are designed to appeal to a wide variety of customers by
allowing them to obtain merchandise that they might otherwise be unable to
obtain due to insufficient cash resources or a lack of access to credit. These
agreements also cater to customers who only have a temporary need, or who simply
desire to rent rather than purchase the merchandise.

We have pursued an aggressive growth strategy since 1989. We have sought to
acquire underperforming stores to which we could apply our operating model as
well as open new stores. As a result, the acquired stores have generally
experienced more significant revenue growth during the initial periods following
their acquisition than in subsequent periods. Because of significant growth
since our formation, particularly due to the Thorn Americas acquisition, our
historical results of operations and period-to-period comparisons of such
results and other financial data, including the rate of earnings growth, may not
be meaningful or indicative of future results.

We plan to accomplish our future growth through selective and opportunistic
acquisitions, with an emphasis on new store development. Typically, a newly
opened store is profitable on a monthly basis in the ninth to twelfth month
after its initial opening. Historically, a typical store has achieved break-even
profitability in 18 to 24 months after its initial opening. Total financing
requirements of a typical new store approximate $450,000, with roughly 70% of
that amount relating to the purchase of rental merchandise inventory. A newly
opened store historically has achieved results consistent with other stores that
have been operating within the system for greater than two years by the end of
its third year of operation. As a result, our quarterly earnings are impacted by
how many new stores are opened during that quarter and the quarters preceding
it. There can be no assurance that we will open any new stores in the future, or
as to the number, location or profitability.

We believe the cashflow generated from operations, together with amounts
available under our senior credit facilities, will be sufficient to fund our
debt service requirements, working capital needs, capital expenditures, the
November 2001 repurchase of our common stock held by Mr. J. Ernest Talley as
discussed below, and our store expansion program during the remainder of 2001.
Our revolving credit facilities provide us with revolving loans in an aggregate
principal amount not exceeding $125.0 million. At September 30, 2001, we had
$61.4 million available under our various debt agreements.

In addition, to provide any additional funds necessary for the continued pursuit
of our operating and growth strategies, we may incur from time to time
additional short or long-term bank indebtedness and may issue, in public or
private transactions, equity and debt securities. The availability and
attractiveness of any outside sources of financing will depend on a number of
factors, some of which will relate to our financial condition and performance,
and some of which are beyond our control, such as prevailing interest rates and
general economic conditions. There can be no assurance additional financing will
be available, or if available, will be on terms acceptable to us.

If a change in control occurs, we may be required to offer to purchase all of
our outstanding subordinated notes at 101% of their principal amount, plus
accrued interest to the date of repurchase. Our senior credit facilities
restrict our ability to repurchase our subordinated notes, including in the
event of a change in control. In addition, a change in control would result in
an event of default under our senior credit facilities, which could then be
accelerated by our lenders, and would require us to offer to redeem our Series A
preferred stock. In the event a change in control occurs, we cannot be sure that
we would have enough funds to immediately pay our accelerated senior credit
facility obligations, all of our senior subordinated notes and for the
redemption of our Series A preferred stock, or that we would be able to obtain
financing to do so on favorable terms, if at all.



                                       13
<PAGE>

COMPONENTS OF INCOME AND EXPENSE

Revenue. We collect non-refundable rental payments and fees in advance,
generally on a weekly or monthly basis. This revenue is recognized over the term
of the agreement. Rental purchase agreements generally include a discounted
early purchase option. Amounts received upon sales of merchandise under these
options, and upon the sale of used merchandise, are recognized as revenue when
the merchandise is sold.

Franchise Revenue. Revenue from the sale of rental merchandise is recognized
upon shipment of the merchandise to the franchisee. Franchise fee revenue is
recognized upon completion of substantially all services and satisfaction of all
material conditions required under the terms of the franchise agreement.

Depreciation of Rental Merchandise. We depreciate our rental merchandise using
the income forecasting method. The income forecasting method of depreciation
does not consider salvage value and does not allow the depreciation of rental
merchandise during periods when it is not generating rental revenue. For income
tax purposes we depreciate our merchandise using the modified accelerated cost
recovery system, or MACRS, with a three year life.

Cost of Merchandise Sold. Cost of merchandise sold represents the book value net
of accumulated depreciation of rental merchandise at time of sale.

Salaries and Other Expenses. Salaries and other expenses include all salaries
and wages paid to store level employees, together with market managers'
salaries, travel and occupancy, including any related benefits and taxes, as
well as all store level general and administrative expenses and selling,
advertising, occupancy, fixed asset depreciation and other operating expenses.

General and Administrative Expenses. General and administrative expenses include
all corporate overhead expenses related to our headquarters such as salaries,
taxes and benefits, occupancy, administrative and other operating expenses, as
well as regional directors' salaries, travel and office expenses.

Amortization of Intangibles. Amortization of intangibles consists primarily of
the amortization of the excess of purchase price over the fair market value of
acquired assets and liabilities. In July 2001, the Financial Accounting
Standards Board issued SFAS 142, Goodwill and Intangible Assets, which revises
the accounting for purchased goodwill and intangible assets. Under SFAS 142,
goodwill and intangible assets with indefinite lives acquired after June 30,
2001 will not be amortized. Effective January 1, 2002, all previously recognized
goodwill and intangible assets with indefinite lives will no longer be subject
to amortization. Also effective January 1, 2002, goodwill and intangible assets
with indefinite lives will be tested for impairment annually, and in the event
of an impairment indicator. SFAS 142 is effective for fiscal years beginning
after December 15, 2001, with early adoption permitted for companies with fiscal
years beginning after March 15, 2001 if their first quarter financial statements
have not previously been issued.

RECENT DEVELOPMENTS

In the second half of 2000, we resumed our strategy of increasing our store base
and annual revenues and profits through opportunistic acquisitions and new store
openings. During the third quarter of 2001, we acquired 13 stores for
approximately $8.5 million in cash in 5 separate transactions and opened an
additional 18 stores. We also closed 13 stores, merging them all with existing
stores. For the nine months ended September 30, 2001, we acquired a total of 91
stores for approximately $41.0 million in 17 separate transactions, opened 61
new stores, and closed 22 stores. Of the closed stores, 19 were merged with
existing stores and three were sold. As of November 13, 2001 we have acquired
one additional store, opened ten new stores and closed two stores during the
fourth quarter of 2001. The closed stores were merged with existing stores. It
is our intention to increase the number of stores we operate by an average of
approximately 5 to 10% per year over the next several years.

On October 8, 2001, we announced the retirement of J. Ernest Talley as our
Chairman and Chief Executive Officer, and the appointment of Mark E. Speese as
our new Chairman and Chief Executive Officer. In connection with Mr. Talley's
retirement, our board of directors approved the repurchase of $25.0 million
worth of shares of our common stock held by Mr. Talley at a purchase price equal
to the average closing price of our common stock over the 10 trading days
beginning October 9, 2001, subject to a maximum of $27.00 per share and a
minimum of $20.00 per share. Under this formula, the purchase price for the
repurchase was calculated at $20.258 per share. Accordingly, on October 23, 2001
we repurchased 493,632 shares of our common stock from Mr. Talley at $20.258 per
share for a total purchase price of $10.0 million. In addition, on or before
November 30, 2001, we will repurchase an additional 740,488 shares of our common
stock from Mr. Talley at $20.258 per share, for a total purchase price of an
additional $15.0 million. Furthermore, we have the option to purchase any or all
of the remaining 1,714,046 shares of our common stock held by Mr. Talley at
$20.258 per share through February 5, 2002.


                                       14
<PAGE>

On November 1, 2001, we announced that we reached an agreement in principle for
the settlement of the Margaret Bunch, et al. v. Rent-A-Center, Inc. matter
pending in federal court in Kansas City, Missouri. The settlement is subject to
court approval. Under the terms of the proposed settlement, while not admitting
liability, we agreed to pay an aggregate of $12,250,000 to the agreed upon
class, plus plaintiff's attorneys' fees as determined by the court, and costs to
administer the settlement process. Accordingly, to account for the
aforementioned costs, as well as our own attorneys' fees, we recorded a one time
non-recurring charge of $16.0 million in the third quarter as a result of the
settlement of this matter.

RESULTS OF OPERATIONS

THE NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2000

Store Revenue. Total store revenue increased by $139.9 million, or 12.2%, to
$1,288.7 million for the nine months ended September 30, 2001 from $1,148.8
million for the nine months ended September 30, 2000. The increase in total
store revenue is directly attributable to the success of our efforts on
improving store operations through:

     o    increasing the number of units on rent;

     o    increasing our customer base;

     o    increasing the average price per unit on rent by upgrading our rental
          merchandise; and

     o    incremental revenues through acquisitions and new store openings.

This focus resulted in same store revenues increasing by $79.2 million, or 7.5%,
to $1,140.3 million for the nine months ended September 30, 2001 from $1,061.1
million for the nine months ended September 30, 2000. Same store revenues
represent those revenues earned in stores that were operated by us for each of
the entire nine month periods ending September 30, 2001 and 2000. This
improvement was primarily attributable to an increase in the number of customers
served, the number of items on rent, as well as revenue earned per item on rent.

Franchise Revenue. Total franchise revenue decreased by $138,000, or 0.3%, to
$40.8 million for the nine months ended September 30, 2001 from $41.0 million
for the nine months ended September 30, 2000. This decrease was primarily
attributable to a decrease in the number of franchise locations during the first
three quarters of 2001 as compared to the first three quarters of 2000.

Depreciation of Rental Merchandise. Depreciation of rental merchandise increased
by $28.7 million, or 12.9%, to $251.3 million for the nine months ended
September 30, 2001 from $222.5 million for the nine months ended September 30,
2000. This increase was primarily attributable to an increase in the number of
units on rent. Depreciation of rental merchandise expressed as a percent of
store rentals and fees revenue increased to 20.7% in 2001 from 20.6% for the
same period in 2000. This slight increase is primarily a result of in-store
promotions made during the third quarter of 2001. These promotions included a
reduction in the rates and terms on certain rental agreements, thus causing
depreciation to be a greater percent of store rentals and fees revenue on those
items rented.

Cost of Merchandise Sold. Cost of merchandise sold increased by $2.4 million, or
4.7%, to $54.2 million for the nine months ended September 30, 2001 from $51.7
million for the nine months ended September 30, 2000. This increase was
primarily a result of an increase in the number of items sold during the first
nine months of 2001 as compared to the first nine months of 2000.

Salaries and Other Expenses. Salaries and other expenses expressed as a
percentage of total store revenue increased to 58.1% for the nine months ended
September 30, 2001 from 55.6% for the nine months ended September 30, 2000. This
increase was primarily attributable to the infrastructure expenses and costs
associated with the opening of 94 new stores since October 1, 2000 and increases
in store level labor, insurance costs, and other operating expenses.

Franchise Cost of Merchandise Sold. Franchise cost of merchandise sold decreased
by $228,000, or 0.7%, to $34.8 million for the nine months ended September 30,
2001 from $35.0 million for the nine months ended September 30, 2000. This
decrease is primarily a result of a decrease in the number of franchise
locations during the first three quarters of 2001 as compared to the first three
quarters of 2000.


                                       15
<PAGE>

General and Administrative Expenses. General and administrative expenses
expressed as a percent of total revenue increased slightly to 3.1% for the nine
months ending September 30, 2001 from 3.0% for the nine months ending September
30, 2000. This increase is primarily attributable to an increase in home office
labor and other overhead expenses for the first three quarters of 2001 as
compared to the first three quarters of 2000.

Amortization of Intangibles. Amortization of intangibles increased by $1.3
million, or 6.2%, to $22.4 million for the nine months ended September 30, 2001
from $21.1 million for the nine months ended September 30, 2000. This increase
was primarily attributable to the additional goodwill amortization associated
with the acquisition of 39 stores in the last half of 2000 and the additional 78
stores acquired in the first half of 2001. Accounting for goodwill and
intangibles amortization will be revised under SFAS 142. However, we will
continue to amortize goodwill and intangible assets recognized prior to July 1,
2001 under the current method until January 1, 2002, at which time quarterly and
annual goodwill amortization of approximately $7.1 million and $28.4 million
will no longer be recognized.

Operating Profit. Operating profit decreased by $45.0 million, or 21.8%, to
$161.5 million for the nine months ended September 30, 2001 from $206.5 million
for the nine months ended September 30, 2000. Excluding the pre-tax effect of
the class action litigation settlement of $16.0 million recorded in the third
quarter of 2001 and the class action litigation settlement refund of $22.4
million received in the second quarter of 2000, operating profit decreased by
$6.6 million, or 3.6%, to $177.5 million for the nine months ended September 30,
2001 from $184.1 million for the nine months ended September 30, 2000. Operating
profit as a percentage of total revenue decreased to 13.4% for the nine months
ended September 30, 2001 before the pre-tax class action litigation settlement
of $16.0 million, from 15.5% for the nine months ended September 30, 2000 before
the pre-tax non-recurring class action litigation settlement refund of $22.4
million. This decrease is primarily attributable to the infrastructure expenses
and initial costs associated with the opening of 94 new stores since October 1,
2000 and increases in store level labor, insurance, utility, and other operating
expenses.

Net Earnings. Including the class action litigation settlement adjustments noted
above, net earnings were $62.5 million for the nine months ended September 30,
2001, and $79.4 million for the nine months ended September 30, 2000. Net
earnings increased by $3.8 million, or 5.6%, to $71.5 million for the nine
months ended September 30, 2001 before the after tax effect of the $16.0 million
class action litigation settlement, from $67.7 million for the nine months ended
September 30, 2000 before the after-tax effect of the $22.4 million class action
litigation settlement refund. This increase, excluding the after tax effect of
the class action litigation settlement adjustments, is primarily attributable to
growth in total revenues and reduced interest expenses resulting from a
reduction in outstanding debt.

Preferred Dividends. Dividends on our Series A preferred stock are payable
quarterly at an annual rate of 3.75%. We account for shares of preferred stock
distributed as dividends in-kind at the greater of the stated value or the value
of the common stock obtainable upon conversion on the payment date. Preferred
dividends increased by $4.3 million, or 55.7%, to $12.1 million for the nine
months ended September 30, 2001 as compared to $7.8 million for the nine months
ended September 30, 2000. This increase is a result of more shares of Series A
Preferred stock outstanding in 2001 as compared to 2000.

THE THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2000

Store Revenue. Total store revenue increased by $41.2 million, or 10.5%, to
$433.4 million for the three months ended September 30, 2001 from $392.2 million
for the three months ended September 30, 2000. The increase in total store
revenue is directly attributable to the success of our efforts on improving
store operations through:

     o    increasing the number of units on rent;

     o    increasing our customer base; and

     o    incremental revenues through acquisitions and new store openings.

This focus resulted in same store revenues increasing by $16.7 million, or 4.5%,
to $385.1 million for the three months ended September 30, 2001 from $368.3
million for the three months ended September 30, 2000. Same store revenues
represent those revenues earned in stores that were operated by us for each of
the entire three month periods ending September 30, 2001 and 2000. This
improvement was primarily attributable to an increase in the number of customers
served and the number of items on rent.


                                       16
<PAGE>


Franchise Revenue. Total franchise revenue increased by $867,000, or 6.8%, to
$13.6 million for the three months ended September 30, 2001 from $12.8 million
for the three months ended September 30, 2000. This increase was primarily
attributable to an increase in merchandise sales to franchise locations during
the third quarter of 2001 as compared to the third quarter of 2000.

Depreciation of Rental Merchandise. Depreciation of rental merchandise increased
by $9.2 million, or 11.9%, to $86.2 million for the three months ended September
30, 2001 from $77.0 million for the three months ended September 30, 2000. This
increase was primarily attributable to an increase in the number of units on
rent. Depreciation of rental merchandise expressed as a percent of store rentals
and fees revenue increased to 21.0% in 2001 from 20.7% in 2000. This slight
increase in primarily a result of in-store promotions made during the third
quarter of 2001. These promotions included a reduction in the rates and terms on
certain rental agreements, thus causing depreciation to be a greater percent of
store rentals and fees revenue on those items rented.

Cost of Merchandise Sold. Cost of merchandise sold increased by $2.8 million, or
19.7%, to $17.2 million for the three months ended September 30, 2001 from $14.3
million for the three months ended September 30, 2000. This increase was
primarily a result of an increase in merchandise sold during the third quarter
of 2001.

Salaries and Other Expenses. Salaries and other expenses expressed as a
percentage of total store revenue increased to 60.4% for the three months ended
September 30, 2001 from 55.9% for the three months ended September 30, 2000.
This increase was primarily attributable to the infrastructure expenses and
costs associated with our new store growth initiatives and increases in store
level labor, insurance costs, and other operating expenses.

Franchise Cost of Merchandise Sold. Franchise cost of merchandise sold increased
by $809,000, or 7.5%, to $11.6 million for the three months ended September 30,
2001 from $10.8 million for the three months ended September 30, 2000. This
increase is primarily a result of an increase in merchandise sales to franchise
locations during the third quarter of 2001 as compared to the third quarter of
2000.

General and Administrative Expenses. General and administrative expenses
expressed as a percent of total revenue remained constant at 3.1% for the three
months ending September 30, 2001 and 2000.

Amortization of Intangibles. Amortization of intangibles increased by $570,000,
or 8.0%, to $7.7 million for the three months ended September 30, 2001 from $7.2
million for the three months ended September 30, 2000. This increase was
primarily attributable to the additional goodwill amortization associated with
the acquisition of 39 stores in the last half of 2000 and the additional 78
stores acquired in the first half of 2001. Accounting for goodwill and
intangibles amortization will be revised under SFAS 142. However, we will
continue to amortize goodwill and intangible assets recognized prior to July 1,
2001 under the current method until January 1, 2002, at which time quarterly and
annual goodwill amortization of approximately $7.1 million and $28.4 million
will no longer be recognized.

Operating Profit. Operating profit decreased by $15.3 million, or 24.1%, to
$48.4 million for the three months ended September 30, 2001, before the pre-tax
non-recurring class action litigation settlement of $16.0 million, from $63.7
million for the three months ended September 30, 2000. Including the $16.0
million class action litigation settlement, operating profit was $32.4 million
for the three months ending September 30, 2001. The decrease before the pre-tax
class action litigation settlement is primarily attributable to the
infrastructure expenses and initial costs associated with our new store growth
initiatives, an increase in store level labor, insurance, utility, and other
operating expenses, as well as a deterioration of the gross profit margin.

Net Earnings. Net earnings decreased by $5.0 million, or 20.8%, to $18.9 million
for the three months ended September 30, 2001, before the after-tax effect of
the $16.0 million class action litigation settlement, from $23.9 million for the
three months ended September 30, 2000. Net earnings were $10.0 million for the
three months ended September 30, 2001 including the class action litigation
settlement. The decrease before the after-tax effect of the litigation
settlement is attributable to the infrastructure expenses and initial costs
associated with our new store growth initiatives, an increase in store level
labor, insurance, utility, and other operating expenses, as well as a
deterioration of the gross profit margin.

Preferred Dividends. Dividends on our Series A preferred stock are payable
quarterly at an annual rate of 3.75%. We account for shares of preferred stock
distributed as dividends in-kind at the greater of the stated value or the value
of the common stock obtainable upon conversion on the payment date. Preferred
dividends increased by $78,000, or 3.0%, to $2.7 million for the three months
ended September 30, 2001 as compared to $2.6 million for the three months ended
September 30, 2000. This increase is a result of more shares of Series A
Preferred stock outstanding in 2001 as compared to 2000.


                                       17
<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

Our primary liquidity requirements are for debt service, working capital,
capital expenditures, acquisitions and new store openings. Our primary sources
of liquidity have been cash provided by operations, borrowings and sales of
equity securities. In the future, we may incur additional debt, or may issue
debt or equity securities to finance our operating and growth strategies. The
availability and attractiveness of any outside sources of financing will depend
on a number of factors, some of which relate to our financial condition and
performance, and some of which are beyond our control, such as prevailing
interest rates and general economic conditions. There can be no assurance that
additional financing will be available, or if available, that it will be on
terms we find acceptable.

For the nine months ending September 30, 2001, cash provided by operating
activities decreased by $25.9 million to $116.8 million in 2001 from $142.7
million during the nine month period ending September 30, 2000. This decrease
was primarily the result of an increase in the amount of rental merchandise
resulting from strong consumer demand in the first nine months of 2001, as well
as lower net earnings. We purchased $395.0 million and $345.7 million of rental
merchandise during the first nine months of 2001 and 2000, respectively.

Cash used in investing activities increased by $22.9 million to $86.8 million
during the nine month period ending September 30, 2001 from $63.9 million during
the nine month period ending September 30, 2000. This increase is primarily
attributable to the cost associated with the opening and acquisition of new
stores during the first nine months of 2001. We make capital expenditures in
order to maintain our existing operations as well as for new capital assets in
new and acquired stores. We spent $42.3 million and $25.0 million on capital
expenditures during the nine month periods ending September 30, 2001 and 2000,
respectively, and expect to spend no more than $12.8 million for the remainder
2001. In the second half of 2000, we resumed our strategy of increasing our
store base through opening new stores, as well as through opportunistic
acquisitions. As of November 13, 2001, we have acquired one store, opened ten
additional stores, and closed two stores in the fourth quarter of 2001. The
closed stores were merged with existing stores. It is our intention to increase
the number of stores we operate by an average of approximately 5 to 10% per year
over the next several years.

Cash used in financing activities decreased by $12.8 million to $37.5 million
during the nine month period ending September 30, 2001 from $50.3 million during
the nine month period ending September 30, 2000. This decrease is primarily
related to the net proceeds associated with the issuance of our common stock in
May 2001 and an increase in the amount of stock options exercised during the
first three quarters of 2001 as compared to the first three quarters of 2000,
offset by debt repayments under our senior credit facilities. During the first
nine months of 2001, we paid down $108.0 million in debt using the proceeds from
the issuance of our common stock in the May 2001 offering and from stock options
exercised during the first three quarters of 2001, as well as from available
cash flow from operations.

The profitability of our stores tends to grow at a slower rate approximately
five years from the time we open or acquire them. As a result, in order for us
to show improvements in our profitability, it is important for us to continue to
open stores in new locations or acquire underperforming stores on favorable
terms. There can be no assurance that we will be able to acquire or open new
stores at the rates we expect, or at all. We cannot assure you that the stores
we do acquire or open will be profitable at the same levels that our current
stores are, or at all.

Borrowings. The table below shows the scheduled maturity dates of our senior
debt outstanding at September 30, 2001.

<Table>
<Caption>
                 YEAR ENDING
                 DECEMBER 31,                                 (IN THOUSANDS)
                 ------------                                 --------------
<S>                                                           <C>
      October 1 to December 31, 2001                           $          0
                                2002                                  1,980
                                2003                                  1,980
                                2004                                 29,104
                                2005                                110,476
                          Thereafter                                314,480
                                                               ------------
                                                               $    458,020
                                                               ============
</Table>

Under our senior credit facility, we are required to use 25% of the net proceeds
from any equity offering to repay our term loans. In June 2001, we used the net
proceeds of approximately $45.7 million from the offering of our common stock to
repay a portion of our term loans.


                                       18
<PAGE>


We intend to continue to make prepayments of debt under our senior credit
facilities, repurchase some of our senior subordinated notes or repurchase our
common stock under our common stock repurchase program or pursuant to our
agreement with Mr. Talley, to the extent we have available cash that is not
necessary for store openings or acquisitions. We cannot, however, assure you
that we will have excess cash available for these purposes.

Senior Credit Facilities. The senior credit facilities are provided by a
syndicate of banks and other financial institutions led by The Chase Manhattan
Bank, as administrative agent. At September 30, 2001, we had a total of $458.0
million outstanding under these facilities, all of which was under our term
loans. At September 30, 2001, we had $56.4 million of availability under the
revolving credit facility.

Borrowings under the senior credit facilities bear interest at varying rates
equal to 1.25% to 2.75% over LIBOR, which was 2.76% at September 30, 2001. We
also have a prime rate option under the facilities, but do not have any
exercised as of September 30, 2001. At September 30, 2001, the average rate on
outstanding senior debt borrowings was 5.23%.

During 1998, we entered into interest rate protection agreements with two banks.
Under the terms of the interest rate agreements, the LIBOR rate used to
calculate the interest rate charged on $250.0 million of the outstanding senior
term debt has been fixed at an average rate of 5.59%. The protection on the
$250.0 million expires in 2003. The senior credit facilities are secured by a
security interest in substantially all of our tangible and intangible assets,
including intellectual property and real property. The senior credit facilities
are also secured by a pledge of the capital stock of our subsidiaries.

The senior credit facilities contain covenants that limit our ability to:

     o    incur additional debt (including subordinated debt) in excess of $25
          million;

     o    repurchase in excess of $50 million of our capital stock and senior
          subordinated notes generally;

     o    incur liens or other encumbrances;

     o    merge, consolidate or sell substantially all our property or business;

     o    sell assets, other than inventory;

     o    make investments or acquisitions unless we meet financial tests and
          other requirements;

     o    make capital expenditures; or

     o    enter into a new line of business.

The senior credit facilities require us to comply with several financial
covenants, including a maximum leverage ratio, a minimum interest coverage ratio
and a minimum fixed charge coverage ratio. At September 30, 2001, the maximum
leverage ratio was 4.25:1, the minimum interest coverage ratio was 2.50:1, and
the minimum fixed charge coverage ratio was 1.3:1. On that date, our actual
ratios were 2.03:1, 4.77:1 and 2.13:1.

Events of default under the senior credit facilities include customary events,
such as a cross-acceleration provision in the event that we default on other
debt. In addition, an event of default under the senior credit facilities would
occur if we undergo a change of control. This is defined to include the case
where Apollo ceases to own at least 50% of the amount of our voting stock that
they owned on August 5, 1998, or a third party becomes the beneficial owner of
33.33% or more of our voting stock at a time when certain permitted investors
own less than the third party or Apollo entities own less than 35% of the voting
stock owned by the permitted investors. We do not have the ability to prevent
Apollo from selling its stock, and therefore would be subject to an event of
default if Apollo did so and its sales were not agreed to by the lenders under
the senior credit facilities. This could result in the acceleration of the
maturity of our debt under the senior credit facilities, as well as under the
subordinated notes through their cross-acceleration provision.


                                       19
<PAGE>


Subordinated Notes. In August 1998, we issued $175.0 million of subordinated
notes, maturing on August 15, 2008, under an indenture dated as of August 18,
1998 among us, our subsidiary guarantors and IBJ Schroder Bank & Trust Company,
as trustee.

The indenture contains covenants that limit our ability to:

          o    incur additional debt;

          o    sell assets or our subsidiaries;

          o    grant liens to third parties;

          o    pay dividends or repurchase stock; and

          o    engage in a merger or sell substantially all of our assets.

Events of default under the indenture include customary events, such as a
cross-acceleration provision in the event that we default in the payment of
other debt due at maturity or upon acceleration for default in an amount
exceeding $25 million.

We may redeem the notes after August 15, 2003, at our option, in whole or in
part.

The subordinated notes also require that upon the occurrence of a change of
control (as defined in the indenture), the holders of the notes have the right
to require us to repurchase the notes at a price equal to 101% of the original
aggregate principal amount, together with accrued and unpaid interest, if any,
to the date of repurchase. If we did not comply with this repurchase obligation,
this would trigger an event of default under our senior credit facilities.

Sales of Equity Securities. On May 31, 2001, we completed an offering of
3,680,000 shares of our common stock at an offering price of $42.50 per share.
In this offering, 1,150,000 shares were offered by us and 2,530,000 shares were
offered by some of our stockholders. Net proceeds to us were approximately $45.7
million.

During 1998, we issued 260,000 shares of our Series A preferred stock at $1,000
per share, resulting in aggregate proceeds of $260.0 million. Dividends on our
Series A preferred stock accrue on a quarterly basis, at the rate of $37.50 per
annum, per share, and are currently paid in additional shares of Series A
preferred stock because of restrictive provisions in our senior credit
facilities. Beginning in 2003, we will be required to pay the dividends in cash
and may do so under our senior credit facilities so long as we are not in
default.

The Series A preferred stock is not redeemable until 2002, after which time we
may, at our option, redeem the shares at 105% of the $1,000 per share
liquidation preference plus accrued and unpaid dividends.

Litigation. In 1998, we recorded an accrual of approximately $125.0 million for
estimated probable losses on litigation assumed in connection with the Thorn
Americas acquisition. As of September 30, 2001, we have paid approximately
$117.1 million of this accrual in settlement of most of these matters and legal
fees. These settlements were funded primarily from amounts available under our
senior credit facilities, including the revolving credit facility and the
multidraw facility, as well as from cash flow from operations. Additional
settlements or judgments against us on our existing litigation could affect our
liquidity.

Talley Repurchase. In connection with Mr. Talley's retirement, we entered into
an agreement to repurchase $25.0 million worth of shares of our common stock
held by Mr. Talley at a purchase price equal to the average closing price of our
common stock over the 10 trading days beginning October 9, 2001, subject to a
maximum of $27.00 per share and a minimum of $20.00 per share. Under this
formula, the purchase price for the repurchase was calculated at $20.258 per
share. Accordingly, on October 23, 2001 we repurchased 493,632 shares of our
common stock from Mr. Talley at $20.258 per share for a total purchase price of
$10.0 million. In addition, on or before November 30, 2001, we will repurchase
an additional 740,488 shares of our common stock from Mr. Talley at $20.258 per
share, for a total purchase price of an additional $15.0 million. Furthermore,
we have the option to purchase any or all of the remaining 1,714,046 shares of
common stock held by Mr. Talley at $20.258 per share through February 5, 2002.


                                       20
<PAGE>

Our senior credit facilities contain covenants that generally limit our ability
to repurchase in excess of $50.0 million of our capital stock and senior
subordinated notes. In addition, the indenture governing our senior subordinated
notes contains covenants limiting our ability to repurchase our capital stock.
Under these agreements, we had the ability to effect the October 2001 repurchase
of $10.0 million of our common stock from Mr. Talley and we currently have the
ability to effect the November 2001 repurchase of $15.0 million of our common
stock from Mr. Talley. However, each of these repurchases may limit our ability
to make further repurchases of our common stock, including our ability to
exercise the option to repurchase the remaining shares of our common stock held
by Mr. Talley and pursuant to our Common Stock Repurchase Plan. Furthermore, the
restrictions under our senior credit facilities may, in some instances, limit
our ability to repurchase our senior subordinated notes following the November
2001 repurchase of $15.0 million of our common stock from Mr. Talley.

Common Stock Repurchase Plan. In April 2000, we announced that our board of
directors had authorized a program to repurchase in the open market up to an
aggregate of $25 million of our common stock. To date, no shares of common stock
have been purchased by us under this share repurchase program. However, we may
begin repurchasing shares of our common stock at any time, subject to the
limitations in our senior credit facilities and the indentures governing our
senior subordinated notes.

Economic Conditions. Although our performance has not suffered in previous
economic downturns, we cannot assure you that demand for our products,
particularly in higher price ranges, will not significantly decrease in the
event of a prolonged recession.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

SFAS 133. Effective January 1, 2001, we adopted SFAS 133, which establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts and hedging activities. All
derivatives, whether designated in hedging relationships or not, are required to
be recorded on the balance sheet at fair value. If the derivative is designated
as a fair value hedge, the changes in the fair value of the derivative and of
the hedged item attributable to the hedged risk are recognized in earnings. If
the derivative is designated as a cash flow hedge, the effective portions of
changes in the fair value of the derivative are recorded in other comprehensive
income and are recognized in the income statement when the hedged item affects
earnings. Ineffective portions of changes in the fair value of cash flow hedges
are recognized in earnings.

The adoption of SFAS 133 on January 1, 2001 resulted in a cumulative pre-tax
increase to other comprehensive income of $2.6 million, or $1.4 million after
taxes. As a result of a decline in interest rates for the nine months ended
September 30, 2001, accumulative other comprehensive loss at the end of the
period was $2.5 million after taxes.

SFAS 141 and SFAS 142. On July 20, 2001, the Financial Accounting Standards
Board issued SFAS 141, Business Combinations and SFAS 142, Goodwill and
Intangible Assets. SFAS 141 is effective for all business combinations completed
after June 30, 2001. SFAS 142 is effective for fiscal years beginning after
December 15, 2001; however, certain provisions of this Statement apply to
goodwill and other intangible assets acquired between July 1, 2001 and the
effective date of SFAS 142.

Major provisions of these statements and their effective dates for us are as
follows:

     o    all business combinations initiated after June 30, 2001 must use the
          purchase method of accounting;

     o    intangible assets acquired in a business combination must be recorded
          separately from goodwill if they arise from contractual or other legal
          rights or are separable from the acquired entity and can be sold,
          transferred, licensed, rented or exchanged, either individually or as
          part of a related contract, asset or liability;

     o    goodwill, as well as intangible assets with indefinite lives, acquired
          after June 30, 2001, will not be amortized;

     o    effective January 1, 2002, all previously recognized goodwill and
          intangible assets with indefinite lives will no longer be subject to
          amortization;

     o    effective January 1, 2002, goodwill and intangible assets with
          indefinite lives will be tested for impairment annually and whenever
          there is an impairment indicator; and

     o    all acquired goodwill must be assigned to reporting units for purposes
          of impairment testing and segment reporting.



                                       21
<PAGE>

We will continue to amortize goodwill and intangible assets recognized prior to
July 1, 2001, under our current method until January 1, 2002, at which time
quarterly and annual goodwill amortization of approximately $7.1 million and
$28.4 million will no longer be recognized. We intend to complete a transitional
impairment test of all intangible assets by March 21, 2002 and a transitional
fair value based impairment test of goodwill as of January 1, 2002 by June 30,
2002. Impairment losses, if any, resulting from the transitional testing will be
recognized in the quarter ended March 31, 2002, as a cumulative effect of a
change in accounting principle.

SFAS 144. On October 3, 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144 Accounting for Impairment or
Disposal of Long-Lived Assets. SFAS 144 is effective for fiscal years beginning
after December 15, 2001. We do not believe that the implementation of this
standard will have a material effect on our financial position, results of
operations, or cash flows.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

INTEREST RATE SENSITIVITY

As of September 30, 2001, we had $175.0 million in senior subordinated notes
outstanding at a fixed interest rate of 11.0%, and $458.0 million in term loans.
Our senior subordinated notes mature on August 15, 2008. The fair value of the
senior subordinated notes is estimated based on discounted cash flow analysis
using interest rates currently offered for loans with similar terms to borrowers
of similar credit quality. The fair value of the senior subordinated notes at
September 30, 2001 was $169.8 million, which is $5.2 million below their
carrying value. Unlike the senior subordinated notes, the $458.0 million in term
loans and all borrowings under the senior credit facility have variable interest
rates indexed to current LIBOR rates. Because the variable rate structure
exposes us to risk of increased interest cost if interest rates rise, in 1998 we
entered into $500.0 million in interest rate swap agreements that lock in a
LIBOR rate of 5.59%, thus hedging this risk. Of the $500.0 million in
agreements, $250.0 million expired in September 2001 and the remaining $250.0
million will expire in 2003. The swap agreements had an aggregate fair value of
($11.5) million at September 30, 2001. A hypothetical 1.0% change in the LIBOR
rate would have affected the fair value of the swaps by approximately $15.8
million.

MARKET RISK

Market risk is the potential change in an instrument's value caused by
fluctuations in interest rates. Our primary market risk exposure is fluctuations
in interest rates. Monitoring and managing this risk is a continual process
carried out by the Board of Directors and senior management. We manage our
market risk based on an ongoing assessment of trends in interest rates and
economic developments, giving consideration to possible effects on both total
return and reported earnings.

INTEREST RATE RISK

We hold long-term debt with variable interest rates indexed to prime or LIBOR
that exposes us to the risk of increased interest costs if interest rates rise.
To reduce the risk related to unfavorable interest rate movements, we have
entered into certain interest rate swap contracts on $250.0 million of debt to
pay a fixed rate of 5.59%.


                                       22
<PAGE>



PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we, along with our subsidiaries, are party to various legal
proceedings arising in the ordinary course of business. Except as described
below, we are not currently a party to any material litigation.

Colon v. Thorn Americas, Inc. The plaintiffs filed this class action in November
1997 in New York state court. This matter was assumed by us in connection with
the Thorn Americas acquisition, and appropriate purchase accounting adjustments
were made for such contingent liabilities. The plaintiffs acknowledge that
rent-to-own transactions in New York are subject to the provisions of New York's
Rental Purchase Statute but contend the Rental Purchase Statute does not provide
Thorn Americas immunity from suit for other statutory violations. Plaintiffs
allege Thorn Americas has a duty to disclose effective interest under New York
consumer protection laws, and seek damages and injunctive relief for Thorn
Americas' failure to do so. This suit also alleges violations relating to
excessive and unconscionable pricing, late fees, harassment, undisclosed
charges, and the ease of use and accuracy of its payment records. In their
prayers for relief, the plaintiffs have requested the following:

     o    class certification;

     o    injunctive relief requiring Thorn Americas to (A) cease certain
          marketing practices, (B) price their rental purchase contracts in
          certain ways, and (C) disclose effective interest;

     o    unspecified compensatory and punitive damages;

     o    rescission of the class members contracts;

     o    an order placing in trust all moneys received by Thorn Americas in
          connection with the rental of merchandise during the class period;

     o    treble damages, attorney's fees, filing fees and costs of suit;

     o    pre- and post-judgment interest; and

     o    any further relief granted by the court.

The plaintiffs have not alleged a specific monetary amount with respect to their
request for damages.

The proposed class originally included all New York residents who were party to
Thorn Americas' rent-to-own contracts from November 26, 1991 through November
26, 1997. In her class certification briefing, Plaintiff acknowledged her claims
under the General Business Law in New York are subject to a three year statute
of limitations, and is now requesting a class of all persons in New York who
paid for rental merchandise from us since November 26, 1994. We are vigorously
defending this action. In November 2000, following interlocutory appeal by both
parties from the denial of cross-motions for summary judgement, we obtained a
favorable ruling from the Appellate Division of the State of New York,
dismissing Plaintiff's claims based on the alleged failure to disclose an
effective interest rate. Plaintiff's other claims were not dismissed. Plaintiff
moved to certify a state-wide class in December 2000. Plaintiff's class
certification motion was heard by the court on November 7, 2001, at which time
the court took the motion under advisement. We are vigorously opposing class
certification. Although there can be no assurance that our position will
prevail, or that we will be found not to have any liability, we believe the
decision by the Appellate Division to be a significant and favorable development
in this matter.

Wisconsin Attorney General Proceeding. On August 4, 1999, the Wisconsin Attorney
General filed suit against us and our subsidiary ColorTyme in the Circuit Court
of Milwaukee County, Wisconsin, alleging that our rent-to-rent transaction
violates the Wisconsin Consumer Act and the Wisconsin Deceptive Advertising
Statute. The Attorney General claims that our rent-to-rent transaction, coupled
with the opportunity afforded our customers to purchase rental merchandise under
what we believe is a separate transaction, is a disguised credit sale subject to
the Wisconsin Consumer Act. Accordingly, the Attorney General alleges that we
have failed to disclose credit terms, misrepresented the terms of the
transaction and engaged in unconscionable practices. We currently operate 27
stores in Wisconsin.


                                       23
<PAGE>

The Attorney General seeks injunctive relief, restoration of any losses suffered
by any Wisconsin consumer harmed and civil forfeitures and penalties in amounts
ranging from $50 to $10,000 per violation. The Attorney General's claim for
monetary penalties applies to at least 7,746 transactions through June 30, 2001.
On October 31, 2001, the Attorney General filed a motion for summary judgment.
Our response is due on November 30, 2001. A pre-trial conference is currently
scheduled to occur after November 30, 2001, with a trial date expected sometime
in the spring of 2002.

Since the filing of this suit, we have attempted to negotiate a mutually
satisfactory resolution of these claims with the Wisconsin Attorney General's
office, including the consideration of possible changes in our business
practices in Wisconsin. To date, we have not been successful, but our efforts
are ongoing. If we are unable to negotiate a settlement with the Attorney
General, we intend to litigate the suits. Although we cannot assure you that we
will be found to have no liability in this matter, we believe its ultimate
resolution will not have a material adverse effect upon us.

Wilfong, et. al. v. Rent-A-Center, Inc./Margaret Bunch, et. al. v.
Rent-A-Center, Inc. In August 2000, a putative nationwide class action was filed
against us in federal court in East St. Louis, Illinois by Claudine Wilfong and
18 other plaintiffs, alleging that we engaged in class-wide gender
discrimination following our acquisition of Thorn Americas. The allegations
underlying Wilfong involve charges of wrongful termination, constructive
discharge, disparate treatment and disparate impact. The plaintiffs, in their
prayer for relief, have requested class certification, injunctive relief, actual
damages of $410,000,000, unspecified compensatory and punitive damages,
attorney's fees, filing fees and costs of suit, pre-judgment interest, and any
further relief granted by the court. In addition, the U.S. Equal Employment
Opportunity Commission filed a motion to intervene on behalf of the plaintiffs,
which the court granted on May 14, 2001. On November 1, 2001, the plaintiffs
filed their motion for class certification. Our response to their motion is due
in January 2002. Although we believe the claims in this case are without merit,
we cannot assure you that we will be found to have no liability in this matter.

In December 2000, a similar suit filed by Margaret Bunch in federal court in the
Western District of Missouri was amended to allege class action claims similar
to those in Wilfong, although no specific amounts were claimed as actual
damages. In July 2001, the court stayed the Bunch action and compelled the
plaintiffs to arbitrate their claims. In November 2001, we announced that we had
reached an agreement in principle for the settlement of the Bunch matter, which
is subject to court approval. Under the terms of the proposed settlement, we
agreed to pay an aggregate of $12,250,000 to the agreed upon class, plus
plaintiffs' attorneys fees as determined by the court, and costs to administer
the settlement. We have the right to terminate the settlement in the event that
more than ninety-two class members opt out of the settlement. To the extent that
the claims of a purported class member in Wilfong are covered by the terms of
the Bunch settlement and such class member does not opt out of the Bunch
settlement, that class member would be entitled to her applicable portion of the
settlement proceeds in Bunch and would accordingly not be entitled to any
recovery for those claims in Wilfong. Both the individual plaintiffs in Wilfong
and the EEOC have filed objections to the settlement in the Bunch case. We
anticipate that the court in Bunch will set a date for determining preliminary
approval of the settlement in the near future.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

CURRENT REPORTS ON FORM 8-K

None.

EXHIBITS

EXHIBIT
NUMBER                            EXHIBIT DESCRIPTION
-------                           -------------------

  3.1(1)   --   Amended and Restated Certificate of Incorporation of Renters
                Choice, Inc.

  3.2(2)   --   Certificate of Amendment to the Amended and Restated
                Certificate of Incorporation of Renters Choice, Inc.

  3.3(3)   --   Certificate of Amendment to the Amended and Restated
                Certificate of Incorporation of Rent-A-Center, Inc.

  3.4(4)   --   Amended and Restated Bylaws of Rent-A-Center, Inc.

  4.1(5)   --   Form of Certificate evidencing Common Stock


                                       24
<PAGE>


  4.2(6)   --   Certificate of Designations, Preferences and Relative Rights
                And Limitations of Series A Preferred Stock of Renters Choice,
                Inc.

  4.3(7)   --   Certificate of Designations, Preferences and Relative Rights
                And Limitations of Series B Preferred Stock of Renters Choice,
                Inc.

  4.4(8)   --   Indenture, dated as of August 18, 1998, by and among Renters
                Choice, Inc., as Issuer, ColorTyme, Inc. and Rent-A-Center,
                Inc., As Subsidiary Guarantors, and IBJ Schroder Bank &
                Trust Company, As Trustee

  4.5(9)   --   Form of Certificate evidencing Series A Preferred Stock

  4.6(10)  --   Form of Exchange Note

  4.7(11)  --   First Supplemental Indenture, dated as of December 31, 1998, by
                And among Renters Choice Inc., Rent-A-Center, Inc., ColorTyme,
                Inc., Advantage Companies, Inc. and IBJ Schroder Bank & Trust
                Company, as Trustee.

 10.1(12)  --   Amended and Restated Rent-A-Center, Inc. Long-Term Incentive
                Plan

 10.2(13)  --   Credit Agreement, dated August 5, 1998, among Renters Choice,
                Inc., Comerica Bank, as Documentation Agent, NationsBank
                N.A., as Syndication Agent, and The Chase Manhattan Bank, as
                Administrative Agent, and certain other lenders

 10.3(14)  --   First Amendment, dated as of February 25, 2000, to the Credit
                Agreement, dated August 5, 1998, among Rent-A-Center, Inc.
                (formerly known as Renters Choice, Inc.), Comerica Bank, as
                Documentation Agent, NationsBank N.A., as Syndication Agent,
                and The Chase Manhattan Bank, as Administrative Agent, and
                certain Other lenders

 10.4(15)  --   Amended and Restated Credit Agreement, dated as of August 5,
                1998 as amended and restated as of June 29, 2000, among
                Rent-A-Center, Inc., Comerica Bank, as Documentation Agent,
                Bank Of America, NA, as Syndication Agent, and The Chase
                Manhattan Bank, as Administration Agent

 10.5(16)  --   First Amendment, dated as of May 8, 2001, to the Credit
                Agreement, dated as of August 5, 1998, as amended and
                restated as Of June 29, 2000, among Rent-A-Center, Inc., the
                Lenders parties To the Credit Agreement, the Documentation
                Agent and Syndication Agent named therein and The Chase
                Manhattan Bank, as Administrative Agent.

 10.6(17)  --   Guarantee and Collateral Agreement, dated August 5, 1998, made
                By Renters Choice, Inc., and certain of its Subsidiaries in
                favor Of the Chase Manhattan Bank, as Administrative Agent

 10.7*     --   Amended and Restated Stockholders Agreement, effective as of
                October 8, 2001, by and among Apollo Investment Fund IV,
                L.P., Apollo Overseas Partners IV, L.P., J. Ernest Talley,
                Mark E. Speese, Rent-A-Center, Inc., and certain other
                persons


                                       25
<PAGE>

10.8(18)   --   Registration Rights Agreement, dated August 5, 1998, by and
                between Renters Choice, Inc., Apollo Investment Fund IV,
                L.P., and Apollo Overseas Partners IV, L.P., related to the
                Series A Convertible Preferred Stock

10.9*      --   Common Stock Purchase Agreement, dated as of October 8, 2001,
                by and among J. Ernest Talley, Mary Ann Talley, the Talley
                1999 Trust, and Rent-A-Center, Inc.
----------
 * Filed herewith.

(1)  Incorporated herein by reference to Exhibit 3.2 to the registrant's Annual
     Report on Form 10-K for the year ended December 31, 1994

(2)  Incorporated herein by reference to Exhibit 3.2 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended September 30, 1996

(3)  Incorporated herein by reference to Exhibit 3.3 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 2001

(4)  Incorporated herein by reference to Exhibit 3.4 to the registrant's Annual
     Report on Form 10-K for the year ended December 31, 2000

(5)  Incorporated herein by reference to Exhibit 4.1 to the registrant's Form
     S-4 filed on January 19, 1999.

(6)  Incorporated herein by reference to Exhibit 4.2 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1998

(7)  Incorporated herein by reference to Exhibit 4.3 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1998

(8)  Incorporated herein by reference to Exhibit 4.4 to the registrant's
     Registration Statement Form S-4 filed on January 19, 1999

(9)  Incorporated herein by reference to Exhibit 4.5 to the registrant's
     Registration Statement Form S-4 filed on January 19, 1999

(10) Incorporated herein by reference to Exhibit 4.6 to the registrant's
     Registration Statement Form S-4 filed on January 19, 1999

(11) Incorporated herein by reference to Exhibit 4.7 to the registrant's
     Registration Statement Form S-4 filed on January 19, 1999

(12) Incorporated herein by reference to Exhibit 99.1 to the registrant's
     Registration Statement of Form S-8 (File No. 333-62582)

(13) Incorporated herein by reference to Exhibit 10.18 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1998

(14) Incorporated herein by reference to Exhibit 10.3 to the registrant's Annual
     Report on form 10-K for the year ended December 31, 1999

(15) Incorporated herein by reference to Exhibit 10.4 to the registrant's
     Quarterly Report on form 10-Q for the quarter ended June 30, 2000

                                       26
<PAGE>
(16) Incorporated herein by reference to Exhibit 10.5 to the registrant's
     Quarterly Report on form 10-Q for the quarter ended March 31, 2001

(17) Incorporated herein by reference to Exhibit 10.19 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1998

(18) Incorporated herein by reference to Exhibit 10.22 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1998


                                       27
<PAGE>


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned duly authorized officer.

                                 RENT-A-CENTER, INC.

                                 By: /s/ Robert D. Davis
                                     -------------------------------------------
                                     Robert D. Davis
                                     Senior Vice President-Finance and
                                     Chief Financial Officer

Date: November 13, 2001



                                       28
<PAGE>


                               INDEX TO EXHIBITS

<Table>
<Caption>

EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
<S>             <C>
  3.1(1)   --   Amended and Restated Certificate of Incorporation of Renters
                Choice, Inc.

  3.2(2)   --   Certificate of Amendment to the Amended and Restated
                Certificate of Incorporation of Renters Choice, Inc.

  3.3(3)   --   Certificate of Amendment to the Amended and Restated
                Certificate of Incorporation of Rent-A-Center, Inc.

  3.4(4)   --   Amended and Restated Bylaws of Rent-A-Center, Inc.

  4.1(5)   --   Form of Certificate evidencing Common Stock

  4.2(6)   --   Certificate of Designations, Preferences and Relative Rights
                And Limitations of Series A Preferred Stock of Renters Choice,
                Inc.

  4.3(7)   --   Certificate of Designations, Preferences and Relative Rights
                And Limitations of Series B Preferred Stock of Renters Choice,
                Inc.

  4.4(8)   --   Indenture, dated as of August 18, 1998, by and among Renters
                Choice, Inc., as Issuer, ColorTyme, Inc. and Rent-A-Center,
                Inc., As Subsidiary Guarantors, and IBJ Schroder Bank &
                Trust Company, As Trustee

  4.5(9)   --   Form of Certificate evidencing Series A Preferred Stock

  4.6(10)  --   Form of Exchange Note

  4.7(11)  --   First Supplemental Indenture, dated as of December 31, 1998, by
                And among Renters Choice Inc., Rent-A-Center, Inc., ColorTyme,
                Inc., Advantage Companies, Inc. and IBJ Schroder Bank & Trust
                Company, as Trustee.

 10.1(12)  --   Amended and Restated Rent-A-Center, Inc. Long-Term Incentive
                Plan

 10.2(13)  --   Credit Agreement, dated August 5, 1998, among Renters Choice,
                Inc., Comerica Bank, as Documentation Agent, NationsBank
                N.A., as Syndication Agent, and The Chase Manhattan Bank, as
                Administrative Agent, and certain other lenders

 10.3(14)  --   First Amendment, dated as of February 25, 2000, to the Credit
                Agreement, dated August 5, 1998, among Rent-A-Center, Inc.
                (formerly known as Renters Choice, Inc.), Comerica Bank, as
                Documentation Agent, NationsBank N.A., as Syndication Agent,
                and The Chase Manhattan Bank, as Administrative Agent, and
                certain Other lenders

 10.4(15)  --   Amended and Restated Credit Agreement, dated as of August 5,
                1998 as amended and restated as of June 29, 2000, among
                Rent-A-Center, Inc., Comerica Bank, as Documentation Agent,
                Bank Of America, NA, as Syndication Agent, and The Chase
                Manhattan Bank, as Administration Agent
</Table>


                                       29
<PAGE>

<Table>
<S>             <C>

10.5(16)   --   First Amendment, dated as of May 8, 2001, to the Credit
                Agreement, dated as of August 5, 1998, as amended and
                restated as Of June 29, 2000, among Rent-A-Center, Inc., the
                Lenders parties To the Credit Agreement, the Documentation
                Agent and Syndication Agent named therein and The Chase
                Manhattan Bank, as Administrative Agent.

10.6(17)   --   Guarantee and Collateral Agreement, dated August 5, 1998, made
                By Renters Choice, Inc., and certain of its Subsidiaries in
                favor Of the Chase Manhattan Bank, as Administrative Agent

10.7*      --   Amended and Restated Stockholders Agreement, effective as of
                October 8, 2001, by and among Apollo Investment Fund IV,
                L.P., Apollo Overseas Partners IV, L.P., J. Ernest Talley,
                Mark E. Speese, Rent-A-Center, Inc., and certain other
                persons

10.8(18)   --   Registration Rights Agreement, dated August 5, 1998, by and
                between Renters Choice, Inc., Apollo Investment Fund IV,
                L.P., and Apollo Overseas Partners IV, L.P., related to the
                Series A Convertible Preferred Stock

10.9*      --   Common Stock Purchase Agreement, dated as of October 8, 2001,
                by and among J. Ernest Talley, Mary Ann Talley, the Talley
                1999 Trust, and Rent-A-Center, Inc.
</Table>
----------
 * Filed herewith.

(1)  Incorporated herein by reference to Exhibit 3.2 to the registrant's Annual
     Report on Form 10-K for the year ended December 31, 1994

(2)  Incorporated herein by reference to Exhibit 3.2 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended September 30, 1996

(3)  Incorporated herein by reference to Exhibit 3.3 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 2001

(4)  Incorporated herein by reference to Exhibit 3.4 to the registrant's Annual
     Report on Form 10-K for the year ended December 31, 2000

(5)  Incorporated herein by reference to Exhibit 4.1 to the registrant's Form
     S-4 filed on January 19, 1999.

(6)  Incorporated herein by reference to Exhibit 4.2 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1998

(7)  Incorporated herein by reference to Exhibit 4.3 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1998

(8)  Incorporated herein by reference to Exhibit 4.4 to the registrant's
     Registration Statement Form S-4 filed on January 19, 1999

(9)  Incorporated herein by reference to Exhibit 4.5 to the registrant's
     Registration Statement Form S-4 filed on January 19, 1999

(10) Incorporated herein by reference to Exhibit 4.6 to the registrant's
     Registration Statement Form S-4 filed on January 19, 1999


                                       30
<PAGE>


(11) Incorporated herein by reference to Exhibit 4.7 to the registrant's
     Registration Statement Form S-4 filed on January 19, 1999

(12) Incorporated herein by reference to Exhibit 99.1 to the registrant's
     Registration Statement of Form S-8 (File No. 333-62582)

(13) Incorporated herein by reference to Exhibit 10.18 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1998

(14) Incorporated herein by reference to Exhibit 10.3 to the registrant's Annual
     Report on form 10-K for the year ended December 31, 1999

(15) Incorporated herein by reference to Exhibit 10.4 to the registrant's
     Quarterly Report on form 10-Q for the quarter ended June 30, 2000

(16) Incorporated herein by reference to Exhibit 10.5 to the registrant's
     Quarterly Report on form 10-Q for the quarter ended March 31, 2001

(17) Incorporated herein by reference to Exhibit 10.19 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1998

(18) Incorporated herein by reference to Exhibit 10.22 to the registrant's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1998


                                       31

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>3
<FILENAME>d92108ex10-7.txt
<DESCRIPTION>AMENDED/RESTATED STOCKHOLDERS AGREEMENT
<TEXT>
<PAGE>
                                                                    Exhibit 10.7


                   AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
                             OF RENT-A-CENTER, INC.

            THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (the "AGREEMENT"),
is effective as of the 8th day of October 2001, and is entered into by and
among (i) each of Apollo Investment Fund IV, L.P., a Delaware limited
partnership, and Apollo Overseas Partners IV, L.P., an exempted limited
partnership registered in the Cayman Islands acting through its general partner
(individually and collectively with their Permitted Transferees (defined below),
"APOLLO"), (ii) J. Ernest Talley, an individual ("TALLEY"), (iii) Mark E.
Speese, an individual ("SPEESE"), (iv) Rent-A-Center, Inc., a Delaware
corporation (the "COMPANY"), (v) each Person (defined below) named in Exhibit A
attached hereto (the "TALLEY OTHER PARTIES" and together with Talley, the
"TALLEY GROUP"), (vi) each Person named in Exhibit B attached hereto (the
"SPEESE OTHER PARTIES" and together with Speese, the "SPEESE GROUP"), and (vii)
each other Person who becomes a party to the Agreement in accordance with the
terms hereof (all of the foregoing, collectively, the "PARTIES"). Terms with
initial capital letters used but not otherwise defined herein shall have the
meanings given in Section 1.1.

                               W I T N E S S E T H

            WHEREAS, the Parties are also parties to that certain Stockholders
Agreement, dated as of August 5, 1998 (the "ORIGINAL AGREEMENT"), entered into
in connection with the closing of the transactions contemplated by the Stock
Purchase Agreement (defined below);

            WHEREAS, the Parties desire to amend and restate the Original
Agreement, to reflect the agreement of the Parties to, among other things: (a)
provide for the repurchase of Common Stock (as defined below) from the Talley
Group pursuant to the Stock Repurchase Agreement (as defined below), (b) set
forth certain agreements with respect to the Transfer and voting of the Shares
following the Effective Date, and (c) reflect the current capital structure of
the Company and beneficial ownership of the Company's capital stock by the
Parties;

            WHEREAS, the authorized capital stock of the Company consists of
125,000,000 shares of common stock, $.01 par value (the "COMMON STOCK"), and
5,000,000 shares of preferred stock, $.01 par value (the "PREFERRED STOCK") of
which 400,000 shares are designated Series A Preferred Stock, $.01 par value
(the "SERIES A PREFERRED STOCK"), and 400,000 shares are designated Series B
Preferred Stock, $.01 par value, and (ii) as of September 30, 2001, the issued
and outstanding capital stock of the Company consists of 26,682,119 shares of
Common Stock, 289,725 shares of Series A Preferred Stock and no shares of Series
B Preferred Stock, with approximately 21,402,375 shares of Common Stock reserved
for issuance upon the exercise of certain stock options and upon conversion of
the Series A Preferred Stock;

            WHEREAS, as of October 8, 2001 (i) Apollo beneficially owns 278,596
shares of Series A Preferred Stock, (ii) the Talley Group owns 2,948,166 shares
of Common Stock, and (iii) the Speese Group collectively owns 1,176,832 shares
of Common Stock;

            WHEREAS, the Parties desire to restrict the Transfer of the Shares,
including both issued and outstanding Shares as well as Shares that may be
issued or otherwise acquired

<PAGE>

hereafter, to provide for certain rights and obligations in respect to the
Shares and the Company as hereinafter provided;

            WHEREAS, the Company and Talley and certain members of the Talley
Group have entered into that Common Stock Purchase Agreement, as of even date
herewith (as amended from time to time the "STOCK REPURCHASE AGREEMENT") whereby
the Company has agreed to repurchase and Talley and such members have agreed to
sell $25 million worth of Common Stock and have granted the Company the right
from time to time to acquire any or all of the remaining Talley Included Shares,
in each case under the terms and conditions specified therein;

            WHEREAS, under the Original Agreement, the consummation of the
transactions contemplated by the Stock Repurchase Agreement requires the consent
of all the Parties to it and delivery of this Agreement is a condition to
closing the transactions contemplated by the Stock Repurchase Agreement; and

            WHEREAS, the Parties desire that this Agreement become effective
immediately;.

            NOW THEREFORE, the Parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

            Section 1.1 Definitions. As used in this Agreement, the following
terms have the following meanings:

            "AFFILIATE" as applied to any specified Person, shall mean any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person and, in the case of a Person
who is an individual, shall include (i) members of such specified Person's
immediate family (as defined in Instruction 2 of Item 404(a) of Regulation S-K
under the Securities Act) and (ii) trusts, the trustee and all beneficiaries of
which are such specified Person or members of such Person's immediate family as
determined in accordance with the foregoing clause (i). For the purposes of this
definition, control when used with respect to any Person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "AFFILIATED," "CONTROLLING" and "CONTROLLED" have meanings
correlative to the foregoing. Notwithstanding the foregoing, Apollo and its
Affiliates shall not be deemed Affiliates of the Company for purposes of this
Agreement.

            "APOLLO NOMINEES" shall have the meaning set forth in Section
4.1(a).

            "BENEFICIAL OWNER" of a security shall mean any Person who, directly
or indirectly, through any contract, arrangement, understanding, relationship,
or otherwise has (i) the power to vote, or to direct the voting of, such
security or (ii) the power to dispose, or to direct the disposition of, such
security.

                                       2

<PAGE>

            "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.

            "BUSINESS DAY" shall mean each day other than Saturdays, Sundays and
days when commercial banks are authorized to be closed for business in New York,
New York.

            "CERTIFICATE OF DESIGNATION" shall mean the Certificate of
Designation of the Series A Preferred Stock in the form attached as an exhibit
to the Stock Purchase Agreement.

            "CHARTER DOCUMENTS" shall mean the Amended and Restated Certificate
of Incorporation and Amended and Restated By-Laws of the Company, each as
amended to date, as included as exhibits (or incorporated therein) to the
Company's periodic reports filed with the Commission under the Exchange Act.

            "COMMISSION" shall mean the United States Securities and Exchange
Commission.

            "COMMON STOCK" shall have the meaning set forth in the recitals.

            "COMPANY" shall have the meaning set forth in the preamble.

            "COMPANY NOMINEES" shall have the meaning set forth in Section
4.1(a).

            "CREDIT AGREEMENT" shall mean that certain Amended and Restated
Credit Agreement, dated as of August 5, 1998 and amended and restated as of June
29, 2000, by and among the Company, Comerica Bank, Bank of America, N.A. and The
Chase Manhattan Bank, as amended from time to time.

            "EFFECTIVE DATE" shall mean October 8, 2001.

            "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

            "GROUP MEMBER" shall mean a member of the Talley Group or a member
of the Speese Group, as applicable.

            "INDEBTEDNESS" shall mean with respect to any person, without
duplication, all liabilities of such person (a) for borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such person or
only to a portion thereof), (b) evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (other than any such balance that represents an account
payable or any other monetary obligation to a trade creditor (whether or not an
Affiliate)), or (c) for the payment of money relating to a capitalized lease
obligation.

            "IRR" shall have the meaning set forth in Section 4.2(b).

            "MD&A" shall mean a management's discussion and analysis of the
Company's financial condition and results of operation comparable to the
discussion that is required to be included in periodic reports filed under the
Exchange Act.

                                       3

<PAGE>

            "NOTICES" shall have the meaning set forth in Section 6.5.

            "PIK SHARES" means any Shares issued in lieu of cash dividends
pursuant to the Certificate of Designations.

            "PECUNIARY INTEREST" in any security shall mean the opportunity,
directly or indirectly, to profit or share in any profit derived from a
transaction in such security, and shall include securities owned by an
individual's spouse or issue or any trust solely for the benefit of such
individual, spouse or issue.

            "PERMITTED TRANSFEREE" shall mean:

                  (a) in the case of Apollo (i) any officer, director or partner
of, or Person controlling, Apollo, (ii) any other Person that is (x) an
Affiliate of the general partners, investment managers or investment advisors of
Apollo, (y) an Affiliate of Apollo or a Permitted Transferee of an Affiliate or
(z) an investment fund, investment account or investment entity whose investment
manager, investment advisor or general partner thereof is Apollo or a Permitted
Transferee of Apollo or (iii) if a Permitted Transferee of a Person set forth in
the foregoing clauses (i) and (ii) is an individual, (x) any spouse or issue of
such individual, or any trust solely for the benefit of such individual, spouse
or issue, and (y) upon such individual's death, any Person to whom Shares are
transferred in accordance with the laws of descent and/or testamentary
distribution, in each case in a bona fide distribution or other transaction not
intended to avoid the provisions of this Agreement;

                  (b) in the case of a Group Member, (i) any Person that is
solely controlled by such Group Member, (ii) upon a bona fide liquidation of, or
a bona fide withdrawal from, such Group Member, in each case, not intended to
avoid the provisions of this Agreement, the shareholders, partners or
principals, as the case may be, of such Group Member, or (iii) if such Group
Member is an individual, (x) any spouse or issue of such individual, or any
trust or limited partnership solely for the benefit of such individual, spouse
or issue, and (y) upon such individual's death, any Person to whom Shares are
transferred in accordance with the laws of descent and/or testamentary
distribution; and

                  (c) any Person who is a party to this Agreement.

            "PERSON" shall mean an individual or a corporation, limited
liability company, partnership, trust, or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.

            "PREFERRED STOCK" shall have the meaning set forth in the recitals.

            "REGISTRATION RIGHTS AGREEMENT" shall mean the Series A Registration
Rights Agreement, dated as of August 5, 1998, by and between the Company and
Apollo.

            "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.

            "SERIES A PREFERRED STOCK" shall have the meaning set forth in the
recitals.

                                       4

<PAGE>

            "SHARES" shall mean, collectively, the Common Stock and the
Preferred Stock, whether now owned or acquired after the date hereof. Whenever
this Agreement refers to a number or percentage of Shares, such number or
percentage shall be calculated as if each of the Shares (including, in the case
of Apollo, any PIK Shares) had been exchanged or converted into shares of Common
Stock immediately prior to such calculation regardless of the existence of any
restrictions on such exchange or conversion.

            "SPEESE GROUP" shall have the meaning set forth in the preamble.

            "SPEESE INCLUDED SHARES" shall mean those 1,176,832 shares of Common
Stock owned by the Speese Group as of the Effective Date.

            "SPEESE OTHER PARTIES" shall have the meaning set forth in the
preamble.

            "STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement,
dated as of August 5, 1998, between the Company and Apollo.

            "STOCK REPURCHASE AGREEMENT" shall have the meaning set forth in the
recitals.

            "SUBSIDIARY" shall mean, with respect to any Person, (a) a
corporation a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by a Subsidiary of such Person, or by such Person and one or
more Subsidiaries of such Person, (b) a partnership in which such Person or a
Subsidiary of such Person is, at the date of determination, a general partner of
such partnership, or (c) any other Person (other than a corporation) in which
such Person, a Subsidiary of such Person or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has (i) at least a majority ownership interest or (ii)
the power to elect or direct the election of the directors or other governing
body of such Person.

            "TALLEY GROUP" shall have the meaning set forth in the preamble.

            "TALLEY INCLUDED SHARES" shall mean those 2,948,166 shares of Common
Stock owned by the Talley Group as of the Effective Date.

            "TALLEY OTHER PARTIES" shall have the meaning set forth in the
preamble.

            "TRANSFER" shall mean (i) when used as a noun: any direct or
indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or other
disposition and (ii) when used as a verb: to directly or indirectly transfer,
sell, assign, pledge, hypothecate, encumber, or otherwise dispose of; provided,
however, Transfer shall not include a pledge in connection with a recourse, bona
fide loan transaction that is not intended to avoid the provisions of this
Agreement.

            "TRANSFEREE" shall mean any Person to whom Shares have been
Transferred in compliance with the terms of this Agreement.

                                       5

<PAGE>

                                   ARTICLE II

                            RESTRICTIONS ON TRANSFERS

            Section 2.1 Transfers in Accordance with this Agreement. Any attempt
to Transfer, or purported Transfer of, any of the Talley Included Shares or the
Speese Included Shares in violation of the terms of this Agreement shall be null
and void and the Company shall not register upon its books, and shall direct its
transfer agent not to register on its books any such Transfer. A copy of this
Agreement shall be filed with the Secretary of the Company and the Company's
transfer agent and kept with the records of the Company.

            Section 2.2 Agreement to be Bound.

                  (a) No party hereto (other than the Company, Apollo and their
Permitted Transferees) shall Transfer any Shares except (i) to a Permitted
Transferee or (ii) as specifically provided herein.

                  (b) No member of the Talley Group or its Permitted Transferees
shall Transfer its respective pecuniary interests in any of the Talley Included
Shares to any party other than a Permitted Transferee of the Talley Group,
except that Talley, the other members of the Talley Group and their Permitted
Transferees may sell shares of Common Stock under and pursuant to the terms of
the Stock Repurchase Agreement. Notwithstanding the foregoing, after February 5,
2002, the Talley Group and its Permitted Transferees shall be permitted to
Transfer their respective pecuniary interests in the Talley Included Shares
without restrictions imposed by this Agreement, other than those Talley Included
Shares that members of the Talley Group or its Permitted Transferees have an
obligation to sell to the Company as a result of the Company properly and timely
delivering an Exercise Notice (as defined in the Stock Repurchase Agreement).

                  (c) No member of the Speese Group or its Permitted Transferees
shall Transfer its respective pecuniary interests in any of the Speese Included
Shares to any party other than a Permitted Transferee of the Speese Group,
except that during any twelve-month period the Speese Group and its Permitted
Transferees shall be entitled to Transfer up to 300,000 Shares in aggregate
through sales pursuant to Rule 144 under the Securities Act, or otherwise.
Notwithstanding the foregoing, in no case shall the Speese Group or its
Permitted Transferees (i) Transfer any Speese Included Shares prior to or on
August 5, 2002, (ii) Transfer more than 50% of the Speese Included Shares during
the one year period commencing on August 6, 2002 or (iii) Transfer any Shares if
such Transfer would trigger default or change-in-control provisions under the
Certificate of Designation or any material debt instrument of the Company.

                  (d) No Transfer to a Permitted Transferee of Apollo or of any
party as provided in the foregoing clauses (a), (b) and (c) of this Section 2.2
shall be permitted unless (i) the certificates representing such Shares issued
to the Transferee bear the legend provided in Section 2.3 and (ii) the
Transferee (if not already a party hereto) has executed and delivered to each
other party hereto, as a condition precedent to such Transfer, an instrument or
instruments, reasonably satisfactory to the Company, confirming that the
Transferee agrees to be bound by

                                       6

<PAGE>

the terms of this Agreement in the same manner as such Transferee's transferor,
except as otherwise specifically provided in this Agreement.

            Section 2.3 Legend. Apollo and each Group Member hereby agree that
(i) each outstanding certificate representing Shares issued to any of them prior
to the Effective Date, shall bear a legend reading substantially as set forth in
Section 2.3 of the Original Agreement; and (ii) each outstanding certificate
representing Shares issued to any of them after the Effective Date, or any
certificate issued after the Effective Date in exchange for or upon conversion
of any similarly legended certificate, shall bear a legend reading substantially
as follows:

            THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES
LAWS, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. THE HOLDER OF THESE SHARES MAY BE REQUIRED TO DELIVER
TO THE COMPANY, IF THE COMPANY SO REQUESTS, AN OPINION OF COUNSEL (REASONABLY
SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY) TO THE EFFECT THAT AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (OR FROM REGISTRATION OR
QUALIFICATION UNDER STATE SECURITIES LAWS) IS AVAILABLE WITH RESPECT TO ANY
TRANSFER OF THESE SHARES THAT HAS NOT BEEN SO REGISTERED (OR QUALIFIED).

            THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AND OBLIGATIONS, TO WHICH ANY TRANSFEREE
AGREES BY HIS ACCEPTANCE HEREOF, AS SET FORTH IN THE AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT, AS AMENDED FROM TIME TO TIME, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY. NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE BOOKS
OF THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF
SUCH AGREEMENT AND BY AN AGREEMENT OF THE TRANSFEREE TO BE BOUND BY THE
RESTRICTIONS SET FORTH IN THE AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, AS
AMENDED FROM TIME TO TIME.

                                  ARTICLE III

                      ADDITIONAL RIGHTS AND OBLIGATIONS OF
                             APOLLO AND THE COMPANY

            Section 3.1 Access to Information; Confidentiality. Upon the request
of Apollo, the Company shall afford Apollo and its accountants, counsel and
other representatives reasonable access to all of the properties, books,
contracts, commitments and records (including, but not limited to, tax returns)
of the Company and its Subsidiaries that are reasonably requested. Apollo will,
and will cause its agents to, conduct any such investigations on reasonable
advance notice, during normal business hours, with reasonable numbers of persons
and in such a manner as not to interfere unreasonably with the normal operations
of the Company and its Subsidiaries.

                                       7

<PAGE>

            Except as otherwise required by applicable law, neither the Company
nor any of its Subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of any customer or other Person, would jeopardize the attorney-client
privilege of the Person in possession or control of such information, or would
contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date hereof. The Parties will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.

            Apollo shall, and shall use its best efforts to cause their
representatives to, keep confidential all such information to the same extent
such information is treated as confidential by the Company, and shall not
directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
not apply to (i) any information that (x) was already in Apollo's possession
prior to the disclosure thereof by the Company (other than through disclosure by
any other Person known by Apollo to be subject to a duty of confidentiality),
(y) was then generally known to the public, or (z) was disclosed to Apollo by a
third party not known by Apollo to be bound by an obligation of confidentiality
or (ii) disclosures made as required by law or legal process or to any person
exercising regulatory authority over such Apollo or its Affiliates. If in the
absence of a protective order or the receipt of a waiver hereunder, Apollo is
nonetheless, in the opinion of their counsel, compelled to disclose information
concerning the Company to any tribunal or governmental body or agency or else
stand liable for contempt or suffer other censure or penalty, Apollo may
disclose such information to such tribunal or governmental body or agency
without liability hereunder. In addition, in the event that any information
disclosed by the Company to Apollo is material nonpublic information, Apollo
agrees to comply with its obligations under the applicable Federal and state
securities laws with respect thereto, including but not limited to, the laws
pertaining to the possession, dissemination and utilization of such material
nonpublic information.

            Section 3.2 Furnishing of Information. (a) The Company shall deliver
to Apollo, as long as Apollo shall own any Shares:

                  (i) As promptly as practical, but in no event later than 30
      days after the end of each calendar month, a copy of the monthly financial
      reporting package for such month customarily prepared for the Company's
      Chief Executive Officer.

                  (ii) As promptly as practical, but in no event later than 60
      days after the close of each of its first three quarterly accounting
      periods during any fiscal year of the Company, the consolidated balance
      sheet of the Company as at the end of such quarterly period, and the
      related consolidated statements of operations, stockholders' equity and
      cash flows for such quarterly period, and for the elapsed portion of the
      fiscal year ended with the last day of such quarterly period, and in each
      case setting forth comparative figures for the related periods in the
      prior fiscal year (if such comparative figures are available without
      unreasonable expense), all of which shall be certified by the chief
      financial officer of the Company, to have been prepared in accordance with
      generally accepted accounting principles, subject to year-end audit
      adjustments, together with an MD&A;

                                       8

<PAGE>

                  (iii) As promptly as practical, but in no event later than 105
      days after the close of each fiscal year of the Company, the consolidated
      balance sheet of the Company as of the end of such fiscal year and the
      related consolidated statements of operations, stockholders' equity and
      cash flows for such fiscal year, in each case setting forth comparative
      figures for the preceding fiscal year, and certified by independent
      certified public accountants of recognized national standing, together
      with an MD&A; and

                  (iv) All reports, if any, filed by the Company or any
      Subsidiary of the Company with the Commission under the Exchange Act, as
      promptly as practical, but in no event later than 15 days after filing any
      such reports with the Commission.

                  (b) The provisions of Sections 3.2(a)(ii) and (iii) above
shall be deemed to have been satisfied if the Company delivers the reports
timely filed by the Company with the Commission on Form l 0-Q or 10-K, as
applicable, for such periods promptly, but in no event later than 15 days after
filing any such Form with the Commission.

                                   ARTICLE IV

                         CORPORATE GOVERNANCE AND VOTING

            Section 4.1 Board of Directors of the Company.

                  (a) As of the Effective Date, the number of directors
constituting the entire Board of Directors of the Company shall be eight (8).
Thereupon the Company shall be entitled, but not required, to nominate up to
five (5) members to the Board of Directors and Apollo (or any representative
thereof designated by Apollo) shall be entitled, but not required, to nominate
up to three (3) members to the Board of Directors (collectively, the "APOLLO
NOMINEES"), two of whom shall be the directors elected by the holders of the
Series A Preferred Stock so long as the holders of the Series A Preferred Stock
have the right to elect two (2) directors. One Apollo Nominee shall be
classified as a Class I Director of the Company, who will be one of the
directors elected by the holders of the Series A Preferred Stock, one Apollo
Nominee shall be classified as a Class II Director of the Company, who will be
one of the directors elected by the holders of the Series A Preferred Stock, and
one Apollo Nominee shall be classified as a Class III Director of the Company,
who will not be one of the directors elected by the holders of the Series A
Preferred Stock.

                  (b) The Talley Group and the Speese Group shall vote all of
the Shares owned or held of record by them at all regular and special meetings
of the stockholders of the Company called or held for the purpose of filling
positions on the Board of Directors, and in each written consent executed in
lieu of such a meeting of stockholders, and, to the extent entitled to vote
thereon, each party hereto shall take all actions otherwise necessary to ensure
(to the extent within the Parties' collective control) that the Apollo Nominees
are elected to the Board of Directors.

                  (c) The Company, the Talley Group and the Speese Group shall
use their respective best efforts to call, or cause the appropriate officers and
directors of the

                                       9

<PAGE>

Company to call, a special meeting of stockholders of the Company, as
applicable, and to vote all of the Shares owned or held of record by them for,
or to take all actions by written consent in lieu of any such meeting necessary
to cause, the removal (with or without cause) of any Apollo Nominee if Apollo
requests such director's removal in writing for any reason. Apollo shall have
the right to designate a new nominee in the event any Apollo Nominee shall be so
removed under this Section 4.1(c) or shall vacate his directorship for any
reason.

            Except as provided in this Section 4.1(c), each Group Member hereto
agrees that, at any time that it is then entitled to vote for the election or
removal of directors, it will not vote in favor of the removal of Apollo Nominee
unless (i) such removal shall be at the request of Apollo or (ii) the right of
Apollo to designate such director has terminated in accordance with clause (e)
below.

                  (d) The Company shall not, and shall not permit any of its
Subsidiaries to, without the consent of holders of a majority of the Shares held
by Apollo, take any action under Section 4.2(b) of this Agreement that requires
the approval of the Apollo Nominees, if any of the Apollo Nominees are Persons
whose removal from the Board of Directors has been requested at or prior to the
time of such action by Apollo. Each party hereto shall use reasonable efforts to
prevent any action from being taken by the Board of Directors, during the
pendency of any vacancy due to death, resignation or removal of a director,
unless the Person entitled to have a person nominated by it elected to fill such
vacancy shall have failed, for a period of ten (10) days after notice of such
vacancy, to nominate a replacement.

                  (e) At such time as Apollo, together with any and all of its
Permitted Transferees, cease to hold in aggregate 50% or more of the Shares
issued to Apollo on August 5, 1998, Apollo shall be entitled, but not required,
to nominate only two Apollo Nominees in accordance with this Section 4, one of
whom shall be one of the directors elected by the holders of the Series A
Preferred Stock if any shares of the Series A Preferred Stock are outstanding.
At such time as Apollo, together with any and all of its Permitted Transferees,
cease to hold in aggregate 33.33% or more of the Shares owned by Apollo on
August 5, 1998, Apollo shall be entitled, but not required, to nominate only one
Apollo Nominees in accordance with this Section 4, who shall be the one director
elected by the holders of the Series A Preferred Stock if any shares of the
Series A Preferred Stock are outstanding. At such time as Apollo, together with
any and all of its Permitted Transferees, cease to hold in aggregate 10% or more
of the Shares owned by the Apollo on August 5, 1998, the Apollo shall no longer
be entitled to nominate any Apollo Nominees in accordance with this Section 4.

                  (f) In the event the Company establishes an Executive
Committee of the Board of Directors, it shall be comprised of such persons as a
majority of the Board of Directors shall approve, provided, however, such
committee shall also include at least one Apollo Nominee, who shall be one of
the directors elected by the holders of the Series A Preferred Stock so long as
any shares of the Series A Preferred Stock are outstanding. The Executive
Committee shall have authority, subject to applicable law, to take all actions
that (A) are ancillary to or arise in the normal course of the businesses of the
Company, or (B) implement and are consistent with resolutions of the Board of
Directors provided, however, that such Executive Committee shall not be
authorized to take any action which, if proposed to

                                       10

<PAGE>

be taken by the full Board of Directors would require the affirmative vote of
the Apollo Nominees in accordance with Section 4.2.

                  (g) Unless otherwise approved in advance in writing by all the
Apollo Nominees, each and every committee of the Board of Directors shall be
comprised of three directors, one of whom shall be an Apollo Nominee and at
least one of whom is selected by the Board of Directors but who is not also a
member of management of the Company. The Apollo Nominee on the Finance
Committee, the Audit Committee and Compensation Committee, shall be one of the
directors elected by the holders of the Series A Preferred Stock so long as any
shares of the Series A Preferred Stock are outstanding.

                  (h) Each committee of the Board of Directors, to which
authority has been delegated, shall keep complete and accurate minutes and
records of all actions taken by such committee, prepare such minutes and records
in a timely fashion and promptly distribute such minutes and records to each
member of the Board of Directors.

                  (i) The Parties agree that upon the request of Apollo, the
Company shall cause the Board of Directors of any wholly-owned subsidiary of the
Company to include such number of individuals designated by Apollo (or any
representative thereof designated by Apollo) in the same proportion of the total
number of members of the Board of Directors of such subsidiary as the proportion
of the Company's Board of Directors to which Apollo is entitled pursuant to
Section 4.1(a).

            Section 4.2 Action by the Board of Directors.

                  (a) Except as provided below, all decisions of the Board of
Directors shall require the affirmative vote of a majority of the directors of
the Company then in office, or a majority of the members of an Executive
Committee of the Board of Directors, to the extent such decisions may be
lawfully delegated to an Executive Committee pursuant to Section 4.1(f).

                  (b) The Company shall not, and it shall cause each of its
Subsidiaries not to, take (or agree to take) any action regarding the following
matters, directly or indirectly, including through a merger or consolidation
with any other corporation or otherwise, without the affirmative vote of the
Apollo Nominees: (i) increase the number of authorized shares of Preferred Stock
or authorize the issuance or issue of any shares of Preferred Stock other than
to existing holders of Preferred Stock, (ii) issue any new class or series of
equity security, (iii) amend, alter or repeal, in any manner whatsoever, the
designations, preferences and relative rights and limitations and restrictions
of the Series A Preferred Stock; (iv) amend, alter or repeal any of the
provisions of the Charter Documents or the Certificate of Designation in a
manner that would negatively impact the holders of the Series A Preferred Stock,
including (but not limited to) any amendment that is in conflict with the
approval rights set forth in this Section 4.2; (v) directly or indirectly,
redeem, purchase or otherwise acquire for value (including through an exchange),
or set apart money or other property for any mandatory purchase or other
analogous fund for the redemption, purchase or acquisition of any shares of
Common Stock or Junior Stock (as defined in the Certificate of Designation), or
declare or pay any dividend or make any distribution (whether in cash, shares of
capital stock of the Company, or other property) on shares of Common Stock or
Junior Stock; (vi) cause the number of directors of the Company to

                                       11

<PAGE>

be greater than eight (8); (vii) enter into any agreement or arrangement with or
for the benefit of any Person who is an Affiliate of the Company with a value in
excess of $5 million in a single transaction or series of related transactions;
(viii) effect a voluntary liquidation, dissolution or winding up of the Company;
(ix) sell or agree to sell all or substantially all of the assets of the
Company, unless such transaction (1) occurs after August 5, 2002, (2) is a sale
for cash and (3) results in an internal rate of return ("IRR") to Apollo of 30%
compounded quarterly or greater with respect to each Share issued to Apollo on
August 5, 1998; or (x) enter into any merger or consolidation or other business
combination involving the Company (except a merger of a wholly-owned subsidiary
of the Company into the Company in which the Company's capitalization is
unchanged as a result of such merger) unless such transaction (1) occurs after
August 5, 2002, (2) is for cash and (3) results in an IRR to Apollo of 30%
compounded quarterly or greater with respect to each Share issued to Apollo on
August 5, 1998.

                  (c) Notwithstanding the foregoing Section 4(b), if Apollo owns
less than 33 1/3% of the Shares owned by them on August 5, 1998, the provisions
of Section 4(b) shall cease to exist and shall be of no further force or effect.

                  (d) While any shares of Series A Preferred Stock are
outstanding, the Company shall not and it shall cause each of its Subsidiaries
not to, issue any debt securities of the Company with a value in excess of $10
million (including any refinancing of existing indebtedness) without the
majority affirmative vote of the Finance Committee.

                  (e) While any shares of Series A Preferred Stock are
outstanding, the Company shall not, and it shall cause each of its Subsidiaries
not to, issue any equity securities of the Company with a value in excess of $10
million (including any refinancing of existing indebtedness) without the
unanimous affirmative vote of the Finance Committee; provided, however, that the
following equity issuances shall require only a majority affirmative vote of the
Finance Committee: (A) an offering of Common Stock in which the selling price is
equal to or greater than the price that would imply a 25% or greater IRR
compounded quarterly on the Conversion Price (as defined below) and (B) an
issuance of equity in connection with an acquisition if the issuance is equal to
or less than 10% of the outstanding Common Stock (calculated post-issuance of
such shares of Common Stock).

            Section 4.3 Charter Documents. (a) Except with respect to any
amendments to the Charter Documents properly adopted at the Board of Directors
meeting on October 8, 2001, the Charter Documents most recently included (or
incorporated therein) as exhibits to the Company's periodic reports filed with
the Commission are the Charter Documents as in effect on the Effective Date.

                  (b) The Company covenants that it will act, and each Group
Member and Apollo agrees to use its best efforts to cause the Company to act, in
accordance with its Charter Documents and Certificate of Designation in all
material respects and to cause compliance with all provisions contained herein.
Each Group Member and Apollo shall vote all the Shares owned or held of record
by it at any regular or special meeting of stockholders of the Company or in any
written consent executed in lieu of such a meeting of stockholders, and shall
take all action necessary, to ensure (to the extent within the Parties'
collective control) that (i) the Charter Documents and Certificate of
Designation of the Company do not, at any time, conflict

                                       12

<PAGE>

with the provisions of this Agreement, and (ii) unless an amendment is approved
by the Board of Directors in accordance with Section 4.2, the Charter Documents
of the Company continue to be in effect in the forms most recently included as
exhibits to the Company's periodic reports filed with the Commission and the
Certificate of Designation continues to be in effect in the form attached as
exhibits to the Stock Purchase Agreement.

                                    ARTICLE V

                                   TERMINATION

            Section 5.1 Termination. Except as otherwise provided herein with
respect to certain specific provisions, this Agreement shall terminate upon the
earlier to occur of:

                  (i) the mutual agreement of the Parties,

                  (ii) with respect to any party hereto other than the Company,
      such party ceasing to own, beneficially or otherwise, any Shares,

                  (iii) such time as less than 10% of the Shares continue to be
      subject to the provisions of this Agreement, or

                  (iv) with respect to any party hereto other than the Talley
      Group or its Permitted Transferees, on August 5, 2009.

                                   ARTICLE VI

                                  MISCELLANEOUS

            Section 6.1 No Inconsistent Agreements. Each party hereto hereby
consents to the termination of any prior written or oral agreement or
understanding, including without limitation the Original Agreement, restricting,
conditioning or limiting the ability of any party to transfer or vote Shares.

            Each of the Company and the Group Members represents and agrees
that, as of the Effective Date, there is no (and from and after the Effective
Date they will not, and will cause their respective Subsidiaries and Affiliates
not to, enter into any) agreement with respect to any securities of the Company
or any of its Subsidiaries (and from and after the Effective Date neither the
Company nor any Group Members shall take, or permit any of their Subsidiaries or
Affiliates to take, any action) that is inconsistent in any material respect
with the rights granted to Apollo in this Agreement.

            Without limiting the foregoing and other than the Original
Agreement, the Company represents that there are no existing agreements relating
to the voting or registration of any equity securities of the Company or any of
its Subsidiaries, and there are no other existing agreements between the Company
and any other holder of Shares relating to the transfer of any equity securities
of the Company or any of its Subsidiaries.

                                       13

<PAGE>

            Section 6.2 Recapitalization, Exchanges. etc. If any capital stock
or other securities are issued in respect of, in exchange for, or in
substitution of, any Shares by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Shares or any other change in capital
structure of the Company, appropriate adjustments shall be made with respect to
the relevant provisions of this Agreement so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
Parties under this Agreement and the terms "COMMON STOCK," "PREFERRED STOCK" and
"SHARES," each as used herein, shall be deemed to include shares of such capital
stock or other securities, as appropriate. Without limiting the foregoing,
whenever a particular number of Shares is specified herein, such number shall be
adjusted to reflect stock dividends, stock-splits, combinations or other
reclassifications of stock or any similar transactions.

            Section 6.3 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Parties, and their respective
successors and permitted assigns; provided that (i) neither this Agreement nor
any rights or obligations hereunder may be transferred or assigned by the
Company (except by operation of law in any permitted merger); (ii) neither this
Agreement nor any rights or obligations hereunder may be transferred or assigned
by the Group Members or Apollo except to any Person to whom it has Transferred
Shares in compliance with this Agreement and who has become bound by this
Agreement pursuant to Section 2.2 hereof; and (iii) the rights of the Parties
under Article IV hereof may not be assigned to any Person except as explicitly
provided therein.

            Section 6.4 No Waivers: Amendments. (a) No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.

                  (b) This Agreement may not be amended or modified, nor may any
provision hereof be waived, other than by a written instrument signed by the
Parties.

            Section 6.5 Notices. All notices, demands, requests, consents or
approvals (collectively, "NOTICES") required or permitted to be given hereunder
or which are given with respect to this Agreement shall be in writing and shall
be personally delivered or mailed, registered or certified, return receipt
requested, postage prepaid (or by a substantially similar method), or delivered
by a reputable overnight courier service with charges prepaid, or transmitted by
hand delivery or facsimile, addressed as set forth below, or such other address
(and with such other copy) as such party shall have specified most recently by
written notice. Notice shall be deemed given or delivered on the date of service
or transmission if personally served or transmitted by facsimile. Notice
otherwise sent as provided herein shall be deemed given or delivered on the
third business day following the date mailed or on the next business day
following delivery of such notice to a reputable overnight courier service.

                                       14

<PAGE>

                     To the Company or the Speese Group:

                                    Rent-A-Center, Inc.
                                    5700 Tennyson Parkway
                                    Third Floor
                                    Plano, Texas 75024
                                    Attn:  Mark E. Speese
                                    Fax:  (972) 801-1200

                      with a copy (which shall not constitute notice) to:

                                    Winstead Sechrest & Minick P.C.
                                    5400 Renaissance Tower
                                    1201 Elm Street
                                    Attn: Thomas W. Hughes, Esq.
                                    Fax: (214)745-5390

                     To the Talley Group:

                                    J. Ernest Talley
                                    8914 Hames Road
                                    Pilot Point, Texas  76258

                     To Apollo:

                                    Apollo Investment Fund IV, L.P. and/or
                                    Apollo Overseas Partners IV, L.P.
                                    c/o Apollo Management IV, L.P.
                                    1999 Avenue of the Stars, Suite 1900
                                    Los Angeles, California 90067
                                    Attn: Michael D. Weiner
                                    Facsimile: (310)201-4166

                      with a copy (which shall not constitute notice) to:

                                    Morgan, Lewis & Bockius LLP
                                    300 South Grand Avenue, Suite 2200
                                    Los Angeles, California 90071
                                    Attn: John F. Hartigan, Esq.
                                    Fax:  (213)612-2554

            Section 6.6 Inspection. So long as this Agreement shall be in
effect, this Agreement and any amendments hereto and waivers hereof shall be
distributed to all Parties after becoming effective and shall be made available
for inspection at the principal office of the Company by Apollo.

            Section 6.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS

                                       15

<PAGE>

MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS, EXCEPT AS TO MATTERS OF CORPORATE GOVERNANCE,
WHICH SHALL BE INTERPRETED IN ACCORDANCE WITH THE GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE. EACH PARTY HERETO CONSENTS TO THE NON-EXCLUSIVE JURISDICTION
OF THE FEDERAL AND STATE COURTS WITHIN THE STATE OF NEW YORK.

            Section 6.8 Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

            Section 6.9 Entire Agreement. This Agreement, together with the
Stock Purchase Agreement, the Certificate of Designation and the Registration
Rights Agreement, constitutes the entire agreement and understanding among the
Parties with respect to the subject matter hereof and thereof and supersedes the
Original Agreement and any and all prior agreements and understandings, written
or oral, relating to the subject matter hereof.

            Section 6.10 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdictions, it
being intended that all rights and obligations of the Parties hereunder shall be
enforceable to the fullest extent permitted by law.

            Section 6.11 Counterparts. This Agreement may be signed in
counterparts, each of which shall constitute an original and which together
shall constitute one and the same agreement.

            Section 6.12 Required Approvals. If approval of this Agreement or
any of the transactions contemplated hereby shall be required by any
governmental or supra-governmental agency or instrumentality or is considered to
be necessary or advisable to all the Parties, all Parties shall use their best
efforts to obtain such approval.

            Section 6.13 Public Disclosure. The Company shall not, and shall not
permit any of its Subsidiaries to, make any public announcements or disclosures
relating or referring to Apollo, any of its affiliates, or any of their
respective directors, officers, partners, employees or agents (including,
without limitation, any Person designated as a director of the Company pursuant
to the terms hereof) unless Apollo has consented to the form and substance
thereof, which consent shall not be unreasonably withheld except to the extent
such disclosure is, in the opinion of counsel, required by law or by stock
exchange regulation, provided that (i) any such required disclosure shall only
be made, to the extent consistent with the law, after consultation with Apollo
and (ii) no such announcement or disclosure (except as required by law or by
stock exchange regulation) shall identify any such Person without Apollo's prior
consent.

            Section 6.14 Payment of Costs and Expenses. The Company shall pay
Apollo's reasonable and documented costs and expenses (including attorneys'
fees) associated with

                                       16

<PAGE>

negotiation, documentation and completion of this Agreement, the Stock
Repurchase Agreement and the transactions contemplated herein and therein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       17

<PAGE>

            IN WITNESS WHEREOF, the Parties have executed this Amended and
Restated Stockholders Agreement as of the date first above written.

                       RENT-A-CENTER, INC.
                       a Delaware corporation

                       By: /s/ Mitchell E. Fadel
                          -------------------------------------------
                       Name:   Mitchell E. Fadel
                            -----------------------------------------
                       Title:  President
                             ----------------------------------------

                       APOLLO INVESTMENT FUND IV, L.P.
                       a Delaware limited partnership

                       By:  Apollo Advisors IV, L.P.
                            its General Partner

                            By: Apollo Capital Management IV, Inc.
                                        its General Partner

                                By: /s/ Peter P. Copses
                                   ----------------------------------
                                Name:   Peter P. Copses
                                     --------------------------------
                                Title:  Vice President
                                      -------------------------------

                       APOLLO OVERSEAS PARTNERS IV, L.P.
                       an exempted limited partnership registered
                       in the Cayman Islands

                       By:  Apollo Advisors IV, L.P.
                            its General Partner

                            By: Apollo Capital Management IV, Inc.
                                        its Managing General Partner

                                By: /s/ Peter P. Copses
                                   ----------------------------------
                                Name:   Peter P. Copses
                                     --------------------------------
                                Title:  Vice President
                                      -------------------------------

                       /s/ J. Ernest Talley
                       ----------------------------------------------
                       J. Ernest Talley


                       /s/ Mark E. Speese
                       ----------------------------------------------
                       Mark E. Speese


                       /s/ Mary Ann Talley
                       ----------------------------------------------
                       Mary Ann Talley

                                       18

<PAGE>

                       /s/ Carolyn Speese
                       -----------------------------------
                       Carolyn Speese


                       TALLEY 1999 TRUST

                       By:/s/ J. Ernest Talley
                          --------------------------------
                       J. Ernest Talley, as Trustee

                       MARK SPEESE 2000 GRANTOR RETAINED
                       ANNUITY TRUST

                       By: /s/ Mark E. Speese
                          --------------------------------
                       Mark E. Speese, as Trustee

                       CAROLYN SPEESE 2000 GRANTOR
                       RETAINED ANNUITY TRUST

                       By: /s/ Mark E. Speese
                          --------------------------------
                       Mark E. Speese, as Trustee

                       ALLISON REBECCA SPEESE 2000
                       REMAINDER TRUST

                       By: /s/ Stephen Elken
                          --------------------------------
                       Stephen Elken, as Trustee

                       JESSICA ELIZABETH SPEESE 2000
                       REMAINDER TRUST

                       By: /s/ Stephen Elken
                          --------------------------------
                       Stephen Elken, as Trustee

                       ANDREW MICHAEL SPEESE 2000
                       REMAINDER TRUST

                       By: /s/ Stephen Elken
                          --------------------------------
                       Stephen Elken, as Trustee

                                       19

<PAGE>

                                    EXHIBIT A

                              TALLEY OTHER PARTIES


Mary Ann Talley
Talley 1999 Trust


<PAGE>

                                    EXHIBIT B

                              SPEESE OTHER PARTIES


Carolyn Speese
Mark Speese 2000 Grantor Retained Annuity Trust
Carolyn Speese 2000 Grantor Retained Annuity Trust
Allison Rebecca Speese 2000 Remainder Trust
Jessica Elizabeth Speese 2000 Remainder Trust
Andrew Michael Speese 2000 Remainder Trust

                                       21

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>4
<FILENAME>d92108ex10-9.txt
<DESCRIPTION>COMMON STOCK PURCHASE AGREEMENT
<TEXT>
<PAGE>
                                                                    Exhibit 10.9


                         COMMON STOCK PURCHASE AGREEMENT


            THIS COMMON STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as
of the 8th day of October, 2001, by and among J. Ernest Talley ("J. TALLEY") and
Mary Ann Talley ("M. TALLEY"), husband and wife and each a resident of the State
of Texas, and the Talley 1999 Trust (the "TRUST" and along with J. Talley and M.
Talley each a "SELLER" and collectively, the "SELLERS"), and Rent-A-Center,
Inc., a Delaware corporation ("BUYER").

                                    RECITALS

            WHEREAS, Sellers collectively own of record 2,948,166 shares (the
"SHARES") of common stock, $0.01 par value (the "COMMON STOCK"), of Buyer; and

            WHEREAS, Sellers desire to sell to Buyer, and Buyer wishes to
purchase from Sellers, an aggregate of $25,000,000 worth of shares of Common
Stock owned by Sellers, upon the terms and conditions set forth herein; and

            WHEREAS, Buyer desires to have and Sellers desire to grant Buyer a
call option to acquire the remaining shares of Common Stock owned by Sellers;
and

            WHEREAS, each of the parties hereto, in order to induce each of the
other parties hereto to enter into this Agreement and to consummate the
transactions contemplated hereby, agrees to the covenants and agreements set
forth herein.

            NOW, THEREFORE, in consideration of the representations, warranties
and covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:

                                    AGREEMENT

1. Purchase and Sale of the Shares; Option; the Closings.

            1.1 Purchase and Sale of Common Stock. Subject to the terms and
conditions of this Agreement and on the basis of the representations, warranties
and covenants set forth herein, Sellers agree to sell to Buyer, and Buyer agrees
to purchase from Sellers, shares of Common Stock for an aggregate purchase price
of $25,000,000 (the "PURCHASE PRICE"). The per share purchase price ("PER SHARE
PURCHASE PRICE") shall be equal to the mean average of the last reported sales
price of the Common Stock as reported by the Nasdaq Stock Market for each of the
ten trading days immediately following the public announcement by the Company of
this Agreement; provided, however, if the mean average is (i) equal to or less
than $20.00, then the Per Share Purchase Price shall be $20.00 or (ii) equal to
or greater than $27.00, then the Per Share Purchase Price shall be $27.00.

            1.2 Number of Shares to be Sold. The number of shares of Common
Stock to be sold by the Sellers to the Buyer at the Initial Closing (as
hereinafter defined) shall be the number equal to 10,000,000 divided by the Per
Share Purchase Price, which result shall be rounded to the

<PAGE>

nearest whole number. The number of shares of Common Stock to be sold by the
Sellers to the Buyer at the November Closing (as hereinafter defined) shall be
the number equal to 15,000,000 divided by the Per Share Price, which result
shall be rounded to the nearest whole number. The aggregate maximum number of
shares to be sold at the Initial Closing and the November Closing shall be
1,250,000 and the aggregate minimum number of Shares to be sold at the Initial
Closing and the November Closing shall be 925,926. The allocation of the Shares
to be sold by each Seller at the various Closings (as hereinafter defined) shall
be determined by J. Talley prior to such Closing.

            1.3 Option. The Sellers hereby grant Buyer the option (the "OPTION")
to purchase any or all of the Shares not purchased at the Initial Closing and/or
the November Closing at a per share price equal to the Per Share Purchase Price.
The Option shall last through February 8, 2002 (the "EXPIRATION DATE"). The
Option may be exercised at any time on or after the date of the Initial Closing
and prior to February 6, 2002 by giving written notice (an "EXERCISE NOTICE") to
the Sellers of the time of the Option Closing (as hereinafter defined) and the
number of Shares Buyer is purchasing. The Exercise Notice must be given at least
three business days prior to the applicable Option Closing. The Option may be
exercised at one or more times in any amounts through the Expiration Date.

            1.4 The Closings. Subject to the terms and conditions hereof, the
purchase and sale of the Shares contemplated by this ARTICLE 1 (each a "CLOSING"
and collectively the "CLOSINGS") will take place at the offices of Winstead
Sechrest & Minick P.C., 1201 Elm Street, 5400 Renaissance Tower, Dallas, Texas
75270. The Closing of the purchase and sale of the first $10,000,000 worth of
Shares (the "INITIAL CLOSING") shall occur at 10:00 a.m. Dallas, Texas time on
October 23, 2001. The Closing of the purchase and sale of the second $15,000,000
worth of Shares (the "NOVEMBER CLOSING") shall occur at 10:00 a.m. Dallas, Texas
time on November 30, 2001 (or such earlier date as the Buyer gives reasonable
notice to Sellers). The Closing of the purchase(s) and sale(s) of any Shares
upon the exercise of the Option (each an "OPTION CLOSING") shall be at 10:00
a.m. on the business day set forth in the applicable Exercise Notice, provided
that the Exercise Notice must specify a business date prior to February 9, 2002.
If the Exercise Notice does not specify a date for an Option Closing or if it
specifies a date after February 8, 2002, such Option Closing shall occur on
February 8, 2002. Notwithstanding the foregoing, any Closing may occur at such
other time, date or place as the parties shall mutually agree. At the Closing,
Sellers will deliver to Buyer certificates representing the Shares purchased by
Buyer, duly endorsed or accompanied by stock powers duly executed in blank and
otherwise in form acceptable for transfer on the books of the Buyer, with any
requisite stock transfer tax stamps affixed thereto and Buyer will deliver to
the Sellers the Purchase Price, by wire transfer of immediately available funds
to an account specified by Sellers.

2. Representations and Warranties of the Sellers.

            In order to induce Buyer to enter into this Agreement and to
purchase the Shares hereunder, the Sellers hereby jointly and severally
represent and warrant to Buyer the following:

            2.1 Ownership of Shares. Except as set forth in the Stockholders
Agreement of the Buyer, dated August 5, 1998, as amended and supplemented from
time to time (the "STOCKHOLDERS AGREEMENT") Sellers own, (including beneficially
and of record), 2,948,166 issued

                                      -2-

<PAGE>

and outstanding shares of Common Stock and upon delivery and payment therefor
pursuant to this Agreement, Buyer shall own the entire right, title and interest
in and to the Shares, free and clear of any liens, claims or encumbrances,
including rights of first refusal and similar claims except for restrictions of
applicable state and federal securities laws. Except as set forth in the
Stockholders Agreement, there are no restrictions on the transfer or voting of
any of the Shares imposed by any voting, shareholder or similar agreement or any
law, regulation or order, other than applicable state and federal securities
laws.

            2.2 Authorization. Sellers have full right, power and authority to
execute, deliver and perform this Agreement and to sell, assign and deliver the
Shares to Buyer. This Agreement is the legal, valid and, assuming due execution
and delivery by the other parties hereto, binding obligation of Sellers,
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by (i) principles of public policy, (ii)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally, and (iii) rules of law governing the availability of equitable
remedies.

            2.3 No Violation; No Consent. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby (a) assuming the consents referred to in clause (c) are
received, will not constitute a breach or violation of or default under any
judgment, decree or order or any agreement or instrument of Sellers or to which
Sellers are subject, (b) will not result in the creation or imposition of any
lien upon the Shares, and (c) other than under the Stockholders Agreement will
not require the consent of or notice to any governmental entity or any party to
any contract, agreement or arrangement with any of the Sellers.

            2.4 Brokerage. There are no claims for brokerage commissions or
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Sellers.

            2.5 Accuracy of Information. Other than such information that has
been disclosed to the Board of Directors of the Company in meetings of the Board
of Directors of the Company since August 5, 1998, to the best of J. Talley's
knowledge, (i) the Company's internally generated financial reports reflect all
material liabilities of the Company, and the Company has no material undisclosed
liabilities; and (ii) all information in the reports filed by Buyer with the
Securities Exchange Commission under the Securities Exchange Act of 1934, as
amended, was true, correct and complete in all material respects and did not
omit to state any material fact necessary to make such information not
misleading at the time such reports were filed (other than reports that have
been amended prior to the date hereof, and after the filing of such amendment,
such information complied with the foregoing standard).

3. Representations and Warranties of Buyer.

            Buyer hereby represents and warrants as follows:

            3.1 Organization and Corporate Power; Authorization. Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware.

                                      -3-

<PAGE>

Buyer has the requisite power and authority to execute, deliver and perform this
Agreement and to acquire the Shares. The execution, delivery and performance of
this Agreement and the consummation by Buyer of the transactions contemplated
hereby have been duly authorized by all requisite action on the part of Buyer.
This Agreement and any other agreements, instruments, or documents entered into
by Buyer pursuant to this Agreement have been duly executed and delivered by
Buyer and are the legal, valid and, assuming due execution by the other parties
hereto, binding obligation of Buyer, enforceable against Buyer in accordance
with its terms except to the extent that the enforceability thereof may be
limited by (i) principles of public policy, (ii) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights generally, and (iii) rules of law
governing the availability of equitable remedies.

            3.2 No Violation; No Consent. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby (a) assuming the consents referred to in clause (b) are
received, will not constitute a breach or violation of or default under any
judgment, decree or order or any agreement or instrument of Buyer or to which
Buyers are subject, and (b) other than (i) under the Stockholders Agreement, and
(ii) the holders of the majority of the Buyer's outstanding Series A Convertible
Preferred Stock, par value $0.01 per share, will not require the consent of or
notice to any governmental entity or any party to any contract, agreement or
arrangement with the Buyer; provided however, if the Option is exercised, a
consent under the Amended and Restated Credit Agreement among Buyer, as
borrower, the several lenders from time to time that are parties thereto,
Comerica Bank, as documentation agent, Bank of America, N.A., as syndication
agent, and The Chase Manhattan Bank, as administrative agent, dated as of August
5, 1998, as amended and restated as of June 29, 2000, as amended from time to
time, may be required.

            3.3 Brokerage. There are no claims for brokerage commissions or
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Buyer.

4. Conditions to the Buyer's Obligations.

            The obligations of Buyer under ARTICLE 1 to purchase the Shares at
the applicable Closings are subject to the fulfillment as of such Closing of
each of the following conditions unless waived by Buyer in accordance with
SECTION 8.3:

            4.1 Representations and Warranties. The representations and
warranties of the Sellers contained in ARTICLE 2 shall be true and correct on
and as of the date of such Closing with the same effect as though such
representations and warranties had been made on and as of the date of such
Closing.

            4.2 Performance. The Sellers shall have performed and complied in
all material respects with all agreements, obligations, and conditions contained
in this Agreement that are required to be performed or complied with by it on or
before the date of such Closing.

            4.3 Consents. The Sellers and the Buyer, as applicable, shall have
obtained all necessary consents, waivers, authorizations and approvals of all
other persons, firms or

                                      -4-

<PAGE>

corporations required in connection with the execution, delivery and performance
by them of this Agreement.

            4.4 Delivery of Certificates. The Sellers shall have delivered all
of the stock certificates representing the Shares to be sold at such Closing,
free and clear of any liens, claims or encumbrances, along with all stock
powers, assignments or any other documents, instruments or certificates
necessary for a valid transfer.

            4.5 Stockholders Agreement. The Amended and Restated Stockholders
Agreement, substantially in form attached hereto as Exhibit A, shall have been
properly and duly executed and delivered by all the parties thereto.

            4.6 Resignation. Talley shall have submitted written resignations to
the Buyer and its applicable subsidiaries resigning all of his positions as an
officer or director of the Buyer and all of its subsidiaries as of the date
hereof.

            4.7 Release. Talley shall have executed a written release of all
past or future claims against Buyer in a form reasonably satisfactory to Buyer
other than claims (i) arising out of or related to this Agreement, and (ii)
claims that any other retired employee, officer or director of Buyer would have
in the ordinary course, (e.g. benefits under retirement plans sponsored by
Buyer, and claims for indemnification under the Buyer's certificate of
incorporation or bylaws, the ability to exercise existing vested stock options).

5. Conditions to the Sellers' Obligations.

            The obligations of Sellers under ARTICLE 1 to sell the Shares at the
applicable Closings are subject to the fulfillment as of such Closing of each of
the following conditions unless waived by Sellers in accordance with SECTION
8.3:

            5.1 Representations and Warranties. The representations and
warranties of Buyer contained in ARTICLE 3 shall be true and correct as of the
Closing Date.

            5.2 Payment of Purchase Price. Buyer shall have delivered the
Purchase Price by wire transfer to the account(s) specified by the Sellers.

            5.3 Stockholders Agreement. The Amended and Restated Stockholders
Agreement, substantially in form attached hereto as Exhibit A, shall have been
properly and duly executed and delivered by all the parties thereto.

            5.4 Release. Buyer shall have executed a written release of all past
or future claims, other than claims arising out of fraud or criminal conduct,
against Talley in a form reasonably satisfactory to Talley other than claims
arising out of or related to this Agreement.

            6. Covenants.

            6.1 Public Announcements; Holdback. The Buyer and Talley shall
mutually agree upon any public announcement or similar publicity with respect to
this Agreement or the transactions contemplated hereby, and such public
announcement will be issued within one

                                      -5-

<PAGE>

business day of the execution and delivery of this Agreement by all the parties
hereto. During the ten trading days immediately following the public
announcement by the Company of this Agreement, Sellers will not, directly or
indirectly, (i) purchase any Common Stock or (ii) take any action, including
making any communication, that is intended to or otherwise could be expected to
have an effect on the price of the Common Stock.

            6.2 Closing Conditions. Sellers and Buyer shall use their
commercially reasonable efforts to ensure that each of the conditions to Closing
are satisfied.

            6.3 J. Talley Covenant-Not-to-Compete. For and in consideration of
the repurchase of the Shares and as a material inducement to repurchase the
Shares, for a period of 3 years after the date hereof, J. Talley covenants and
agrees that he will not, without the prior written consent of the Buyer,
directly or indirectly (i) engage in or carry on in any capacity, including as
an officer, director, manager, employee, advisor or consultant of any business
engaged, directly or indirectly, in the rent-to-own industry in the United
States of America or the Commonwealth of Puerto Rico or (ii) have any direct or
indirect ownership or similar economic interest (or any debt) in any firm,
person, partnership, joint venture, corporation, unincorporated association,
limited liability company or other entity that is engaged in rent-to-own
industry in the United States of America or the Commonwealth of Puerto Rico
other than as an owner of less than 5% (including any ownership interests owned
by M. Talley or the Trust) of a class of securities registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or otherwise
publicly traded on the over-the-counter market.

            The Buyer and J. Talley agree that the covenants and agreements of
J. Talley contained in this SECTION 6.3 are special and unique, that a breach of
any term or provision in this SECTION 6.3 may cause irreparable injury to the
Buyer and that remedies at law for the breach of any provision of this SECTION
6.3 will be inadequate and that, in addition to any other remedies it may have
in the event of breach, the Buyer shall be entitled to enforce specific
performance of the terms and provisions of this SECTION 6.3, to obtain temporary
and permanent injunctive relief to prevent the continued breach of such
provisions without the necessity of posting bond or proving actual damage. J.
Talley acknowledges that the geographic boundaries, scope of prohibited
activities, and time duration of the provisions of this SECTION 6.3 are
reasonable and are no broader than are necessary to maintain to protect the
legitimate business interests of the Buyer.

            6.4 M. Talley Covenant-Not-to-Compete. For and in consideration of
the repurchase of the Shares and as a material inducement to repurchase the
Shares, for a period of 3 years after the date hereof, M. Talley covenants and
agrees that she will not, without the prior written consent of the Buyer,
directly or indirectly (i) engage in or carry on in any capacity, including as
an officer, director, manager, employee, advisor or consultant of any business
engaged, directly or indirectly, in the rent-to-own industry in the United
States of America or the Commonwealth of Puerto Rico or (ii) have any direct or
indirect ownership or similar economic interest (or any debt) in any firm,
person, partnership, joint venture, corporation, unincorporated association,
limited liability company or other entity that is engaged in rent-to-own
industry in the United States of America or the Commonwealth of Puerto Rico
other than as an owner of less than 5% (including any ownership interests owned
by J. Talley or the Trust) of a class of securities registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or otherwise
publicly traded on the over-the-counter market.

                                      -6-

<PAGE>

            The Buyer and M. Talley agree that the covenants and agreements of
M. Talley contained in this SECTION 6.4 are special and unique, that a breach of
any term or provision in this SECTION 6.4 may cause irreparable injury to the
Buyer and that remedies at law for the breach of any provision of this SECTION
6.4 will be inadequate and that, in addition to any other remedies it may have
in the event of breach, the Buyer shall be entitled to enforce specific
performance of the terms and provisions of this SECTION 6.4, to obtain temporary
and permanent injunctive relief to prevent the continued breach of such
provisions without the necessity of posting bond or proving actual damage. M.
Talley acknowledges that the geographic boundaries, scope of prohibited
activities, and time duration of the provisions of this SECTION 6.4 are
reasonable and are no broader than are necessary to maintain to protect the
legitimate business interests of the Buyer.

            6.5 The Trust Covenant-Not-to-Compete. For and in consideration of
the repurchase of the Shares and as a material inducement to repurchase the
Shares, for a period of 3 years after the date hereof, the Trust covenants and
agrees that it will not, without the prior written consent of the Buyer,
directly or indirectly (i) engage in or carry on in any capacity, including as
an officer, director, manager, employee, advisor or consultant of any business
engaged, directly or indirectly, in the rent-to-own industry in the United
States of America or the Commonwealth of Puerto Rico or (ii) have any direct or
indirect ownership or similar economic interest (or any debt) in any firm,
person, partnership, joint venture, corporation, unincorporated association,
limited liability company or other entity that is engaged in rent-to-own
industry in the United States of America or the Commonwealth of Puerto Rico
other than as an owner of less than 5% (including any ownership interests owned
by M. Talley or J. Talley )of a class of securities registered under Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or otherwise
publicly traded on the over-the-counter market.

            The Buyer and the Trust agree that the covenants and agreements of
the Trust contained in this SECTION 6.5 are special and unique, that a breach of
any term or provision in this SECTION 6.5 may cause irreparable injury to the
Buyer and that remedies at law for the breach of any provision of this SECTION
6.5 will be inadequate and that, in addition to any other remedies it may have
in the event of breach, the Buyer shall be entitled to enforce specific
performance of the terms and provisions of this SECTION 6.5, to obtain temporary
and permanent injunctive relief to prevent the continued breach of such
provisions without the necessity of posting bond or proving actual damage. The
Trust acknowledges that the geographic boundaries, scope of prohibited
activities, and time duration of the provisions of this SECTION 6.5 are
reasonable and are no broader than are necessary to maintain to protect the
legitimate business interests of the Buyer.

            6.6 Taxes. Any stock transfer or other tax applicable to Sellers'
transfer of the Shares pursuant to this Agreement shall be paid by Sellers.

            6.7 Medical Coverage. For and in consideration of the sale of the
Shares and as a material inducement to the sale of the Shares, Buyer covenants
and agrees to pay the full cost of medical coverage for Talley for 18 months
either under COBRA continuation medical coverage through Buyer's health
insurance plan or under alternative medical coverage obtained by Talley, at
Talley's election. Buyer may satisfy its obligation under this covenant by
payment to Talley at the Closing of a lump sum amount equal to the cost of 18
months of the medical coverage selected by Talley; provided, however, the
aggregated premiums required to be paid by Buyer under this SECTION 6.7 shall
not exceed $22,500.

                                      -7-

<PAGE>

            6.8 Directors and Officers Insurance. For a period of six years
following the Closing, the Company shall continue to carry directors and
officers insurance covering Talley (or his estate) for the periods that he
served as an officer or director of the Company or its subsidiaries or their
predecessors under terms no less favorable than those of the Company's current
directors and officers insurance from an insurance company that is rated the
same or higher as the Buyer's current directors and officers insurance carrier.

            6.9 General Cooperation. For a period of one year, J. Talley shall
use his reasonable efforts to make himself available by telephone or in person,
if necessary, to assist in the transition of his retirement from the Company.
Buyer shall reimburse J. Talley for all actual out-of-pocket expenses incurred
by J. Talley, in accordance with Buyer's policies, in connection with his
compliance with this SECTION 6.9.

7. Survival of Representations and Warranties; Limitation on Liability. All
representations and warranties hereunder shall survive the Closing.
Notwithstanding the foregoing, in no event shall Sellers' liability for breach
of the representations, warranties and covenants exceed the Purchase Price.

8. Miscellaneous.

            8.1 Incorporation by Reference. All exhibits and schedules appended
to this Agreement are herein incorporated by reference and made a part hereof.

            8.2 Parties in Interest; Assignment. All covenants, agreements,
representations, warranties and undertakings in this Agreement made by and on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. This Agreement and the rights and obligations contemplated hereby may not
be assigned, in part or in whole, by the Buyer or the Sellers.

            8.3 Amendments and Waivers. Except as set forth in this Agreement,
changes in or additions to this Agreement may be made, or compliance with any
term, covenant, agreement, condition or provision set forth herein may be
omitted or waived (either generally or in a particular instance and either
retroactively or prospectively), by a writing executed by each of the parties
hereto.

            8.4 Termination. Sellers or Buyer may terminate this Agreement as
permitted elsewhere herein upon written notice to the other party hereto.

            8.5 Governing Law. This Agreement shall be deemed a contract made
under the laws of the State of Texas and, together with the rights of
obligations of the parties hereunder, shall be construed under and governed by
the laws of the State of Texas.

                                      -8-

<PAGE>

            8.6 Notices. All notices, requests, consents and demands shall be in
writing and shall be personally delivered, mailed, postage prepaid or
telecopied:

               To Buyer:          Rent-A-Center, Inc.
                                  5700 Tennyson Pkwy
                                  Suite 180
                                  Plano, Texas  75024
                                  Facsimile No.: (972) 403-4936
                                  Attn:  President

               To Sellers:        c/o J. Ernest Talley
                                  8914 Hames Road
                                  Pilot Point, Texas 76258

or such other address as may be furnished in writing to the other parties
hereto. All such notices, requests, demands and other communication shall, when
mailed (registered or certified mail, return receipt requested, postage prepaid)
or personally delivered be effective four days after deposit in the mails or
when personally delivered, respectively, addressed as aforesaid, unless
otherwise provided herein and, when telecopied, shall be effective upon actual
receipt.

            8.7 Effect of Headings. The section and paragraph headings herein
are for convenience only and shall not affect the construction hereof.

            8.8 Entire Agreement. This Agreement and the Schedules hereto
together with any other agreement referred to herein (the "ADDITIONAL
AGREEMENTS") constitute the entire agreement among Sellers and Buyer with
respect to the subject matter hereof. This Agreement and such Additional
Agreements supersede all prior agreements between the parties with respect to
the subject matter hereof.

            8.9 Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.

            8.10 Counterparts. This Agreement may be executed in counterparts,
all of which together shall constitute one and the same instrument.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -9-

<PAGE>




               IN WITNESS WHEREOF, this Agreement has been executed as of the
date first above written, by the parties hereto.


                                        /s/ J. Ernest Talley
                                        -----------------------------------
                                        J. ERNEST TALLEY


                                        /s/ Mary Ann Talley
                                        -----------------------------------
                                        MARY ANN TALLEY


                                        TALLEY 1999 TRUST


                                        By: /s/ J. Ernest Talley
                                           --------------------------------
                                            J. Ernest Talley, as trustee


                                        RENT-A-CENTER, INC.


                                        By: /s/ Mitchell E. Fadel
                                           --------------------------------
                                           Name:   Mitchell E. Fadel
                                                ---------------------------
                                           Title:  President
                                                 --------------------------

</TEXT>
</DOCUMENT>
</SUBMISSION>
