SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
HOLLYWOOD ENTERTAINMENT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: Set forth the amount on which
the filing fee is calculated and state how it was determined.
---------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------------
<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
25600 Southwest Parkway Center Drive
Wilsonville, Oregon 97070
NOTICE OF THE 1998 ANNUAL MEETING OF SHAREHOLDERS
May 27, 1998
To the Shareholders of Hollywood Entertainment Corporation:
The Annual Meeting of the Shareholders of Hollywood Entertainment
Corporation, an Oregon corporation, will be held at 9:00 a.m., Pacific Time, on
May 27, 1998 at the Riverplace Hotel, 1510 Southwest Harbor Way, Portland,
Oregon for the following purposes:
1. Electing directors to serve for the following year and until their
successors are elected; and
2. Transacting any other business that properly comes before the meeting.
Only shareholders of record at the close of business on April 16, 1998 will
be entitled to vote at the Annual Meeting. Even if you plan to attend in person,
you are requested to date and sign the enclosed proxy and return it in the
postage-prepaid envelope enclosed for that purpose at your earliest convenience.
You may attend the meeting in person even if you send in your proxy; retention
of the proxy is not necessary for admission to or identification at the meeting.
By Order of the Board of Directors
Donald J. Ekman
Senior Vice President,
General Counsel and Secretary
Wilsonville, Oregon
April 21, 1998
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. TO
ENSURE YOUR REPRESENTATION AT THE MEETING, HOWEVER, PLEASE VOTE, DATE, SIGN, AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE.
<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
25600 Southwest Parkway Center Drive
Wilsonville, Oregon 97070
(503) 570-1600
PROXY STATEMENT
Annual Meeting of Shareholders
-----
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the ABoard@) of Hollywood Entertainment
Corporation, an Oregon Corporation (the ACompany@), to be voted at the Annual
Meeting of Shareholders to be held at the Riverplace Hotel, 1510 Southwest
Harbor Way, Portland, Oregon on May 27, 1998 at 9:00 a.m. Pacific time, and any
adjournment thereof.
Upon written request to Donald J. Ekman, Senior Vice President and General
Counsel, any person whose proxy is solicited by this proxy statement will be
provided, without charge, a copy of the Company's Annual Report on Form 10-K.
Record Date
Only shareholders of record at the close of business on April 16, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the meeting.
Shares Outstanding and Voting Rights
At the close of business on the Record Date, the Company had 36,902,446
shares of Common Stock (ACommon Stock@) outstanding. Each share of Common Stock
issued and outstanding is entitled to one vote in each matter properly presented
at the Annual Meeting. There are no cumulative voting rights.
Proxy Procedure
When a proxy card in the form accompanying this proxy statement is properly
executed and returned, the shares represented will be voted at the meeting in
accordance with the instructions specified in the proxy. If no instructions are
specified, the shares will be voted FOR Proposal 1, Nomination and Election of
Board of Directors, in the accompanying Notice of Annual Meeting of
Shareholders, and these votes will be counted toward determining a quorum. Any
person giving a proxy in the form accompanying this
1
<PAGE>
proxy statement has the power to revoke it at any time before it is voted. A
shareholder may revoke a proxy by (i) written notice of revocation to the
Secretary of the Company at the above address; (ii) a later-dated proxy received
by the Company; or (iii) attending the meeting and voting in person. Attendance
at the meeting will not by itself revoke a proxy.
Shares of Common Stock represented in person or by proxy at the Annual
Meeting (including abstentions and broker non-votes) will be tabulated by the
inspector of election appointed for the meeting and will be counted in
determining whether a quorum is present.
The approximate date on which this proxy statement and the accompanying
proxy card are being mailed to the Company=s shareholders is April 21, 1998.
Solicitation material will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
to forward to such beneficial owners. Original solicitation of proxies by mail
may be supplemented by telephone, telegram, fax or personal solicitation by
directors, officers or employees of the Company. No additional compensation will
be paid for these services. Costs of any solicitation will be borne by the
Company.
PROPOSAL 1: NOMINATION AND ELECTION OF BOARD OF DIRECTORS
Nominees
The nominees for election as directors are Mark J. Wattles, Donald J.
Ekman, James N. Cutler, Jr. and Richard A. Galanti, each of whom is now a
director. The directors elected at the 1998 Annual Meeting will serve until the
Annual Meeting of Shareholders in 1999 and until their successors are elected
and qualified.
Unless authority to vote for a director or directors is withheld, the
accompanying proxy, if properly executed and returned, will be voted for the
election of the director nominees named below. If any nominee is unable or
unwilling to serve as a director, proxies may be voted for substitute nominees.
If a quorum of shareholders is present at the annual meeting, the four nominees
for election as directors who receive the greatest number of votes cast at the
meeting will be elected directors. Abstentions and broker non-votes will have no
effect on the results of the vote. The following table briefly describes the
Company's nominees for directors:
2
<PAGE>
<TABLE>
<CAPTION>
BIOGRAPHICAL INFORMATION REGARDING DIRECTORS/NOMINEES
Name Age Position
- ------------------------------ --- ----------------------------------
<S> <C> <C>
Mark J. Wattles (1)(2) 37 Chairman of the Board and
Chief Executive Officer
Donald J. Ekman 46 Senior Vice President, General
Counsel, Secretary, and Director
James N. Cutler, Jr. (1)(2)(3) 46 Director
Richard A. Galanti (1)(2)(3) 42 Director
- --------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Stock Option Committee.
</TABLE>
Mark J. Wattles founded the Company in June 1988 and has served as Chairman
of the Board and Chief Executive Officer since that time and was the President
of the Company until September 1997. Mr. Wattles has been an owner and operator
in the video rental industry since 1985. He has been a participant and key
speaker in several entertainment industry panels and conferences and currently
serves as a member of the Video Software Dealers Association (VSDA) Board of
Directors.
Donald J. Ekman became a director of the Company in July 1993, became Vice
President and General Counsel in March 1994 and was appointed a Senior Vice
President in May 1996. Mr. Ekman was a partner in Ekman & Bowersox from January
1992 until March 1994, and from August 1990 until December 1991 he practiced law
with Foster Pepper & Shefelman.
James N. Cutler, Jr. became a director of the Company in July 1993. Since
1980, Mr. Cutler has been President and Chief Executive Officer of The Cutler
Corporation, a holding company for various private businesses, and, since 1997,
he has been a director of EIP Microwave, Inc. Mr. Cutler also serves as an
officer or a director of a number of other private corporations and is a Trustee
of the University of Puget Sound.
Richard A. Galanti became a director of the Company in April 1996. Mr.
Galanti has been a director of Costco Companies, Inc. since January 1995 and
Executive Vice President - Finance and Chief Financial Officer of Costco
Companies, Inc. since October 1993. From January 1985 to October 1993, Mr.
Galanti was Senior Vice President, Chief Financial Officer and Treasurer of
Costco Wholesale Corporation, which he joined in
3
<PAGE>
March 1984 as Vice President - Finance. From 1978 to February 1984, Mr. Galanti
was an investment banker with Donaldson, Lufkin & Jenrette Securities
Corporation. In March 1995 Mr. Galanti settled an action brought by the
Securities and Exchange Commission (ASEC@) alleging a five-year-old violation of
the Securities Exchange Act of 1934 and Rule 10b-5 thereunder that was unrelated
to Mr. Galanti=s positions with Costco Companies, Inc. or Costco Wholesale
Corporation. Without admitting or denying the allegations of the SEC=s
complaint, Mr. Galanti agreed to pay $64,408 and entered into an order requiring
him to comply with the relevant sections of the federal securities laws and
rules.
BOARD OF DIRECTORS
Directors are elected at the Annual Meeting of Shareholders; vacancies
resulting from an increase in the size of the Board may be filled by the Board
of Directors or by the shareholders. Directors hold office until the next Annual
Meeting of Shareholders and until their successors are elected and qualified.
Meetings and Standing Committees of the Board of Directors
During 1997 the Board of Directors held four meetings and took twelve
actions by unanimous consent in lieu of meeting. Each incumbent director
attended 100% of the aggregate number of meetings of Board of Directors and the
meetings of committees of which he was a member.
The Board of Directors has established three standing committees: The Audit
Committee, the Compensation Committee and the Stock Option Committee.
The Audit Committee consists of Messrs. Galanti, Cutler and Wattles. The
Audit Committee has the power to oversee the retention, performance and
compensation of the independent public accountants for the Company, and
establishment and oversight of such systems of internal accounting and auditing
control as it deems appropriate. The Audit Committee held two meetings during
1997.
The Compensation Committee consists of Messrs. Galanti, Cutler and Wattles.
The Compensation Committee reviews the Company's compensation philosophy and
programs, exercises authority with respect to the payment of salaries and
incentive compensation to directors and executive officers. The Compensation
Committee held one meeting during 1997.
The Stock Option Committee consists of Messrs. Galanti and Cutler. The
Stock Option Committee was created with authority to grant stock options and
other awards under the Company=s Stock Incentive Plans. During 1997 the Stock
Option Committee held one meeting and took three actions by unanimous consent in
lieu of meeting.
4
<PAGE>
Directors' Compensation
Directors who are not officers receive no compensation for serving on the
Board of Directors other than stock options and reimbursement for reasonable
expenses incurred in attending meetings. Under the Company=s 1993 Stock
Incentive Plan, each new non-employee director automatically receives an option
for 15,000 shares of Common Stock with an exercise price equal to the market
price of the Common Stock on the date of election as a director, and a
non-employee director who continues in office will receive an additional option
for 15,000 shares of Common Stock with an exercise price equal to the market
price on the date of each annual meeting of shareholders. Assuming their
reelection as directors, Mr. Cutler and Mr. Galanti will each receive an
additional option under this plan.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership as of December 31, 1997 of the Company=s Common Stock by (i) each
person known by the Company to own beneficially more than 5% of the Common
Stock, (ii) each director and named executive officer of the Company, and (iii)
all executive officers and directors as a group. Except as otherwise noted, the
persons listed below have sole investment and voting power with respect to the
Common Stock owned by them.
<TABLE>
<CAPTION>
Name Owned Shares
- ---------------------- ---------- ------
<S> <C> <C>
Mark J. Wattles (1) ....................... 11,244,600 (2) 30.5%
F. Mark Wolfinger (1)........................ 31,500 (2) *
Donald J. Ekman (1) ......................... 85,800 (2) *
Jeffrey B. Yapp (1).......................... 0 *
Max G. Fratto (1)............................ 95,000 (2) *
James N. Cutler, Jr. (1)..................... 48,850 (2) *
Richard A. Galanti (1)....................... 8,000 (2) *
Investco PLC................................. 2,227,100 (3) 6.1%
1315 Peachtree St. NE.
Atlanta, GA 30309
Legg Mason, Inc.............................. 3,347,284 (3) 8.88%
111 South Calvert Street
Baltimore, MD 21202
FMR Corp..................................... 5,513,580 (3) 14.99%
82 Devonshire St.
Boston, MA 02109
5
<PAGE>
All directors and executive officers
as a group (7 persons)...................... 11,513,750 (2) 31.2%
- --------------
* Less than 1%.
(1) Address of beneficial holder is 25600 Southwest Parkway Center Drive,
Wilsonville, Oregon 97070.
(2) Includes the following shares that may by acquired within 60 days after
December 31, 1997 pursuant to the exercise of options: Mr. Wattles, 120,000
shares; Mr. Ekman, 67,000 shares; Mr. Fratto, 80,000 shares; Mr. Wolfinger,
30,000; Mr. Cutler, 39,000 shares; Mr. Galanti 3,000 shares and all
directors and officers as a group, 339,000 shares.
(3) Based solely on information provided as of December 31, 1997 in a Schedule
13G filed by the shareholder.
</TABLE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information as to the compensation paid or
accrued in the last three years to the Chief Executive Officer and each of the
four other most highly compensated executive officers for the year ended
December 31, 1997:
<TABLE>
<CAPTION>
Securities
Annual Underlying
Name and Principle Position Year Salary Bonus Options
- --------------------------- ---- -------- -------- ----------
<S> <C> <C> <C> <C>
Mark J. Wattles 1995 $200,939
Chairman of the Board 1996 $200,939 20,000
and Chief Executive Officer 1997 $ 8,372 $100,000 500,000
Donald J. Ekman 1995 $163,185 4,000
Senior Vice President, 1996 $163,185 6,000
General Counsel, Secretary 1997 $195,810
and Director
Max G. Fratto 1995 $150,824 6,000
Executive Vice President of 1996 $194,322 8,000
Store Operations 1997 $196,479
F. Mark Wolfinger (1)(2) 1997 $414,907 150,000
Chief Financial Officer
Jeffrey B. Yapp (1)(2) 1997 $136,539 327,500
President
- --------------
6
<PAGE>
(1) Mr. Wolfinger and Mr. Yapp joined the Company in 1997.
(2) Annual salary excludes a loan from the Company received by Mr. Yapp in
connection with his relocation in the amount of $500,000. The loan is
non-interest bearing pursuant to provisions of Internal Revenue Code
Regulation Section 1.7872-5T. Annual salary also excludes moving and
relocation expenses in the amount of $99,840 for Mr. Wolfinger and $53,924
for Mr. Yapp.
</TABLE>
Employment Agreements
Jeffrey Yapp entered into a three-year employment agreement with the
Company in August 1997. His base salary for the first year is $500,000; for the
second year is $550,000; and for the third year is $600,000. In addition, Mr.
Yapp received a grant of options and a loan toward the purchase of a home in
Oregon as described herein.
Stock Option Grants in Last Fiscal Year
The following table provides information regarding all stock options
granted in 1997 to the executive officers named in the Summary Compensation
Table:
<TABLE>
<CAPTION>
Percent of
Numbers Options Potential
of Shares Granted to Exercise Realizable Value at Assumed
Underlying Employees Price Annual Rates of Stock Price
Options in Fiscal per Expiration Appreciation for Option Term (2)
Name Granted (1) Year Share Date 5% 10%
- ---- ----------- ---------- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Mark J. Wattles 500,000 23.24% $18.50 01/01/07 $ 5,099,786 $12,561,016
F. Mark Wolfinger 150,000 6.97% $18.50 01/01/07 $ 1,529,936 $ 3,768,321
Jeffrey B. Yapp 327,500 15.22% $11.63 09/15/07 $ 2,099,010 $ 5,169,961
Max G. Fratto --- --- --- --- --- ---
Donald J. Ekman --- --- --- --- --- ---
- --------------
(1) Mr. Wattles' and Mr. Wolfinger's options vest and become exercisable over a
period of five years on each anniversary of the grant date. 300,000 of Mr.
Yapp's options vest and become exercisable ratably over a period of six
years on each anniversary of the grant date and 27,500 of Mr. Yapp's
options vest and become exercisable ratably over a period of three years on
each anniversary of the grant date.
(2) In accordance with rules of the Securities and Exchange Commission, these
amounts are the
7
<PAGE>
hypothetical gains or Aoption spreads@ that would exist for the respective
options based on assumed rates of annual compound stock price appreciation
of 5% and 10% from the date the options were granted over the full option
term.
</TABLE>
Stock Option Exercises in 1997 and December 31, 1997 Option Values
The following table indicates for all executive officers named in the
Summary Compensation Table (i) stock options exercised during 1997, including
the value realized on the date of exercise, (ii) the number of shares subject to
exercisable and unexercisable stock options as of December 31, 1997, and (iii)
the value of Ain-the-money@ options, which represents the positive spread
between the exercise price of existing stock options and the year-end price of
the Common Stock:
<TABLE>
<CAPTION>
Number of
Shares Subject Value of
to Unexercised Unexercised
Number of Options In-the-Money
Shares at Fiscal Year End at Fiscal Year End
Acquired Value (Exercisable/ (Exercisable/
on Exercise Realized Unexercisable) Unexercisable) (1)
----------- -------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Mark J. Wattles 0 0 20,000 (exercisable) $ 0.00 (exercisable)
500,000 (unexercisable) $ 0.00 (unexercisable)
Donald J. Ekman 0 0 67,000 (exercisable) $415,530 (exercisable)
18,000 (unexercisable) $131,220 (unexercisable)
Max G. Fratto 0 0 62,000 (exercisable) $194,160 (exercisable)
36,000 (unexercisable) $118,440 (unexercisable)
F. Mark Wolfinger 0 0 0 (exercisable) $ 0.00 (exercisable)
150,000 (unexercisable) $ 0.00 (unexercisable)
Jeffrey B. Yapp 0 0 0 (exercisable) $ 0.00 (exercisable)
327,500 (unexercisable) $ 0.00 (unexercisable)
- --------------
(1) Based on the last sale price of $10.625 on December 31, 1997.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mark J. Wattles, Chairman and Chief Executive Officer of the Company, James
N. Cutler, Jr. and Richard A. Galanti were members of the Compensation Committee
8
<PAGE>
during 1997. No committee member participates in committee deliberations or
recommendations relating to his own compensation.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee reviews the compensation levels of the Company=s
executive officers, makes recommendations to the Board of Directors regarding
compensation, and during 1997 had authority to grant options and other awards
under the Company=s 1993 Stock Incentive Plan.
Compensation Principles
The Company is committed to providing a competitive compensation program to
attract and retain the best people available. The compensation program is
intended to:
- -- Attract and retain key individuals critical to the long-term success of the
Company.
- -- Support a performance-oriented environment in which everyone is working
together in pursuit of a common goal.
- -- Promote ownership in the Company, encouraging long-term growth and
profitability and the enhancement of shareholder value.
Compensation Elements
The Company=s executive compensation program consists of three elements:
base salary, annual bonuses, and stock options.
Base Salary. Although not based on any formal survey data, the Company sets
base salaries for executive officers near what it perceives to be the middle
range of compensation levels for comparable positions in comparable companies.
Subjective judgements regarding the impact the individual has on the Company,
the skills and experience required by the job and the performance of the
individual are key factors in determining base salary levels.
Bonuses. Annual cash bonuses have been paid in the past and may be paid in
the future to reward executive officers for Company and individual performance
during the year.
Stock Options. Stock Options are the principal performance-based element of
the Company=s executive compensation program. The Company believes stock options
provide significant compensation based on Company performance as reflected in
the stock price,
9
<PAGE>
create a valuable retention device through standard five-year vesting schedules,
and help align the interests of officers and shareholders. Option grants have
generally been based on levels believed to provide appropriate incentives for
each position in the Company.
Deductibility of Compensation. Section 162 (m) of the Internal Revenue Code
of 1986 limits to $1,000,000 per person the amount that the Company may deduct
for compensation paid to any of its most highly compensated officers in any
year. The levels of salary and bonus generally paid by the Company do not exceed
this limit. Under IRS regulations, the $1,000,000 cap on deductibility does not
apply to compensation received through the exercise of a nonqualified stock
option that meets certain requirements. This option exercise compensation is
equal to the excess of the market price at the time of exercise over the option
price and, unless limited by Section 162 (m), is generally deductible by the
Company. It is the Company=s policy generally to grant options that meet the
requirements of the IRS regulations.
Chief Executive Officer Compensation. Mr. Wattles informed the Board that
he did not wish to receive any additional cash compensation for 1997. Mr.
Wattles suggested to the Board of Directors that it consider instead making a
charitable contribution of amounts it might otherwise have paid to him to one or
more charitable organizations that focus on the needs of children and families.
The Board determined to make a charitable contribution of $500,000 to such
charitable organizations. The Stock Option Committee, made up of the outside
directors, granted Mr. Wattles options to purchase 500,000 shares of common
stock that vest at 20% per year over five years from the date of grant. The
option exercise price is $18.50 per share, the fair market value on the date of
grant. Based on informal market information and judgments, the Company believes
that Mr. Wattles' compensation package is in the range of compensation for
comparable positions in comparable companies. The outside directors are
currently reviewing Mr. Wattles' 1998 compensation package.
COMPENSATION COMMITTEE DURING 1997
Mark J. Wattles, Chair
James N. Cutler, Jr.
Richard A. Galanti
10
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return of the Company=s Common Stock with the cumulative total return of the
Standard and Poor=s 500 Stock Index (AS&P 500"), and the Standard and Poor=s
Retail Stores Composite Index (AS&P Retail@) for the period commencing on July
16, 1993 (the date of the Company=s initial public offering) and ended on
December 31, 1997. The graph assumes that $100 was invested in the Company=s
Common Stock (at the initial public offering price) and each index on July 16,
1993 and that all dividends were reinvested.
<TABLE>
<CAPTION>
[Graphic line chart representing the following values:
7/16/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Hollywood Entertainment 100 257 648 359 793 455
Corporation
S&P 500 100 106 107 148 182 242
S&P Retail 100 104 95 106 125 181]
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of Price Waterhouse, the Company's independent public
accountants, are expected to attend the Annual Meeting and be available to
respond to appropriate questions. The representatives are not expected to make
any statement but will be afforded an opportunity to make a statement if they
desire to do so.
11
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than 10% of the Common
Stock to file reports of ownership and changes in ownership with the SEC.
Executive officers, directors and beneficial owners of more than 10% of the
Common Stock are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on a review of the copies of
such forms received by the Company and on written representations from certain
reporting persons that they have complied with the relevant filing requirements,
the Company believes that, except as previously reported, all Section 16(a)
filing requirements applicable to its executive officers and directors have been
complied with, except that James N. Cutler Jr. filed Statement of Changes in
Beneficial Ownership of Securities late with respect to one transaction.
OTHER MATTERS
The Board knows of no other matters to be brought before the Annual
Meeting. If any other business properly comes before the meeting, however, the
persons named in the accompanying proxy will vote or refrain from voting thereon
in accordance with their judgement pursuant to the discretionary authority given
them in the proxy.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Shareholder proposals submitted for inclusion in the 1999 proxy materials
and consideration at the 1998 Annual Meeting of Shareholders must be received by
the Corporation by December 22, 1998. Any such proposal should comply with the
rules promulgated by the Securities and Exchange Commission governing
shareholder proposals submitted for inclusion in proxy materials.
Donald J. Ekman
Senior Vice President,
General Counsel and Secretary
Wilsonville, Oregon
April 21, 1998
12
<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
25600 SW Parkway Center Drive, Wilsonville, OR 97070
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned holder of Common Stock of Hollywood Entertainment
Corporation, an Oregon corporation (the "Company"), hereby appoints Mark J.
Wattles and Donald J. Ekman, and each of them, as proxies for the undersigned,
each with full power of substitution, for and in the name of the undersigned to
act for this undersigned and to vote, as designated below, all of the shares of
stock of the Company that the undersigned is entitled to vote at the Annual
Meeting of Shareholders of the Company to be held Wednesday, May 27, 1998, at
9:00 a.m., Pacific time, at the RiverPlace Hotel, 1510 SW Harbor Way, Portland,
OR 97201-5105, and at any adjournment(s) or postponement(s) thereof.
The Board of Directors unanimously recommends a vote FOR the election of
all the director nominees listed on the proposal (1) below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Election of Mark J. Wattles, [ ] VOTE FOR all nominees [ ] VOTE WITHHELD from
James N. Cutler, Jr., listed above, except vote all nominees.
Donald J. Ekman, and withheld from the following
Richard A. Galanti as nominee(s) (if any).
directors of the Company.
</TABLE>
--------------------
2. Upon such other matters as may properly come before the Annual Meeting and
any adjournments thereof. In their discretion, the proxies are authorized
to vote upon such other business as may properly come before the Annual
Meeting, and any adjournment or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" PROPOSAL (1) ABOVE AND "FOR" PROPOSAL (2) ABOVE.
(See reverse side)
<PAGE>
(Continued from other side)
The undersigned hereby acknowledges receipt of (i) the Notice of Annual
Meeting, (ii) the Proxy Statement, and (iii) the Company's 1998 Annual Report on
Form 10-K.
Dated: ____________________________, 1998
_________________________________________
Signature
_________________________________________
(Signature if held Jointly)
IMPORTANT: Please sign, exactly as your
name appears herein and mail in promptly
even though you may plan to attend the
meeting. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by president
or other authorized officer. If a
partnership please sign for partnership
name by authorized persons.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN
IN THE ENVELOPE PROVIDED.
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
