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:
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2) Aggregate number of securities to which transaction applies:
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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.
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
9275 S.W. Peyton Lane
Wilsonville, Oregon 97070
NOTICE OF THE 1999 ANNUAL MEETING OF SHAREHOLDERS
May 27, 1999
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, 1999 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, 1999 will
be entitled to vote at the Annual Meeting. Even if you plan to attend in person,
please 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 23, 1999
<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
9275 S.W. Peyton Lane
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 "Board") of Hollywood Entertainment
Corporation, an Oregon Corporation (the "Company"), 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, 1999 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.
The report can also be accessed through the Internet Website of the Securities
and Exchange Commission at http://www.sec.gov.
Record Date
Only shareholders of record at the close of business on April 16, 1999 (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 45,549,751
shares of Common Stock ("Common 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
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<PAGE>
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 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 23, 1999.
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, Scott A. Beck and William P. Zebe, each of whom is now a director. The
directors elected at the 1999 Annual Meeting will serve until the Annual Meeting
of Shareholders in 2000 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.
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<PAGE>
BIOGRAPHICAL INFORMATION REGARDING DIRECTORS/NOMINEES
Name Age Position
- ------------------------- --- --------------------------------
Mark J. Wattles (1)(2)(3) 38 Chairman of the Board and
Chief Executive Officer
Donald J. Ekman (3) 47 Senior Vice President, General
Counsel, Secretary, and Director
Scott A. Beck (1)(2) 40 Director
William P. Zebe (1)(2)(3) 40 Director
- -------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Real Estate Committee
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.
Scott A. Beck became a director of the Company in February 1998. He was
Vice Chairman of the Board of Blockbuster from September 1989 until his
retirement in January 1992 and Chief Operating Officer of Blockbuster from
September 1989 to January 1991. Mr. Beck was a Chairman or Co-Chairman of the
Board and Chief Executive Officer or President of Boston Chicken, Inc. from June
1992 until May 1998. Boston Chicken, Inc. filed for bankruptcy on October 5,
1998. Mr. Beck served as Chairman of the Board of Einstein/Noah Bagel Corp. from
July 1996 until May 1998 and served as a director from March 1995 until May
1998.
William P. Zebe became a director of the Company in July 1998. Mr. Zebe is
the President and principal shareholder of Bardo Equities LLC, a real estate
development
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company. Mr. Zebe joined the Company as National Vice President of Real Estate
in May 1994 and served as Senior Vice President of Development from January
1996 to June 1998. Mr. Zebe previously worked from June 1993 to April 1994 as
the Real Estate Manager for the Western Zone for Blockbuster Video, Blockbuster
Music and Blockbuster franchisee-owned Discovery Zone. From 1992 to May 1993
Mr. Zebe was a Real Estate Representative for Blockbuster.
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 1998 the Board of Directors held five meetings and took eight
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 Real Estate Committee.
The Audit Committee consists of Messrs. Beck, Zebe 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 1998.
The Compensation Committee consists of Messrs. Beck, Zebe 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 1998.
The Real Estate Committee consists of Messrs. Zebe, Wattles and Ekman. The
Real Estate Committee was created with authority to provide direction on real
estate lease sites. During 1998 the Real Estate Committee held one meeting.
Directors' Compensation
Directors who are not officers receive no compensation for serving on the
Board of Directors other than reimbursement for reasonable expenses incurred in
attending meetings.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership as of December 31, 1998 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.
No. of Shares Percentage
Name Beneficially Owned of Shares
- ---------------------- ------------------ ----------
Mark J. Wattles (1) ..........................11,444,600 (2) 25.2%
Donald J. Ekman .................................103,800 (2) *
Jeffrey B. Yapp .................................109,667 (2) *
William P. Zebe ..................................73,000 (2) *
Scott A. Beck .................................1,847,613 (2) 4.1%
Amvescap PLC ..................................2,227,100 (3) 4.9%
1315 Peachtree St. NE.
Atlanta, GA 30309
Legg Mason, Inc................................2,699,600 (3) 5.9%
111 South Calvert Street
Baltimore, MD 21202
CMGI, Inc......................................4,757,633 (3) 10.5%
82 Devonshire St.
Boston, MA 02109
All directors and executive
officers as a group (6 persons)..............13,578,680 (2) 29.9%
- -------------------
* Less than 1%.
(1) Address of beneficial holder is 9275 S.W. Peyton Lane, 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, 320,000
shares; Mr. Ekman, 85,000 shares; Mr. Yapp, 109,167 shares; Mr. Zebe 73,000
shares and all directors and officers as a group, 487,167 shares.
(3) Based solely on information provided as of December 31, 1998 in a Schedule
13G filed by the shareholder.
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<PAGE>
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, 1998.
<TABLE>
<CAPTION>
Securities
Annual Underlying
Name and Principal Position Year Salary Bonus Options
- ----------------------------- ------- -------- -------- ----------
<S> <C> <C> <C> <C>
Mark J. Wattles 1996 $200,939 20,000
Chairman of the Board and 1997 $ 8,372 $100,000 500,000
Chief Executive Officer 1998(1) $ 27,592 500,000
Donald J. Ekman 1996 $163,185 6,000
Senior Vice President, 1997 $195,810 $ 48,209
General Counsel, Secretary 1998(2) $203,121 $134,904 60,000
and Director
Jeffrey B. Yapp 1997(3) $136,539 $ 11,712
President and Chief 1998(4) $514,583 527,500
Operating Officer
F. Mark Wolfinger 1997(3) $414,907 $102,462 150,000
Chief Financial Officer 1998(5) $196,026
- -------------------
(1) Annual salary excludes a loan from the Company received by Mr. Wattles on
September 11, 1998 in the amount of $2 million, which was repaid in full to the
Company on December 7, 1998 together with interest in the amount of $36,809. See
"Chief Executive Officer Compensation" paragraph regarding Mr. Wattle's suggestion
to the Board of Directors to authorize contributions to charitable organizations
instead of additional compensation to him for 1998.
(2) Bonus reflects 100% of the bonus accrued. One half was paid on April 1, 1999. The
second half will be paid on April 1, 2000 conditioned on continued employment on
that date.
(3) 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
$53,924 for Mr. Yapp and $99,840 for Mr. Wolfinger.
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(4) Annual salary excludes a loan from the Company received by Mr. Yapp in connection
with his relocation in the amount of $375,000. 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
$113,422 for Mr. Yapp. Any bonus to be paid for 1998 has not yet been determined
by the Compensation Committee.
(5) Mr. Wolfinger terminated his employment with the Company in August 1998.
</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 1998 to the executive officers named in the Summary Compensation
Table:
<TABLE>
<CAPTION>
Percent of
Numbers Options Potential Realizable Value
of Shares Granted to Exercise at Assumed Annual Rates of
Underlying Employees Price Stock Price Appreciation
Options in Fiscal per Expiration for Option Term (2)
Name Granted(1) Year Share Date 5% 10%
- ---- ---------- ---------- -------- ---------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Mark J. Wattles 500,000 9.4% $ 8.41 02/05/07 $2,317,232 $5,707,454
Jeffrey B. Yapp 327,500 6.1% $ 8.41 02/05/07 $1,517,787 $3,738,382
200,000 3.7% $10.313 08/31/07 $1,137,170 $2,800,903
Donald J. Ekman 60,000 ---- $15.00 10/23/07 $ 467,155 $1,178,012
- --------------------
(1) Mr. Wattles' and Ekman's options become exercisable over a period of five years on each anniversary
of the grant date. Five hundred thousand of Mr. Yapp's options become exercisable ratably over a
period of six years on each anniversary of the grant date, and 27,500 of Mr. Yapp's options 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
hypothetical gains or "option 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>
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<PAGE>
The following table indicates for all executive officers named in the
Summary Compensation Table (i) stock options exercised during 1998, 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, 1998, and (iii)
the value of "in-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 at In-the-Money at
Shares Fiscal Year End Fiscal Year End
Acquired Value (Exercisable/ (Exercisable/
on Exercise Realized Unexercisable) Unexercisable)(1)
----------- -------- ------------------ ---------------------
<S> <C> <C> <C> <C>
Mark J. Wattles 0 0 120,000 (exercisable) $1,182,500 (exercisable)
900,000(unexercisable) $12,922,000(unexercisable)
Donald J. Ekman 0 0 85,000 (exercisable) $1,948,875 (exercisable)
60,000(unexercisable) $735,000(unexercisable)
Jeffrey B. Yapp 0 0 109,167 (exercisable) $1,961,792 (exercisable)
418,333(unexercisable) $7,597,017(unexercisable)
- -------------------
(1) Based on the last sale price of $27.25 on December 31, 1998.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mark J. Wattles, Chairman and Chief Executive Officer of the Company, James
N. Cutler, Jr., Richard A. Galanti and William P. Zebe were members of the
Compensation Committee during 1998. 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 1998 had authority to grant options and other awards
under the Company's Stock Incentive Plans.
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<PAGE>
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:
o Attract and retain key individuals critical to the long-term success of the
Company.
o Support a performance-oriented environment in which everyone is working
together in pursuit of a common goal.
o 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, 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
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option exercise compensation is equal to the excess of the market price at the
time of exercise over the option exercise 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 1998. 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 authorized the Company to make a contribution of $500,000 to the
Hollywood Entertainment Foundation, with a directive that the funds be used to
support such charitable organizations. In February 1998 the outside directors on
the Compensation Committee 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 $8.41 per share, the fair market value on
the date of grant. Based on informal market information and judgments, the
Company believes Mr. Wattles' compensation package is in the range of
compensation for comparable positions in comparable companies. The outside
directors are currently reviewing Mr. Wattles' 1999 compensation package.
COMPENSATION COMMITTEE FOR 1999
Mark J. Wattles, Chair
Scott A. Beck
William P. Zebe
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<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total shareholder
return of the Company's Common Stock with the cumulative total return of the
Standard and Poor's 500 Stock Index ("S&P 500") and the Standard and Poor's
Retail Stores Composite Index ("S&P Retail") for the period commencing on July
16, 1993 (the date of the Company's initial public offering) and ended on
December 31, 1998. 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.
[Graphic Line Chart representing the following values:]
- -------------------------------------------------------------------------------
Hollywood Entertainment Corporation - - - S&P 500 - - - - - S&P Retail
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
7/16/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C> <C> <C>
Hollywood Entertainment Corporation 100 257 648 359 793 455 1,168
S&P 500 100 105 103 138 166 218 276
S&P Retail 100 103 92 102 119 170 272
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of PricewaterhouseCoopers LLP, 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.
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<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 all Section 16(a) filing requirements applicable to
its executive officers and directors have been complied with.
DISCRETIONARY AUTHORITY
Although the Notice of Annual Meeting of Shareholders provides for
transaction of any other business that properly comes before the meeting, the
Board of Directors has no knowledge of any matter to be presented at the meeting
other than the matters described in this proxy statement. The enclosed proxy,
however, gives discretionary authority to the proxy holders to vote in
accordance with their judgment if any other matters are presented.
For this year's annual meeting of shareholders, if notice of a shareholder
proposal to be raised at the meeting was received at the principal executive
offices of the Company after March 7, 1999, proxy voting on that proposal when
and if raised at the annual meeting will be subject to the discretionary voting
authority of the designated proxy holders. For the 2000 annual meeting of
shareholders, if notice of a shareholder proposal to be raised at the meeting is
received at the principal executive offices of the Company after January 23,
2000, proxy voting on that proposal when and if raised at the annual meeting
will be subject to the discretionary voting authority of the designated proxy
holders.
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<PAGE>
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Shareholder proposals to be considered at the Company's 2000 annual meeting
of Shareholders must be received at the principal executive offices of the
Company no later than January 24, 2000. In addition, any shareholder proposal to
be considered for inclusion in proxy materials for the 2000 annual meeting must
be received at the principal executive offices of the Company no later than
December 25, 1999. Any shareholder proposal must include the information
specified in the Company's Bylaws, and a copy of the relevant provisions of the
Bylaws will be provided to any shareholder upon written request to Donald J.
Ekman, Senior Vice President and General Counsel of the Company
Donald J. Ekman
Senior Vice President,
General Counsel and Secretary
Wilsonville, Oregon
April 23, 1999
<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
9275 S.W. Peyton Lane, 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
Common Stock of the Company that the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Company to be held Thursday, May 27, 1999,
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 proposal 1 below.
1. Election of Mark J. Wattles, William P. Zebe, Scott A. Beck and Donald J.
Ekman as director(s) of the Company.
|_| VOTE FOR all nominees listed above, except vote withheld from the
following nominees(s) (if any).
--------------------------------------------------------------------------
|_| VOTE WITHHELD from all nominees.
2. To transact such other business as may properly come before the meeting.
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 IN THE DISCRETION OF THE PROXIES UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(See reverse side)
<PAGE>
(Continued from other side)
The undersigned hereby acknowledges receipt of (i) of the Notice of Annual
Meeting, (ii) the Proxy Statement and (iii) the Company's 1998 Annual Report on
Form 10-K.
Dated: , 1999
----------------------------
-----------------------------------------
Signature
-----------------------------------------
(Signature if held Jointly)
IMPORTANT: Please sign exactly as your
name appears hereon and mail in promptly,
even if 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 in 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
