<PAGE>
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, Inc.
- --------------------------------------------------------------------------------
(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
9275 S.W. Peyton Lane
Wilsonville, Oregon 97070
NOTICE OF THE 2000 ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 2000
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 25, 2000 at the Riverplace Hotel, 1510 Southwest Harbor Way, Portland,
Oregon 97201 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 24, 2000
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 27, 2000
<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 97201 on May 25, 2000 at 9:00 a.m. Pacific Time, and any
adjournment thereof. The approximate date on which this proxy statement and the
accompanying proxy card are being mailed to the Company's shareholders is
April 27, 2000.
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 24, 2000
(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 46,145,892
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.
1
<PAGE>
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 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.
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, Scott A. Beck,
William P. Zebe and Donald J. Ekman, each of whom is now a director. The
directors elected at the 2000 Annual Meeting will serve until the Annual Meeting
of Shareholders in 2001 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,
2
<PAGE>
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.
BIOGRAPHICAL INFORMATION REGARDING DIRECTORS/NOMINEES
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------- -------- ---------------------------------------
<S> <C> <C>
Mark J. Wattles (1)(2)(3) 39 Chairman of the Board and Chief
Executive Officer
Scott A. Beck (1)(2) 41 Director
William P. Zebe (1)(2)(3) 41 Director
Donald J. Ekman (3) 48 Senior Vice President, General Counsel,
Secretary, and Director
</TABLE>
- --------------------
(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.
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.
3
<PAGE>
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 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.
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.
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 1999 the Board of Directors held six meetings and took six 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 1999.
4
<PAGE>
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 two meeting during 1999.
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 1999 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.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership as of December 31, 1999 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>
NO. OF SHARES PERCENTAGE
NAME BENEFICIALLY OWNED OF SHARES
- ---------------------------------- -------------------------- ----------
<S> <C> <C> <C>
Mark J. Wattles (1) .............. 11,164,600 (2) 24.1%
Donald J. Ekman .................. 115,800 (2) *
Jeffrey B. Yapp .................. 219,834 (2) *
David Martin ..................... 55,000 (2) *
William P. Zebe .................. 71,000 (2) *
Scott A. Beck .................... 1,922,613 4.1%
CMGI, Inc. ....................... 2,327,934 (3) 5.1%
82 Devonshire St.
Boston, MA 02109
CMG@Ventures II, LLC. ............ 2,429,729 (3) 5.3%
100 Brickstone Square
Andover, MA 01810
Legg Mason, Inc. ................. 2,699,600 (3) 5.8%
111 South Calvert Street
Baltimore, MD 21202
All directors and executive
officers as a group
(6 persons)...................... 13,568,847 (2) 29.4%
</TABLE>
- --------------------
* 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, 1999 pursuant to the exercise of options: Mr. Wattles, 520,000
shares; Mr. Ekman, 97,000 shares; Mr. Yapp, 218,334 shares; Mr. Zebe 71,000
shares; Mr. Martin 45,000 and all directors and officers as a group,
951,334 shares.
(3) Based solely on information provided as of December 31, 1999 in a
Schedule 13G filed by the shareholder.
6
<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, 1999.
<TABLE>
<CAPTION>
SECURITIES
ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
--------------------------- ---- ------ ----- ----------
<S> <C> <C> <C> <C>
Mark J. Wattles 1997 $ 8,372 $100,000 500,000
Chairman of the Board and 1998(1) $ 27,592 500,000
Chief Executive Officer 1999(2) 500,000
Donald J. Ekman 1997 $195,810 $ 48,209
Senior Vice President, 1998(3) $203,121 $134,904 60,000
General Counsel, Secretary 1999(4) $204,404
and Director
Jeffrey B. Yapp 1997(5) $136,539 $ 11,712
President and Chief 1998(6) $514,583 527,500
Operating Officer 1999(7) $614,751 175,000
David Martin 1999(8) $294,438 200,000
Chief Financial Officer
</TABLE>
- --------------------
(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.
(2) Annual salary excludes loans from the Company during 1999 to Mr. Wattles
in the amount of $2,325,000.
(3) Annual salary excludes loan from the Company during 1998 to Mr. Ekman in
the amount of $55,000.
(4) Annual salary excludes loans from the Company during 1999 to Mr. Ekman in
the amount of $85,000.
7
<PAGE>
(5) Annual salary excludes a loan from the Company to 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.
(6) Annual salary excludes a loan from the Company to 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.
(7) Annual salary excludes loans from the Company during 1999 to Mr. Yapp in
the amount of $143,833.
(8) Mr. Martin joined the Company in 1999.
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 $600,000. In addition,
Mr. Yapp received a grant of options and a loan toward the purchase of a home in
Oregon as described herein.
8
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding all stock options
granted in 1999 to the executive officers named in the Summary Compensation
Table:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
----------------------------------------------------------- REALIZABLE VALUE
PERCENT OF AT ASSUMED
NUMBERS OPTIONS ANNUAL RATES OF
OF SHARES GRANTED TO EXERCISE STOCK PRICE
UNDERLYING EMPLOYEES PRICE APPRECIATION FOR OPTION
OPTIONS IN FISCAL PER EXPIRATION TERM (2)
NAME GRANTED (#)(1) YEAR SHARE ($/SHARE) DATE 5% 10%
- ---- -------------- ---- --------------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Mark Wattles 500,000 17.83% $12.00 08/18/08 $3,307,969 $8,147,686
Jeffrey B. Yapp 175,000 6.24% $12.00 08/18/08 $1,157,789 $2,851,690
David Martin 25,000 0.89% $26.25 02/10/08 $ 361,809 $ 891,153
175,000 6.24% $12.00 08/18/08 $1,157,789 $2,851,690
</TABLE>
- ----------------------
(1) Mr. Wattles' and Mr. Martin's options become exercisable over a period of
five years on each anniversary of the grant date. Mr. Yapp's options become
exercisable ratably over a period of six years on each anniversary of the
grant date.
(2) In accordance with rules of the Securities and Exchange Commission, these
amounts are the hypothetical gains or "option spreads" that would exist for
the respective options based on assumed rates of annual compound stock
price appreciation of 5% and 10% from the date the options were granted
over the full option term.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE
The following table indicates for all executive officers named in the
Summary Compensation Table (i) stock options exercised during 1999, including
the value realized on the date of exercise, (ii) the number of shares subject to
exercisable and unexercisable stock options as of December 31, 1999, and
(iii) the value of "in-the-money" options,
9
<PAGE>
which represents the positive spread between the exercise price of existing
stock options and the year-end price of the Common Stock:
<TABLE>
<CAPTION>
NUMBER OF
SHARES UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
NUMBER OF OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR END AT FISCAL YEAR END
ACQUIRED VALUE (EXERCISABLE/ (EXERCISABLE/
ON EXERCISE (#) REALIZED ($) UNEXERCISABLE) UNEXERCISABLE) (1)
---------------- ------------ ------------------------ -------------------------
<S> <C> <C> <C> <C> <C> <C>
Mark J. Wattles 0 0 360,000 (exercisable) $661,900 (exercisable)
1,200,000 (unexercisable) $3,687,600 (unexercisable)
Donald J. Ekman 0 0 97,000 (exercisable) $865,125 (exercisable)
48,000 (unexercisable) $0 (unexercisable)
Jeffrey B. Yapp 0 0 218,334 (exercisable) $1,139,827 (exercisable)
484,166 (unexercisable) $2,130,857 (unexercisable)
David Martin 0 0 40,000 (exercisable) $200,000 (exercisable)
0 0 360,000 (unexercisable) $1,237,500 (unexercisable)
</TABLE>
- ----------------------
(1) Based on the last sale price of $14.50 on December 31, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mark J. Wattles, Chairman and Chief Executive Officer of the Company,
Scott Beck and William P. Zebe were the members of the Compensation Committee
during 1999. 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 1999 had authority to grant options and other
awards under the Company's Stock Incentive Plans.
10
<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:
- - 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, 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
11
<PAGE>
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 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. In August 1999 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 $12.00 per share, the fair
market value on the date of grant. Based on informal market information and
judgment, the Company believes Mr. Wattles' compensation package is in the range
of compensation for comparable positions comparable companies. Mr. Wattles
informed the Board that he did not wish to receive any additional cash
compensation for 1999. The outside directors are currently reviewing
Mr. Wattles' 2000 compensation package.
COMPENSATION COMMITTEE FOR 1999
Mark J. Wattles, Chairman
Scott A. Beck
William P. Zebe
12
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in
the cumulative total shareholder return on 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, 1999. 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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HOLLYWOOD ENTERTAINMENT CORPORATION S&P 500 S&P RETAIL
<S> <C> <C> <C>
7/16/93 100 100 100
12/31/93 257 105 103
12/31/94 648 103 92
12/31/95 359 138 102
12/31/96 793 166 119
12/31/97 455 218 170
12/31/98 1,168 276 272
12/31/99 622 330 328
</TABLE>
13
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP were the Company's independent accountants for
1999. Representatives of PricewaterhouseCoopers LLP 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.
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, except that Mark
J. Wattles filed an Annual Statement of Changes in Beneficial Ownership late.
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 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. For the 2001 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 26,
2001, 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.
14
<PAGE>
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Shareholder proposals to be considered at the Company's 2001 Annual
Meeting of Shareholders must be received at the principal executive offices of
the Company no later than January 26, 2001. In addition, any shareholder
proposal to be considered for inclusion in proxy materials for the 2001 Annual
Meeting must be received at the principal executive offices of the Company no
later than December 25, 2000. 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 27, 2000
15
<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
9275 SW 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 25, 2000,
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.
<TABLE>
<S> <C>
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 nominee(s) (if any).
/ / VOTE WITHHELD from all nominees.
2. To transact such other business as may properly come before
the meeting.
</TABLE>
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.
