8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 19, 2007

Movie Gallery, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-24548	63-1120122
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

900 West Main Street, Dothan, Alabama 36301

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (334) 677-2108

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Amendment to Material Contract

On November 19, 2007, Movie Gallery, Inc. (“Movie Gallery” or the “Company”) and certain of its affiliates (collectively, the “Debtors”) entered into an amendment (the “Amendment”) to that certain Lock Up, Voting and Consent Agreement dated October 14, 2007 (the “Lock Up Agreement”), by and among the Company, Sopris Capital Advisors LLC and certain second lien lender signatories thereto, and that certain Proposed Restructuring Term Sheet attached as Exhibit A to the Lock Up Agreement (the “Plan Term Sheet”). A copy of the Amendment is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Pursuant to the Amendment, certain “Termination Events” in the Lock Up Agreement have been extended. Specifically, section 8.1(c) of the Lock Up Agreement, which required the filing of a plan of reorganization and related disclosure statement on or before November 15, 2007, has been amended to require the Debtors to file a plan of reorganization and related disclosure statement on or before November 27, 2007. In addition, and as set forth in the Amendment, certain other “Termination Events” have been extended based upon the amendment to section 8.1(c) of the Lock Up Agreement. Moreover, Section III of the Plan Term Sheet has been amended to reflect the filing of a plan of reorganization and related disclosure statement on or before November 27, 2007.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

10.1 Amendment to Lock Up Agreement and Plan Term Sheet, dated November 19, 2007.

Forward-Looking Statements

This current report on Form 8-K, as well as other statements made by Movie Gallery may contain forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, that reflect, when made, the Company’s current views with respect to current events and financial performance. Such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company’s operations and business environment, which may cause the actual results of the Company to be materially different from any future results, express or implied, by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: (i) the ability of the Company to continue as a going concern; (ii) the ability of the Company to operate subject to the terms of the debtor in possession financing; (iii) the Company’s ability to obtain court approval with respect to motions in the Chapter 11 proceeding prosecuted by it from time to time; (iv) the ability of the Company to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 cases including a plan consistent with the terms set forth in the restructuring term sheet; (v) risks associated with a termination of the agreement and financing availability; (vi) risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for the Company to propose and confirm one or more plans of reorganization, for the appointment of a Chapter 11 trustee or to convert the cases to Chapter 7 cases; (vii) the ability of the Company to obtain and maintain normal terms with vendors and service providers; (viii) the Company’s ability to maintain contracts and leases that are critical to its operations; (ix) the potential adverse impact of the Chapter 11 cases on the Company’s liquidity or results of operations; (x) the ability of the Company to execute its business plans and strategy, including the operational restructuring initially announced in 2007, and to do so in a timely fashion; (xi) the ability of the Company to attract, motivate and/or retain key executives and associates; (xii) general economic or business conditions affecting the video and game rental and sale industry (which is dependent on consumer spending), either nationally or regionally, being less favorable than expected; and (xiii) increased competition in the video and game rental and sale industry. Other risk factors are listed from time to time in the Company’s United States Securities and Exchange Commission reports, including but not limited to the Annual Report on Form 10-K for the year ended December 31, 2006. Movie Gallery disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events and/or otherwise.

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Similarly, these and other factors, including the terms of any plan of reorganization ultimately confirmed, can affect the value of the Company’s various prepetition liabilities, common stock and/or other equity securities. Additionally, no assurance can be given as to what values, if any, will be ascribed in the bankruptcy proceedings to each of these constituencies. A plan or plans of reorganization could result in holders of Movie Gallery’s common stock or other equity interests and claims relating to prepetition liabilities receiving no distribution on account of their interest and cancellation of their interests and their claims and cancellation of their claims. Under certain conditions specified in the Bankruptcy Code, a plan of reorganization may be confirmed notwithstanding its rejection by an impaired class of creditors or equity holders and notwithstanding the fact that certain creditors or equity holders do not receive or retain property on account of their claims or equity interests under the plan. In light of the foregoing, the Company considers the value of the common stock and claims to be highly speculative and cautions equity holders that the stock and creditors that the claims may ultimately be determined to have no value. Accordingly, the Company urges that appropriate caution be exercised with respect to existing and future investments in Movie Gallery’s common stock or other equity interest or any claims relating to pre-petition liabilities.

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SIGNATURES

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

	MOVIE GALLERY, INC.
Date: November 21, 2007	BY:	/s/ Thomas D. Johnson, Jr.
		Thomas D. Johnson, Jr.
		Executive Vice President, Chief Financial Officer

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EX-10.1

Exhibit 10.1

November 19, 2007

Sopris Capital Advisors LLC

152 West 57th Street

New York, NY 10019

Attn: Mr. Nikos Hecht

Re: Amendment to Lock Up Agreement and Plan Term Sheet

Dear Mr. Hecht:

Reference is made to (i) that certain Lock Up, Voting and Consent Agreement dated October 14, 2007 (“Lock Up Agreement”), by and among Movie Gallery, Inc. and certain of its affiliate signatories thereto (the “Debtors”), and Sopris Capital Advisors LLC and certain second lien lender signatories thereto (the “Consenting Holders”), (ii) that certain Proposed Restructuring Term Sheet attached as Exhibit A to the Lock Up Agreement (the “Plan Term Sheet”) and (iii) that certain Rights Offering Term Sheet attached as Exhibit A-4 to the Plan Term Sheet (the “Rights Offering Term Sheet” and together with the Lock Up Agreement and the Plan Term Sheet, in each case as amended through the date hereof, the “Restructuring Agreements”). Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Lock Up Agreement.

The Debtors, the Requisite Second Lien Holders and the Requisite Senior Note Holders hereby agree as follows:

1. The terms of the Lock Up Agreement shall be amended as follows:

(a) Section 8.1(c) is hereby amended and replaced in its entirety as follows:

“(c) the Debtors shall not have filed the Plan and Disclosure Statement with the Bankruptcy Court on or before November 27, 2007;”.

(b) Section 8.1(d): the phrase “75 days following the Petition Date” is hereby amended and replaced with “January 11, 2008”.

(c) Section 8.1(e): the phrase “120 days following the Petition Date “ is hereby amended and replaced with “February 28, 2008”.

(d) Section 8.1(f): the phrase “150 days following the Petition Date” is hereby amended and replaced with “March 28, 2008”.

2. The terms of the Plan Term Sheet shall be amended as follows:

Section III, “Plan-Related Pleadings to Be Filed” section: the introductory phrase “On or before 30 days after the Petition Date,” is hereby amended and replaced with “On or before November 27, 2007,”.

Except as specifically amended hereby, all terms, conditions, covenants, representations and warranties contained in the Restructuring Agreements, and all rights of the Consenting Holders, shall remain in full force and effect.

Please confirm you agreement with the foregoing by executing this letter in the space provided below.

Sincerely,

/S/ S. Page Todd

S. Page Todd

Executive Vice President

General Counsel

REQUISITE SECOND LIEN HOLDERS AND
REQUISITE SENIOR NOTE HOLDERS:
SOPRIS CAPITAL ADVISORS LLC
By:
Name:	Nikos Hecht
Title:	Managing Director

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