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 27, 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

Movie Gallery, Inc. (the “Company”) and certain of its affiliates (collectively, the “Debtors”) entered into the First Amendment to Secured Senior-Priority Debt In Possession Credit and Guaranty Agreement with Goldman Sachs Credit Partners L.P., as Syndication Agent and Documentation Agent and The Bank of New York, as Administrative Agent and Collateral Agent, dated as of November 26, 2007 (the “Amendment”). A copy of the Amendment is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Pursuant to the Amendment, section 3.2(b) of the Credit Agreement, which required the Debtors to have been assigned and maintain a credit rating by Moody’s and S&P, has been deleted in its entirety. In addition, and as set forth in the Amendment, section 8.1(l)(iv) of the DIP Credit Agreement has been deleted and replaced in its entirety with the following: “(iv) granting any other relief that is materially adverse to Administrative Agent’s, Syndication Agent’s, Collateral Agent’s or Lenders’ interests under any Credit Document or their rights and remedies hereunder or their interest in the Collateral, provided that, in respect of the foregoing subclause (iv), if such relief was sought by parties other than Credit Parties, any of the Administrative Agent, Syndication Agent or Collateral Agent or any Lender shall have requested in writing that Credit Parties oppose the motion and the Credit Parties shall have failed to do so;”.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

10.1 First Amendment to Secured Super-Priority Debtor in Possession Credit and Guaranty Agreement, dated as of November 26, 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.

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.

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 30, 2007
	BY:	/S/ Thomas D. Johnson, Jr.
		Thomas D. Johnson, Jr.
		Executive Vice President, Chief Financial Officer

EX-10.1

Exhibit 10.1

FIRST AMENDMENT TO

SECURED SUPER-PRIORITY DEBTOR IN POSSESSION

CREDIT AND GUARANTY AGREEMENT

FIRST AMENDMENT (“Amendment”), dated as of November 26, 2007, to the Secured Super-Priority Debtor in Possession Credit and Guaranty Agreement, dated as of October 16, 2007 (“Credit Agreement”), by and among MOVIE GALLERY, INC., a Delaware corporation and a debtor and debtor in possession under Chapter 11 of the Bankruptcy Code (as defined below) (“Borrower”), CERTAIN SUBSIDIARIES OF BORROWER as Guarantors, the Lenders party thereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. as Syndication Agent and as Documentation Agent, and THE BANK OF NEW YORK as Administrative Agent and as Collateral Agent.

RECITALS:

WHEREAS, on October 16, 2007 (“Petition Date”), Borrower and each of the Guarantors filed voluntary petitions for relief commencing cases (collectively, the “Cases”) under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Virginia, Eastern Division (“Bankruptcy Court”).

WHEREAS, on the Petition Date, the Bankruptcy Court entered its Interim Order Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, 364(c), 364(d) and 364(e) and Fed. R. Bankr. P. 4001 and 9014 (i) Authorizing Debtors to Obtain Secured Post-Petition Financing on Super-Priority Priming Lien Basis, Granting Adequate Protection for Priming and Modifying Automatic Stay, (ii) Authorizing Debtors to Use Cash Collateral of Existing Secured Lenders and Granting Adequate Protection for Use, (iii) Authorizing Debtors to Repay Existing Revolver Indebtedness upon Interim Approval and (iv) Prescribing Form and Manner of Notice and Setting Time for Final Hearing (“Interim DIP Order”).

WHEREAS, pursuant to the authorization granted in the Interim DIP Order, the parties thereto entered into the Credit Agreement.

WHEREAS, on November 16, 2007, the Bankruptcy Court entered its Final Order Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, 364(c), 364(d) and 364(e) and Fed. R. Bankr. P. 4001 and 9014 (i) Authorizing Debtors to Obtain Secured Post-Petition Financing on Super-Priority Priming Lien Basis, Granting Adequate Protection for Priming and Modifying Automatic Stay, (ii) Authorizing Debtors to Use Cash Collateral of Existing Secured Lenders and Granting Adequate Protection for Use, and (iii) Confirming Authorization for Debtors to Repay Existing Revolver Indebtedness upon Interim Approval (“Final DIP Order”);

WHEREAS, the Final DIP Order requires that the Credit Agreement be amended as provided herein;

WHEREAS, the Final DIP Order further provides that the required amendments to the Credit Agreement may be evidenced by a writing signed by the Administrative Agent and Debtors; and

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WHEREAS, in accordance with the Final DIP Order, the Credit Agreement is hereby amended upon the terms and subject to the conditions set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS

1.1 All capitalized terms used herein (including in the introductory paragraph and Recitals set forth above) and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.

SECTION 2. CONDITIONS TO EFFECTIVENESS

This Amendment shall be effective on the date on which all of the following conditions precedent have been satisfied or waived (“Effective Date”):

2.1 Administrative Agent shall have received this Amendment, executed and delivered by a duly authorized officer of each of the parties hereto.

2.2 Borrower shall have paid Agents and Arranger for all reasonable out-of-pocket expenses incurred by them and invoiced on or prior to the date hereof in connection with the negotiation and preparation of this Amendment, including the reasonable fees, charges and disbursements of counsel for the Agents and Arranger.

SECTION 3. REPRESENTATIONS AND WARRANTIES

Each Credit Party represents and warrants to the Administrative Agent, the Issuing Bank and each of the Lenders that:

3.1 The execution, delivery and performance of this Amendment by each Credit Party is within its power and has been duly authorized by all necessary action on the part of such Credit Party.

3.2 This Amendment has been duly executed and delivered by each Credit Party and constitutes a legal, valid and binding obligation of such Credit Party, enforceable against each of the Credit Parties in accordance with its terms.

3.3 No Default or Event of Default has occurred and is continuing.

3.4 Each of the representations and warranties made by any Credit Party set forth in the Credit Agreement and in any other Credit Document are true and correct in all material respects on and as of the date of this Amendment to the same extent as though made on and as of such date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date.

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SECTION 4. AMENDMENT TO CREDIT AGREEMENT

4.1 Section 3.2(b) of the Credit Agreement is hereby deleted in its entirety.

4.2 Section 8.1(l) of the Credit Agreement is amended by deleting subclause (iv) thereof in its entirety and replacing it with the following: “(iv) granting any other relief that is materially adverse to Administrative Agent’s, Syndication Agent’s, Collateral Agent’s or Lenders’ interests under any Credit Document or their rights and remedies hereunder or their interest in the Collateral, provided that, in respect of the foregoing subclause (iv), if such relief was sought by parties other than Credit Parties, any of the Administrative Agent, Syndication Agent or Collateral Agent or any Lender shall have requested in writing that Credit Parties oppose the motion and Credit Parties shall have failed to do so;”.

SECTION 5. MISCELLANEOUS

5.1 Headings. Section headings in this Amendment are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.

5.2 Governing Law, Jurisdiction and Venue.

(a) Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

(b) Consent to Jurisdiction and Venue. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY ARISING OUT OF OR RELATING TO THIS AMENDMENT, THE CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, SHALL BE BROUGHT IN THE BANKRUPTCY COURT, OR IN THE EVENT THAT THE BANKRUPTCY COURT DOES NOT HAVE JURISDICTION OVER ANY MATTER OR IF IT HAS JURISDICTION BUT DOES NOT EXERCISE SUCH JURISDICTION FOR ANY REASON, THEN IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AMENDMENT, EACH CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN

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ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.

5.3 Counterparts. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Amendment by telecopier shall be effective delivery of a manually executed counterpart of this Amendment.

5.4 Continued Effectiveness. Except as expressly set forth in this Amendment, the terms of the Credit Agreement and each of the other Credit Documents remain unchanged, and all such Credit Documents shall remain in full force and effect and are hereby confirmed and ratified.

5.5 No Novation. This Amendment shall not be deemed or construed to be a satisfaction, reinstatement, novation or release of the Credit Agreement or of any of the other Credit Documents or a waiver by any Secured Party of any of its rights and remedies under any DIP Order, the Credit Agreement or any of the other Credit Documents, or any of them, or at law or in equity.

5.6 Reaffirmation. Each Credit Party hereby reaffirms each and every covenant, condition, obligation and provision set forth in the Credit Documents, as modified hereby. Each Credit Party has executed and delivered one or more of the Credit Documents in which such Credit Party has granted liens or security interests in certain of its property. Each Credit Party hereby ratifies and reaffirms all of its respective payment and performance obligations, contingent or otherwise, under any DIP Order and under any of the Credit Documents to which it is a party and, to the extent such Credit Party has granted liens on or security interests in any of its property pursuant to any DIP Order or any of the Credit Documents as security for the Obligations, each Credit Party hereby ratifies and reaffirms such payment and performance obligations, grant of security interests and liens and confirms and agrees that such security interests and liens hereafter secure all of the Obligations owed to any of the Secured Parties and any of their successors and assignees. Each Credit Party agrees that each DIP Order and each of the Credit Documents remains in full force and effect and is hereby ratified and reaffirmed, and agrees that this Amendment shall not (a) operate as a waiver of any right, power or remedy of any of the Secured Parties under any DIP Order or any of the Credit Documents or (b) constitute a waiver of any provision of any DIP Order or any of the Credit Documents or serve to effect a novation of the Obligations.

5.7 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING UNDER THIS AMENDMENT, UNDER THE CREDIT AGREEMENT OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY

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AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AMENDMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 5.7 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS AMENDMENT, THE CREDIT AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE UNDER THE CREDIT AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

[Remainder of page left intentionally blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

MOVIE GALLERY, INC.
By:	/s/ S. Page Todd
Name:	S. Page Todd
Title:	Executive Vice President, Secretary, and General Counsel
MOVIE GALLERY US, LLC
By:	Movie Gallery, Inc., its Manager and Sole Member
By:	/s/ S. Page Todd
Name:	S. Page Todd
Title:	Executive Vice President, Secretary, and General Counsel

M.G. DIGITAL, LLC
By:	Movie Gallery US, LLC, its Manager and Sole Member
	By:	Movie Gallery, Inc., its Manager and Sole Member
	By:	/s/ S. Page Todd
	Name:	S. Page Todd
	Title:	Executive Vice President, Secretary, and General Counsel

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M.G.A REALTY I, LLC
By:	Movie Gallery US, LLC, its Manager and Sole Member
	By:	Movie Gallery, Inc., its Manager and Sole Member
	By:	/s/ S. Page Todd
	Name:	S. Page Todd
	Title:	Executive Vice President, Secretary, and General Counsel

HOLLYWOOD ENTERTAINMENT CORPORATION
By:	/s/ S. Page Todd
Name:	S. Page Todd
Title:	Executive Vice President, Secretary, and General Counsel
MG AUTOMATION LLC
By:	Hollywood Entertainment Corporation, its Manager and Sole Member
By:	/s/ S. Page Todd
Name:	S. Page Todd
Title:	Executive Vice President, Secretary, and General Counsel

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THE BANK OF NEW YORK,
as Administrative Agent
By:	/s/ Robert Hingston
Name:	Robert Hingston
Title:	Vice President

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