HOLLYWOOD ENTERTAINMENT COMPANY AND HOLLYWOOD
MANAGEMENT COMPANY

INCOME TAX ALLOCATION AGREEMENT

This agreement, dated as of January 1, 1998, is entered into between
Hollywood Entertainment Company, an Oregon corporation, ("Hollywood") and its
wholly owned subsidiary, Hollywood Management Company, an Oregon corporation
("Subsidiary").
RECITALS

A. Hollywood and Subsidiary wish to enter into an agreement allocating
their income tax obligations;

B. In consideration of the foregoing and other good and valuable
consideration, the parties to this Agreement agree as follows:

AGREEMENT

1. General Statement of Policy.  Hollywood shall prepare a federal
consolidated income tax return and consolidated or combined and or
separate state and local income tax returns on a calendar year basis
for Hollywood and the Subsidiary Group, which are part of an
"affiliated group," as that term is defined in Section 1504 of the
Internal Revenue Code of 1986, as amended (the "Code"), of which
Hollywood is the common parent (the "Hollywood Group").  The term
Subsidiary Group shall mean Subsidiary and all corporations (whether
or not presently in existence) that, at the pertinent time, would be
entitled to join with Subsidiary in filing consolidated federal income
tax returns if Subsidiary were a common parent corporation and were
not a member of the Hollywood Group.  Subsidiary shall prepare and
present to Hollywood for review and inclusion in the Hollywood Group
income tax returns a separate federal consolidated income tax return
and separate combined, consolidated or separate (as required) state
and local income tax returns for the Subsidiary Group.
2. Applicable Taxes.  The taxes, and the returns required in connection
with such taxes, to which this Agreement applies include:  (1) all
taxes and related returns under Subtitles A and F in the Code and (2)
income taxes and functionally similar taxes based upon taxable income
(such as the Oregon corporate excise tax) levied by state and local
jurisdictions on any member of the Hollywood Group.  Such taxes shall
be referred to in this Agreement as "income taxes."  This Agreement
does not apply to any employment-related taxes (such as taxes imposed
under Subtitle C of the Code), taxes under Subtitles D and E of the
Code, or other taxes not imposed with respect to taxable income of a
corporation.  Subsidiary shall be responsible for the timely filing of
all returns for taxes and the timely payment of taxes to which this
Agreement does not apply.
3. Payment of Income Taxes by Subsidiary.  Subsidiary shall pay to
Hollywood the portion of the Hollywood Group's consolidated federal
income tax liability allocable to the members of the Subsidiary Group
under Treasury Regulation 1.1552-1(a)(1) (and amendments or successors
thereto).  In addition, Subsidiary shall pay to Hollywood an amount
equal to the Hollywood Group's aggregate state and local income tax
liabilities, multiplied by the Subsidiary Group Percentage, which is
defined to be the ratio of (i) Subsidiary's payment prescribed in the
previous sentence, divided by (ii) the Hollywood Group's consolidated
federal income tax liability.
4. Time of Payment.  Payment of income taxes to Hollywood by Subsidiary
shall be made in the following manner:
4.1. Federal Income Tax.  Not later than the fifteenth day of
April, June, September and December of each calendar year,
Hollywood and Subsidiary shall make a reasonable determination
of the Hollywood Group's estimated income tax liability and the
estimated Subsidiary Group Percentage.  Based on those
determinations, Subsidiary shall make quarterly payments to
Hollywood on or before the fifteenth day of April, June,
September and December of each calendar year equal to (i)
Hollywood's payment of estimated tax necessary to avoid
underpayment under Code Section 6655 (and amendments or
successors thereto), multiplied by (ii) the estimated Subsidiary
Group Percentage.  Any excess of Subsidiary's income tax
liability for any calendar year over the sum of its quarterly
payments for that year shall be paid to Hollywood on or before
the fifteenth day of March or within 15 days of the date the
income tax return is filed, whichever is later, immediately
following that calendar yaer.  Any overpayment by Subsidiary
shall  be credited by Hollywood to Subsidiary's quarterly
payment next due in the absence of a direction otherwise by
Subsidiary.
4.2. Other Income Taxes.  Subsidiary and Hollywood shall cooperate
in making similar determination of the Hollywood Group's income
tax liabilities to other taxing jurisdictions on or before the
dates on which payments are required to be made to such
jurisdictions.  Subsidiary shall also make periodic tax payments
to Hollywood, in an amount equal to (i) Hollywood's required
payment multiplied by (ii) the estimated Subsidiary Group
Percentage, to allow Hollywood to satisfy those liabilities in a
timely manner.
5. Adjustments to Prior Years.  If the tax liability of the Hollywood
Group or the separate tax liability of Subsidiary for any year covered
by this Agreement is increased or decreased by reason of filing an
amended return or returns (including carryback claims), or by reason
of the examination of the returns by the Internal Revenue Service (the
"Service") or other taxing jurisdiction, the amounts due to or from
Hollywood for payment of income taxes under Sections 3 and 4 for each
such year will be recomputed by Hollywood to reflect the adjustments
to taxable income and tax credits for that taxable year and interest
or penalties, if any.  In the event of a proposed deficiency,
Subsidiary may, at its option, prepay its portion of the proposed tax
to avoid any additional interest assessments.  In accordance with
those recomputations, additional sums shall be paid by Subsidiary to
Hollywood or paid by Hollywood to Subsidiary.  Any amounts due
Subsidiary arising from a refund claim by Subsidiary that affects the
Hollywood Group's consolidated, combined or separate income tax
liability for a  previous year shall be paid only to the extent, if
any, to which the claim is allowed by the taxing jurisdiction.  If any
refunds are received by Hollywood with respect to the Hollywood Group,
Hollywood shall make payment of credit, if any, to Subsidiary if
Subsidiary are entitled to any part of the refund under this
Agreement.  A carryback of a net operating loss, tax credit or other
special item of deduction or allowance of Subsidiary may give rise to
a refund of taxes paid for prior years by Subsidiary; however, any
such refund will be allowed only in accordance with Section 3 above.
6. Interest and Penalties.  Hollywood will charge Subsidiary interest for
underpayments of income tax liabilities and estimated payments in
accordance with the relevant provisions of the Code or state or local
law and at rates charged by the Service or other taxing authority as
authorized by the Code or other law.  Hollywood ordinarily will not
charge penalties unless a penalty is assessed by a taxing authority
and passed through to Hollywood, in which case such penalty will be
passed through to Subsidiary, if Subsidiary's underpayment, return, or
action gave rise to the penalty.  Payment of interest or penalties
shall be made by Subsidiary on demand by Hollywood.
7. New Group Members.  If a new subsidiary corporation is acquired or
created by Hollywood , that subsidiary shall, in the absence if an
agreement between Hollywood and that subsidiary to the contrary, be
bound by the terms of this Agreement in the same manner as Subsidiary.
8. Departing Members.
8.1. Federal Income Taxes.  If Subsidiary is no longer permitted
under the code to be included in the Hollywood Group's
consolidated federal income tax return, Subsidiary shall be
deemed a "Departing Member" as of the date the event that causes
it no longer to be part of the Hollywood Group.  The taxable
income, tax credits, special items of deduction or allowance,
quarterly income tax payments and income tax liabilities of the
Departing Member shall be computed pursuant to this Agreement
for that portion of the taxable year during which the Departing
Member was part of the Hollywood Group and any unused tax
benefits of the Departing Member arising during that portion of
the taxable year or in earlier years shall remain with Hollywood
to the extent that the Hollywood Group has utilized any tax
benefit of that Departing Member for the period in which the
Departing Member was included in the Hollywood Group.  Hollywood
shall provide the Departing Member information regarding the
amounts of any tax benefits unused by the Hollywood Group for
utilization by Departing Member in later separate return years
in accordance with provisions of applicable law.
8.2. Other Income Taxes.  Rules similar to those in subparagraph
8.1 above, but modified to the extent necessary to be consistent
with the laws of the particular taxing jurisdiction, shall apply
to govern circumstances in which a Hollywood Group member is no
longer considered part of the group that files a combined or
consolidated return with a taxing jurisdiction.
9. Determination of Sums Due from and Payable to Subsidiary.  Hollywood
shall determine the sums due from and payable to Subsidiary pursuant
to this Agreement.  Subsidiary agrees to provide to Hollywood with
such information as may be reasonably be necessary to make these
determinations.  Issues arising in the course of the determinations
that are not expressly provided for in this Agreement shall be
resolved by Hollywood in an equitable manner.
10. Tax Controversies.  If a consolidated federal income tax return of
the Hollywood Group for any taxable year during which this Agreement
is in effect is examined by the Service or a consolidated, combined or
separate return is examined by any state or local taxing jurisdiction,
the examination as well as any other matters relating to that tax
return, including any tax litigation, shall be handled by Hollywood on
behalf of the Hollywood Group.
11. Effective Date.  This Agreement shall be effective as of January 1
1998.
12. Changes in Tax Year.  In the event that Hollywood changes its tax
year end to other than a calendar year, Subsidiary shall change its
tax year to coincide with Hollywood's tax year, and all references in
this Agreement to due dates of tax returns and payments shall be
modified to refer to the corresponding quarterly or annual periods.
13. Miscellaneous.
13.1. No Inconsistent Agreements.  None of the parties hereto will,
on or after the date of this Agreement, enter into any agreement
that is inconsistent with the rights granted to the other party
in this Agreement or otherwise conflicts with the provisions
hereof.
13.2. Amendments and Waivers.  The provisions of this Agreement,
including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures
from the provisions of this Agreement may not be given without
the prior written consent of Hollywood.
13.3. Notices.  All notices and other communications provided for
or permitted hereunder shall be made in writing by hand
delivery, registered first-class mail, facsimile or air courier
guaranteed overnight delivery:
(i) if to Hollywood, to it at:

25600 SW Parkway Center Drive
Wilsonville, Oregon 97070
(ii) if to Subsidiary, to it at:

25600 SW Parkway Center Drive
Wilsonville, Oregon 97070

All such notices and communications shall be deemed to have
been duly given:  at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if delivered by facsimile; and on the next business day if
timely delivered to an air courier guaranteeing overnight delivery.
13.4. Successors and Assigns.  This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of
each of the parties hereto.
13.5. Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
13.6. Headings.  The headings in this Agreement are for the
convenience of reference only and shall not limit or otherwise
affect the meaning thereof.
13.7. Oregon Law; Submission to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be construed in accordance with and
governed by the laws of the state of Oregon.  By the execution
and delivery of this Agreement, each party hereto submits to the
nonexclusive jurisdiction of the United States District Court
for the district of Oregon and of any Oregon state court sitting
in Portland for purposes of all legal proceedings arising out of
or relating to this Agreement or the transactions contemplated
hereby.  Each party hereto irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient
forum.  Each party hereto irrevocably waives any and all right
to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby
13.8. Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of any
such provision in such jurisdiction in any other respect and of
the remaining provisions herein shall not be affected or
impaired thereby.
13.9. Entire Agreement.  This Agreement is intended by the parties
as a final expression of their agreement with respect to the
subject matter contained herein and is intended to be a complete
and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained
herein.  This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject
matter.
13.10. Attorneys Fees.  In any action or proceeding brought to
enforce any provision of this Agreement, the successful party
shall be entitled to recover reasonable attorneys' fees,
including such fees on appeal, in addition to its costs and
expenses and any other available remedy.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers or representatives as
of the date hereof.

HOLLYWOOD ENTERTAINMENT CORPORATION

By:	/s/ Donald J. Ekman
	Name:
	Title:  SR. Vice Pres.


HOLLYWOOD MANAGEMENT COMPANY

By:	/s/ Donald J. Ekman
	Name:
	Title:  SR. Vice Pres.