FORBEARANCE AGREEMENT

FORBEARANCE AGREEMENT

This FORBEARANCE AGREEMENT ("Agreement"), dated as of July 20, 2007, is

entered into by and among MOVIE GALLERY, INC., a Delaware corporation

("Borrower"), the Lenders party hereto, GOLDMAN SACHS CREDIT PARTNERS L.P.

("GSCP"), as Lender and in its capacity as Administrative Agent for the

Lenders ("Administrative Agent") and WACHOVIA BANK, NATIONAL ASSOCIATION

("Wachovia"), as Lender and in its capacity as Collateral Agent for the

Secured Parties ("Collateral Agent").

RECITALS:

WHEREAS, the Borrower, the Guarantors party thereto, the Lenders party

thereto, the Administrative Agent, GSCP as Syndication Agent, the Collateral

Agent, and Wachovia as Documentation Agent have entered into that certain

First Lien Credit and Guaranty Agreement, dated as of March 8, 2007 (as has

been amended, restated, supplemented or otherwise modified from time to time,

the "Credit Agreement");

WHEREAS, (a) Events of Default have occurred and are continuing under (i)

Section 8.1(c) of the Credit Agreement as a result of Borrower's failure to

maintain as of the Fiscal Quarter ended July 1, 2007 (x) the Interest

Coverage Ratio required under Section 6.7(a) of the Credit Agreement, (y) the

Leverage Ratio required under Section 6.7(b) of the Credit Agreement and (z)

the Secured Leverage Ratio required under Section 6.7(c) of the Credit

Agreement and (ii) Section 8.1(c) of the Credit Agreement as a result of

Borrower's failure to comply with the notice requirements with respect to the

Existing Defaults (as defined herein) under Section 5.1(e) of the Credit

Agreement, and (b) a Default or Event of Default has occurred and is

continuing as a result of Borrower's failure to comply with the requirements

under Section 10.23 of the Credit Agreement (clauses (a) and (b),

collectively, the "Existing Defaults");

WHEREAS, Borrower has requested that Administrative Agent and the Requisite

Lenders forbear until August 14, 2007 from the exercise of remedies available

to it as a result of the Existing Defaults; and

WHEREAS, Administrative Agent and the Requisite Lenders are willing to so

forbear upon the terms and conditions hereinafter set forth, provided that

Borrower complies with the terms of this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements contained in the

Credit Agreement and the other Credit Documents and herein, and for other

good and valuable consideration, the receipt and sufficiency of which are

hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1. Definitions.

(a) The "Effective Date" of this Agreement shall be July 2, 2007.

(b) "Forbearance Period" shall mean the period beginning on the Effective

Date of this Agreement and ending on the earlier to occur of (the occurrence

of clause (i) or (ii), a "Termination Event"): (i) the date on which

Administrative Agent delivers to Borrower a notice terminating the

Forbearance Period, which notice may (and, at the direction of Requisite

Lenders under the Credit Agreement, shall) be delivered immediately upon and

at any time after the occurrence of any Forbearance Default (as hereinafter

defined), or (ii) August 14, 2007.

(c) "Forbearance Default" shall mean (i) the occurrence of any Event of

Default other than the Existing Defaults, (ii) the failure of Borrower or any

Guarantor to timely comply with any term, condition, or covenant set forth in

this Agreement, (iii) the failure of any representation or warranty made by

Borrower or any Guarantor under or in connection with this Agreement to be

true and complete in all material respects as of the date when made or deemed

made, or (iv) the filing of any petition (voluntary or involuntary) under the

insolvency or bankruptcy laws of the United States or any state thereof, or

of any foreign jurisdiction, with respect to Borrower, any of the Guarantors,

any of their Affiliates, or any of their Subsidiaries.

(d) Unless otherwise defined above or elsewhere in this Agreement,

capitalized terms used herein shall have the meanings ascribed to them in the

Credit Agreement.

SECTION 2. Confirmation by Borrower of Obligations and Existing Defaults

Under the Credit Agreement.

(a) Borrower and each of the Guarantors acknowledge and agree that as of July

1, 2007, the aggregate principal balance of the outstanding Obligations under

the Credit Agreement is $723,500,000.

(b) The foregoing amounts do not include interest, fees, expenses and other

amounts which are chargeable or otherwise reimbursable under the Credit

Agreement and the other Credit Documents.

(c) Borrower and each Guarantor acknowledges and agrees that (i) each of the

Existing Defaults constitutes an Event of Default that has occurred and is

continuing as of the execution of this Agreement, (ii) none of the Existing

Defaults has been cured as of the date hereof, and (iii) except for the

Existing Defaults, no other Events of Default have occurred and are

continuing as of the date hereof, or are expected to occur during the

Forbearance Period, as the case may be. Prior to the effectiveness of this

Agreement, each of the Existing Defaults: (i) relieves the Lenders, the

Issuing Bank and the Synthetic LC Issuing Bank from any obligation to extend

any Loan, issue any Letter of Credit or Synthetic Letter of Credit, or

provide other financial accommodations under the Credit Agreement or other

Credit Documents (including consenting to Borrower's use of cash collateral),

and (ii) permits the Lenders, Requisite Lenders or other Secured Parties, as

the case may be, to, among other things, (A) suspend or terminate any

commitment to provide Loans, issue any Letter of Credit or Synthetic Letter

of Credit, or make other extensions of credit under any or all of the Credit

Agreement and the other Credit Documents, (B) accelerate all or any portion

of the Obligations, (C) commence any legal or other action to collect any or

all of the Obligations from Borrower, any Guarantor and/or any Collateral,

(D) foreclose or otherwise realize on any or all of the Collateral, and/or

appropriate, set-off and apply to the payment of any or all of the

Obligations, any or all of the Collateral, and/or (E) take any other

enforcement action or otherwise exercise any or all rights and remedies

provided for by any or all of the Credit Agreement, the other Credit

Documents or applicable law.

SECTION 3. Amendments to Credit Agreement.

Subject to the occurrence of the Effective Date, the Credit Agreement is

hereby amended as follows:

(a) The definition of "Interest Payment Date" in Section 1.1 is hereby

amended by deleting the same in its entirety and replacing it with the

following:

" "Interest Payment Date" means, with respect to Loans that

are Base Rate Loans and Loans that are Eurodollar Rate Loans, the

last Business Day of each calendar month."

(b) Section 2.9(a)(i) is hereby amended by adding the following at the end

of each of subclauses (1) and (2) thereof: "plus 1.0% per annum".

(c) Section 2.9(a)(ii) is hereby amended by adding the following at the end

thereof: "plus 1.0% per annum".

(d) Section 2.9(a)(iii) is hereby amended by adding the following at the

end of each of subclauses (1) and (2) thereof: "plus 2% per annum".

(e) Section 2.12(b)(i) is hereby amended by adding the words "plus 2% per

annum" immediately following the words "plus 3.50% per annum".

SECTION 4. Waiver.

Without limitation of any other provision of this Agreement, in accordance

with Section 10.5 of the Credit Agreement, the Requisite Lenders, the

Collateral Agent and the Administrative Agent (x) except as otherwise

provided in subclause (y) of this Section 4, hereby waive the 2% per annum

interest rate increase pursuant to Section 2.11 and (y) in respect of the

Revolving Exposure, hereby waive 1.0% of the 2% per annum interest rate

increase pursuant to Section 2.11, leaving 1.0% per annum of such interest

rate increase in place; provided, that the waiver pursuant to this Section 4

shall immediately terminate and no longer be in effect at any time that any

of the amendments pursuant to Section 3 of this Agreement shall no longer be

in full force and effect. For the avoidance of doubt, no Lender or other

Secured Party has waived or is by this Agreement waiving, and no Lender or

other Secured Party has any intention of waiving, any other provisions of the

Credit Documents, any Default or Event of Default which may be continuing on

the date hereof or any Event of Default which may occur after the date hereof

(whether the same or similar to the Existing Defaults or otherwise).

SECTION 5. Forbearance; Forbearance Default Rights and Remedies.

(a) As of the Effective Date, each of the Lenders and the Administrative

Agent agrees that until the expiration or termination of the Forbearance

Period, it will forbear from exercising its default-related rights and

remedies against Borrower or any Guarantor arising solely with respect to

the Existing Defaults; provided, however, (i) the Obligations shall continue

to bear interest as specified herein, (ii) the Lenders, the Issuing Bank and

the Synthetic LC Issuing Bank shall have no obligation to make any further

Loans, or issue any Letter of Credit or Synthetic Letter of Credit, or make

other extensions of credit to Borrower or any Guarantor, (iii) Borrower and

each Guarantor shall comply with all limitations, restrictions or prohibitions

that would otherwise be effective or applicable under the Credit Agreement or

any of the other Credit Documents during the continuance of any Event of

Default, (iv) except as otherwise expressly set forth herein, nothing herein

shall restrict, impair or otherwise affect any Lender's or other Secured

Party's other rights and remedies under any agreements, including, without

limitation, any agreement containing subordination provisions in favor of any

or all of the Lenders or amend or modify any provision thereof, and (v)

nothing herein shall restrict, impair or otherwise affect Administrative

Agent's right to file, record, publish or deliver a notice of default or

document of similar effect under any state foreclosure law.

(b) Any Forbearance Default shall constitute an immediate Event of

Default under the Credit Agreement.

(c) Upon the occurrence of a Termination Event, the agreement of

the Lenders hereunder to forbear from exercising their respective default-

related rights and remedies shall immediately terminate without the

requirement of any demand, presentment, protest, or notice of any kind

(provided, that, without limitation of this Section 5(c), the Administrative

Agent agrees to give notice of such Termination Event to the Borrower (it

being understood that the failure to give such notice will not prevent the

occurrence of such Termination Event and that the Administrative Agent shall

have no liability to the Borrower, any of its Subsidiaries or their

respective affiliates for the failure to give such notice)), all of which

Borrower and the Guarantors each waives. Borrower and the Guarantors each

agrees that any or all of the Lenders and other Secured Parties may at any

time thereafter proceed to exercise any and all of their respective rights

and remedies under any or all of the Credit Agreement and any other Credit

Document and/or applicable law, including, without limitation, their

respective rights and remedies with respect to the Existing Defaults.

Without limiting the generality of the foregoing, but subject to the

provisions of the Intercreditor Agreement, upon the occurrence of a

Termination Event, the Lenders may, in their sole discretion and without the

requirement of any demand, presentment, protest, or notice of any kind, (i)

suspend or terminate any commitment to provide Loans or other extensions of

credit under any or all of the Credit Agreement and other Credit Documents,

(ii) continue to charge interest on any or all of the Obligations in

accordance with the Credit Agreement, (iii) commence any legal or other

action to collect any or all of the Obligations from Borrower, any Guarantor

and/or any Collateral, (iv) foreclose or otherwise realize on any or all of

the Collateral, and/or appropriate, setoff or apply to the payment of any or

all of the Obligations and any or all of the Collateral, and (v) take any

other enforcement action or otherwise exercise any or all rights and remedies

provided for by any or all of the Credit Documents and/or applicable law, all

of which rights and remedies are fully reserved by the Lenders.

(d) Any agreement by the Lenders to extend the Forbearance Period,

if any, must be set forth in writing and signed by a duly authorized

signatory of each of the Administrative Agent, Borrower, the Guarantors and

the Requisite Lenders under the Credit Agreement.

(e) Borrower and the Guarantors each acknowledges that neither the

Administrative Agent nor any of the Lenders have made any assurances

concerning any possibility of an extension of the Forbearance Period.

(f) The parties hereto agree that the running of all statutes of

limitation or doctrine of laches applicable to all claims or causes of action

that any Lender or other Secured Party may be entitled to take or bring in

order to enforce its rights and remedies against Borrower or any Guarantor

is, to the fullest extent permitted by law, tolled and suspended during the

Forbearance Period.

(g) Borrower and the Guarantors each acknowledges and agrees that

any Loan or other financial accommodation which any Lender, Issuing Bank or

Synthetic Issuing Bank makes on or after the Effective Date has been made by

such party in reliance upon, and is consideration for, among other things,

the general releases and indemnities contained in Section 7 hereof and the

other covenants, agreements, representations and warranties of Borrower and

the Guarantors hereunder.

(h) Borrower acknowledges and agrees that, during the Forbearance

Period, it shall not be entitled to, and will not request, any Swing Line

Loan borrowings.

SECTION 6. Supplemental Terms, Conditions and Covenants.

The parties hereto hereby agree to comply with the following

terms, conditions and covenants, in each case notwithstanding any provision

to the contrary set forth in this Agreement, the Credit Agreement or any

other Credit Document:

(a) Retention of Financial Advisor for the Administrative Agent.

Administrative Agent may, at its sole discretion, and at the cost and expense

of the Borrower, engage one financial advisor for the benefit of itself and

any of the Lenders and/or a steering committee for the Lenders under the

Credit Agreement (the "Financial Advisor") to advise and assist

Administrative Agent, Administrative Agent's counsel, and Lenders (and/or a

steering committee for the Lenders) with their on-going assessment of

Borrower's financial performance, such assistance to include, without

limitation, the duties described in the engagement letter entered into

between the Administrative Agent and the Financial Advisor ( a copy of which

shall be provided to the Borrower). Administrative Agent and Lenders may

elect to maintain the confidentiality of any conclusions reached or reports

prepared by the Financial Advisor and may also provide that the Financial

Advisor's conclusions shall be covered by the attorney work-product

privilege. Borrower shall promptly reimburse Administrative Agent for the

fees and expenses of the Financial Advisor in accordance herewith and Section

10.2 of the Credit Agreement. Borrower and the Guarantors each authorizes

members of their senior management to (i) provide the Financial Advisor with

reasonable access to Borrower's and Guarantors' books and records and

premises, at reasonable times and subject to such Financial Advisor's

representatives acting with all discretion reasonably appropriate under the

circumstances (such access shall include, without limitation, (x) access to

books and records relating to accounts receivable and accounts payable of

Borrower and the Guarantors, all existing leases and contracts of Borrower

and the Guarantors and all leases and contracts of Borrower and the

Guarantors currently under negotiation (and the projected effects on

Borrower's future profitability) and (y) reviews and inspections of

Borrower's operations and the items outlined in clause (x) above), and (ii)

make such members of senior management and Strategic Advisor (as defined

below) reasonably available to consult with, and respond to the inquiries of,

Administrative Agent, the Financial Advisor and Administrative Agent's

counsel concerning any and all matters relating to the operations, finances

and businesses of Borrower or any Guarantor, the assets and capital stock of

Borrower or any Guarantor.

(b) Retention of Strategic Advisor for the Borrower. At all times

during the Forbearance Period, the Borrower shall have engaged and retained,

at its cost and expense, an outside crisis management firm reasonably

acceptable to the Administrative Agent (it being agreed that Alvarez & Marsal

is acceptable to the Administrative Agent) (a "Strategic Advisor"), in

connection with the Borrower's business to, among other things, (a) become

familiar with and analyze the business operations, properties and financial

condition, prospects and funding requirements of Borrower, (b) consult with

the Borrower with respect to the operation of the Borrower and allocation of

its resources, (c) assist Borrower with the formulation of strategic long

term business plans and the Borrower's adoption and implementation of such

plan, and (d) consult, assist and cooperate on such other matters as the

Borrower shall determine are reasonable or necessary. The Borrower hereby

agrees to (i) cooperate with and provide such Strategic Advisor with all

information reasonably requested in order for it to perform its functions as

Strategic Advisor, and (ii) provide such Strategic Advisor with access to all

of Borrower's retained advisors and professionals and information and reports

prepared by any of them (subject to privilege concerns).

(c) Required Deliveries. Borrower, or the Strategic Advisor on

behalf of Borrower, shall provide the following to the Administrative Agent

and the Financial Advisor (each of whom may provide copies to any of the

Lenders that have entered into a confidentiality agreement in form and

substance satisfactory to the Administrative Agent and the Borrower (each

such Lender, a "Private Side Lender")):

(i) Immediate Deliveries. Within three days following the

satisfaction of the conditions to effectiveness of this Agreement: (a)

Borrower's and its Subsidiaries' store revenue, expense and cash flow

detail (including rent expense) for the annual periods 2003 through

2006 and the last twelve months through May 2007 identified by store

number only for all stores open as of May 1, 2007; (b) a summary of

Borrower's and its Subsidiaries' cash flows and working capital changes

for the second Fiscal Quarter of 2007; (c) current payables aging

report; (d) a summary of trade terms for the top 10 vendors of Borrower

and its Subsidiaries; (e) a summary and detailed schedule of inventory;

(f) a detailed explanation of major items causing material sources or

uses of cash by Borrower and its Subsidiaries in each working capital

line item (e.g. accrued liabilities and prepaid expenses); and (g) a

detailed statement of monthly results for the Borrower and its

Subsidiaries for the fiscal months April 2007 and May 2007 (including

the monthly financial package delivered to the Borrower's senior

management team for such months, which shall include, among other

items, results for the month, quarter to date, year to date, and versus

prior year and plan).

(ii) Periodic Information. (a) Within three days following the

satisfaction of the conditions to effectiveness of this Agreement,

during the Forbearance Period, a rolling 13 week cash flow prepared at

the end of June 2007 and, thereafter, a 13 week cash flow forecast for

each subsequent rolling 13 week period (each, a "Cash Flow Forecast")

due five days following the end of each fiscal month, which shall

reflect Borrower's good faith projection of all weekly cash receipts

and disbursements in connection with the operation of its business

during such period and include the Borrower's studio payment forecast

model detailing purchases by studio and title; (b) for each week ended

Sunday, due by 5:00 p.m. EST on the immediately following Wednesday, an

actual-to-projected analysis comparing Borrower's actual cash receipts

and disbursements for the immediately preceding week in the Cash Flow

Forecast compared to projected cash receipts and disbursements for such

week as set forth in the Cash Flow Forecast; (c) a weekly conference

call to discuss the Borrower's performance and address questions from

advisors to the Administrative Agent, Collateral Agent, any of the

Lenders (and/or a steering committee for the Lenders), including,

without limitation, the Financial Advisor; (d) on each Tuesday

afternoon by 1:00 p.m. PST, a weekly sales report for the Borrower and

its Subsidiaries, reflecting total sales and comparable sales versus

prior periods and budget; (e) each Tuesday afternoon by 1:00 p.m. PST,

a weekly "comp calendar" report for all divisions of the Borrower and

its Subsidiaries; and (f) on or prior to 30 days after the end of each

fiscal month, a detailed statement of monthly results for the Borrower

and its Subsidiaries for such fiscal month (including the monthly

financial package delivered to the Borrower's senior management team

for such month, which shall include, among other items, results for the

month June 2007 (and each subsequent fiscal month), for the second

Fiscal Quarter of 2007 (or such applicable quarter) to date, Fiscal

Year 2007 year to date, and versus prior year and plan).

(iii) End of Forbearance Period Deliveries. On or prior to the

last day of the Forbearance Period: (a) delivery of a financial plan

and business model (income statement, balance sheet and cash flow) for

the Borrower and its Subsidiaries, including monthly projections for

the each fiscal month ending after the Effective Date in Fiscal Year

2007 and for each fiscal month in Fiscal Year 2008, in each case with

detailed back-up containing underlying assumptions; (b) detail of

capital expenditures for the Borrower and its Subsidiaries for

remainder of Fiscal Year 2007 and for Fiscal Year 2008; (c) a

comprehensive analysis and recommendation on store closings and

associated financial impact on the Borrower and its Subsidiaries; (d) a

presentation by Borrower and Strategic Advisor on restructuring options

for the Borrower and its Subsidiaries; and (e) all reports, findings,

appraisals and recommendations developed by Strategic Advisor and other

business advisors of the Borrower's regarding the real estate leases of

Borrower and its Subsidiaries.

(iv) Other. Promptly following any such request, all other

available financial and operational information of the Borrower and its

Subsidiaries that is reasonably requested by the Administrative Agent

or its advisors, including information requested pursuant to the

Financial Advisor's July 12, 2007 Preliminary Information Request List.

The Cash Flow Forecast and the other analyses, reports, information and

deliveries described in this Section 6(c) shall be in a form and prepared

in accordance with a methodology in each case reasonably satisfactory to

Administrative Agent.

(d) Loan-to-Value and Inventory Reporting. Borrower, or the

Strategic Advisor on behalf of Borrower, shall provide the following to the

Collateral Agent and the Financial Advisor (who may distribute a copy to each

of the Private Side Lenders): (i) within three days following the

satisfaction of the conditions to the effectiveness of this Agreement, a Loan

to Value Ratio Certificate as of May 31, 2007 and (ii) no later than July 27,

2007, a Loan to Value Ratio Certificate as of June 30, 2007.

(e) Applicable Loan to Value Ratio. During the Forbearance

Period, the Applicable Loan to Value Ratio for all purposes under the Credit

Agreement and the other Credit Documents shall be 3.5:1.0.

(f) Post-Closing Items; Additional Collateral. All post-closing

actions required under Section 10.23 of the Credit Agreement shall be

completed by August 1, 2007, unless extended by the Administrative Agent. In

addition, from time to time, Borrower and each Guarantor will, at its cost

and expense, promptly secure the Obligations by pledging or creating, or

causing to be pledged or created, in accordance hereunder and with the

applicable Collateral Documents, perfected security interests with respect to

such of its assets and properties as the Administrative Agent or the Required

Lenders shall designate (it being understood that it is the intent of the

parties that the Obligations shall be secured by substantially all the assets

of the Borrower and its Subsidiaries (including real and other properties

existing on, or acquired subsequent to, the Closing Date). Such security

interests and Liens on the Collateral will be created under the Collateral

Documents and other security agreements, mortgages, deeds of trust and other

instruments and documents in form and substance reasonably satisfactory to

the Collateral Agent, and the Borrower and/or the relevant Guarantors shall

deliver or cause to be delivered to the Collateral Agent all such instruments

and documents (including customary legal opinions (if requested by

A