Exhibit 10.25
FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
     This Fifth Amendment to Loan and Security Agreement (the “Fifth Amendment”)
is made as of this 28th day of” February, 2006 by and among
     Fleet Retail Group, LLC, f/k/a Fleet Retail Group, Inc., f/k/a Fleet Retail
Finance Inc. (the “Agent”), a Delaware limited liability company with its
principal executive offices at 40 Broad Street, Boston, Massachusetts, for the
Revolving Credit Lenders party to the Agreement (defined below), and
     The CIT Group/Business Credit, Inc. (the “Co-Agent”), a New York
corporation with offices at 300 South Grand Avenue, Los Angeles, California
90071, and
     The Revolving Credit Lenders party to the Agreement, and
     Hastings Entertainment, Inc. (the “Borrower”), a Texas corporation with its
principal executive offices at 3601 Plains Boulevard, Amarillo, Texas 79102
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
W I T N E S S E T H:
     WHEREAS, on August 29, 2000, the Agent, the Co-Agent, the Revolving Credit
Lenders and the Borrower entered in a certain Loan and Security Agreement (as
amended and in effect, the “Agreement”); and
     WHEREAS, the Agent, the Co-Agent, the Revolving Credit Lenders and the
Borrower desire to modify certain provisions of the Agreement as set forth
herein.
     NOW, THEREFORE, it is hereby agreed among the Agent, the Co-Agent, the
Revolving Credit Lenders and the Borrower as follows:

1.   Capitalized Terms. All capitalized terms used herein and not otherwise
defined shall have the same meaning herein as in the Agreement.   2.  
Amendments to Article 1. The provisions of Article 1 of the Agreement are hereby
amended as follows:

  a.   The definition of “Appraised Inventory Percentage” is hereby amended by
deleting the following therefrom:

88%

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and substituting the following in its stead:
85%

  b.   The definition of “Base Margin” is hereby amended by inserting the
following provisions at the end thereof:

“Notwithstanding the foregoing provisions, commencing on the first day of the
first Fiscal quarter immediately following the effective date of the Fifth
Amendment, the Base Margin shall be the following percentages based upon the
following criteria:

                  Level   Average Availability   Libor Margin
I
  Greater than $35,000,000     0.00 %
 
               
II
  Greater than or equal to $25,000,000
    0.00 %
 
  and less than or equal to $35,000,000        
 
               
III
  less than $25,000,000     0.00 %

On the first day of each fiscal quarter, the Base Margin shall be adjusted based
upon the Borrower’s aggregate daily Average Availability for the immediately
preceding Fiscal quarter divided by the total number of days in such immediately
preceding Fiscal quarter. Provided, however, upon the occurrence of an Event of
Default, interest shall be determined in the manner set forth in Section 2-1
l(f).”

  c.   The definition of “Libor Margin” is hereby amended by inserting the
following provisions at the end thereof:

“Notwithstanding the foregoing provisions, commencing on the first day of the
first Fiscal quarter immediately following the effective date of the Fifth
Amendment, the Libor Margin shall be the following percentages based upon the
following criteria:

                  Level   Average Availability   Libor Margin
I
  Greater than $35,000,000     1.25 %
 
               
II
  Greater than or equal to $25,000,000
    1.50 %
 
  and less than or equal to $35, 000,000        
 
               
III
  less than $25,000,000     1.75 %

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On the first day of each Fiscal quarter, the Libor Margin shall be adjusted
based upon the Borrower’s aggregate daily Average Availability for the
immediately preceding fiscal quarter divided by the total number of days in such
immediately preceding Fiscal quarter. Provided, however, upon the occurrence of
an Event of Default, the Libor Margin shall be immediately increased to the
percentage set forth in Level III above (even if the Average Availability
requirements for another Level have been met), and interest shall be determined
in the manner set forth in Section 2-1l(f).”

  d.   The definition of “Majority Lenders” is hereby deleted in its entirety,
and the following substituted in its stead:

“ Majority Lenders”: So long as there are only two (2) Revolving Credit Lenders
party to this Agreement, “Majority Lenders” shall mean both such Revolving
Credit Lenders (unless one of the Revolving Credit Lenders is a Delinquent
Revolving Credit Lender, in which case, “Majority Lenders shall mean the other
Revolving Credit Lender), and if there are more than two (2) Revolving Credit
Lenders party to this Agreement, “Majority Lenders” shall mean Revolving Credit
Lenders (other than Delinquent Revolving Credit Lenders) holding 51 % or more of
the Revolving Credit Dollar Commitment (other than any Loan Commitments held by
Delinquent Revolving Credit Lenders).”

  e.   The definition of “Maturity Date” is hereby amended by deleting the
following therefrom:

August 29, 2007
and substituting the following in its stead:
August 29, 2011

  f.   The definition of “Revolving Credit Ceiling” is hereby deleted in its
entirety, and the following substituted in its stead:

“Revolving Credit Ceiling”: $100,000,000.00.

  g.   The following new definition is hereby added to the Agreement:

“Fifth Amendment” Shall mean that certain Fifth Amendment to Loan and Security
Agreement dated February 28, 2006 by and among the Borrower, the Agent, the
Co-Agent, and the Revolving Credit Lenders.

3.   Amendments to Article 2. The provisions of Article 2 of the Agreement are
hereby amended as follows:

  a.   Section 2-14 of the Agreement is hereby amended as follows:

  i.   by deleting the following from the fourth (4th) line thereof:

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$80,000,000.00
and substituting the following in its stead:
$100,000,000.00

  ii.   by inserting the following provision at the end thereof:

     “ Notwithstanding the foregoing, commencing with the first full fiscal
quarter ending after the effective date of the Fifth Amendment, in addition to
any other fee to be paid by the Borrower on account of the Revolving Credit, the
Borrower shall pay the Agent, for the benefit of the Revolving Credit Lenders,
the “Unused Line Fee” (so referred to herein) of 0.25% per annum of the
difference, during the quarter just ended (or relevant period with respect to
the payment being made on the Termination Date) between $ 100,000,000.00 and the
average of the unpaid principal balance of the Loan Account and the undrawn
Stated Amount of L/C’s outstanding during the relevant period. The Unused Line
Fee shall be paid in arrears, on the first day of each quarter after the
execution of the Fifth Amendment and on the Termination Date.”

  b.   Section 2-18(b)(i) of the Agreement is hereby amended by deleting the
following therefrom:

$10,000,000.00
and substituting the following in its stead:
$20,000,000.00

4.   Amendments to Article 5. The provisions of Article 5 are hereby amended as
follows:

  a.   Section 5-5(a)(i) of the Agreement is hereby amended by inserting the
following provision at the end thereof:

     “Notwithstanding the foregoing, if Availability shall at any time be less
than $25 Million, instead of providing the Agent with the information required
by this subsection 5-5(a)(i)(A),(B), (C),(D) and (E) on a monthly basis, the
Borrower shall provide the Agent with such information on a weekly basis, on
Wednesday of each week (as of the immediately preceding Saturday), commencing
with the week in which Availability was less than $25 Million. The Agent
acknowledges that so long as the Borrower is required to provide such
information to the Agent on a weekly basis, the Borrower will be providing such
weekly information based upon its good faith estimates (except for the
information provided for final week of each Fiscal month, which shall not be
based upon estimates); provided, however, the Borrower acknowledges and agrees
with the Agent that the Borrower shall use its best efforts and good faith to
provide the Agent with as accurate information as possible for such weekly
reports. The weekly report required to be delivered by the Borrower to the Agent
for the final week of each Fiscal month while the provisions of this paragraph
are in effect shall provide, in addition to the information required by this
subsection 5-5(a)(i)(A),(B), (C),(D) and (E), a reconciliation of any
discrepancies in the information which was previously provided to the Agent in
the prior weekly reports for such Fiscal month. The Borrower’s obligation to
provide such information on a weekly basis shall terminate commencing with the
first Fiscal month following the month in which Availability exceeds $25
Million, upon which the Borrower shall provide the information required by this
subsection 5-5(a)(i)(A),(B), (C),(D) and (E) within Fifteen (15) days of the end
of the previous Fiscal month; provided however, the Borrower acknowledges that
if Availability shall thereafter at any time be less than $25 Million, the
provisions of this paragraph shall become effective.”

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  b.   Section 5-11 of the Agreement is hereby deleted in its entirety, and the
following substituted in its stead:

“5-11. FINANCIAL PERFORMANCE COVENANT. The Borrower shall maintain Availability
of not less than $ 10 Million at all times.”

5.   Amendments to Exhibits.

  a.   Exhibit 2:2-22 is hereby deleted in its entirety, and is replaced by
Exhibit 2:2-22 annexed hereto and incorporated herein by reference.     b.   The
remaining Exhibits to the Agreement arc true and accurate in all respects and
there have been no changes thereto from the date on which such Exhibits were
delivered to the Agent.

6.   Amendment Fee. As compensation for the commitments of the Revolving Credit
Lenders to enter into this Fifth Amendment with the Borrower and to continue to
make loans and advances to the Borrower and as compensation for such Revolving
Credit Lenders’ respective maintenance of sufficient funds available for such
purpose, such Revolving Credit Lenders have earned an Amendment Fee (the
“Amendment Fee”) in the amount and which shall be paid, in accordance with the
terms and conditions of the Amendment Fee Letter of even date herewith by and
between the Borrower and the Agent (the “Amendment Fee Letter”). The Amendment
Fee shall be deemed fully earned upon the execution hereof and shall not be
subject to refund or rebate under any circumstances.   7.   Ratification of Loan
Documents. Except as provided herein, all terms and conditions of the Agreement
and the other Loan Documents remain in full force and effect. The Borrower
hereby ratifies, confirms, and reaffirms all representations, warranties, and
covenants contained therein and hereby represents that no Events of Default
exist under the Loan Documents. The Borrower further ratifies and confirms that
any and all Collateral previously granted to the Agent for the ratable benefit
of the Revolving Credit Lenders continues to secure the existing Liabilities as
well as the Liabilities as amended hereby, and any future Liabilities.   8.  
Conditions to Effectiveness. This Fifth Amendment shall be become effective upon
the satisfaction of the following conditions precedent:

  a.   This Fifth Amendment shall have been duly executed and delivered by each
of the Borrower, the Revolving Credit Lenders and the Agent and shall be in full
force and effect.     b.   The Borrower shall have paid to the Agent, for the
ratable benefit of the Revolving Credit Lenders, the Amendment Fee.

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  c.   The Borrower shall have delivered to the Agent its Secretary’s
Certificate with certified copies of (i) Incumbency Certificate; (ii) Specimen
Signatures; and (iii) Resolutions.     d.   All proceedings in connection with
the transactions contemplated by this Fifth Amendment and all documents incident
thereto shall be reasonably satisfactory in substance and form to the Agent, and
the Agent shall have received all information and such counterpart originals or
certified or other copies of such documents as the Agent may reasonably request.
Further, the Borrower shall have delivered to the Agent such additional
documents which the Agent may reasonably request, including, without limitation,
an amended and restated Revolving Credit Note to reflect the increase in the
Revolving Credit Ceiling, the Amendment Fee Letter, and a ratification by each
guarantor of their respective guaranties.     c.   The Borrower shall have paid
all reasonable costs and expenses of the Agent including, without limitation,
all attorneys’ fees and expenses incurred by the Agent in connection with the
Agreement, the Loan Documents, and the preparation, negotiation and execution of
this Fifth Amendment.

9.   Miscellaneous.

  a.   This Fifth Amendment may be executed in several counterparts and by each
party on a separate counterpart, each of which when so executed and delivered
shall be an original, and all of which together shall constitute one instrument.
    b.   This Fifth Amendment and the Amendment Fee Letter express the entire
understanding of the parties with respect to the transactions contemplated
hereby. No prior negotiations or discussions shall limit, modify, or otherwise
affect the provisions hereof.     c.   Any determination that any provision of
this Fifth Amendment or any application hereof is invalid, illegal or
unenforceable in any respect and in any instance shall not effect the validity,
legality, or enforceability of such provision in any other instance, or the
validity, legality or enforceability of any other provisions of this Fifth
Amendment.     d.   The Borrower shall pay on demand all costs and expenses of
the Agent, including, without limitation, reasonable attorneys’ fees in
connection with the preparation, negotiation, execution and delivery of this
Fifth Amendment.     e.   The Borrower warrants and represents that the Borrower
has consulted with independent legal counsel of the Borrower’s selection in
connection with this Fifth Amendment and is not relying on any representations
or warranties of any

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      Revolving Credit Lender or the Agent or their respective counsel in
entering into this Fifth Amendment.     f.   The Borrower acknowledges and
agrees that the Borrower does not have any claims, counterclaims, offsets, or
defenses against any Revolving Credit Lender or the Agent directly or indirectly
relating to the Borrower’s relationship with, and/or the Borrower’s Liabilities,
and to the extent that the Borrower has or ever had any such claims,
counterclaims, offsets, or defenses against any of the Revolving Credit Lenders
or the Agent, the Borrower affirmatively WAIVES the same. The Borrower, and for
its representatives, successors and assigns, hereby RELEASES, and forever
discharges the Revolving Credit Lenders and the Agent and their respective
officers, directors, agents, servants, attorneys, and employees, and their
respective representatives, successors and assigns, of, to, and from all known
debts, demands, actions, suits, accounts, covenants, contracts, agreements,
damages, and any and all claims, demands, or liabilities whatsoever, of every
name and nature, both at law and in equity through the date hereof.

[remainder of page left intentionally blank]

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     IN WITNESS WHEREOF, the parties have hereunto caused this Fifth Amendment
to be executed and their seals to be hereto affixed as of the date first above
written.

                  HASTINGS ENTERTAINMENT, INC.    
 
          (“Borrower”)
 
           
 
  By:
Name:   /s/ Dan Crow
 
Dan Crow    
 
  Title:   CFO / Senior Vice President    
 
                FLEET RETAIL GROUP, LLC    
 
          (“Agent”)
 
           
 
  By:
Name:   /s/ Daniel Platt
 
Daniel Platt    
 
  Title:   Managing Director    
 
                THE CIT GROUP/BUSINESS CREDIT, INC.    
 
          (“Co-Agent”)
 
           
 
  By:
Name:   /s/ Adrian Avalos
 
Adrian Avalos    
 
  Titte:   VP    

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The “Revolving Credit Lenders”

                  FLEET RETAIL GROUP, LLC    
 
           
 
  By:
Name:   /s/ Daniel Platt
 
Daniel Platt    
 
  Title:   Managing Director    
 
                THE CIT GROUP/BUSINESS CREDIT, INC.    
 
           
 
  By:
Name:   /s/ Adrian Avalos
 
Adrian Avalos    
 
  Title:   VP    

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EXHIBIT 2:2-22
REVOLVING CREDIT LENDERS’ COMMITMENTS

                      Revolving Credit     Revolving Credit   Revolving Credit
Lender   Dollar Commitment     Commitment Percentage  
Fleet Retail Group, LLC
  $ 60,000,000.00     60%  
The CIT Group/Business Credit, Inc.
  $ 40,000,000.00     40%
Inc.  
               
 
           
Totals
  $ 100,000,000.00     100.000%
 
           

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February 28, 2006
Fleet Retail Group, LLC, As Agent
40 Broad Street
Boston, Massachusetts 02108
     Re: Amendment to Loan Arrangement with Hastings Entertainment, Inc.
Gentlemen:
     Reference is made to a certain loan arrangement originally dated as of
August 29, 2000 (the “Loan Arrangement”) entered into by and among Hastings
Entertainment, Inc., a Texas corporation (the “Borrower”) and Fleet Retail
Finance Inc., n/k/a Fleet Retail Group, LLC, as Agent (the “Agent”) and The CIT
Group/Business Credit, Inc. (the “Co-Agent”) for a syndicate of Revolving Credit
Lenders, and such Revolving Credit Lenders pursuant to which such Revolving
Credit Lenders established a revolving line of credit in the Borrower’s favor in
accordance with the terms of a Loan and Security Agreement dated August 29, 2000
(as amended and in effect, the “Loan Agreement”). Unless otherwise defined
herein, all capitalized terms used herein shall have the meaning set forth in
the Loan Agreement.
     The undersigned have each guarantied the Liabilities of the Borrower
pursuant to their respective Guaranties dated August 29, 2000 (singly, a
“Guaranty” and collectively, the “Guaranties”).
     The Borrower, the Agent and the Revolving Credit Lenders desire to modify
and amend the terms of the Loan Agreement pursuant the terms and conditions of a
certain Fifth Amendment to Loan and Security Agreement of even date (the
“Amendment”), pursuant to which, among other things, the Agent, the Revolving
Credit Lenders and the Borrower have agreed to extend the Maturity Date and
increase the amount of the Revolving Credit Ceiling to $100,000,000.00. The
Agent and the Revolving Credit Lenders have indicated that they will not enter
into such Amendment unless, among other things, the undersigned execute and
deliver this letter. Therefore, to induce the Agent and the Revolving Credit
Lenders to enter into the Amendment, the undersigned each hereby:

  (a)   acknowledges and agrees that any and all increases in and to the
Revolving Credit Ceiling and all loans and advances made thereunder constitute
Liabilities which have been guarantied by the undersigned pursuant to their
respective Guaranties.     (b)   ratifies, confirms and reaffirms, all and
singular, the terms and conditions of, and all warranties and representations
set forth in, their respective Guaranties.     (c)   acknowledges, confirms and
agrees that their respective Guaranties remain in full force and effect and
shall in no way be limited or affected by the Amendment.     (d)   acknowledges
and agrees that such Person has no offsets, defenses, or counterclaims against
the Agent, or any Revolving Credit Lender with respect to such Person’s Guaranty
or otherwise, and to the extent that any of the undersigned has any such
offsets, defenses, or counterclaims, then such Person hereby WAIVES and RELEASES
the same.

 

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     This letter shall take effect as a sealed instrument as of the date first
written above.

              Very truly yours,
 
        Witness:   HASTINGS COLLEGE STORES, INC.
 
       
/s/ Lois Ross
  By:   /s/ Dan Crow
 
       
 
  Name:   Dan Crow
 
  Title:   President
 
        Witness:   HASTINGS INTERNET, INC.
 
       
/s/ Lois Ross
  By:   /s/ Dan Crow
 
       
 
  Name:   Dan Crow
 
  Title:   President
 
        Witness:   HASTINGS PROPERTIES, INC.
 
       
/s/ Lois Ross
  By:   /s/ Dan Crow
 
       
 
  Name:   Dan Crow
 
  Title:   President

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Acknowledged and Agreed to:
Fleet Retail Group, LLC, as Agent
and Revolving Credit Lender

         
By:
  /s/ Daniel Platt
 
   
Name:
  Daniel Platt    
Title:
  Managing Director    

The CIT Group/ Business Credit, Inc., as Co-Agent
and Revolving Credit Lender

         
By:
  /s/ Adrian Avalos
 
   
Name:
  Adrian Avalos    
Title:
  VP    

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