Exhibit 10.27
EMPLOYMENT AGREEMENT
     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made the 5 day of Dec, 2005
(the “Effective Date”), by and between HASTINGS ENTERTAINMENT, INC., a Texas
corporation (“Company”) and Michael Rigby (“Executive”).
WITNESSETH:
     WHEREAS, Company and its affiliates are engaged in the retail sale of
books, music, videos, periodicals, and software and the rental of videos; and
     WHEREAS, Executive has expertise, experience and capability in the business
of Company;
     WHEREAS, Executive has agreed to serve Company as its SVP Merchandising;
and
     WHEREAS, Company desires to enter into this Agreement to provide severance
and other benefits for Executive and obtain Executive’s agreements regarding
confidentiality and post-employment restrictive covenants for Company; and
     WHEREAS, Executive is willing to provide such agreements to Company.
     NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which consideration is mutually acknowledged by the parties, it
is hereby agreed as follows:
     1. Duties and Responsibilities. The duties and responsibilities of
Executive are and shall continue to be of an executive nature as shall be
required by Company in the conduct of its business. Executive’s powers and
authority shall include all those presently delegated to him or such other
duties and responsibilities as from time to time may be assigned to him.
Executive recognizes, that during his employment hereunder, he owes an undivided
duty of loyalty to Company, and agrees to devote substantially all of his
business time, skills, efforts, and attention to the performance of said duties
and responsibilities and to use his best efforts to promote and develop the
business of Company.
     2. Employment Term. Executive’s employment shall continue until terminated
by either party in accordance with Sections 4, 5, 6, or 7 herein. Except as may
otherwise be expressly provided herein, regardless of the basis of any
termination, Executive’s obligations under Sections 10, 11, 12, and 13 hereof
shall continue. Anything to the contrary notwithstanding, two (2) years from and
after the Effective Date either Company or Executive may terminate this
Agreement upon thirty (30) days written notice to the other. In such event, the
terms and provisions of this Agreement shall no longer be effective as to either
party.
     3. Compensation and Benefits.
     (a) Base Salary. For services rendered by Employee under this Agreement,
Company shall compensate Employee in the annual amount of $170,000 (“Base
Salary”) payable in equal semi monthly installments during the term of this
Agreement. This base salary will be reviewed on an annual basis commencing
August 2006 and may be adjusted upwards or downwards.

1

--------------------------------------------------------------------------------

 

     (b) Bonus. For each fiscal year during the term of this Agreement, Employee
shall be eligible for a bonus payable based on the Company’s Corporate Officer
Incentive Plan (“COIP”) at a 75% base salary bonus level.
     (c) Withholding. All compensation shall be paid net of such withholdings as
Employee requests or as are required by applicable law, rule or regulation.
Company shall periodically review Employee’s Base Salary in an effort to assure
Employee continued reasonable compensation for Employee’s services.
     (d) Stock Options. Ten Thousand (10,000) shares granted pursuant to
Company’s stock option program guidelines.
     (e) Business Expenses. Employee is authorized to incur reasonable and
necessary expenses for promoting the business of Company, including expenses for
entertainment, travel and similar items in accordance with Company policy.
Company will reimburse Employee for all such expenses upon the presentation by
Employee, from time to time, of an itemized account of such expenditure in
conformance with Company policy.
     (f) Housing and Relocation Expenses. Company will provide its standard
relocation and moving expenses from your current residence in Parkland, Florida.
Company will assist Employee with duplicate housing costs for a period equal to
the lesser of twelve months or until Employee’s residence located in Parkland,
Florida is sold. During such period Company will reimburse Employee for the
lesser of your actual monthly principal, interest, taxes and insurance payments
for the lesser of such costs in either Amarillo, Texas or Parkland, Florida. In
addition, Company will reimburse your realtor sales commission not to exceed 6%
in connection with the sale of your home in parkland, Florida. You agree to
attempt to obtain a fee arrangement with a realtor providing for a 3-5% sales
commission, if possible.
     (g) Benefits. Subject to meeting eligibility provisions, if any, Employee
shall be entitled to such benefits as the Board of Directors of Company may from
time to time establish generally for employees of the Company. Such benefits
shall be generally consistent with the benefits provided by comparable firms
within Company’s industry and shall include, without limitation, vacation pay,
sick pay benefits and major medical coverage. The Company will also provide
Employee with three (3) weeks of paid vacation per year and will pay for
Employee’s attendance at reasonable trade organization meetings and seminars.
     4. Termination by Company; Special Compensation.
     (a) At any time, Company may terminate Executive’s employment for any
reason. If Executive’s termination is other than pursuant to Section 5,
Executive shall, subject to the other provisions of this Section 4, be entitled
to the following Special Compensation (as that term is defined in this
Section 4) in lieu of any benefits available under any and all Company
separation plans or policies.

  (b)   For purposes of this Agreement, “Special Compensation” shall entitle
Executive:       (i) to continue to receive for a period of eighteen (18) months
from the date of termination (the “Severance Period”) monthly compensation at
the rate equal to the monthly amount of his base annual salary in effect at the
date of termination of employment;       (ii) to receive a bonus, based on
actual performance results, up to the 100% Performance

2

--------------------------------------------------------------------------------

 

      Percentage under the COIP throughout the Severance Period provided that
the amount, if any, payable under such plan for the award period including the
last day of the Severance Period shall be pro rated based upon the number of
months of the Severance Period that fall within the award period and the total
number of months in such award period;       (iii) to continue to receive
throughout the Severance Period any executive medical, dental, life, and
qualified or nonqualified retirement benefits which the Executive was receiving
or was entitled to receive at the time of termination, except that long term
disability and short term disability benefits cease on the last day worked;

     (c) Company shall pay or cause to be paid the amounts payable under
paragraph (b)(i) above in equal installments, monthly in arrears, and the amount
payable under paragraph (b)(ii) in accordance with the terms of such plan. All
payments pursuant to this Section shall be subject to applicable federal and
state income and other withholding taxes.
     (d) In addition to the Special Compensation described above, Executive
shall also be entitled to any vacation pay for vacation accrued by Executive in
the calendar year of termination but not taken at the time of termination.
     (e) In the event Executive becomes employed full time during the Severance
Period, Executive’s entitlement to continuation of the benefits described in
paragraph (b)(iii) shall immediately cease, however, Executive shall retain any
rights to continue medical insurance coverage under the COBRA continuation
provisions of the group medical insurance plan by paying the applicable premium.
     (f) The payments and benefits provided for in this Section shall be in
addition to all other sums then payable and owing to Executive hereunder and,
except as expressly provided herein, shall not be subject to reduction for any
amounts received by Executive for employment or services provided after
termination of employment hereunder, and shall be in full settlement and
satisfaction of all of Executive’s claims and demands.
     (g) In all events, Executive’s right to receive Special Compensation and/or
other benefits pursuant to this Section shall cease immediately in the event
Executive is reemployed by Company or an affiliate or Executive breaches any
provision of Sections 10, 11, 12 or 13 hereof. In all cases, Company’s rights
under Section 14 shall continue.
     (h) In the event that the Special Compensation is determined to be an
“excess parachute payment” under section 280G of the Internal Revenue Code of
1986, as amended (the “Code”) or any successor provision, subject to the excise
tax imposed by section 4999 of the Code or any successor provision (the “Excise
Tax”), Company agrees to pay to Executive an additional sum (the “Gross Up”) in
an amount such that the net amount retained by Executive, after receiving both
the Special Compensation and the Gross Up and after paying: (i) any Excise Tax
on the Payment and the Gross Up, and (ii) any Federal, state and local income
taxes on the Gross Up, is equal to the amount of the Special Compensation.
     For purposes of determining the Gross Up, Executive shall be deemed to pay
state and local income taxes at the highest marginal rate of taxation in his
filing status for the calendar year in which the Special Compensation is to be
made based upon Executive’s domicile on the date of the payment. The
determination of whether such Excise Tax is payable and the amount of such
Excise Tax shall be based upon the opinion of tax counsel selected by Company
subject to the approval of Executive. If such opinion

3

--------------------------------------------------------------------------------

 

is not finally accepted by the Internal Revenue Service, then appropriate
adjustments shall be calculated (with Gross Up, if applicable) by such tax
counsel based upon the final amount of Excise Tax so determined. The final
amount shall be paid, if applicable, within thirty (30) days after such
calculations are completed.
     5. Voluntary Resignation by Executive; Termination for Cause; Total
Disability; Death. Upon termination of Executive’s employment by either
Voluntary Resignation, or Termination for Cause (as those terms are defined in
this Section 5), Executive shall have no right to compensation, severance pay or
other benefits described herein but Executive’s obligations under Sections 10,
11, 12 and 13 hereof shall continue. Upon termination for total disability,
Executives obligations under Sections 10, 11, 12, and 13 hereof shall continue.

(a)   Voluntary Resignation by Executive. At any time, Executive has the right,
by written notice to Company, to terminate his services hereunder (“Voluntary
Resignation”), effective as of sixty (60) days after such notice.   (b)  
Termination for Cause by Company. At any time, Company has the right to
terminate Executive’s employment for cause. Termination upon the occurrence of
any of the following shall be deemed termination for cause (“Termination for
Cause”):

(i) fails to follow any material requirement, instruction, order or mandate of
any superior officer or the board of directors of Company;
(ii) commits any dishonest act towards Company, its officers, employees or Board
of Directors;
(iii) engages in any activity involving fraud, dishonesty, moral turpitude or
dereliction of duty; or
(iv) materially violates Company’s policies or procedures.
     Termination for failure to meet any material requirements, instruction,
orders or mandates, or materially violating Company’s policies or procedures,
unless willful, continuing and substantial, shall not be deemed a Termination
for Cause. For Termination for Cause, written notice of the termination of
Executive’s employment by Company shall be served upon Executive and shall be
effective as of the date of such service. Such notice given by Company shall
specify the act or acts of Executive underlying such termination.
     (c) Total Disability. Upon the total disability of Executive, as disability
is defined in the disability policies and plans applicable to Executive,
Executive shall have no right to compensation or severance pay described herein
but shall be entitled to long term disability and other such benefits afforded
under Company’s applicable policies and plans.
     (d) Death. Upon the death of Executive, Executive’s estate shall have no
right to receive compensation or other severance pay described herein, but shall
be entitled to receive any benefits afforded under Company’s applicable policies
and plans.
     6. Resignation Following Constructive Discharge. If at any time, except in
connection with a termination pursuant to Sections 4, 5, or 7, Executive is
Constructively Discharged (as that term is

4

--------------------------------------------------------------------------------

 

defined in this Section 6) then Executive shall have the right, by written
notice to Company within sixty (60) days of such Constructive Discharge, to
terminate his services hereunder, effective as of thirty (30) days after such
notice. Executive shall in such event be entitled to the compensation and
benefits as if such employment were terminated pursuant to Section 4 of this
Agreement.
     For purposes of this Agreement, Executive shall be “Constructively
Discharged” upon the occurrence of any one of the following events:
     (a) Executive is removed from his position with Company other than as a
result of Executive’s appointment to a position of equal or superior scope and
responsibility; or
     (b) Executive’s total compensation is reduced by more than 20% (other than
across-the-board reductions similarly affecting all executive officers of
Company).
     7. Effect of Change in Control.
     (a) Upon a Change in Control, Executive will be entitled to a payment (the
“Change of Control Gross-Up”) for all unexercised incentive stock options, and
shares owned immediately prior to the Change of Control that were acquired as a
result of incentive stock options exercised within 12 months prior to the Change
in Control and non-qualified options exercised within 18 months prior to the
Change in Control. Payments will be determined separately for each option, and
type of option, granted.
     The Change of Control Gross-Up shall be determined in accordance with the
following formula:

  (i)   For all unexercised incentive stock options

G = [((P = E) x N) x (1-L)] ¸ (1-M)

         
 
  Where   G = Change of Control Gross-Up Payment
 
       
 
      P = The price per share paid in the tender offer or merger agreement that
results in the Change in Control. If no such tender offer or merger agreement
occurs in connection with a Change in Control, then the price per share shall be
determined by a majority of disinterested incumbent members of the Board of
Directors of Company’s in office immediately prior to the Change in Control.
 
       
 
      E = The exercise price per share of the incentive stock option.
 
       
 
      N = The number of unexercised shares of such incentive stock option.
 
       
 
      L = The long term capital gains tax rate (expressed as a decimal) in
effect for the calendar year in which the Change of Control Gross-Up is to be
made.
 
       
 
      M = The highest marginal rate (expressed as a decimal) of taxation in the
Executive’s filing status for the calendar year in which the Change of Control
Gross-Up is to be made.

5

--------------------------------------------------------------------------------

 

     (ii) For all Incentive Stock Options exercised within the 12-month period
prior to the Change in Control and owned by Executive immediately prior to the
Change in Control.

         
 
      G = [((P - F) x Q) x (l-L)] ¸ (l-M)
 
       
 
  Where   G = Change of Control Gross-Up Payment
 
       
 
      P = The price per share paid in the tender offer or merger agreement that
results in the Change in Control. If no such tender offer or merger agreement
occurs in connection with a Change in Control, then the price per share shall be
determined by a majority of disinterested incumbent members of the Board of
Directors of Company’s in office immediately prior to the Change in Control.
 
       
 
      F = The exercise price of such option.
 
       
 
      Q = The number of shares exercised in such Incentive Stock Option.
 
       
 
      L = The long term capital gains tax rate (expressed as a decimal) in
effect for the calendar year in which the Change of Control Gross-Up is to be
made.
 
       
 
      M = The highest marginal rate (expressed as a decimal) of taxation in the
Executive’s filing status for the calendar year in which the Change of Control
Gross-Up is to be made.

                  (iii) For all non-qualified stock options exercised within the
18-month period prior to the Change in Control and owned by Executive
immediately prior to the Change in Control.

         
 
      G = [((P-V) x Q) x (l-L)] ¸ (l-M)
 
       
 
  Where   G = Change of Control Gross-Up Payment
 
       
 
      P = The price per share paid in the tender offer or merger agreement that
results in the Change in Control. If no such tender offer or merger agreement
occurs in connection with a Change in Control, then the price per share shall be
determined by a majority of disinterested incumbent members of the Board of
Directors of Company in office immediately prior to the Change in Control.
 
       
 
      V = The fair market value of the stock at time of exercise of the
non-qualified option (determined as of the closing price of the stock on the
date such option is exercised).
 
       
 
      Q = The number of shares exercised in such Incentive Stock Option.
 
       
 
      L = The long term capital gains tax rate (expressed as a decimal) in
effect for the calendar year in which the Change of Control Gross-Up is to be
made.

6

--------------------------------------------------------------------------------

 

M = The highest marginal rate (expressed as a decimal) of taxation in the
Executive’s Filing status for the calendar year in which the Change of Control
Gross-Up is to be made.
     The Change in Control Gross-Up for unexercised incentive stock options
shall be paid upon surrender and cancellation of the incentive stock options.
The Change in Control Gross-Up for incentive stock options exercised in the
12-month period prior to the Change in Control and for non-qualified stock
options exercised in the 18-month period prior to the Change in Control shall be
paid upon the Change in Control.
     (b) “Change in Control” shall mean an event which shall be deemed to have
occurred if: (i) a merger or consolidation of the Company with or into another
corporation occurs in which the Company shall not be the surviving corporation
(for purposes of this definition, the Company shall not be deemed the surviving
corporation in any such transaction if, as the result thereof, it becomes a
wholly- owned subsidiary of another corporation); (ii) a dissolution of the
Company occurs; (iii) a transfer of all or substantially all of the assets or
shares of stock of the Company in one transaction or a series of related
transactions to one or more other persons or entities occurs; (iv) if any
“person” or “group” as those terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than
Excluded Persons, becomes the “beneficial owner” (as defined in Rule 13d-3 of
the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then
outstanding securities; or (v) during any period of two consecutive years
commencing on or after January 1, 2000, individuals who at the beginning of the
period constituted the Board cease for any reason to constitute at least a
majority, unless the election of each director who was not a director at the
beginning of the period has been approved in advance by directors representing
at least two-thirds (2/3) of the directors then in office who were directors at
the beginning of the period. The term “Excluded Persons” means each of John H.
Marmaduke, the John H. Marmaduke Family Limited Partnership, the Stephen S.
Marmaduke Family Limited Partnership, and the Estate of Sam Marmaduke, Deceased,
and any person, entity, or group under the control of any of them, or a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company.
     A Change of Control shall include any other transactions or series of
related transactions occurring which have substantially the same effect as the
transactions specified in any of the preceding clauses of this Section 7.
     (c) Except as otherwise specifically provided, amounts paid under this
Section 7 shall be paid, if applicable, within thirty (30) days after such
calculations are completed.
     8. Dispute Resolution. All disputes arising under this Agreement, other
than those disputes relating to Executive’s alleged violations of Sections 10
through 13 herein, shall be submitted to arbitration by the American Arbitration
Association of Dallas, Texas. Costs of arbitration shall be borne equally by the
parties. The decision of the arbitrators shall be final and there shall be no
appeal from any award rendered. Any award rendered may be entered as a judgment
in any court of competent jurisdiction. In any judicial enforcement proceeding,
the losing party shall reimburse the prevailing party for its reasonable costs
and attorneys’ fees for enforcing its rights under this Agreement, in addition
to any damages or other relief granted. This Section 8 does not apply to any
action by Company to enforce Sections 10 through 13 of this Agreement and does
not in any way restrict Company’s rights under Section 14 herein.

7

--------------------------------------------------------------------------------

 

     9. Enforcement. All reasonable legal fees paid or incurred by Executive
pursuant to any dispute or question of interpretation relating to this Agreement
shall be paid or reimbursed by Company if Executive is successful pursuant to a
legal judgment, arbitration or settlement.
     10. Confidential Information. Executive acknowledges that during the course
of his employment he has learned or will learn or develop Confidential
Information (as that term is defined in this Section 10). Executive further
acknowledges that unauthorized disclosure or use of such Confidential
Information, other than in discharge of Executive’s duties, will cause Company
irreparable harm.
     For purposes of this Section, Confidential Information means trade secrets
(such as technical and non-technical data, a formula, pattern, compilation,
program, device, method, technique, drawing, process) and other proprietary
information concerning the business of Company, or its affiliates, including but
not limited to: pricing and financial information; computer programs; unpatented
inventions, discoveries or improvements; marketing, manufacturing, or
organizational research and development; business plans; sales forecasts;
personnel information, including the identity of other employees of Company,
their responsibilities, competence, abilities, and compensation; current and
prospective suppliers’ lists and information on suppliers; information
concerning planned or pending acquisitions or divestitures; and information
concerning purchases or leasing of major equipment or property, which
information: (a) has not been made generally available to the public; and (b) is
useful or of value to the current or anticipated business, or research or
development activities of Company, or (c) has been identified to Executive as
confidential by Company, either orally or in writing.
     Except in the course of his employment and in the pursuit of the business
of Company or any of its subsidiaries or affiliates, Executive shall not, during
the course of his employment, or for a period of eighteen (18) months following
termination of his employment for any reason, directly or indirectly, disclose,
publish, communicate or use on his behalf or another’s behalf, any proprietary
information or data of Company or any of its subsidiaries or affiliates.
     Executive acknowledges that Company operates and competes nationally, and
that Company will be harmed by unauthorized disclosure or use of Confidential
Information regardless of where such disclosure or use occurs, and that
therefore this confidentiality agreement is not limited to any single state or
other jurisdiction.
     11. Non-Competition.
     (a) Scope. During the effectiveness of this Agreement (the “Term”),
Employee shall devote substantially of his business, time, attention and
energies to the business and interests of Company, and shall not be engaged
(whether or not during normal business hours) in any other business or
professional activity (whether or not such activity is pursued for gain, profit
or other pecuniary advantage) without first obtaining the written consent of the
Board of Directors of Company. During the Term of and for a period of two years
after the expiration or termination of this Agreement, for any reason or for no
reason at all, Employee shall not directly or indirectly:
          (i) Own, have any interest in or be, serve or act as an individual
proprietor, partner, agent, stock holder, officer, employee, consultant,
director, joint venturer, investor, lender, or in any other capacity whatsoever
(other than as the holder of not more than one percent (1%) of the total
outstanding stock of a publicly held company) of or with, or assist in any way,
any corporation, partnership, firm or business enterprise at least 20% of whose
sales (in dollar volume) are books, music

8

--------------------------------------------------------------------------------

 

or video sales or rentals (whether such book, music or video (including games)
is new or pre-owned) (individually or in the aggregate with all affiliates
thereof) and which does business anywhere in the United States.
          (ii) Solicit or induce, or attempt to induce, any employee or
independent contracter of Company or any other person who shall be in the
service of Company to terminate his or her employment with or otherwise cease
his or her relationship with Company; or
          (iii) Solicit divert or take away, or attempt to solicit, divert or
take away, the business or patronage of any of the clients, customers (whether
any such customer has done business once or more than once), suppliers or
accounts, or prospective clients, customers or accounts, or suppliers to
Company.
     12. Inducement of Other Employees. For an eighteen (18) month period
following termination of employment, Executive will not directly or indirectly
solicit, induce or encourage any employee or agent of Company to terminate his
relationship with Company.
     13. Return of Company’s Property. All notes, reports, sketches, plans,
published memoranda or other documents created, developed, generated or held by
Executive during employment concerning or related to Company’s business, and
whether containing or relating to Confidential Information or not, are the
property of Company and will be promptly delivered to Company upon termination
of Executive’s employment for any reason whatsoever. During the course of
employment, Executive shall not remove any of the above property containing
Confidential Information, or reproductions or copies thereof, or any apparatus
from Company’s premises without authorization.
     14. Remedies. Executive acknowledges that the restraints and agreements
herein provided are fair and reasonable, that enforcement of the provisions of
Sections 10, 11, 12 and 13 will not cause him undue hardship and that said
provisions are reasonably necessary and commensurate with the need to protect
Company and its legitimate and proprietary business interests and property from
irreparable harm.
     Executive acknowledges that failure to comply with the terms of this
Agreement will cause irreparable damage to Company. Therefore, Executive agrees
that, in addition to any other remedies at law or in equity available to Company
for Executive’s breach or threatened breach of this Agreement, Company is
entitled to specifie performance or injunctive relief, without bond, against
Executive to prevent such damage or breach, and the existence of any claim or
cause of action Executive may have against Company will not constitute a defense
thereto. Executive further agrees to pay reasonable attorney fees and costs of
litigation incurred by Company in any proceeding relating to the enforcement of
the Agreement or to any alleged breach thereof in which Company shall prevail in
whole or in part.
     In the event of a breach or a violation by Executive of any of the
covenants and provisions of this Agreement, the running of the Non-Compete
Period (but not of Executive’s obligation thereunder), shall be tolled during
the period of the continuance of any actual breach or violation.
     15. Entire Understanding. This Agreement constitutes the entire
understanding between the parties relating to Executive’s employment hereunder
and while this Agreement is in effect supersedes all prior written and oral
understandings and agreements with respect to such matters.
     16.  No Attachment. Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance,

9

--------------------------------------------------------------------------------

 

charge pledge, or hypothecation, or to execution, attachment, levy, or similar
process or assignment operation of law, and any attempt, voluntary or
involuntary, to affect any such action shall be null, void, and of no effect.
     17.  Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, Executive’s executors, administrators, legal
representatives, heirs, successors, and assigns and the successors and assigns
of Company. Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of Company, expressly and
unconditionally to assume and agree to perform Company’s obligations under this
Agreement, in the same manner and to the same extent that Company would be
required to perform if no such succession or assignment had taken place.
     18. Partial Invalidity. The various provisions of this Agreement are
intended to be severable and to constitute independent and distinct binding
obligations. Should any provision of this Agreement be determined to be void and
unenforceable, in whole or in part, it shall not be deemed to affect or impair
the validity of any other provision or part thereof, and such provision or part
thereof shall be deemed modified to the extent required to permit enforcement.
Without limiting the generality of the foregoing, if the scope of any provision
contained in this Agreement is too broad to permit enforcement to its full
extent, but may be made enforceable by limitations thereon, such provision shall
be enforced to the maximum extent permitted by law, and Executive hereby agrees
that such scope may be judicially modified accordingly.
     19. Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by Company and Executive to express their mutual
intent and no rule of strict construction shall be applied against any person.
     20. Waiver. The waiver of any party hereto of a breach of any provision of
this Agreement by any other party shall not operate or be construed as a waiver
of any subsequent breach.
     21. Notices. Any notice or other communication required or permitted to be
given hereunder shall be determined to have been duly given to any party
(a) upon delivery to the address of such party specified below if delivered
personally or by courier; (b) upon dispatch if transmitted by telecopy or other
means of facsimile, provided a copy thereof is also sent by regular mail or
courier; or (c) within forty-eight (48) hours after deposit thereof in the U.S.
mail, postage prepaid, for delivery as certified mail, return receipt requested,
addressed, in any case to the party at the following address(es) or telecopy
numbers:

             
 
  If to Executive:       If to Company:
 
           
 
  Michael Rigby       Hastings Entertainment, Inc.
 
  C/o Hastings Entertainment, Inc.       P.O. Box 35350
 
  P.O. Box 35350       Amarillo, TX 79120
 
  Amarillo, TX 79120       Facsimile: (806) 351-2299
 
  Facsimile: (806) 351-2299       Attention: Corporate Secretary

or to such other address(es) or telecopy number(s) as any party may designate by
written notice in the aforesaid manner.
     22. Governing Law. This Agreement shall be governed by, and interpreted,
construed and

10

--------------------------------------------------------------------------------

 

enforced in accordance with, the laws of the State of Texas.
     23. Gender. Wherever from the context it appears appropriate, each term
stated in either the singular of plural shall include the singular and the
plural, and the pronouns stated in either the masculine, the feminine or the
neuter gender shall include the masculine, feminine or neuter.
     24. Headings. The headings of the Sections of this Agreement are for
reference purposes only and do not define or limit, and shall not be used to
interpret or construe the contents of this Agreement.
     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date above set forth.

                  HASTINGS ENTERTAINMENT, INC.    
 
           
 
  By:   /s/ John H. Marmaduke    
 
           
 
      John H. Marmaduke, President    
 
                /s/ Michael Rigby                   Michael Rigby    

11