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   with a material term or condition contained within this Agreement. Suchpolicies and procedures may be supplemented, modified, changed or adoptedwithout notice in the sole discretion of the Company at any time. In theevent of a conflict between such policies and procedures and this Agreement,this Agreement will control unless compliance with this Agreement willviolate any law or regulation applicable to the Company or its affiliatedentities. The Company will apply its existing and future policies andprocedures in a lawful and evenhanded manner.**3. Other Activities.**Except for activities approved by the Board of Directors, during theperiod of Executive’s employment, the Executive will not: (a) engage in activities whichrequire such substantial services on the part of the Executive that the Executive is unableto perform the duties assigned to the Executive in accordance with this Agreement; (b) serveas an officer or director of any publicly held entity; or (c) directly or indirectly investin, participate in or acquire an interest in any entity as defined in Section 8(a)(i)(a) or(b). The limitations in this Section 3 will not prohibit an investment by the Executive inpublicly traded securities as allowed in Section 8(a)(i). The Executive is not restrictedfrom maintaining or making investments, or engaging in other businesses, enterprises orcivic, charitable or public service functions if such activities, investments, businesses orenterprises do not result in a violation of clauses (a) through (c) of this Section 3.**4. Executive’s Compensation.**The Company agrees to compensate the Executive as follows: **4.1** **Base Salary.**A base salary (the **“Base Salary”**), in an annualrate of not less than ONE HUNDRED SIXTY-SEVEN THOUSAND FOUR HUNDREDSEVENTY-FIVE AND NO/100 ($167,475.00), will be paid to the Executive ininstallments consistent with the Company’s customary payroll practices, duringthe term of this Agreement.  **4.2** **Bonus.**In addition to the Base Salary, the Executive willparticipate in the Corporate Officer Incentive Plan (“**COIP**”). Executive’sincentive target expressed as a percentage of Base Salary for the COIPinitially shall be Twenty-Five percent (25%), proportionately reduced as to anypro-rated performance period during which Executive is employed.  **4.3** **Equity Compensation.**In addition to the compensation set forthin Sections 4.1 and 4.2 of this Agreement, the Executive will be allowed toparticipate in grants of stock options, restricted stock or other equityrelated awards from the Company’s stock compensation plans put into effect fromtime to time, subject to the terms and conditions of such plans.  **4.4** **Benefits.**The Company agrees to extend to the Executiveretirement benefits, deferred compensation, reimbursement of reasonableexpenditures for dues, travel and entertainment and any other benefits theCompany provides to other executives or officers from time to time on the samegeneral terms as such benefits are provided to such individuals. The Companywill also provide the Executive the opportunity to apply for coverage under the
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   Company’s medical, life and disability plans, if any. If the Executive isaccepted for coverage under such plans, the Company will provide suchcoverage on the same terms as is customarily provided by the Company to theplan participants as modified from time to time. **4.4.1** **Vacation.**The Executive will be entitled totake paid vacation (as approved) each calendar year during the term ofthis Agreement in accordance with Company policy, subject to prorationfor any portion of a calendar year under this Agreement. No additionalcompensation will be paid for failure to take vacation and no vacationmay be carried forward from one calendar year to another. **4.5** **Gross-Up Payment.**In the event it is determined that anypayment or distribution by the Company or the Company’s subsidiaries oraffiliates to or for the benefit of the Executive (whether paid or payable ordistributed or distributable pursuant to the terms of this Agreement orotherwise, but determined without regard to any additional payments requiredunder this Section 4.5) (“**Parachute Payments**”) subject to the excise taximposed by Section 4999 of the Internal Revenue Code (the **“Code”**) or anyinterest or penalties related to such excise tax (collectively, the **“ExciseTax”**), and parachute payments exceed 110% of the Executive’s “280G parachutelimit” (determined in accordance with Internal Revenue Code Section 280G) theExecutive will be entitled to receive an additional payment (a **“Gross-UpPayment”)**from the Company. The Gross-Up Payment will be equal to the amountsuch that after payment by the Executive of all taxes (including the ExciseTax, income taxes, interest and penalties imposed with respect to such taxes)on the Gross-Up Payment, the Executive will retain an amount of the Gross-UpPayment equal to the Excise Tax imposed on the Payment. If the ParachutePayments to Executive are less than 110% of the 280G parachute limit, then theamount of Parachute Payments will instead be reduced so that they are $1 lessthan the 280G parachute limit. The Gross-Up Payment shall be paid to Executiveno later than the last day of the year after the year in which the Executiveremits the underlying taxes, penalties, and interest. If and to the extentExecutive’s compensation must be reduced to avoid Section 4999 excise taxes,the annual bonus amount shall be reduced first, and if any additional amountsmust be reduced then the annual salary amount shall be reduced. **4.5.1** **Determination.**Subject to the provisions ofSection 4.5.2 all determinations required to be made under this Section4.5 (including whether and when a Gross-Up Payment is required, theamount of such Gross-Up Payment and the assumptions to be utilized)will be made by a nationally recognized certified public accountingfirm designated by the Executive (the **“Accounting Firm”**). TheAccounting Firm will provide detailed supporting calculations both tothe Company and the Executive within fifteen (15) business days of thereceipt of notice from the Executive that there has been a Payment ofexcise tax, interest and/or penalties on the Parachute, or such
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   earlier time as is reasonably requested by the Company. In the eventthat the Accounting Firm is serving as accountant or auditor for theindividual, entity or group effecting a Change of Control (ashereinafter defined), the Executive will be entitled to appointanother nationally recognized accounting firm to make thedeterminations required under this Section (which accounting firmwill then be referred to as the Accounting Firm hereunder). All feesand expenses of the Accounting Firm will be paid by the Company. AnyGross-Up Payment required to be paid under this Section 4.5 will bepaid by the Company to the Executive within five (5) days of thereceipt of the Accounting Firm’s determination, but no later than thelast day of the year after the year in which the Executive remits theunderlying taxes, penalties, and interest. Any determination by theAccounting Firm will be binding on the Company and the Executive. Asa result of the uncertainty in the application of Section 4999 of theCode at the time of initial determination by the Accounting Firm, theGross-Up Payment made by the Company may be less than actuallyrequired (an **“Underpayment”**) consistent with the calculationsrequired to be made hereunder. In the event that the Companyexhausts its remedies pursuant to Section 4.5.2 below and theExecutive thereafter is required to make a payment of any Excise Tax,the Accounting Firm will determine the amount of the Underpaymentthat has occurred and any such Underpayment will be promptly paid bythe Company to or for the benefit of the Executive. Any Underpaymentwill be reimbursed, to the extent possible, in the same calendar yearin which it occurred, but in no event later than the end of thecalendar year after the year in which the Executive remits theunderlying taxes.  **4.5.2.** **Contest of Claims.**The executive will notify the Company in writingof any claim by the Internal Revenue Service that, if successful, wouldrequire the payment by the Company of a Gross-Up Payment. Suchnotification will be given as soon as practicable but no later than ten(10) business days after the Executive is informed in writing of suchclaim and will apprise the Company of the nature of such claim and thedate on which such claim is requested to be paid. The Executive willnot pay such claim prior to the expiration of the thirty (30) dayperiod following the date on which the Executive notifies the Company(or such shorter period ending on the date that any payment of taxeswith respect to such claim is due). If the Company notifies theExecutive in writing prior to the expiration of such thirty (30) dayperiod that the Company desires to contest such claim, the Executivewill: (a) provide to the Company any information reasonably requestedby the Company relating to such claim; (b) take such action inconnection with contesting such claim as the Company reasonablyrequests in writing including, without limitation, accepting legalrepresentation with respect to such claim by an attorney reasonablyselected by the Company; (c) cooperate with the Company in good faithas necessary to effectively contest
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   such claim; and (d) permit the Company to participate in anyproceedings relating to such claim. The Company will bear and paydirectly all costs and expenses (including additional interest andpenalties) incurred in connection with the contest of the claim andagrees to indemnify and hold the Executive harmless, on an after-taxbasis, for any Excise Tax or income tax (including interest andpenalties with respect thereto) imposed as a result of such protest(including payment of costs and expenses as provided hereunder).Without limitation on the foregoing provisions, the Company willcontrol all proceedings related to such contested claim, may at itssole option pursue or forgo any and all administrative appeals,proceedings, hearings and conferences with the taxing authority inrespect of such claim and may at its sole option either direct theExecutive to pay the tax claimed and sue for a refund or contest theclaim in any permissible manner. The Executive agrees to prosecutesuch contest to a determination before any administrative tribunal,in a court of initial jurisdiction and in one or more appellatecourts, as the Company reasonably determines. If the Company directsthe Executive to pay a claim and sue for a refund, the Company willbe required to advance the amount of such payment to the Executive onan interest-free basis and agrees to indemnify and hold the Executiveharmless, on an after-tax basis, from any Excise Tax or income tax(including interest or penalties with respect thereto) imposed withrespect to such advance or with respect to any imputed income withrespect to such advance, provided that any extension of the statuteof limitations relating to payment of taxes for the taxable year ofthe Executive with respect to which such contested amount is claimedto be due is limited solely to such contested amount. Furthermore,the Company’s control of the contested claim will be limited toissues with respect to which a Gross-Up Payment would be payablehereunder and the Executive will be entitled to settle or contest, asthe case may be, any other issue raised by the Internal RevenueService or any other taxing authority.  **4.5.3** **Refunds.**If, after the receipt by theExecutive of an amount advanced by the Company pursuant to Section4.5.2 the Executive becomes entitled to receive any refund with respectto such claim the Executive will (subject to the Company’s complyingwith the requirements of Section 4.5.2) promptly pay to the Company theamount of such refund (together with any interest paid or creditedthereon after taxes applicable thereto). If, after the receipt by theExecutive of an amount advanced by the Company pursuant to Section4.5.2, a determination is made that the Executive will not be entitledto any refund with respect to such claim and the Company does notnotify the Executive in writing of its intent to contest such denial ofrefund prior to the expiration of thirty (30) days after suchdetermination then the advance will be forgiven and will not berequired to be repaid and the amount of such advance will offset, to
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   the extent thereof, the amount of Gross-Up Payment required to bepaid. **4.6** **Compensation Review.**The compensation of the Executive will bereviewed on a regular basis by the Board of Directors of the Company (or aCompensation Committee thereof) and shall be reviewed annually if thecompensation of other executive officers of the Company is reviewed at suchfrequency. The compensation of the Executive prescribed in Section 4 of thisAgreement (including benefits) may be increased at the discretion of the Boardof Directors of the Company or the Compensation Committee.**5. Term.**In the absence of an earlier termination as set forth in Section 6 below, thisAgreement will extend for a term commencing on the Effective Date, and ending on December31, 2009 and, subject to the separation from service rights of either Company or Executive,continuing automatically for successive twelve (12) month periods thereafter. EitherCompany or Executive may terminate this Agreement effective as of January 1st ofany year beginning as of January 1, 2010 provided that written notice of such termination isgiven to the other party on or before ninety (90) days preceding such January 1stdate of termination. However, unless the Company provides written notice of non-extensionto the Executive on or before thirty days prior to the expiration date, the term and theexpiration date will be automatically extended for one (1) additional year. The Executivemay continue to be employed by the Company upon termination of this Agreement if mutuallyagreed in writing by Executive and Company.**6. Separation from Service.**The Executive’s employment will continue in effect until theexpiration of the term set forth in Section 5 of this Agreement unless an earlier separationfrom service occurs pursuant to this Section 6. **6.1** **Separation from Service by Company.**The Company will have thefollowing rights to cause a separation from service between Employee andCompany: **6.1.1** **Separation from Service without Cause.**    The Company may cause a separation from service and Executive’semployment shall terminate without Cause at any time by the serviceof written notice of separation from service and termination to theExecutive specifying an effective date of such separation andtermination not sooner than ten (10) days after the date of suchnotice (the **“Separation from Service Date”**). In the event theExecutive is separated and terminated without Cause (other than a CCSeparation from Service under Section 6.3 of this Agreement), theExecutive will receive as compensation: (i) for a period of 18months his Base Salary (as in effect on the Separation from ServiceDate) plus bonus payable under COIP (based upon the incentive targetpercentage in effect on the Separation from Service Date and assumingCompany performance at 100% of target); and (ii) any vacation payaccrued through the Separation from Service Date. The payment ofsuch
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   amounts shall be made during the remaining term of the Agreement ininstallments consistent with the Company’s normal payroll practices(including proration of bonus and payment of bonus when normally paidby the Company) but, if on the Separation from Service Date, theExecutive is a “specified employee” as defined in regulations underSection 409A of the Code, such payments, to the extent not exempt,will commence on the first payroll payment date which is more thansix (6) months following the Separation from Service Date (except asotherwise required under 11.11 hereof) and the first payment shallinclude any amounts that would have otherwise been payable during thesix month period.  **6.1.2** **Separation from Service for Cause.**TheCompany may cause a separation from service, and Executive’s employmentshall terminate, for Cause. For purposes of this Agreement, **“Cause”**means either of the following:(a) the engagement by the Executive in illegal conduct, grossmisconduct or a clearly established material violation of theCompany’s written policies and procedures; or(b) the failure of the Executive to perform substantially theExecutive’s duties with the Company or its subsidiaries or affiliates(other than a failure resulting from incapacity due to physical ormental illness).      For purposes of Section 6.1.2(a) of this Agreement, “**grossmisconduct**” means conduct evidencing a willful or wanton disregardfor the legitimate business interests of the Company, deliberateviolations of Company policy or flagrant disregard for standards ofbehavior the Company has a right to expect from one of its corporateofficers, to the extent such policy or standards of behavior do notviolate any law or regulation.      Any act, or failure to act, based on authority given pursuant toa resolution duly adopted by the Board of Directors based on theadvice of counsel for the Company will be conclusively presumed to bedone, or omitted to be done, by the Executive in good faith and inthe best interests of the Company. In the event a separation fromservice occurs for Cause, the Company will not have any obligation toprovide any further payments or benefits to the Executive after theeffective date of such separation from service, except for proratedbonus based on actual performance at the end of the performanceperiod, and accrued vacation through date of separation from service,and any other amounts required by applicable law or policy. **6.2** **Separation from Service by Executive.**The Executive mayvoluntarily cause a separation from service with the Company by the service ofwritten
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   notice of such separation from service to the Company specifying aneffective date of such separation from service thirty (30) days after thedate of such notice, during which time the Executive may use remainingaccrued vacation days, or at the Company’s option, be paid for such days.In the event separation from service is undertaken by the Executive, neitherthe Company nor the Executive will have any further obligations hereunder,except for any obligations which expressly survive separation from serviceincluding, without limitation, any obligation of the Company to provide anyfurther payments or benefits to the Executive after the effective date ofsuch separation from service.  **6.3** **Separation from Service After Change in Control.**If during theterm of this Agreement there is a **“Change of Control”**and within twenty-four(24) months thereafter, notwithstanding any separation from service pursuant toSection 5, there is a CC Separation from Service (as hereafter defined), thenthe Executive will be entitled to a severance payment (in addition to any otherrights and other amounts payable to the Executive or under Company plans inwhich Executive is a participant) payable in a lump sum in cash within 10 daysfollowing the CC Separation from Service in an amount equal to two times (2X)the sum of the following: (a) the Executive’s Base Salary for the lasteighteen (18) calendar months ending immediately prior to the CC Separationfrom Service and bonus paid pursuant to Section 4.2 (based upon the incentivetarget percentage in effect on the Separation from Service Date and assumingCompany performance at 100% of target); plus (b) any applicable Gross-UpPayment. If the foregoing amount is not paid within ten (10) days after the CCSeparation from Service, the unpaid amount will bear interest at the per annumrate of 12%, but in no event higher than the highest rate allowed by applicablelaw. Notwithstanding the foregoing, if at the time of a CC Separation fromService, the Executive is a “specified employee” as defined in regulationsunder Section 409A of the Code, such payment, to the extent not exempt, will bemade on the first day which is more than six months following the CC Separationfrom Service. In connection with any Change of Control, the Company shallobtain the assumption of this Agreement, without limitation or reduction, byany successor to the Company or any parent corporation of the Company. Inaddition, the vesting for stock options, SERP, and issued restricted stockshall be accelerated to the date of the CC Separation from Service. **6.3.1** **Change of Control**. For the purpose of thisAgreement, a **“Change of Control”**means the occurrence of any of thefollowing:(a) The acquisition by any individual, entity or group (within themeaning of Section 13(d)(3) or 14 (d)(2) of the Securities ExchangeAct of 1934, as amended (the **“Exchange Act”**)) (a **“Person”**), otherthan John H. Marmaduke or his affiliate or by a party or entityacting for or by the direction of John Marmaduke (the **“ExemptPersons”**), of beneficial ownership (within the meaning of Rule 13d-3promulgated under the Exchange Act) of 50% or more of either (i) the
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then outstanding shares of common stock of the Company (the**“Outstanding Company Common Stock”**) or (ii) the combined voting powerof the then outstanding voting securities of the Company entitled tovote generally in the election of directors (the **“Outstanding CompanyVoting Securities”**). For purposes of this paragraph (a) thefollowing acquisitions by a Person will not constitute a Change ofControl: (i) any acquisition directly from the Company; (ii) anyacquisition by the Company; (iii) any acquisition by any employeebenefit plan (or related trust) sponsored or maintained by theCompany or any corporation controlled by the Company; or (iv) anyacquisition by any corporation pursuant to a transaction whichcomplies with clauses (i), (ii) and (iii) of this Section 6.3.1.(b) If, during any 12 consecutive month period during this Agreement,the individuals who, as of the date hereof, constitute the Board ofDirectors (the **“Incumbent Board”**) cease for any reason to constituteat least a majority of the Board of Directors. Any individualbecoming a director subsequent to the date hereof whose election, ornomination for election by the Company’s shareholders, is approved bya vote of at least a majority of the directors then comprising theIncumbent Board will be considered a member of the Incumbent Board asof the date hereof, but any such individual whose initial assumptionof office occurs as a result of an actual or threatened electioncontest with respect to the election or removal of directors or otheractual or threatened solicitation of proxies or consents by or onbehalf of a Person other than the Incumbent Board will not be deemeda member of the Incumbent Board as of the date hereof.(c) The consummation of a reorganization, merger, consolidation orsale or other disposition of all or substantially all of the assetsof the Company (a **“Business Combination”**), unless following suchBusiness Combination:(i) (a) the individuals and entities who were the beneficialowners, respectively, of the Outstanding Company Common Stockand Outstanding Company Voting Securities immediately priorto such Business Combination beneficially own, directly orindirectly, more than 60% of, respectively, the thenoutstanding shares of common stock and the combined votingpower of the then outstanding voting securities entitled tovote generally in the election of directors, as the case maybe, of the corporation resulting from such BusinessCombination (including without limitation, a corporationwhich as a result of such transaction owns the Company or allor substantially all of the Company’s assets either directlyor through one or more subsidiaries) in
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substantially the same proportions as their ownership,immediately prior to such Business Combination of theOutstanding Company Common Stock and Outstanding CompanyVoting Securities as the case may be,     (b) no Person (excluding any corporation resulting fromsuch Business Combinations or any employee benefit plan (orrelated trust) of the Company or such corporation resultingfrom such Business Combination) other than one or more of theExempt Persons beneficially owns, directly or indirectly, 40%or more of, respectively, the then outstanding shares ofcommon stock of the corporation resulting from such BusinessCombination of the combined voting power of the thenoutstanding voting securities of such corporation except tothe extent that such ownership existed prior to the BusinessCombination and     (c) at least a majority of the members of the board ofdirectors of the corporation resulting from such BusinessCombination were members of the Incumbent Board at the timeof the execution of the initial agreement, or of the actionof the Board, providing for such Business Combination, or     (d) A majority of the board of directors of thecorporation resulting from such Business Combination areIncumbent Directors.(d) The approval by the shareholders of the Company of a completeliquidation or dissolution of the Company. **6.3.2** **Change of Control Separation from Service.**The term “**CC Separation from Service**” means any of the following: (a)a separation from service is undertaken by the Company other than underSections 6.1.2, 6.4 or 6.5; or (b) the Executive undertakes aseparation from service as a result of a material adverse change in theExecutive’s duties or title, a significant reduction in the Executive’sthen current Base Salary that is not generally applicable to all orsubstantially all of the Company’s executives or a significantreduction in the Executive’s then current benefits as provided inSection 4; (c) a relocation of more than One Thousand (1,000) milesfrom the Executive’s then current place of employment being required bythe Board of Directors; (d) the approval by the shareholders of theCompany of a complete liquidation or dissolution of the Company; or (e)a default by the Company under this Agreement. **6.4** **Incapacity of Executive.**If the Executive suffers from amedically diagnosed physical or mental condition, which in the reasonablebusiness
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   judgment of the Company’s Board of Directors, prevents the Executive (inwhole or in part) from performing the duties specified herein for a periodof four (4) consecutive months, the Company may cause a separation fromservice, in which event, the Company will pay Executive his Base Salary andBonus (computed at up to 100% of plan based on actual performance, but in noevent more than 100% of plan regardless of actual performance) in effect onthe date of notice of separation from service through the lesser of (i) thedeath of Executive; or (ii) the remaining term of this Agreement, but in anyevent through the Expiration Date, reduced by any disability paymentsreceived by Executive from any third party. The payment of such amountsshall be made during the remaining term of the Agreement in installmentsconsistent with the Company’s normal payroll practices. It is the intent ofthe parties to hereby create a “bona fide disability plan provision” exemptfrom IRC 409A, but, if on the separation from service date, the Executive isa “specified employee” as defined in regulations under Section 409A of theCode, such payments, in and to the extent deemed covered by 409A, willcommence on the first payroll payment date which is more than six monthsfollowing the notice of separation from service date and the first paymentshall include any amounts that would have otherwise been payable during thesix (6) month period. Notwithstanding the foregoing, the amount payablehereunder will be reduced by any benefits payable under any disability plansprovided by the Company under Section 4.4 of this Agreement. Nothing inthis Section will be interpreted or applied so as to lessen the Executive’srights under state or federal disability or medical leave laws.  **6.5** **Death of Executive.**If the Executive dies during the term ofthis Agreement, it will be deemed that a separation from service occurred onthe date of death and Executive’s employment will terminate withoutcompensation to the Executive’s estate except: (a) the obligation to continuethe Base Salary payments under Section 4.1 of this Agreement for twelve (12)months after the date of death of the Executive, and (b) the benefits describedin Section 4.4 of this Agreement accrued through the date of death of theExecutive, including a prorated portion of bonus paid pursuant to theprovisions and goals of the COIP then in effect, based upon the incentivetarget percentage in effect and assuming performance at 100% of target.  **6.6** **Resignation Following Constructive Discharge.**If at any time,except in connection with a separation from service otherwise pursuant to thisAgreement, Executive is Constructively Discharged (as that term is defined inthis Section 6.6) then Executive shall have the right, by written notice toCompany within sixty (60) days of such Constructive Discharge, to undertake aseparation from service hereunder, effective as of thirty (30) days after suchnotice; provide the Company has failed to cure the constructive Dischargewithin the thirty-day period following the notice. Executive shall in suchevent be entitled to the compensation and benefits as if such separation fromservice occurred pursuant to Section 6.1.1.
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   For purposes of this Agreement, Executive shall be “ConstructivelyDischarged” upon the occurrence of any one of the following events:(a) Executive is demoted or removed from his position with the Company otherthan as a result of Executive’s appointment to a position of equal orsuperior scope and responsibility.(b) Executive’s targeted total compensation is reduced by more than 20%(other than across-the-board reductions similarly affecting all executiveofficers of Company).(c) Executive experiences a material adverse change of duties orresponsibilities in his position.(d) Any material breach of this Agreement by the Company. **6.7** **Effect of Separation from Service.**A separation from servicewill terminate all obligations of the Executive to render services on behalf ofthe Company. The Executive will maintain the confidentiality of allinformation acquired by the Executive during the term of his Employment inaccordance with Section 7 of this Agreement and the covenants set forth inSection 8 of this Agreement. Except as otherwise provided in this Section 6,no accrued bonus, severance pay or other form of compensation will be payableby the Company to the Executive by reason of the separation from service. Inthe event that payments are required to be made by the Company under thisSection 6, the Executive will not be required to seek other employment as ameans of mitigating the Company’s obligations hereunder resulting fromseparation from service and the Company’s obligations hereunder (includingpayment of severance benefits) will not be terminated, reduced, or modified asa result of the Executive’s earnings from other employment or self-employment.All keys, entry cards, credit cards, records, financial information, furniture,furnishings, equipment, supplies and other items relating to the Company willremain the property of the Company. The Executive will have the right toretain and remove all personal property and effects that are owned by theExecutive and located in the offices of the Company, subject to inspection bythe Company. All such personal items will be removed from such offices nolater than ten (10) days after the effective date of separation from service,and the Company is hereby authorized to discard any items remaining and toreassign the Executive’s office space after such date. Prior to the effectivedate of termination, the Executive will cooperate with the Company to providefor the orderly separation from service of the Executive’s employment.**7. Confidentiality.**The Executive recognizes that the nature of the Executive’s servicesare such that Executive will have access to information which constitutes trade secrets, isof a confidential nature, is of great value to the Company or is the foundation on which thebusiness of the Company is predicated. The Executive agrees not to disclose to any personother than the Company’s employees or the Company’s legal counsel or other
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parties authorized by the Company to receive confidential information (**“ConfidentialInformation”**) nor use for any purpose, other than the performance of this Agreement, anyConfidential Information. Confidential Information includes data or material (regardless ofform) which is: (a) a trade secret; (b) provided, disclosed or delivered to Executive bythe Company, any officer, director, employee, agent, attorney, accountant, consultant, orother person or entity employed by the Company in any capacity, any customer, borrower orbusiness associate of the Company or any public authority having jurisdiction over theCompany of any business activity conducted by the Company; or (c) produced, developed,obtained or prepared by or on behalf of Executive or the Company (whether or not suchinformation was developed in the performance of this Agreement) with respect to the Companyor any assets oil and gas prospects, business activities, officers, directors, employees,borrowers or customers of the foregoing. However, Confidential Information will not includeany information, data or material which at the time of disclosure or use was generallyavailable to the public other than by a breach of this Agreement, was available to the partyto whom disclosed on a non-confidential basis by disclosure or access provided by theCompany or a third party, or was otherwise developed or obtained independently by the personto whom disclosed without a breach of this Agreement. On request by the Company, theCompany will be entitled to a copy of any Confidential Information in the possession of theExecutive. The provisions of this Section 7 will survive the termination, expiration orcancellation of Executive’s employment and shall continue indefinitely. The Executive willdeliver to the Company all originals and copies of the documents or materials containingConfidential Information. For purposes of Sections 7, 8, and 9 of this Agreement, theCompany expressly includes any of the Company’s subsidiaries or affiliates.**8. Non-Competition.**(a) Scope. During the effectiveness of this Agreement (the **“Term”**), Executive shall devotesubstantially of his business, time, attention and energies to the business and interests ofCompany, and except as otherwise provided herein, shall not be engaged (whether or notduring normal business hours) in any other business or professional activity (whether or notsuch activity is pursued for gain, profit or other pecuniary advantage) without firstobtaining the written consent of the Board of Directors of Company. During the Term of andfor a period of eighteen (18) months 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, jointventurer, investor, lender, or in any other capacity whatsoever (other than as theholder of not more than one percent (1%) of the total outstanding stock of apublicly held company) of or with, or assist in any way,(a) any corporation, partnership, firm or business enterprise at least 20%of whose sales (in annual dollar volume) are books, music or video sales orrentals (whether such book, music or video [including games] is new orpre-owned) (individually or in the aggregate with all affiliates thereof) orwhich does business anywhere in the United States, or
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(b) any of the following companies (individually or in the aggregate withall their affiliates) Wal-Mart Stores, Inc., Books-A-Million, Inc., GameStopCorp., Barnes & Noble, Inc., Borders Group, Inc., Target Corp., Best Buy Co.Inc., Circuit City Stores Inc., Blockbuster Inc., and Movie Gallery, Inc.(ii) Solicit or induce, or attempt to induce, any employee or independent contractorof Company or any other person who shall be in the service of Company to terminatehis 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 thebusiness or patronage of any of the clients, customers (whether any such customerhas done business once or more than once), suppliers or accounts, or prospectiveclients, customers or accounts, or suppliers to Company, but Executive shall not beprevented from doing business with such persons or entities.(b) It is hereby expressly agreed that if any portion of this Section 7 or any of thecovenants and provisions set forth in this Agreement regarding restrictions on competition,confidentiality or solicitation is held to be unreasonable, arbitrary, against public policyor otherwise unenforceable for any reason, then each such covenant or provision shall beconsidered divisible as to scope, time and geographical area, with each month of a specifiedperiod being deemed a separate period of time and each county within any geographical areabeing deemed a separate geographical area. The parties to this Agreement also expresslyagree that notwithstanding their mutual expectation that the covenants and restrictionscontained herein will be enforceable and enforced, a lesser scope, period of time orgeographic area shall be enforced to the extent that the covenants contained herein may beunenforceable as written.**9. Proprietary Matters.**The Executive expressly understands and agrees that any and allimprovements, inventions, discoveries, processes or know-how that are generated or conceivedby the Executive during the term of this Agreement, whether generated or conceived duringthe Executive’s regular working hours or otherwise, will be the sole and exclusive propertyof the Company. Whenever requested by the Company (either during the term of this Agreementor thereafter), the Executive will assign or execute any and all applications, assignmentsand/or other instruments and do all things which the Company deems necessary or appropriatein order to permit the Company to: (a) assign and convey or otherwise make available to theCompany the sole and exclusive right, title, and interest in and to said improvements,inventions, discoveries, processes, know-how, applications, patents, copyrights, trade namesor trademarks; or (b) apply for, obtain, maintain, enforce and defend patents, copyrights,trade names, or trademarks of the United States or of foreign countries for saidimprovements, inventions, discoveries, processes or know-how. However, the improvements,inventions, discoveries, processes or know-how generated or conceived by the Executive andreferred to above (except as they may be included in the patents, copyrights or registeredtrade names or trademarks of the Company, or corporations, partnerships or other entitieswhich may be affiliated with the Company) will not be exclusive property of the Company atany time after having been disclosed or revealed or have otherwise become available to thepublic or to a third party on a non-confidential basis other than by a breach of thisAgreement, or after they have been independently developed or
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discussed without a breach of this Agreement by a third party who has no obligation to theCompany or the Company Entities.**10. Arbitration.**The parties will attempt to promptly resolve any dispute or controversyarising out of or relating to this Agreement or separation of service of the Executive bythe Company. Any negotiations pursuant to this Section 10 are confidential and will betreated as compromise and settlement negotiations for all purposes. If the parties areunable to reach a settlement amicably, the dispute will be submitted to binding arbitrationbefore a single arbitrator in accordance with the Employment Dispute Resolution Rules of theAmerican Arbitration Association. The arbitrator will be instructed and empowered to takereasonable steps to expedite the arbitration and the arbitrator’s judgment will be final andbinding upon the parties subject solely to challenge on the grounds of fraud or grossmisconduct. The arbitration will be held in Potter County, Texas. Judgment upon anyverdict in arbitration may be entered in any court of competent jurisdiction and the partieshereby consent to the jurisdiction of, and proper venue in, the federal and state courtslocated in Potter or Randall County, Texas. The Company will pay the costs and expenses ofthe arbitration including, without implied limitation, the fees for the arbitrators.Subject to the provisions of Section 11.8, Executive shall pay for the fees and expenses ofhis counsel, experts and any other advisors, unless otherwise determined by the arbitrator.Unless otherwise expressly set forth in this Agreement, the procedures specified in thisSection 10 will be the sole and exclusive procedures for the resolution of disputes andcontroversies between the parties arising out of or relating to this Agreement.Notwithstanding the foregoing, a party may seek a preliminary injunction or otherprovisional judicial relief if in such party’s judgment such action is necessary to avoidirreparable damage or to preserve the status quo.**11. Miscellaneous.**The parties further agree as follows: **11.1** **Time.**Time is of the essence of each provision of thisagreement.  **11.2** **Notices.**Any notice, payment, demand or communication requiredor permitted to be given by any provision of this Agreement will be in writingand will be deemed to have been given when received by personal delivery, byfacsimile, by overnight courier, or by certified mail, postage and chargesprepaid, directed to the following address or to such other or additionaladdresses as any party might designate by written notice to the other party:       To the Company: Hastings Entertainment, Inc.    Attn: President    P. O. Box 35350 (79120)    3601 Plains Blvd.    Amarillo, TX 79102          With a copy to: Sprouse Shrader Smith, P.C.    Attn: Jeffrey G. Shrader    P. O. Box 15008 (79105)    701 S. Taylor, Suite 500    Amarillo, TX 79101
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       To the Executive: John Hintz    Hastings Entertainment, Inc.    P. O. Box 35350 (79120)