Document:

exv10w27

 

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.

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     (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

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	 	 	 	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

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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

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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.

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     (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.

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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.

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     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

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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,

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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

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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	 	 

11exv10w28

 

Exhibit 10.28

SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

     This Sixth Amendment to Loan and Security Agreement (the “Sixth Amendment”) is made as of this
27th day of February, 2007 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 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 here from.

WITNESSETH:

     WHEREAS, on August 29, 2000, the Agent, the Revolving Credit Lenders and the Borrower, among
others, entered in a certain Loan and Security Agreement (as amended and in effect, the
“Agreement”); and

     WHEREAS, contemporaneously herewith, The CIT Group/Business Credit, Inc. is assigning 100% of
its interest in the Revolving Credit to Fleet Retail Group, LLC pursuant to that certain Assignment
and Acceptance by and between The CIT Group/Business Credit, Inc. and Fleet Retail Group, LLC dated
as of even date herewith; and

     WHEREAS, the 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 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 “Base Margin” is hereby amended by inserting the following
provisions at the end thereof:

1

 

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

	 	 	 	 	 	 	 
	Level	 	Average Availability.	 	Base Margin
	I

	 	Greater than $35,000,000
	 	 	0.00	%
	II

	 	Greater than $30,000,000 but less than
or equal to $35,000,000
	 	 	0.00	%
	III

	 	Greater than $20,000,000 but less than
or equal to $30,000,000
	 	 	0.00	%
	IV

	 	Less than or equal to $20,000,000
	 	 	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 2-11(f).”

	b.	 	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 Sixth
Amendment, the Libor Margin shall be the following percentages based upon the
following criteria:

	 	 	 	 	 	 	 
	Level	 	Average Availability	 	Libor Margia
	I

	 	Greater than $35,000,000
	 	 	1.00	%
	II

	 	Greater than $30,000,000 but less than or equal
to $35,000,000
	 	 	1.25	%
	III

	 	Greater than $20,000,000 but less than or equal
to $30,000,000
	 	 	1.50	%
	IV

	 	less than $20,000,000
	 	 	1.75	%

2

 

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 IV 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 2-11(f).”

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

“Sixth Amendment” Shall mean that certain Sixth Amendment to Loan and Security
Agreement dated February 27, 2007 by and among the Borrower, the Agent and the
Revolving Credit Lenders.

	3.	 	Amendment to Article 4. Section 4-19 of the Agreement is hereby amended by adding
the words “following the effective date of the Sixth Amendment” after the words “$15 Million”
in the second line thereof.

	4.	 	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 are 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.

	5.	 	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.

	6.	 	Conditions to Effectiveness. This Sixth Amendment shall be become effective upon the
satisfaction of the following conditions precedent:

	 	a.	 	This Sixth 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.

3

 

	 	b.	 	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.
	 
	 	c.	 	All proceedings in connection with the transactions contemplated by this Sixth
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 in favor of Fleet Retail
Group, LLC and a ratification by each guarantor of their respective guaranties.
	 
	 	d.	 	The Agent shall have received the Assignment and Acceptance between The CIT
Group/Business Credit, Inc. and Fleet Retail Group, LLC.
	 
	 	e.	 	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 Sixth Amendment.

	7.	 	Miscellaneous.

	 	a.	 	This Sixth 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 Sixth Amendment expresses 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 Sixth 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
Sixth 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 Sixth 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 Sixth
Amendment and is not relying on any representations or warranties of any

4

 

	 	 	 	Revolving Credit Lender or the Agent or their respective counsel in entering into this
Sixth 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]

5

 

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

	 	 	 
	 

	 	HASTINGS ENTERTAINMENT, INC. 

(“Borrower”)
	 
	 	 
	 

	 	By: [ILLEGIBLE]
	 

	 	Name: DAN CROW
	 

	 	Title: CFO
	 
	 	 
	 

	 	FLEET RETAIL GROUP, LLC

(“Agent”)
	 
	 	 
	 

	 	By: [ILLEGIBLE]
	 

	 	Name: MARK D. TWONEY
	 

	 	Title: U. P.

6

 

EXHIBIT 2:2-22

REVOLVING CREDIT LENDERS’ COMMITMENTS

	 	 	 	 	 	 	 	 	 
	 	 	Revolving Credit	 	 	Revolving Credit	 
	Revolving Credit Lender	 	Dollar Commitment	 	 	Commitment Percentage	 
	Fleet Retail Group, LLC
	 	 	$100,000,000.00	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 
	Totals
	 	$	100,000,000.00	 	 	 	100	%

7

 

February 27, 2007

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 Sixth Amendment to Loan and
Security Agreement of even date (the “Amendment”). 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)	 	ratifies, confirms and reaffirms, all and singular, the terms and conditions
of, and all warranties and representations set forth in, their respective Guaranties.
	 
	 	(b)	 	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.
	 
	 	(c)	 	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.

8

 

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

	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	 

	 	HASTINGS COLLEGE STORES, INC.
	 
	 	 
	Witness:
	 	 
	Stephanie Eslep

	 	By: [ILLEGIBLE]
	 

	 	Name: DAN CROW
	 

	 	Title: CFO
	 
	 	 
	 

	 	HASTINGS INTERNET, INC.
	 
	 	 
	Witness:
	 	 
	Stephanie Eslep

	 	By: [ILLEGIBLE]
	 

	 	Name: DAN CROW
	 

	 	Title: CFO
	 
	 	 
	Witness:
	 	 
	Stephanie Eslep

	 	HASTINGS PROPERTIES, INC.
	 
	 	 
	 

	 	By: [ILLEGIBLE]
	 

	 	Name: DAN CROW
	 

	 	Title: CFO

Acknowledged and Agreed to:

Fleet Retail Group, LLC, as Agent 

and Revolving Credit Lender

	 	 	 	 	 
	By:
	 	/s/ Mark D. Tworey	 	 
	 

	 	 

	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 

9

 

ASSIGNMENT AND ACCEPTANCE

Effective Date: February 27, 2007

     Re: Loan and Security Agreement dated August 29, 2000 (as amended and in effect, the
“Loan Agreement”) between Fleet Retail Group, LLC (f/k/a Fleet Retail Finance Inc.), as agent for a
syndicate of revolving credit lenders (the “Revolving Credit Lenders” referenced therein and the
Revolving Credit Lenders, on the one hand, and Hastings Entertainment, Inc., on the other (Terms
used herein which are defined in the Loan Agreement have the same meaning herein as in the Loan
Agreement).

     Agreement By and Between:

     THE CIT GROUP/BUSINESS CREDIT, INC. (The “Assignor”) and

     FLEET RETAIL GROUP, LLC (The “Assignee”)

	1.	 	Assignment and Assumption: The Assignor hereby sells and
assigns to the Assignee, and the
Assignee hereby purchases and
assumes from the Assignor, as of the
Effective Date, 100% of the
Assignor’s interest in the Revolving
Credit.
	 
	2.	 	Representations By Assignor: The Assignor represents that the
Assignor is the legal and beneficial
owner of the interest being assigned
hereby free and clear of any adverse
claims.
	 
	3.	 	Exclusion of Warranties by Assignor: The Assignor:

	 	a.	 	Makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with this any
Loan Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any other instrument or document furnished
pursuant hereto.
	 
	 	b.	 	Makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any other Person primarily or secondarily
liable in respect of any of the Liabilities, or the performance or observance by the
Borrower or any other Person primarily or secondarily liable in respect of any of the
Liabilities of any of their obligations under any Loan Documents or any other
instrument or document furnished pursuant hereto or thereto.
	 
	 	c.	 	Attaches the Revolving Credit Note of which the Assignor is the holder
and requests that the Agent cause the Borrower’s exchange of such Note for new

 

 

	 	 	 	Revolving Credit Notes payable to the Assignor and the Assignee reflecting the
assignment referenced above.

	4.	 	Assignee’s Representations Warranties and Agreements: The Assignee:

	 	a.	 	Confirms that it has received a copy of the Loan Agreement (and any amendment
thereto), the most recent financial statements then to have been delivered pursuant to
the Loan Agreement, and such other documents and information as the Assignee has deemed
appropriate to make its own credit analysis and decision to enter into such Assignment
and Acceptance.
	 
	 	b.	 	Confirms and represents that, independently and without reliance upon the
Assignor, the Agent, or any other Revolving Credit Lender and based on such documents
and information as the Assignee deems appropriate, has made such Person’s own credit
decision to join in the credit facility contemplated by the Loan Documents and to
become a “Revolving Credit Lender”.
	 
	 	c.	 	Confirms and represents that the Assignee will continue to make such Person’s
own credit decisions in taking or not taking action under the Loan Agreement and other
Loan Documents independently and without reliance upon the Assignor, the Agent or any
other Revolving Credit Lender and based on such documents and information as the
Assignee shall deem appropriate at the time.
	 
	 	d.	 	Appoints and authorizes the Agent to take such action on behalf of the Assignee
and to exercise such powers under the Loan Documents as are delegated to the Agent by
the terms hereof or thereof, together with such powers as are reasonably incidental
thereto.
	 
	 	e.	 	Agrees that the Assignee will perform, in accordance with their terms, all of
the obligations which, by the terms of the Loan Agreement and all other Loan Documents
are required to be performed by it as a “Revolving Credit Lender” as if the Assignee
had been a signatory thereto and to any amendments thereof.
	 
	 	f.	 	Represents and warrants that it is legally authorized to enter into this
Assignment and Acceptance and to perform its obligations hereunder, under the Loan
Agreement and under the Loan Documents.

	5.	 	Effect of Assignment and Assumption: Following delivery, acceptance and recording by the
Agent of this Assignment and Acceptance, from and after the Effective Date:

	 	a.	 	The Assignee be a party to the Loan Agreement and the other Loan Documents
(and any amendments thereto) and to the extent of the commitment assigned by this
Assignment and Acceptance, have the rights and obligations of a Revolving Credit
Lender thereunder.

 

 

	 	b.	 	The Assignor shall be released from the Assignor’s obligations under the Loan
Agreement and the other Loan Documents to the extent of the commitment assigned by
this Assignment and Acceptance.
	 
	 	c.	 	The Agent shall make all payments in respect of the interest in the Revolving
Credit Loans assigned hereby (including payments of principal, interest, and applicable
fees) to the Assignee.
	 
	 	d.	 	The Assignor and Assignee shall make all appropriate adjustments in payments
for periods prior to the Effective Date by the Agent or with respect to the making of
this assignment directly between themselves.

	6.	 	Massachusetts Law: This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of The Commonwealth of Massachusetts.

 

 

     IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned has caused
this Assignment and Acceptance to be executed on its behalf by its officer thereunto duly
authorized, as of the date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	ASSIGNOR:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	THE CIT GROUP/BUSINESS
CREDIT, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Adrian Avalos	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Adrian Avalos	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ASSIGNEE:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	FLEET RETAIL GROUP, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Mark D. Twoncy	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Mark D. Twoncy	 	 
	 

	 	 	 	Title:
	 	VP	 	 

 

 

			
	 	 	 
	REVOLVING CREDIT NOTE
	 	Fleet Retail Group, LLC
	 
	 	Agent
	 	 	 
	Boston, Massachusetts
	 	February 28, 2006
	$40,000,000.00
	 	Payee: The CIT Group / Business Credit, Inc.

     FOR VALUE RECEIVED, the undersigned, Hastings Entertainment, Inc., a Texas corporation with
its principal executive offices at 3601 Plains Boulevard, Amarillo, Texas 79102 (the “Borrower”)
promises to pay to the order of The CIT Group / Business Credit, Inc., a New York corporation
with offices at 5420 LBJ Freeway (Suite 200), Dallas, Texas 75240 (with any subsequent holder, a
“Revolving Credit Lender”) that amount which the Revolving Credit Lender has advanced towards
the aggregate unpaid principal balance of Revolving Credit Loans made to or for the account of
the Borrower pursuant to the Loan and Security Agreement dated August 29, 2000 as amended from
time to time, including pursuant to that certain Fifth Amendment to Loan and Security Agreement
of even date herewith (as such may be amended hereafter, the “Loan Agreement”) between Fleet
Retail Group, LLC, f/k/a Fleet Retail Finance Inc., a Delaware limited liability company with its
offices at 40 Broad Street Boston, Massachusetts 02109 (in Such
capacity, the “Agent”), as agent
for the ratable benefit of the “Revolving: Credit Lenders”, on the one hand, and the Borrower,
on the other, with interest at the rate and payable in the manner stated therein. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned thereto in the Loan
Agreement.

     This
is a “Revolving Credit Note” (this “Note”) to which reference is made in the Loan
Agreement and is subject to all terms and provisions thereof. The principal of, and interest
on, this. Note shall be payable as provided in the Loan Agreement and shall be subject to
Acceleration as provided therein.

     In the absence of manifest error, the Agent’s books and records concerning Revolving
Credit Loans, the accrual of interest thereon, and the repayment of such Revolving Credit
Loans, shall be prima facie evidence of the Indebtedness hereunder.

     No delay or omission by the Agent or any Revolving Credit Lender in exercising or enforcing any of
the
Agent’s or such Revolving Credit Lender’s powers, rights, privileges, remedies, or discretions
hereunder shall
operate as a waiver thereof on that occasion nor on any other occasion. No waiver of any Event of
Default with
respect hereto hereunder shall operate as a waiver of any other Event of Default hereunder, nor as
a continuing waiver.

1

 

     The Borrower, and each endorser and guarantor of this Note, respectively waives presentment,
demand, notice, and protest, and also waives any delay on the part of the holder hereof. Each of
the Borrower and any endorser or guarantor hereof assents to any
extension or other indulgence
(including, without limitation, the release or substitution of Collateral) permitted by the Agent
with respect to this Note and/or any Collateral given to secure this Note.

     This
Note shall be binding upon the Borrower, and each endorser and guarantor hereof, and
upon their respective heirs, successors, assigns, and representatives, and shall inure to the
benefit of the Lender and its successors, endorsees, and assigns.

     The Liabilities of the Borrower, and of any endorser or guarantor of this Note, are joint and
several, provided, however, the release by the Agent or the Revolving Credit Lender of any one or
more of the Borrower or endorsers or guarantors shall not release any other Person obligated on
account of this Note. Each reference in this Note to the Borrower, any endorser, and any
guarantor, is to such Person individually and also to all such Persons jointly. No Person
obligated on account of this Note may seek contribution from any other Person also obligated
unless and until all Liabilities to the Revolving Credit Lender of the Person from whom
contribution is sought have been satisfied in full.

     This Note is delivered at the offices of the Agent in Boston, Massachusetts and shall be
governed by the laws of The Commonwealth of Massachusetts, and shall take effect as a sealed
instrument.

     This Revolving Credit Note hereby amends and restates in full that certain Revolving Credit
Note dated August 29, 2000 from Borrower to Revolving Credit
Lender.

     The Borrower makes the following waiver knowingly, voluntarily, and intentionally, and
understands that the Agent and the Revolving Credit Lender in the establishment and maintenance of
their respective relationship with the Borrower contemplated by this Note, is relying thereon: THE
BORROWER, AND EACH ENDORSER AND GUARANTOR OF THIS NOTE TO THE EXTENT ENTITLED THERETO, RESPECTIVELY
WAIVES ANY PRESENT OR FUTURE RIGHT IT MAY HAVE ON ACCOUNT OF OR IN RESPECT TO THE LIABILITIES, TO A
TRIAL BY JURY IN ANY CASE OR CONTROVERSY IN WHICH THE AGENT AND/OR ANY REVOLVING CREDIT LENDER IS
OR BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE AGENT AND/OR
ANY

2

 

     REVOLVING CREDIT LENDER OR IN WHICH THE AGENT AND/OR ANY REVOLVING CREDIT LENDER IS JOINED AS A
PARTY LITIGANT), THAT ARISES OUT OF, OR IS IN RESPECT TO, THIS NOTE, THE LOAN AGREEMENT OR ANY OTHER
LOAN DOCUMENTS.

	 	 	 	 	 	 	 
	 

	 	HASTINGS ENTERTAINMENT,
INC.

The (“Borrower”)

	 	 

	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Daniel Crow	 	 
	 

	 	 	 	 

Daniel Crow
	 	 
	 

	 	 	 	Senior Vice President	 	 

 

 

	 	 	 
	

	 	Marjorie B. Crider

mcrider@riemerlaw.com 

(617) 880-3423 direct

(617)692-3423 direct fax

March 16, 2007

VIA FEDERAL EXPRESS

Dan Crow

V.P. Finance and Chief Financial Officer

Hastings Entertainment, Inc.

3601 Plains Blvd.

Amarillo, Texas 79102

     Re: Sixth Amendment to Loan and Security Agreement with Fleet Retail Group, LLC
Dear Dan:

     Enclosed herewith please find the following original documents for your files in
connection with the above matter:

	 	1.	 	Sixth Amendment to Loan and Security Agreement;
	 
	 	2.	 	Confirmation of Guaranty;
	 
	 	3.	 	Assignment and Acceptance Agreement between The CIT Group/Business Credit,
Inc. and Fleet Retail Group, LLC; and
	 
	 	4.	 	Revolving Credit Note dated February 28, 2006 payable to The CIT
Group/Business Credit, Inc. (this Note is no longer in effect and may be destroyed or filed at
your option).

     Please feel free to contact me with any questions regarding the above materials.

	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	 

	 	
	 

	 	Marjorie B. Crider

MBC

Enclosures

	 	 	 
	cc:

	 	Mr. Mark Twomey (via email, w/out enclosures)
 Jeff Shrader, Esq. (via
email, w/out enclosures) 

1001545.1

Riemer
& Braunstein LLP

Three Center Plaza · Boston, MA 02108-2003

 

	BOSTON	NEW YORK	BURLINGTON

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