Document:

exv10w24

 

Exhibit 10.24

SEVERANCE AGREEMENT AND RELEASE

     This Severance Agreement and Release (“Agreement”) is entered into as of the 16th day of
December, 2005 (the “Effective Date”). The parties to this Agreement are Hastings Entertainment,
Inc. (“Hastings” or the “Company”) and Steve Hicks (“Hicks”).

Recitals

     1. Hicks has been employed by Hastings as Vice President of Product and has
voluntarily resigned his position as the Vice President of Product with Hastings effective
December
7, 2005, in order to pursue other business opportunities. Hicks will remain an employee of
Hastings
through January 13, 2006.

     2. Hastings and Hicks do not anticipate that there will be any dispute between them or
legal claims arising out of Hicks’ separation from the Company, but nevertheless desire to
settle fully
and finally any and all differences, causes of action, claims, or disputes that might
otherwise arise out
of Hicks’ employment with the Company.

Agreement

     IN CONSIDERATION OF THE MUTUAL PROMISES CONTAINED HEREIN, IT IS AGREED AS FOLLOWS:

     1. Temporary Continuation of Pay. Hastings will continue to pay Hicks his regular
salary through January 13, 2006. These payments will be issued through the Company’s payroll
less
all applicable taxes and withholding. Hicks will receive his vested employee benefits
(including a
proportionate part of the bonus payable for the period ending January 31, 2006 payable when
bonuses for the period ending January 31, 2006 are paid, and $7,379.25 for accrued but not
used
vacation pay) payable on or before December 31, 2005.

     2. Severance Benefits.

          (a) Following his final date of employment, Hastings agrees to pay Hicks a sum equal
to ten (10) months of his current base salary plus bonus computed at his bonus percentage for
such
period based upon an assumed achievement of 100%, equal to $152,303.00, payable in one lump
sum less all applicable taxes and withholding. This payment will be made after January 1,
2006, but
before February 5, 2006.

          (b) If Hicks has not obtained employment by October 15, 2006, Hastings will pay
Hicks on a month by month basis his base salary plus bonus computed at his bonus percentage
for
such period based upon an assumed achievement of 100% for up to an additional three-month
period
payable in the amount of $ 15,230.30 per month, payable once a month, beginning October 15,
2006,
and continuing until January  15, 2007, unless Hicks finds a job sooner. If Hicks becomes
employed

	 		
	SEVERANCE AGREEMENT AND RELEASE
	 	Page 1

 

 

during such three-month period this payment shall cease. For purposes of this Agreement,
“Employment” means any contract of hire in excess of eighty (80) hours per month whether written,
verbal or implied whereby Hicks receives compensation of any kind in exchange for work or services
including but not limited to consulting, customer care, data processing, data analysis or market
planning.

          (c) In addition, the Company will pay the Company’s group health care plan premiums on behalf
of Hicks and his family for the ten (10) month period beginning January 13, 2006 and during any
period payments are made to Hicks pursuant to Section 2.b above.

     3. Placement Assistance. The Company will provide placement assistance to assist
Hicks through Right Management Consultants for a period of three (3) months, starting April 1,
2006.

     4. Letter of Recommendation. Hastings will execute a letter of recommendation on
Hicks’ behalf which letter will be subject to reasonable approval by Hicks. Hastings agrees to
supply
up to twenty-five (25) original copies for Hicks at his request. Any subsequent inquiry
regarding
Hicks’ employment and subsequent resignation will be addressed by supplying a copy of the
letter of
recommendation or otherwise communicating its content.

     5. Options. The unvested Options granted pursuant to Option Grant Nos. 514 (being
6000 shares) and 609 (being 9000 shares) will be vested as of January 13, 2006, and all
Options
under such grants must be exercised within ninety (90) days of January 13, 2006. Any option
shares
under such grants not exercised by such date will expire. All other Options Grants remain in
force as
written, and must be exercised within ninety (90) days of January 13, 2006 and Hicks agrees to
release grants 12, 552 and 675 as to the unvested portions of such options.

     6. Return of Property. Hicks agrees to return to the Company any property owned by
the Company in a timely manner, provided that he may retain his Company phone at the Company’s
expense (based upon historical costs) through March 15, 2006, retain the cell phone at his
cost
thereafter and the digital video camera provided to him by the Company.

     7. Agreement Confidentiality. Hicks represents and agrees that the existence, terms
and conditions of this Agreement shall be kept strictly and completely confidential subject
only to
the following exceptions:

	 	A.	 	Hicks may tell, on condition of confidentiality, his immediate
family, appropriate governmental agencies, such as the Internal Revenue
Service, Bankruptcy trustee, his investment adviser, attorneys, and
accountant; and any other person he is required to tell by law or must do so
to effectuate this Agreement.

	 	 	 
	SEVERANCE AGREEMENT AND RELEASE
	 	Page 2

 

 

	 	B.	 	Hicks may disclose relevant information regarding the terms and
conditions of this Agreement in response to a validly executed and served
subpoena or other court order. However, in so responding, Hicks will advise
the court and all interested parties of the existence and substance of this
confidentiality agreement and will take all reasonable steps necessary to
limit his disclosure of confidential information governed by this Agreement.

     The phrase, “terms and conditions of this Agreement” means those terms and conditions that
appear on the face of the Agreement and any and all discussions, information and documentation
used, generated and/or relied upon in producing this Agreement. Except to the extent necessary to
enforce this Agreement, it is further agreed that neither this Agreement nor any part thereof is to
be used or admitted into evidence in any proceeding of any character, judicial or otherwise, now
pending or hereafter instituted.

     8. Release. In consideration of the severance pay, severance benefits, and other
promises contained herein, and as a material inducement to Hastings to enter into this
Agreement,
Hicks hereby irrevocably and unconditionally releases, acquits, forever discharges, and agrees
to hold harmless Hastings and its agents, assigns, directors, officers, employees,
representatives,
attorneys, divisions, subsidiaries, affiliates and all persons acting by, through, under, or
in concert
with any of them (hereinafter “the releasees”), from any and all claims, causes of action,
demands or
liabilities whatsoever, whether known or unknown or suspected to exist by Hicks that he ever
had or
may now have against the releasees, or any of them, including, without limitation, any claims,
causes
of action, demands, or liabilities in connection with either Hicks’ employment with the
Company or
his resignation from the Company. This Agreement expressly covers, but is not limited to, any
claims that Hicks may have raised under any state or federal statutory or common law
prohibiting
discrimination in employment on the basis of age, gender, disability, race, national origin,
religion,
“whistleblower” or on any other basis prohibited by law including claims arising under Title
VII of
the Civil Rights Act of 1964, Section 21.051 of the Texas Labor Code, and the Americans with
Disabilities Act.

     In addition and in consideration of the promises contained in this Agreement, Hicks hereby
waives, releases and forever discharges, and agrees that he will not in any manner institute,
prosecute, or pursue, any complaint, claim, charge, demand, or suit, whether in law or in equity,
which asserts or could assert at common law or any statute, rule or any grounds whatsoever, any
claim or claims under the federal Age Discrimination in Employment Act, 29 U.S.C. §621 et seq.,
against any one or all of the releasees with respect to any event, matter, claim, damage, or
injury, whether known or unknown, arising out of his employment and resignation of employment with
the Company and its subsidiaries and/or the execution of this Agreement.

     9. Reasonable Assistance & Cooperation. In consideration of the severance payment
and other benefits provided to Hicks in this Agreement, from the Effective Date through
January 13,
2006, Hicks agrees to provide reasonable assistance and cooperation to Hastings regarding
certain
items and areas over which he managed or otherwise worked on while employed at the Company,

	 	 	 
	SEVERANCE AGREEMENT AND RELEASE
	 	Page 3

 

 

not to exceed twenty (20) hours per month or a total of thirty (30) hours overall. Hicks
acknowledges and agrees that his receipt of the severance payment and other benefits provided for
in this Agreement are contingent upon his good faith efforts to provide reasonable assistance and
cooperation during the transition period identified in paragraph 1 above. Further, the parties
acknowledge and agree that “reasonable assistance and cooperation” includes both parties, including
their representatives or family members, refraining from communicating in any manner any
disparaging remarks, comments or gestures concerning each other or any employee, officer or agent
of Hastings. Hicks agrees to hold an exit interview upon his final day of employment, and the
Parties agree that anything stated in the exit interview will not violate any of the terms of this
Agreement.

     10. COBRA. Hicks hereby acknowledges that Hastings or its authorized designee has
advised him that pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985
(COBRA) he has the right to elect continued coverage under the Company’s group health plan at
his
own expense once Hastings stops paying for his health insurance under paragraph 2. Such
election
must be made no later than sixty (60) days after his resignation.

     11. No Admission of Fault on Behalf of Hastings. This Agreement shall not in any way
be construed as an admission by Hastings, its agents, employees, directors, officers,
representatives, or assigns, or its subsidiaries, of any act of wrongdoing whatsoever against
Hicks or any other person.

     12. Complete Agreement. This Agreement sets forth the entire agreement between the
parties hereto and fully supersedes any and all prior agreements or understandings between the
parties hereto pertaining to the subject matter hereof.

     13. Acknowledgment of Right to Seek Counsel. Hicks acknowledges that he has a
complete and unequivocal right to seek legal advice and/or representation from any attorney of
his choice regarding the matters set forth in this Agreement. Hicks acknowledges that he has
either consulted with counsel and is satisfied with the representation he received with respect to
this Agreement, or he acknowledges that he has knowingly and voluntarily waived his right to seek
legal representation.

     14. Choice of Forum and Venue. The terms of this Agreement shall be construed in
accordance with the laws of the State of Texas. Any proceeding brought to enforce or interpret
this Agreement shall be brought in Potter County, Texas.

     15. Time to Sign and Revoke Agreement. In accordance with the Older Workers
Benefit Protection Act, 29 U.S.C. §626(f)(l), Hicks acknowledges and agrees that he has the
right to examine the terms of this Agreement for twenty-one (21) calendar days from the date he first
received this Agreement before executing the Agreement, but has chosen to waive this right.

	 	 	 
	SEVERANCE AGREEMENT AND RELEASE
	 	Page 4

 

 

     Hicks understands that for a period of seven (7) calendar days after he executes this
Agreement he has the right to revoke it and this Agreement shall not become effective and
enforceable until after the passage of this seven day period without Hicks having revoked it.
Non-revocation shall be evidence by an executed copy of the attached Statement of Non-Revocation.
This Agreement may not be revoked after the seven day period.

     16. Confidentiality, Non-Disclosure Following Termination and Covenant Not to Compete. Hicks
acknowledges and stipulates that: 1) during the time he worked for Hastings, he was placed in a
position to become acquainted with Hastings’ Proprietary and Confidential Information (defined
below); 2) the use or disclosure of Proprietary and Confidential Information by Hicks, except as
expressly authorized by Hastings, is prohibited and would seriously damage Hastings; 3) in
addition to being given access to Proprietary and Confidential Information Hicks received material
benefits as a result of his employment, including compensation and experience; and 4) in addition
to the foregoing, Hicks agrees as follows:

	 	A.	Hicks and his immediate family shall not, without the prior
written consent of
Hastings, directly or indirectly:

	 	(i)	 	disclose, divulge, furnish or make accessible
to any person, or copy, take or use in any manner, any of the
Proprietary and Confidential Information of Hastings;
	 
	 	(ii)	 	take any action that might reasonably or
foreseeably be expected to compromise the confidentiality or proprietary
nature of any of the Proprietary and Confidential Information of
Hastings;
	 
	 	(iii)	 	fail to follow the reasonable guidelines
established by Hastings from time to time regarding the confidential
and proprietary nature of the Proprietary and Confidential
Information; or
	 
	 	(iv)	 	divulge, furnish or make accessible to any
other employee of Hastings a copy of this Agreement, or in any other
manner divulge the contents thereof.
	 
	 	(v)	 	discuss or disclose information relating to
his employment or matters or issues relating to the Company.

	 	B.	 	Hicks agrees to return all documents, discs, files, software,
compilations of information, or any other materials provided or made available to him by
Hastings (including all copies of any such material) that contain
Proprietary and Confidential Information as defined by this Agreement.

	 	 	 
	SEVERANCE AGREEMENT AND RELEASE
	 	Page 5

 

 

	 	C.	 	“Proprietary and Confidential Information” means all of the data,
documents,
materials, information and ideas of Hastings, including, without limitation:
any and all applicant and employee records and information, customer and
vendor records and information, operation methods and information,
marketing information and strategies, accounting and financial information,
internal publications and memoranda, goodwill, this Agreement and its
contents, computer systems, software, and other matters considered
proprietary or confidential by Hastings. Proprietary and Confidential
Information shall not include: (i) any information or material that Hicks can
establish has become publicly available; (ii) any information or material
required to be disclosed by order of a court of competent jurisdiction; or
(iii)
any otherwise confidential information or material that Hastings* Board of
Directors allows to be disclosed by Hicks, as evidenced by the Board’s
written consent for such disclosure.
	 
	 	D.	 	Covenant Not to Compete.
	 
	 	(a)	 	Length of Time and Area. For a period of ten(10) months after
the Effective
Date, Hicks shall not accept any position with Blockbuster, Inc., Movie
Gallery, Inc., or Best Buy Co., Inc.
	 
	 	(b)	 	The ownership by Hicks of ten percent (10%) or less of a
publicly-traded
class of securities in one of the above-named companies shall not be deemed
a violation of this Section 16.
	 
	 	(c)	 	Reasonableness of Limitations. Hicks acknowledges and agrees
that the
covenant not to compete contained this Section 16 is ancillary to or part of
this Severance Agreement and Release and that the limitations contained in
this covenant not to compete (1) are reasonable limitations as to time,
geographical area, and scope of activity to be restrained; (2) do not impose
a greater restraint than is necessary to protect the business interests of
Hastings, which, not by limitation, include the Proprietary and
Confidential Information; and (3) will not create a hardship on Hicks.
	 
	 	(d)	 	Partial Invalidity. If for any reason any court of competent
jurisdiction determines that the restrictions contained in this covenant not to compete
are not reasonable, that the consideration is inadequate, or that Hicks has been
prevented from earning a livelihood, such restrictions should be interpreted,
modified, or rewritten to include as much of the duration, scope, and
geographic area identified in this Section 16 as will render such
restrictions valid and enforceable.

	 	 	 
	SEVERANCE AGREEMENT AND RELEASE
	 	Page 6

 

 

	 	(e)	 	Nonsolicitation of Employees. For a period of ten months (10) months
following the Effective Date, Hicks shall not directly solicit, encourage, or
induce any other employees of Hastings to terminate employment with
Hastings or employ or offer employment to any such other employee of
Hastings.

	 	17.	 	Assignment of Intellectual Property.

	 	A.	 	Hicks agrees that any idea, innovation, concept, useful article, software,
program, database, system, modification to an existing system or program, or
other analytical tool he created or developed as part of his employment with
Hastings (collectively referred to as ‘“Development”) shall be the sole
exclusive property of Hastings, and Hicks agrees that he retains no
intellectual property rights in any such Development. As such, Hicks
expressly assigns to Hastings all right, title and interest in any and all
Developments, made or conceived solely or jointly by Hicks, whether or not
such Developments are patentable, copyrightable, or protectable in any other
manner, that relate in any way to the business or operations of Hastings.
	 
	 	B.	 	The assignment of any Development only applies to any
Development(s) created while Hicks was employed by Hastings.
	 
	 	C.	 	To the extent Hicks claims that any Development was his own
intellectual property prior to the date he began his employment with Hastings, Hicks
agrees to list such Development below, with a brief description that is
sufficient to allow the parties to easily identify what Hicks claims as his
own. Hicks claims the following Development(s) as his own creation prior to the
date he began his employment with Hastings, and does not assign his right,
title and interest in such Development(s) to Hastings:

None

	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

	 	 	 	(Write “NONE” if no prior Developments exist).
	 
	 	D.	 	Excluded from Hicks’ assignment of his Developments are the
following, which Hicks cannot assign to Hastings because of a prior agreement with
                                        , which is effective until                    .

	 	 	 
	 

	 	 

None

	 

	 	 

	 	 	 
	SEVERANCE AGREEMENT AND RELEASE
	 	Page 7

 

 

	 	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

	 	 	 	                    (Write “NONE” if no prior agreements exist).

	 	E.	 	Hastings and its licensees are not required to designate Hicks
as the author or creator of any Development assigned in this paragraph 16 when
distributing the Development publicly or otherwise. To the extent Hicks writes
any article in any publication or trade journal referencing or relating to any
Development, the article shall be considered a joint work of Hastings and
Hicks, shall recognize both Hastings and Hicks as joint authors, and shall
include information identifying Hicks as an employee of Hastings.

     18. Right to Injunctive Relief and Other Remedies. If it is determined that Hicks has
breached any of the covenants contained in paragraphs 8, 16, and 17, Hastings may obtain an
injunction prohibiting such breach. Hicks expressly stipulates and agrees that his obligations
under this Agreement are specifically enforceable by temporary and permanent injunctive relief.
Hicks further agrees that Hastings shall not be required to post a bond in order to obtain
injunctive relief against Hicks for violating any of the covenants contained in paragraphs 8, 16, and 175, or if
a bond is required by law or by any court of competent jurisdiction, Hicks hereby agrees to a bond in
the lowest amount permitted by law. Nothing in this paragraph shall be deemed to deny Hastings the
right to seek damages, or any other remedy that may be available, in addition to the
injunctive provided herein.

     19. Notices. All communications and notices between the parties hereto shall be given at
the following addresses:

Hastings Entertainment, Inc.

c/o Dave Moffatt, Vice-President Human Resources

3601 Plains Blvd.

Amarillo, Texas 79102

Steve Hicks

1228 South Lamar

Amarillo, TX 79102

Notice under this Agreement will be considered to have been accomplished on the date the party
deposits in the United States Mail a copy of the notice at issue, which must be properly addressed
using the addresses identified in this paragraph, postage prepaid with adequate postage thereon.

	 	 	 
	SEVERANCE AGREEMENT AND RELEASE
	 	Page 8

 

 

     20. INDEMNITY. HICKS AGREES TO INDEMNIFY, RELEASE, DEFEND AND HOLD HARMLESS HASTINGS
AND ITS EMPLOYEES, AFFILIATES, AND ASSIGNS FROM ANY AND ALL LIABILITY, CLAIMS, LOSSES, COSTS,
ATTORNEYS’ FEES AND/OR DAMAGES OF ANY SORT THAT ARISE OR RESULT FROM THE BREACH OF ANY WARRANTIES
OR REPRESENTATIONS MADE IN THIS AGREEMENT.

     HASTINGS AGREES TO INDEMNIFY, RELEASE, DEFEND AND HOLD HARMLESS HICKS FROM ANY AND ALL
LIABILITY, CLAIMS, LOSSES, COSTS, ATTORNEYS’ FEES AND/OR DAMAGES OF ANY SORT THAT ARISE OR RESULT
FROM THE PERFORMANCE OF HICKS’ DUTIES CONDUCTED IN GOOD FAITH WHILE ACTING ON HASTINGS’ BEHALF OR
THE BREACH OF ANY WARRANTIES OR REPRESENTATIONS MADE BY IT IN THIS AGREEMENT.

     BY SIGNING BELOW, HICKS ACKNOWLEDGES THAT HE HAS READ AND CAREFULLY CONSIDERED THIS AGREEMENT
AND UNDERSTANDS THAT IT IS A FULL RELEASE OF ALL CLAIMS KNOWN OR UNKNOWN. HICKS ACKNOWLEDGES AND
AFFIRMS THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS CONCERNING THIS AGREEMENT AND HE HAS HAD
HIS QUESTIONS ANSWERED TO HIS COMPLETE SATISFACTION. HICKS ACKNOWLEDGES THAT HE IS SIGNING THIS
AGREEMENT FREELY AND VOLUNTARILY.

	 	 	 	 	 
	 	HASTINGS ENTERTAINMENT, INC.,

a Texas corporation

 	 
	 	By:  	/s/ John H. Marmaduke
 	 
	 	Title:  	12/16/05
 	 
	 	  	     on Behalf of the corporation
 	 
	 

	 	 	 	 	 
	 	EMPLOYEE 

 	 
	 	/s/Steve Hicks
 	 
	 	STEVE HICKS        	 
	 	12/14/05
 	 
	 	Date
 	 
	 

	 	 	 
	SEVERANCE AGREEMENT AND RELEASE
	 	Page 9

 

 

STATEMENT OF NON-REVOCATION

     By signing below, 1 hereby verify that I have chosen not to revoke my Agreement to and
execution of the “Severance Agreement and Release” dated December 16, 2005 between myself and
HASTINGS ENTERTAINMENT, INC. My signature below confirms my continued agreement to the terms of
that Agreement in all its particulars including my release and waiver of any and all claims
relating to my employment and voluntary resignation of employment with HASTINGS ENTERTAINMENT, INC.

	 	 	 	 	 
	/s/ Steve Hicks
	 	12/22/05	 	 
	 

	 	 
Date	 	 
	/s/
Dave Moffatt
	 	12/22/05	 	 
	 

	 	 

Date
	 	 
	Dave Moffatt
	 	 	 	 
	 

V.P. of HR

	 	 	 	 

NOTICE: DO NOT SIGN, DATE OR RETURN THIS DOCUMENT UNTIL EIGHT (8) DAYS AFTER YOU SIGN THE
“SEVERANCE AGREEMENT AND RELEASE.”

	 	 	 
	SEVERANCE AGREEMENT AND RELEASE
	 	Page 10exv10w25

 

Exhibit 10.25

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

     This Fifth Amendment to Loan and Security Agreement (the “Fifth Amendment”) is made as of this 28th
day of” February, 2006 by and among

     Fleet Retail Group, LLC, f/k/a Fleet Retail Group, Inc., f/k/a Fleet Retail Finance Inc. (the
“Agent”), a Delaware limited liability company with its principal executive offices at 40 Broad
Street, Boston, Massachusetts, for the Revolving Credit Lenders party to the Agreement (defined
below), and

     The CIT Group/Business Credit, Inc. (the “Co-Agent”), a New York corporation with offices at 300
South Grand Avenue, Los Angeles, California 90071, and

     The Revolving Credit Lenders party to the Agreement, and

     Hastings Entertainment, Inc. (the “Borrower”), a Texas corporation with its principal executive
offices at 3601 Plains Boulevard, Amarillo, Texas 79102

in consideration of the mutual covenants herein contained and benefits to be derived herefrom.

W I T N E S S E T H:

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

     WHEREAS, the Agent, the Co-Agent, the Revolving Credit Lenders and the Borrower desire to modify
certain provisions of the Agreement as set forth herein.

     NOW, THEREFORE, it is hereby agreed among the Agent, the Co-Agent, the Revolving Credit Lenders and
the Borrower as follows:

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

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

88%

1

 

and substituting the following in its stead:

85%

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

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

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

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

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

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

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

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 III above (even if the Average Availability
requirements for another Level have been met), and interest shall be determined in the manner set
forth in Section 2-1l(f).”

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

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

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

August 29, 2007

and substituting the following in its stead:

August 29, 2011

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

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

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

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

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

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

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

3

 

$80,000,000.00

and substituting the following in its stead:

$100,000,000.00

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

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

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

$10,000,000.00

and substituting the following in its stead:

$20,000,000.00

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

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

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

4

 

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

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

	5.	 	Amendments to Exhibits.

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

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

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

5

 

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

	9.	 	Miscellaneous.

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

6

 

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

[remainder of page left intentionally blank]

7

 

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

	 	 	 	 	 	 	 
	 	 	HASTINGS ENTERTAINMENT, INC.	 	 
	 

	 	 	 	 	 	(“Borrower”)
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Dan Crow
 

Dan Crow
	 	 
	 

	 	Title:
	 	CFO / Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	FLEET RETAIL GROUP, LLC	 	 
	 

	 	 	 	 	 	(“Agent”)
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Daniel Platt
 

Daniel Platt
	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	THE CIT GROUP/BUSINESS CREDIT, INC.	 	 
	 

	 	 	 	 	 	(“Co-Agent”)
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Adrian Avalos
 

Adrian Avalos
	 	 
	 

	 	Titte:
	 	VP	 	 

8

 

The “Revolving Credit Lenders”

	 	 	 	 	 	 	 
	 	 	FLEET RETAIL GROUP, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Daniel Platt
 

Daniel Platt
	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	THE CIT GROUP/BUSINESS CREDIT, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Adrian Avalos
 

Adrian Avalos
	 	 
	 

	 	Title:
	 	VP	 	 

9

 

EXHIBIT 2:2-22

REVOLVING CREDIT LENDERS’ COMMITMENTS

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

10

 

February 28, 2006

Fleet Retail Group, LLC, As Agent

40 Broad Street

Boston, Massachusetts 02108

     Re: Amendment to Loan Arrangement with Hastings Entertainment, Inc.

Gentlemen:

     Reference is made to a certain loan arrangement originally dated as of August 29, 2000 (the
“Loan Arrangement”) entered into by and among Hastings Entertainment, Inc., a Texas corporation
(the “Borrower”) and Fleet Retail Finance Inc., n/k/a Fleet Retail Group, LLC, as Agent (the
“Agent”) and The CIT Group/Business Credit, Inc. (the
“Co-Agent”) for a syndicate of Revolving
Credit Lenders, and such Revolving Credit Lenders pursuant to which such Revolving Credit Lenders
established a revolving line of credit in the Borrower’s favor in accordance with the terms of a
Loan and Security Agreement dated August 29, 2000 (as amended and in effect, the “Loan
Agreement”). Unless otherwise defined herein, all capitalized terms used herein shall have the
meaning set forth in the Loan Agreement.

     The undersigned have each guarantied the Liabilities of the Borrower pursuant to their
respective Guaranties dated August 29, 2000 (singly, a “Guaranty” and collectively, the
“Guaranties”).

     The Borrower, the Agent and the Revolving Credit Lenders desire to modify and amend the terms
of the Loan Agreement pursuant the terms and conditions of a certain Fifth Amendment to Loan and
Security Agreement of even date (the “Amendment”), pursuant to which, among other things, the
Agent, the Revolving Credit Lenders and the Borrower have agreed to extend the Maturity Date and
increase the amount of the Revolving Credit Ceiling to $100,000,000.00. The Agent and the
Revolving Credit Lenders have indicated that they will not enter into such Amendment unless, among
other things, the undersigned execute and deliver this letter. Therefore, to induce the Agent and
the Revolving Credit Lenders to enter into the Amendment, the undersigned each hereby:

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

 

 

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

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	Witness:	 	HASTINGS COLLEGE STORES, INC.
	 
	 	 	 	 
	/s/ Lois Ross

	 	By:
	 	/s/ Dan Crow
	 

	 	 	 	 
	 

	 	Name:
	 	Dan Crow
	 

	 	Title:
	 	President
	 
	 	 	 	 
	Witness:	 	HASTINGS INTERNET, INC.
	 
	 	 	 	 
	/s/ Lois Ross

	 	By:
	 	/s/ Dan Crow
	 

	 	 	 	 
	 

	 	Name:
	 	Dan Crow
	 

	 	Title:
	 	President
	 
	 	 	 	 
	Witness:	 	HASTINGS PROPERTIES, INC.
	 
	 	 	 	 
	/s/ Lois Ross

	 	By:
	 	/s/ Dan Crow
	 

	 	 	 	 
	 

	 	Name:
	 	Dan Crow
	 

	 	Title:
	 	President

-2-

 

Acknowledged and Agreed to:

Fleet Retail Group, LLC, as Agent

and Revolving Credit Lender

	 	 	 	 	 
	By:

	 	/s/ Daniel Platt
 

	 	 
	Name:

	 	Daniel Platt	 	 
	Title:

	 	Managing Director	 	 

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

and Revolving Credit Lender

	 	 	 	 	 
	By:

	 	/s/ Adrian Avalos
 

	 	 
	Name:

	 	Adrian Avalos	 	 
	Title:

	 	VP	 	 

-3-

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