SVP Merchandising Employment Agreement - Michael Rigby

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 ...