The Audit Committee undertakes a variety of activities designed to assist our Board in fulfilling its oversight role regarding the professional services and independence of Hastings' independent auditors and our accounts, procedures and internal controls. The Audit Committee acts pursuant to a Charter that was adopted and became effective December 5, 2003 (a copy of which is attached as Exhibit A to this proxy statement). The Audit Committee is responsible for (i) reviewing the scope of, and approving in advance the fees for, the annual audit and any non-audit services, (ii) reviewing with Hastings' independent auditors, the corporate accounting practices and policies and recommending to whom reports should be submitted within Hastings, (iii) reviewing Hastings' independent auditors final report, (iv) reviewing with internal and independent auditors overall accounting and financial controls (v) being available to the independent auditors during the year for consultation purposes, (vi) reviewing the annual audited and quarterly financial statements with the Company's management, it's Disclosure Committee and the independent auditor, including the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations", (vii) discussing the Company's earnings press releases, as well as financial information and earnings guidance provided by the Company to analysts and rating agencies, with the Chief Financial Officer, and (viii) procedures for receiving, retaining, and tracking confidential and anonymous complaints about our accounting, internal controls, or other auditing matters.

The Director Nominating Committee formally nominates individuals for consideration as directors and makes recommendations to the Board of Directors regarding the size, composition, and committees of the Board. A charter has not yet been adopted for the Director Nominating Committee.

The Compensation Committee, among other things, recommends the compensation of our executive officers and recommends grants of options under our stock option plans for consideration by the Board of Directors.

The independent directors of the Company meet in executive session in conjunction with regularly scheduled Board of Director Meetings and more frequently as deemed necessary.

Shareholders and other interested persons seeking to communicate with the Board should submit any communications in writing to the Corporate Secretary, Hastings Entertainment Inc., 3601 Plains Boulevard, Amarillo, Texas 79102. Any such communication must state the number of shares beneficially owned by the shareholder making the communication. The Corporate Secretary will forward such communications to the full Board or to any individual Director or Directors to whom the communication is directed.