Exhibit 10.7

 

GOLFSMITH INTERNATIONAL HOLDINGS, INC.

 

SEVERANCE PLAN

 

PREAMBLE

 

Golfsmith International Holdings, Inc. (the “Company”) desires to have a
severance pay policy for eligible employees of its participating subsidiaries
providing payments to certain terminated employees.   The Golfsmith
International Holdings, Inc. Severance Plan set forth herein (the “Plan”)
formalizes such severance pay policy as it applies to all eligible employees of
such subsidiaries.  The effective date of the Plan is January 1, 2009.   The
Plan supersedes and replaces all prior severance pay plans of the Company and
its participating subsidiaries.

 

Section 1.  Definitions.

 

1.1           “Base Salary” shall mean the Participant’s annual rate of base pay
on the date of his or her Involuntary Separation from Service, such amount to
exclude overtime, incentive pay, bonuses, and any other special forms of
allowance or compensation paid or payable to the Participant, provided that a
Participant whose pay depends at least in part on commissions, his or her annual
rate of base pay for purposes of the immediately preceding sentence shall
include the amount of commissions that the Plan Administrator determines that he
or she earned from the Participating Employer during the calendar year that
immediately precedes the calendar year of the Participant’s Involuntary
Separation from Service (or, if the Participant was employed for less than a
year, such determination shall be made on an annualized basis).  For purposes of
the first sentence of this Section 1.1, a Participant’s Base Salary shall
include any elective salary deferrals under a tax-qualified retirement plan
maintained by the Company or any Participating Employer (or any non-qualified
plan designed to mirror any such tax-qualified plan), but shall not include
(a) any employer matching or other contributions on such Participant’s behalf to
any such tax-qualified plan (or any such mirror plan) or (b) any employer
contributions on behalf of such Participant under any cafeteria, flexible
spending or other plan subject to Section 125 of the Code, which such
Participant has elected to be distributed in cash.  One month of Base Salary
shall mean the Participant’s Base Salary divided by 12 and one week of Base
Salary shall mean the Participant’s Base Salary divided by 52.  Base Salary for
purposes of the Plan shall be determined by the Plan Administrator.

 

1.2           “Cause” shall mean the occurrence of any of the following events:

 

(A)           THE PARTICIPANT HAS MISAPPROPRIATED ANY FUNDS OR PROPERTY OF THE
COMPANY OR ITS SUBSIDIARY OR OF A FELLOW EMPLOYEE;

 

(b)           the Participant has been convicted of a felony;

 

(c)           the Participant has obtained personal profit from any transaction
of the Company or its subsidiary with a third party without the prior approval
of such profit by the Company;

 

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(d)           the Participant has been warned in writing about poor performance
and after counseling has failed to improve his or her performance to an
acceptable level;

 

(e)           the Participant engages in on-the-job personal conduct below the
standards the Company or a Participating Employer may reasonably expect;

 

(f)            the Participant illegally possesses or uses a drug or narcotic;

 

(g)           the Participant willfully destroys property of the Company or its
subsidiary;

 

(h)           the Participant has made any untrue or material omission on or in
support of the Participant’s application for employment with a Participating
Employer, regardless of when discovered, and/or the Participant has falsified
business or personnel records of the Company or its subsidiary; or

 

(i)            the Participant commits any act intended to damage the reputation
of the Company or its subsidiary and/or their respective employees or which, in
fact, damages the reputation of the Company and/or any such subsidiary or
employees.

 

1.3           “Code” means the Internal Revenue Code of 1986, as amended.

 

1.4           “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended.

 

1.5           “Involuntary Separation from Service” means a termination of the
Participant’s services with a Participating Employer and its affiliates that is
either (a) initiated by the Participating Employer, or (b) due to a resignation
by the Participant within two years following a nonconsensual and material
reduction in his or her base salary or a material diminution in his or her
duties or responsibilities, provided that the Participant shall have provided
written notice to the Participating Employer of the existence of such a
condition within 90 days of the initial existence of such condition, and the
Participating Employer shall not have remedied such condition within 60 days
following receipt of such notice by the Participating Employer.  Notwithstanding
the foregoing, an Involuntary Separation from Service shall not include any
termination of services due to (i) the sale of a facility, division or
subsidiary where the Participant is offered substantially equivalent employment
by the purchaser, (ii) death of the Participant, (iii) the Participant’s
disability (as defined under the Company’s long-term disability plan) or
retirement on or after attainment of age of 65 (in each case as determined by
the Plan Administrator (as defined in Section 5.1 of the Plan), or
(iv) termination of the Participant’s employment by the Participating Employer
due to the existence of Cause.  For purposes of this Section 1.5, “affiliates”
means any entity that would be aggregated with the Participating Employer for
purposes of Section 1.409A-1(h)(3) of the Treasury Regulations.

 

1.6           “Participant” means each eligible employee who participates in the
Plan in accordance with Section 2 of the Plan.

 

1.7           “Participating Employer” means any subsidiary of the Company
designated by the Plan Administrator as a Participating Employer for purposes of
the Plan.

 

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1.8           “Severance Pay” means the amount of severance pay payable to a
Participant in accordance with Section 4.1 of the Plan

 

1.9           “Severance Period” means, with respect to any Participant, the
period of time with respect to which Severance Pay are payable to such
Participant in accordance with Section 4.1 of the Plan.

 

1.10         “Year of Service” means continuous employment with a Participating
Employer for 12 consecutive calendar months, commencing on the date the
Participant’s employment with the Participating Employer last commenced, and
each anniversary of such date thereafter during such period of the Participant’s
employment, but including any period of paid leave of absence, vacation, holiday
or sick time, and paid short-term disability leave occurring during such period
of continuous employment.

 

Section 2.  Participation.

 

2.1           Except as provided in Section 2.2 of the Plan, each full-time
employee of a Participating Employer shall be eligible to participate in the
Plan.   For purposes of the Plan, a full-time employee is an employee of a
Participating Employer who is regularly scheduled to work at least 35 hours per
week.

 

2.2           Employees covered by employment agreements or other individual
arrangements with a Participating Employer that contain provisions relating to
post-termination of employment salary continuation or other monetary severance
payments are not eligible to participate in the Plan.

 

Section 3.  Eligibility for Severance Pay.  Each Participant shall be entitled
to Severance Pay determined under Section 4 of the Plan upon any Involuntary
Separation from Service, provided that the Participant executes, delivers to the
Plan Administrator, and does not revoke, a general release of claims, in a form
acceptable to the Company, in each case, within 60 days following the
Participant’s Involuntary Separation from Service.

 

Section 4.  Severance Pay.The amount of Severance Pay potentially payable to any
Participant under the Plan shall be determined by (i) the position of the
Participant with the Company and (ii) the number of full Years of Service
completed by the Participant immediately prior to Participant’s Involuntary
Separation from Service as set forth in the following table:

 

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Officer

Base Salary

Director

 

< 1 Year of Service

 

2 weeks of Base Salary

1 Years of Service

 

3 weeks of Base Salary

2 Years of Service

 

6 weeks of Base Salary

3 Years of Service

 

9 weeks of Base Salary

4 – 6 Years of Service

 

12 weeks of Base Salary

7 – 10 Years of Service

 

15 weeks of Base Salary

11 – 15 Years of Service

 

18 weeks of Base Salary

16 – 20 Years of Service

 

22 weeks of Base Salary

> 20 Years of Service

 

26 weeks of Base Salary

 

Manager

 

< 1 Years of Service

 

1 week of Base Salary

1 Years of Service

 

2 weeks of Base Salary

2 Years of Service

 

4 weeks of Base Salary

3 Years of Service

 

6 weeks of Base Salary

4 – 6 Years of Service

 

8 weeks of Base Salary

7 – 10 Years of Service

 

10 weeks of Base Salary

> 10 Years of Service

 

12 weeks of Base Salary

 

Exempt (and not Officer, Director or Manager)

 

< 1 Year of Service

 

1 week of Base Salary

1 Year of Service

 

2 weeks of Base Salary

2 Years of Service

 

4 weeks of Base Salary

3 Years of Service

 

6 weeks of Base Salary

4 – 6 Years of Service

 

8 weeks of Base Salary

7 – 10 Years of Service

 

10 weeks of Base Salary

> 10 Years of Service

 

12 weeks of Base Salary

 

Non-Exempt

 

< 1 Year of Service

 

1 week of Base Salary

2 Years of Service

 

2 weeks of Base Salary

3 Years of Service

 

4 weeks of Base Salary

4 – 6 Years of Service

 

7 weeks of Base Salary

> 6 Years of Service

 

10 weeks of Base Salary

 

4.2           Severance Pay shall be paid to Participants in substantially equal
installments at the same frequency as payments of salary were made to the
Participant prior to the Participant’s Involuntary Separation from Service,
commencing within 75 days following the date of the Participant’s Involuntary
Separation from Service.  All Severance Pay to a Participant will cease, and
such Participant’s Severance Period shall end, upon such Participant’s
subsequent employment by any employer.

 

4.3           Notwithstanding the foregoing, a Participant who is a “specified
employee” within the meaning of Section 409A of the Code shall not be entitled
to receive Severance Pay or other benefits, to the extent that such pay or
benefits provide for a deferral of compensation within the meaning of
Section 409A of the Code, before the date that is six months after his or her
Involuntary Separation from Service or, if earlier, his or her date of death. 
At the conclusion of such six-month period, the specified employee shall
commence receipt of his or her Severance Pay (without interest) to the extent he
or she is otherwise entitled to commence receipt of such pay or benefit at such
time under the Plan.

 

Section 5.  Administration and Claims.

 

5.1           The Plan shall be administered by the Vice President of Human
Resources of the Company (the “Plan Administrator”).  The Plan Administrator
shall have full and final responsibility and authority, in its sole discretion,
for the administration of the Plan including, without limitation, the authority
to interpret and apply provisions of the Plan and construe all of the Plan’s
terms, to authorize Severance Pay in accordance with Section 4 of the Plan, to

 

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establish and enforce such rules and regulations as the Plan Administrator shall
deem proper for the efficient administration of the Plan, to correct any defect,
supply any omission or reconcile any inconsistency in the Plan, and to determine
eligibility for Plan participation and the entitlement to and amount of
Severance Pay or other benefits which shall be payable or provided to any person
in accordance with the provisions of the Plan.  In exercising such powers and
authorities, the Plan Administrator shall at all times exercise good faith,
apply standards of uniform application, and refrain from arbitrary action.  All
determinations, decisions, interpretations and actions by the Plan Administrator
with respect to the Plan shall be final, conclusive and binding on all
Participants and any other persons having or claiming to have any right under or
interest in the Plan.  The Plan Administrator may allocate or delegate, in whole
or in part, its responsibilities for the administration of the Plan to others
and employ others to carry out or give advice with respect to its
responsibilities under the Plan.  Notwithstanding any other provisions of the
Plan to the contrary, all determinations, decisions, interpretations and actions
by the Plan Administrator with respect to officers of the Company under the Plan
shall be subject to review and approval by the Compensation Committee of the
Board of Directors of the Company.

 

5.2           A terminated employee who believes he or she is eligible for
Severance Pay or other benefits pursuant to the Plan may make a claim for
benefits by submitting a claim to the Plan Administrator at the following
address:

 

Golfsmith International Holdings, Inc.

c/o Human Resources Department

11000 North IH – 35

Austin, TX 78753

 

5.3           Any claim by a Participant or any other employee or former
employee of the Company (“Claimant”) with respect to eligibility, participation,
benefits or payments under the Plan, or other aspects of the operation of the
Plan shall be made in writing to the Plan Administrator or such other person
designated by the Plan Administrator from time to time for such purpose.  The
Plan Administrator or its delegee shall review all claims for benefits under the
Plan and shall give due consideration to all claims presented.  The Plan
Administrator or designated person receiving a claim shall notify the Claimant
in writing (which may be transmitted electronically) of its decision on the
claim within 90 days after receipt thereof.  In the event of special
circumstances, the 90-day period may be extended for a period of up to 90 days
(for a total of 180 days).  If the initial 90-day period is extended, the Plan
Administrator or its designee shall notify the Claimant in writing (which may be
transmitted electronically) within 90 days of receipt of the claim.  Such notice
of extension shall indicate the special circumstances requiring such extension
of time and provide the date by which the Plan Administrator expects to make a
determination with respect to such claim.

 

Any adverse benefit determination with respect to a Claimant’s claim for a
benefit shall be stated in writing (which may be transmitted electronically) and
shall state clearly, in language calculated to be understood by the Claimant:

 

(a)           the specific reason or reasons for the adverse benefit
determination;

 

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(b)           references to the specific provisions of the Plan on which the
adverse benefit determination is based;

 

(c)           a description of the additional material or information (if any)
that the Claimant shall provide to the Plan Administrator in order for the Plan
Administrator to reconsider the claim and an explanation of why such material or
information is necessary; and

 

(d)           a description of the appeals procedures under the Plan, and the
time limits applicable to such procedures, including a statement of the
Claimant’s right to bring a civil action under Section 502(a) of ERISA following
an adverse benefit determination on review.

 

For purposes of the Plan, an “adverse benefit determination” is a (i) denial of
a benefit, (ii) reduction or termination of a benefit, or (iii) failure to
provide or make a payment (in whole or in part) for a benefit.  For purposes of
the foregoing, any such (A) denial, (B) reduction or termination or (C) failure
to provide or make a payment for a benefit that is based upon eligibility is an
“adverse benefit determination.”

 

5.4           A Claimant may appeal an adverse benefit determination with
respect to his claim by submitting a written request for review to the Plan
Administrator, within sixty (60) days after receipt of written notice of such
adverse benefit determination.  The Plan Administrator shall then review such
claim.  A Claimant or his authorized representative may (a) upon request and
free of charge, be provided with reasonable access to, and copies of the Plan
document and all other relevant documents, records and other information
relevant to the Claimant’s claim, and (b) submit written comments, documents,
records and other information relating to such claim.  The review of the claim
determination shall take into account all comments, documents, records and other
information submitted by the Claimant relating to his claim, without regard to
whether such information was submitted or considered in the initial claim
determination.

 

If the Claimant appeals in accordance with the foregoing, the Plan Administrator
shall render its final decision on the Claimant’s claim, setting forth the
specific reasons therefor in writing (which may be transmitted electronically),
within 60 days after the Plan Administrator’s receipt of the request for review,
but this period may be extended by the Plan Administrator for up to an
additional 60 days in special circumstances.  Written notice (which may be
transmitted electronically) of any such extension of time, including the nature
of such special circumstances and the date by which the Plan Administrator
expects to render its decision, shall be sent to the Claimant.  In the case of
an adverse benefit determination on review, the written notice (which may be
transmitted electronically) to the Claimant of the Plan Administrator’s decision
on review shall state clearly, in language calculated to be understood by the
Claimant:

 

A.            THE SPECIFIC REASON OR REASONS FOR THE ADVERSE BENEFIT
DETERMINATION ON APPEAL;

 

B.            reference to specific provisions of the Plan on which the adverse
benefit determination is based;

 

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C.            a statement that the Claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, the Plan document and
all documents, records, and other information relevant to the Claimant’s claim;
and

 

D.            a statement of the Claimant’s right to bring an action under
Section 502(a) of ERISA.

 

A Claimant must fully exercise all appeal rights provided herein prior to
bringing a civil action under Section 502(a) of ERISA.  The Plan Administrator’s
decision on review shall be final and binding on any claimant or any successor
in interest.

 

Section 6.  Funding.         The Plan is an unfunded employee welfare benefit
plan as defined in Section 3(1) of ERISA.  Severance pay and benefits payable
under the Plan shall be paid from the general assets of the Company or its
subsidiary, if and when such severance pay and benefits are owed.  No
Participant or any other person shall have any rights to or interest in any
specific assets or accounts of the Company or any subsidiary of the Company by
reason of the Plan.

 

Section 7.  Miscellaneous.

 

7.1           The Company and/or any Participating Employer shall have the
authority to withhold or to cause to have withheld applicable income and payroll
taxes from any payments made under the Plan to the extent required by law.

 

7.2           The Plan shall not be deemed to constitute a contract of
employment, or impose on any Participating Employer any obligation to retain any
Participant as an employee, to continue any Participant’s current employment
status or to change any employment policies of any Participating Employer; nor
shall any provision hereof restrict the right of any Participating Employer to
discharge any of its employees or restrict the right of any such employee to
terminate his employment with any Participating Employer.

 

7.3           If a Participant dies after qualifying for Severance Pay under the
Plan but before receiving all payments scheduled under the Plan, any unpaid
amounts of such Severance Pay shall be paid to the Participant’s estate in a
lump sum.

 

7.4           No Participant or his or her estate shall have the right to
alienate, assign, commute or otherwise transfer or encumber any benefit under
the Plan for any purpose whatsoever (whether voluntarily or involuntarily) and,
except to the extent prohibited by applicable law, any attempt to do so shall be
disregarded completely as null and void.

 

7.5           In the event a Participant discloses to any unauthorized person
information relating to the business of the Company or its subsidiaries which is
confidential or breaches any contract (including the general release described
in Section 3 of the Plan) with or violates any legal obligation to the Company
or its subsidiaries, or if the Company or any subsidiary thereof, acting in good
faith determines that it has a claim against a Participant that relates back
directly or indirectly to his or her employment with a Participating Employer,
the Plan Administrator shall have the right to suspend or discontinue
permanently any further payments to or for the benefit of such Participant under
the Plan and/or to offset the Severance Pay otherwise payable to the Participant
under the Plan to the extent deemed necessary to satisfy any debt or other

 

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amount that the Plan Administrator, acting in good faith, determines is owed by
the Participant to the Company or any subsidiary thereof.

 

7.6           The Plan shall be construed and governed under the laws of the
State of Texas, except to the extent Federal law is applicable.

 

Section 8.  Amendment or Termination.       The Plan may be amended or
terminated at any time, with or without notice, by action of the Company.

 

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