<PAGE>
                                                                   Exhibit 10.12

                                  CARL F. PAUL
                              EMPLOYMENT AGREEMENT
                                      WITH
                          GOLFSMITH INTERNATIONAL, INC.

      This is an Employment Agreement entered into between Golfsmith
International, Inc., a Delaware corporation (the "COMPANY"), and Carl F. Paul
("EXECUTIVE").

                                    RECITALS:

      WHEREAS, the Company and Executive desire that Executive provide the
Company employment services upon the terms and conditions set forth below;

      WHEREAS, this Employment Agreement is entered into as a condition of the
parties consummating their obligations under the Agreement and Plan of Merger
(the "MERGER AGREEMENT") dated as of September 23, 2002, by and among the
Company, Golfsmith International Holdings, Inc., a Delaware corporation
("Parent"), and BGA Acquisition Corporation, a Delaware corporation and a
wholly-owned Subsidiary of Parent ("SUB").

      NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, the parties, intending to be legally bound, agree as follows:

                                   AGREEMENT:

SECTION 1. TERM OF EMPLOYMENT

      (a) Effective Date. Subject to the terms and conditions set forth in this
Employment Agreement, the Company agrees to employ Executive, and Executive
agrees to be employed by the Company for the one year period which starts on the
Closing Date (as defined in the Merger Agreement) (the "EFFECTIVE DATE").

      (b) Term. The term of this Employment Agreement is subject to automatic
one year extensions starting on the first anniversary of the Effective Date of
this Employment Agreement and on each subsequent anniversary date, unless
Executive or the Company cancels the automatic extension at least 30 days prior
to the anniversary date.

SECTION 2. DEFINITIONS

      "COMPETING BUSINESS" means (i) any business which designs, distributes,
sells or markets golf equipment and golf related products; or (ii) any other
business in which the Company or any of its subsidiaries is substantially
engaged at the time of the termination of Executive's employment and in which
Executive was substantially engaged on behalf of the
<PAGE>
Company or any of its subsidiaries during the last year of Executive's
employment. Notwithstanding the foregoing, "Competing Business" shall not under
any circumstance include: (w) golf course(s); (x) golf school(s); (y) golf
driving range(s); or (z) any business principally concerned with non-golf
Internet, catalogue, or retail sales; provided, however, that any pro shop
operated in connection with any such golf course, golf school or driving range
must be a Company shop.

      "RESTRICTED PERIOD" means the longer of (x) one year following the
termination of Executive's employment under this Employment Agreement or (y)
five years from the Effective Date.

      "TERM" means the one year period described in Section 1(b).

SECTION 3. POSITION AND RESPONSIBILITIES

      (a) Position. Executive shall act as a Senior Advisor to the Company's
Golf Club Components Division.

      (b) Responsibilities.

            (1) Executive shall advise the Company with respect to its Golf Club
      Components Division and such other duties as authorized by the Board of
      Directors of the Company and/or the President of the Company and agreed to
      by Executive. Such other duties may include attending trade shows,
      visiting vendors and/or suppliers on behalf of the Company, writing
      articles and participating in meetings.

            (2) Executive, as a condition to his employment under this
      Employment Agreement, represents and warrants that he can assume and
      fulfill responsibilities described in Section 3(b)(1) without any risk of
      violating any non-compete or other restrictive covenant or other agreement
      to which he is a party.

      (c) Reporting Relationship. Executive shall report to the Board of
Directors of the Company.

      (d) "As Needed" Basis. Executive shall render his services on "as needed"
basis, as mutually agreed by the parties.

      (e) Geographic Area. Executive shall perform his duties and
responsibilities principally in the Austin, Texas metropolitan area and shall
travel outside of that area as determined in the good faith judgment of the
Board of Directors of the Company and as agreed to by Executive.

SECTION 4. COMPENSATION AND BENEFITS

      (a) Annual Salary. Executive's salary shall be $50,000 per year, which
amount may be reviewed and increased at the discretion of the Board of Directors
of the Company or any


                                       2
<PAGE>
committee of the Board of Directors of the Company duly authorized to take such
action. Executive's base salary shall be payable in accordance with the
Company's standard payroll practices and policies for such positions and shall
be subject to such withholdings as required by law or as otherwise permissible
under such practices or policies.

      (b) Employee Benefit Plans. Executive shall be eligible to participate in
certain specified employee benefit plans, programs and policies maintained by
the Company in accordance with the terms and conditions to participate in such
plans, programs and policies as in effect from time to time, and subject to
Executive's eligibility for such plans, programs and policies as determined by
the Company, provided, however, that the Company will amend its group health
plan in accordance with the terms of the letter agreement between Executive and
the Company, attached hereto as Exhibit A and incorporated herein by reference,
and will otherwise comply with the terms and intent of such letter agreement.

      (c) Vacation. Executive shall continue to receive Executive's base salary
during periods of vacation and other time off. Although there is no fixed limit
to the amount of vacation or other time off Executive may take, Executive is
expected to schedule Executive's vacations and other time off so as not to
materially and adversely interfere with the performance of his responsibilities
under this Employment Agreement.

      (d) Expense Reimbursements. Executive shall have the right to expense
reimbursements in accordance with the Company's standard policy on expense
reimbursements.

      (e) Indemnification. With respect to Executive's acts or failures to act
during his employment in his capacity as an employee or agent of the Company,
Executive shall be entitled to indemnification from the Company, and to
liability insurance coverage (if any), on the same basis as other employees or
agents of the Company.

SECTION 5. TERMINATION OF EMPLOYMENT

      The Board of Directors of the Company shall have the right to terminate
Executive's employment, without liability, at any time with or without cause,
and Executive shall have the right to resign at any time. Upon termination or
resignation, the Company's only obligation to Executive under this Employment
Agreement shall be to pay Executive his earned but unpaid salary, if any, up to
the date Executive's employment terminates. The Company shall only be obligated
to make such payments and provide such benefits under any employee benefit plan,
program or policy in which Executive was a participant as are explicitly
required to be paid to Executive by the terms of any such benefit plan, program
or policy following the date on which Executive's employment terminates.

SECTION 6. COVENANTS BY EXECUTIVE

      (a) Company Property. Executive upon the termination of Executive's
employment for any reason or, if earlier, upon the Company's request shall
promptly return all Company Property which had been entrusted or made available
to Executive by the Company, where the term "PROPERTY" means all records, files,
memoranda, reports, price lists, customer lists, drawings, plans, sketches,
keys, codes, computer hardware and software and other property of any kind or
description prepared, used or possessed by Executive during Executive's


                                       3
<PAGE>
employment by the Company (and any duplicates of any such Property) together
with any and all information, ideas, concepts, discoveries, and inventions and
the like conceived, made, developed or acquired at any time by Executive
individually or, with others during Executive's employment which relate to the
Company or its products or services.

      (b) Trade Secrets. Executive agrees that Executive shall hold in a
fiduciary capacity for the benefit of the Company and its affiliates and shall
not directly or indirectly use or disclose any Trade Secret that Executive may
have acquired during the term of Executive's employment by the Company or any of
its predecessors for so long as such information remains a Trade Secret, where
the term "TRADE SECRET" means information, including, but not limited to,
technical or non-technical data, a formula, a pattern, a compilation, a program,
a device, a method, a technique, a drawing or a process that (1) derives
economic value, actual or potential, from not being generally known to, and not
being generally readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use and (2) is the subject of
reasonable efforts by the Company and any of its affiliates to maintain its
secrecy. This Section 6(b) is intended to provide rights to the Company and its
affiliates which are in addition to, not in lieu of, those rights the Company
and its affiliates have under the common law or applicable statutes for the
protection of trade secrets.

      (c) Confidential Information. Executive while employed by the Company or
its affiliates and thereafter during the Restricted Period shall hold in a
fiduciary capacity for the benefit of the Company and its affiliates, and shall
not directly or indirectly use or disclose, any Confidential Information that
Executive may have acquired (whether or not developed or compiled by Executive
and whether or not Executive is authorized to have access to such information)
during the term of, and in the course of, or as a result of Executive's
employment by the Company or its predecessors without the prior written consent
of the Board of Directors of the Company unless and except to the extent that
such disclosure is (i) made in the ordinary course of Executive's performance of
his duties under this Employment Agreement or (ii) required by any subpoena or
other legal process (in which event Executive will give the Company prompt
notice of such subpoena or other legal process in order to permit the Company to
seek appropriate protective orders). For the purposes of this Employment
Agreement, the term "CONFIDENTIAL INFORMATION" means any secret, confidential or
proprietary information possessed by the Company or any of its affiliates,
including, without limitation, trade secrets, customer or supplier lists,
details of client or Executive contracts, current and anticipated customer
requirements, pricing policies, price lists, market studies, business plans,
operational methods, marketing plans or strategies, product development
techniques or flaws, computer software programs (including object code and
source code), data and documentation data, base technologies, systems,
structures and architectures, inventions and ideas, past current and planned
research and development, compilations, devices, methods, techniques, processes,
financial information and data, business acquisition plans and new personnel
acquisition plans (not otherwise included as a Trade Secret under this
Employment Agreement) that has not become generally available to the public, and
the term "Confidential Information" may include, but not be limited to, future
business plans, licensing strategies, advertising campaigns, information
regarding customers or suppliers, executives and independent contractors and the
terms and conditions of this Employment Agreement. Notwithstanding the
provisions of this Section 6(c) to the contrary, Executive shall be permitted to
furnish this Employment Agreement to a subsequent employer or prospective
employer.


                                       4
<PAGE>
      (d) Non-solicitation of Customers or Employees.

            (1) Executive (i) while employed by the Company or any of its
      affiliates shall not, on Executive's own behalf or on behalf of any
      person, firm, partnership, association, corporation or business
      organization, entity or enterprise (other than the Company or one of its
      affiliates), solicit Competing Business from customers of the Company or
      its affiliates and (ii) during the Restricted Period shall not, on
      Executive's own behalf or on behalf of any person, firm, partnership,
      association, corporation or business organization, entity or enterprise,
      solicit Competing Business from customers or suppliers of the Company or
      its affiliates with whom Executive within the twenty-four month period
      immediately preceding the beginning of the Restricted Period had or made
      contact with in the course of Executive's employment by the Company.

            (2) Executive (i) while employed by the Company or any of its
      affiliates shall not, either directly or indirectly, call on, solicit or
      attempt to induce any other officer, employee or independent contractor of
      the Company or any of its affiliates to terminate his or her employment
      with such business and shall not assist any other person or entity in such
      a solicitation (regardless of whether any such officer, employee or
      independent contractor would commit a breach of contract by terminating
      his or her employment), and (ii) during the Restricted Period, shall not,
      either directly or indirectly, call on, solicit or attempt to induce any
      other officer, employee or independent contractor of such business with
      whom Executive had contact, knowledge of, or association in the course of
      Executive's employment with the Company or any of its predecessors or
      affiliates, as the case may be, during the twelve month period immediately
      preceding the beginning of the Restricted Period, to terminate his or her
      employment with the Company or any of its affiliates and shall not assist
      any other person or entity in such a solicitation (regardless of whether
      any such officer, employee or independent contractor would commit a breach
      of contract by terminating his or her employment). Notwithstanding the
      foregoing, nothing shall prohibit any person from contacting Executive
      about employment or other engagement during the restricted period,
      provided that Executive does not solicit the contact.

      (e) Non-competition Obligation. Executive while employed by the Company or
any of its affiliates and thereafter until the end of the Restricted Period will
not, for himself or on behalf of any other person, partnership, company or
corporation, directly or indirectly, acquire any financial or beneficial
interest in (except as provided in the next sentence), be employed by, or own,
manage, operate or control, or become a director, officer, partner, employee,
agent or consultant of, any entity which is primarily engaged in a Competing
Business. Notwithstanding the preceding sentence, Executive will not be
prohibited from owning less than five (5%) percent of any publicly traded
corporation, whether or not such corporation is in a Competing Business.

      (f) Reasonable and Continuing Obligations. Executive agrees that
Executive's obligations under this Section 6 are obligations which will continue
beyond the date Executive's employment terminates and that such obligations are
reasonable and necessary to protect the Company's legitimate business interests.


                                       5
<PAGE>
      (g) Remedy for Breach. Executive agrees that the remedies at law of the
Company for any actual or threatened breach by Executive of the covenants in
this Section 6 would be inadequate and that the Company shall be entitled to
specific performance of the covenants in this Section 6, including entry of a
temporary restraining order in state or federal court, preliminary and permanent
injunctive relief against activities in violation of this Section 6, or both, or
other appropriate judicial remedy, writ or order, in addition to any damages and
legal expenses which the Company may be legally entitled to recover. The Company
agrees, however, to give Executive and, if known, Executive's attorney
reasonable advance notice of any legal proceeding, including any application for
a temporary restraining order, relating to an attempt to enforce the covenants
in this Section 6 against Executive. Executive acknowledges and agrees that the
covenants in this Section 6 shall be construed as agreements independent of any
other provision of this Employment Agreement or any other agreement between the
Company and Executive, and that the existence of any claim or cause of action by
Executive against the Company, whether predicated upon this Employment Agreement
or any other agreement, shall not constitute a defense to the enforcement by the
Company of such covenants.

SECTION 7. MISCELLANEOUS

      (a) Notices. Notices and all other communications shall be in writing and
shall be deemed to have been duly given when personally delivered or when mailed
by United States registered or certified mail. Notices to the Company shall be
sent to:

                       GOLFSMITH INTERNATIONAL, INC.
                       c/o First Atlantic Capital, Ltd.
                       135 E. 57th Street, 29th Floor
                       New York, New York 10022
                       Attention: Noel Wilens
                       Facsimile:  (212) 750-0300

      Notices and communications to Executive shall be sent to the address
Executive most recently provided to the Company.

      (b) No Waiver. Except for the notice described in Section 7(a), no failure
by either the Company or Executive at any time to give notice of any breach by
the other of, or to require compliance with, any condition or provision of this
Employment Agreement shall be deemed a waiver of any provisions or conditions of
this Employment Agreement.

      (c) Texas Law. This Employment Agreement shall be governed by Texas law
without reference to the choice of law principles thereof. Any litigation that
may be brought by either the Company or Executive involving the enforcement of
this Employment Agreement or any rights, duties, or obligations under this
Employment Agreement, shall be brought exclusively in a Texas state court or
United States District Court in Texas.

      (d) Assignment. This Employment Agreement shall be binding upon and inure
to the benefit of the Company and any successor in interest to the Company or
any segment of such business. The Company may assign this Employment Agreement
to any affiliate or successor that acquires all or substantially all of the
assets and business of the Company or a majority of


                                       6
<PAGE>
the voting interests of the Company, and no such assignment shall be treated as
a termination of Executive's employment under this Employment Agreement.
Executive's rights and obligations under this Employment Agreement are personal
and shall not be assigned or transferred.

      (e) Other Agreements. This Employment Agreement, its Exhibit A and the
Merger Agreement replace and merge any and all previous agreements and
understandings regarding all the terms and conditions of Executive's employment
relationship with the Company, and this Employment Agreement constitutes the
entire agreement between the Company and Executive with respect to such terms
and conditions. In the event of any conflict between the terms of this
Employment Agreement and the Merger Agreement, the terms of this Employment
Agreement shall prevail.

      (f) Amendment. No amendment to this Employment Agreement shall be
effective unless it is in writing and signed by the Company and by Executive.

      (g) Invalidity. If any part of this Employment Agreement is held by a
court of competent jurisdiction to be invalid or otherwise unenforceable, the
remaining part shall be unaffected and shall continue in full force and effect,
and the invalid or otherwise unenforceable part shall be deemed not to be part
of this Employment Agreement.

      (h) Litigation. In the event that either party to this Employment
Agreement institutes litigation against the other party to enforce his or its
respective rights under this Employment Agreement, each party shall pay its own
costs and expenses incurred in connection with such litigation.

             [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]


                                       7
<PAGE>
      IN WITNESS WHEREOF, the Company and Executive have executed this
Employment Agreement in multiple originals effective as of the Effective Date.

GOLFSMITH INTERNATIONAL, INC.                        EXECUTIVE



By: /s/ FRANKLIN C. PAUL                              /s/  CARL F. PAUL
   -----------------------------                     --------------------------
Name: Franklin C. Paul                               Name: Carl F. Paul
Title: President

Date: 10/15/02                                       Date: 10/15/02
      --------------------------                          ---------------------



ACCEPTED AND APPROVED BY:

GOLFSMITH INTERNATIONAL
HOLDINGS, INC.



By:  /s/ NOEL E. WILENS
    ----------------------------
Name: Noel E. Wilens
Title: Vice President

Date: 10/15/02
      --------------------------


                                       8