EXHIBIT 4.1


 


GOLF
GALAXY, INC.


2004
STOCK INCENTIVE PLAN


 


The purpose of the Golf
Galaxy, Inc. 2004 Stock Incentive Plan (the “Plan”) is to promote the
growth and profitability of Golf Galaxy, Inc. (the “Company”) and its
Affiliates (as defined below) by providing its directors, officers, employees,
consultants and other service providers (“Eligible Persons”) with an incentive
to achieve long-term corporate objectives, to attract and retain persons of
outstanding competence, and to provide such persons with an equity interest in
the Company.


 


1.             Shares
Subject to Plan.  Subject to
adjustment as provided in Sections 8 and 9 of the Plan, an aggregate of One
Million (1,000,000) shares (the “Shares”) of the common stock, par value $0.01
per share, of the Company (“Common Stock”) may be subject to awards granted
under the Plan.  Of such aggregate Plan
limit, the maximum number of shares of Common Stock that may be issued as
Incentive Stock Options under the Plan shall be limited to One Million
(1,000,000) shares.  Shares that are
subject to an award which expires or is terminated unexercised, or which are
reacquired by the Company upon the forfeiture of restricted Shares, shall again
be available for issuance under the Plan. 
Shares that are withheld in full or partial payment to the Company of
the purchase or exercise price relating to an award under the Plan or in
connection with the satisfaction of tax obligations relating to an award (other
than an Incentive Stock Option) shall again be available for granting awards
under the Plan.  Any previously issued
shares of Common Stock that are used by an award recipient as full or partial
payment to the Company of the purchase or exercise price relating to an award
or in connection with the satisfaction of tax obligations relating to an award
shall again be available for granting Awards under the Plan.


 


2.             Administration.


 


a.             Compensation
Committee.  The Plan shall be
administered by the Compensation Committee of the Board of Directors (the “Board”),
or such other committee of the Board as the Board may from time to time
designate (the “Committee”).  The
Committee shall be comprised of not less than such number of directors as shall
be required to permit awards granted under the Plan to qualify under Rule 16b-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, or any successor rule or regulation, and
no member of the Committee shall be an employee of the Company or an Affiliate
within the meaning of Rule 16b-3.


 


b.             Powers
and Duties.  The Committee shall have
the authority to make rules and regulations governing the administration
of the Plan; to select the Eligible Persons to whom awards shall be granted; to
determine the type, amount, size and terms of awards; to determine the time
when awards shall be granted; to determine whether any


 





















 


restrictions shall be
placed on Shares purchased pursuant to any option or issued pursuant to any
award; and to make all other determinations necessary or advisable for the
administration of the Plan. The Committee’s determinations need not be uniform,
and may be made by it selectively among Eligible Persons, whether or not such
persons are similarly situated. All interpretations, decisions or
determinations made by the Committee with respect to the Plan shall be final
and conclusive.


 


3.             Eligibility;
Participants.


 


a.             Any
Eligible Persons who provide services to the Company or any of its Affiliates
shall be eligible to receive awards under the Plan. Eligible Persons may be
selected to receive awards individually or by group or category (for example,
by pay grade) as the Committee may determine. The selection of officers of the
Company to receive awards under the Plan and the terms of any award granted to
such officers shall be approved by the Committee. The Committee, in its sole
discretion, may delegate to one or more officers of the Company the authority
to select persons who are not officers of the Company to receive awards under
the Plan and to establish the terms of awards granted to such persons.


 


b.             A
person who has been granted an award under this Plan, or under any predecessor
plan, may be granted additional awards if the Committee shall so determine.
Except to the extent otherwise provided in the instrument evidencing an award,
the granting of an award under this Plan shall not affect any outstanding award
previously granted under this Plan or under any other plan of the Company or
any Affiliate.


 


c.             For
purposes of this Plan, the term “Affiliate” shall mean any “parent corporation”
or “subsidiary corporation” of the Company, as those terms are defined in
Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended (the “Code”).


 


4.             Awards.  The Committee may make awards to Eligible
Persons in the form of (i) stock options which are intended to qualify as “Incentive
Stock Options” within the meaning of Section 422 of the Code, or any
successor provision, (ii) stock options which are not intended to so
qualify (“Non-Qualified Options”), (iii) awards of restricted stock, or (iv) any
combination thereof.


 


5.             Stock
Options.  A stock option granted
pursuant to the Plan shall entitle the optionee, upon exercise, to purchase
Shares at a specified price during a specified period. Options shall be subject
to such terms and conditions as the Committee shall from time to time approve;
provided, that each such option shall be subject to the following requirements:


 


a.             Type
of Option.  Each option shall be
identified in the instrument pursuant to which it is granted as an Incentive
Stock Option or as a Non-Qualified Option, as the case may be.


 





















 


b.             Term.  No option shall be exercisable more than ten
years after the date on which it is granted.


 


c.             Payment.  The purchase price of Shares subject to an
option (“Exercise Price”) shall be payable in full at the time the option is
exercised. Payment may be made in cash, in shares of Common Stock having an
aggregate fair market value on the date of exercise which is not less than the
Exercise Price, or by a combination of cash and such shares, as the Committee
may determine, and subject to such terms and conditions as the Committee deems
appropriate.


 


d.             Options
Not Transferable.  Except to the
extent permitted by the instrument evidencing such option, no option shall be
transferable by the optionee other than by will or by the laws of descent and
distribution. If, pursuant to the instrument evidencing any option, such option
remains exercisable after the optionee’s death, it may be exercised, to the
extent permitted by such instrument, by the personal representative of the
optionee’s estate or by any person who acquired the right to exercise such
option by bequest, inheritance or otherwise by reason of the optionee’s
death.  The Committee, in its discretion
and subject to such additional terms and conditions as it determines, may
permit an optionee to transfer a Non-Qualified Stock Option to any “family
member” (as such term is defined in the General Instructions to Form S-8
(or any successor to such Instructions or such Form) under the Securities Act
of 1933, as amended) at any time that such optionee holds such option, provided
that such transfers may not be for value (i.e.,
the transferor may not receive any consideration therefor) and the family
member may not make any subsequent transfers other than by will or by the laws
of descent and distribution.  No option
granted under the Plan may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or encumbrance
thereof shall be void and unenforceable against the Company.


 


e.             Incentive
Stock Options.  If an option is an
Incentive Stock Option, it shall be subject to the following additional
requirements:


 


i.              Incentive
Stock Options may be granted only to persons who are employees of the Company
or of an Affiliate.


 


ii.             The
Exercise Price of Shares that are subject to an Incentive Stock Option shall
not be less than 100% of the fair market value of such Shares on the date the
option is granted, as determined in good faith by the Committee.


 


iii.            The
aggregate fair market value (determined on the date the option is granted) of
the Shares with respect to which Incentive Stock Options are exercisable by the
optionee for the first time during any calendar year, under this Plan or any
other plan of the Company or any Affiliate, shall not exceed $100,000.


 





















 


iv.            The
Exercise Price of Shares that are subject to an Incentive Stock Option granted
to an employee who, at the time such option is granted, owns 10% or more of the
total combined voting power of all classes of stock of the Company or of an
Affiliate shall not be less than 110% of the fair market value of such Shares
on the date such option is granted, and such option may not be exercisable more
than five years after the date on which it is granted. For the purposes of this
subparagraph, the rules of Section 424(d) of the Code shall
apply in determining the stock ownership of any employee.


 


Subject to the foregoing,
options may be made exercisable in one or more installments, upon the happening
of certain events, upon the fulfillment of certain conditions, or upon such
other terms and conditions as the Committee shall determine.


 


6.             Restricted
Stock.  Restricted stock awards
granted pursuant to the Plan shall entitle the holder to receive Shares, subject
to forfeiture if specified conditions are not satisfied at the end of a
specified period, and shall be subject to such additional terms and conditions
as the Committee shall from time to time approve; provided, that each
such award shall be subject to the following requirements:


 


a.             Restricted
Period.  The Committee shall
establish a period (the “Restricted Period”) at the time an award is granted
during which the holder will not be permitted to sell, transfer, assign, pledge
or otherwise encumber the Shares subject to the award. The Committee may
provide for the lapse of restrictions in installments, or upon the occurrence
of certain events, where deemed appropriate. Any attempt by a holder to dispose
of restricted Shares in a manner contrary to the applicable restrictions shall
be void and of no force and effect. 
Notwithstanding the foregoing, the Committee may, but is not obligated
to, permit acceleration of vesting of such awards in the event of the recipient’s
death, disability or retirement.


 


b.             Rights
During Restricted Period.  Except to
the extent otherwise provided in this Section 6 or under the terms of any
instrument, during the Restricted Period the holder of restricted Shares shall
have all of the rights of a shareholder in the Company with respect to such
Shares, including the right to vote the Shares and to receive dividends and
other distributions with respect to the Shares; provided, that all stock
dividends, stock rights and stock issued upon split-ups or reclassifications of
Shares shall be subject to the same restrictions as the Shares with respect to
which such stock dividends, rights, or additional stock are issued, and may be
held in custody as provided below in this Section 6 until the restrictions
thereon shall have lapsed.


 


c.             Forfeitures.  Except to the extent otherwise provided in
any restricted stock instrument, all Shares then subject to any restriction
shall be forfeited to the Company without further obligation of the Company to
the holder thereof, and all right of the holder with respect to such Shares
shall terminate, if the holder shall cease to provide


 





















 


services to the Company
or its Affiliates, or if any condition established by the Committee for the
release of any restriction shall not have occurred, prior to the expiration of
the Restricted Period.


 


d.             Issuance
and Delivery of Shares.  A restricted
stock award under the Plan may be evidenced in such manner as the Committee may
deem appropriate, including book-entry registration or issuance of a stock
certificate or certificates, which certificate or certificates shall be held by
the Company.  The Committee may require
that the recipient of any restricted stock award deliver to the Company one or
more stock powers, endorsed in blank, relating to the restricted Shares as a
condition of receiving the award.  Such
certificate or certificates, if any, shall be registered in the name of the
recipient and shall bear an appropriate legend referring to the restrictions
applicable to such restricted stock. 
Shares representing restricted stock that is no longer subject to
restrictions shall be delivered to the recipient promptly after the applicable
restrictions lapse or are waived.


 


e.             Gifts,
Etc.  Notwithstanding any other
provision of this Section 6, the Committee may permit a gift of restricted
stock to the holder’s spouse, child, stepchild, grandchild, or legal dependent,
or to a trust whose sole beneficiary or beneficiaries shall be the holder
and/or any one or more of such persons; provided, that the donee shall have
entered into an agreement with the Company pursuant to which it agrees that the
restricted stock shall be subject to the same restrictions in the hands of such
donee as it was in the hands of the donor.


 


7.             Instruments.  Each award granted pursuant to the Plan shall
be evidenced by a written instrument or other document evidencing the award,
setting forth the terms and conditions upon which it is granted, and duly
executed on behalf of the Company and, if requested by the Company, signed by
the recipient. Multiple awards may be evidenced by a single instrument. Subject
to the limitations set forth in the Plan, the Committee may waive any
conditions of or rights of the Company under any outstanding award,
prospectively or retroactively.  Except
as otherwise provided herein or in an instrument evidencing an award, the
Committee may not amend, alter, suspend, discontinue or terminate any
outstanding award, prospectively or retroactively, if such action would
adversely affect the rights of the holder of such award, without the consent of
the holder or beneficiary thereof.


 


8.             Adjustments.  In the event of any change in the outstanding
shares of Common Stock by reason of any stock dividend or split,
recapitalization, reclassification, combination, or exchange of shares or other
similar corporate change, then if the Committee shall determine, in its sole
discretion, that such change necessarily or equitably requires an adjustment in
the maximum number of Shares subject to this Plan, or in the number of Shares
subject to an award, the Exercise Price or value of an outstanding award, such
adjustments shall be made by the Committee and shall be conclusive and binding
for all purposes of this Plan. No adjustment shall be made in connection with
the issuance by the Company of any shares of Common Stock, any warrants, rights
or options to acquire shares of Common Stock, or any securities convertible
into Common Stock.


 





















 


9.             Merger,
Consolidation, Reorganization, Liquidation, etc.  Subject to the provisions of the instrument
evidencing any award, if the Company shall become a party to any corporate
merger, consolidation, major acquisition of property for stock, reorganization
or liquidation, the Board shall have the power to make any arrangement it deems
advisable with respect to outstanding awards and in the number of Shares
subject to this Plan, which shall be binding for all purposes of this Plan,
including, but not limited to, the substitution of new awards for any awards
then outstanding, the assumption of any such awards, and the termination of
such awards.


 


10.          Expenses
of Plan.  The expenses of
administering this Plan shall be borne by the Company and its Affiliates.


 


11.          Reliance
on Reports.  Each member of the
Committee and each member of the Board shall be fully justified in relying or
acting in good faith upon any report made by the independent public accountants
of the Company and its Affiliates and upon any other information furnished in
connection with this Plan by any person or persons other than himself. In no
event shall any person who is or shall have been a member of the Board or the
Committee be liable for any determination made or other action taken or omitted
in reliance upon any such report or information, or for any action taken or
omitted, including the furnishing of information, in good faith.


 


12.          Rights
as Shareholder.  Except to the extent
otherwise specifically provided hereon, no recipient of any award shall have
any rights as a shareholder with respect to Shares sold or issued pursuant to
the Plan until such shares have been issued to such person.


 


13.          General
Restrictions.  Each award granted
pursuant to the Plan shall be subject to the requirement that if, in the
opinion of the Board or the Committee, the listing, registration or
qualification of any Shares related thereto upon any securities exchange or
under any state or federal law, the consent or approval of any regulatory body,
or an agreement by the recipient with respect to the disposition of any such
Shares, is necessary or desirable as a condition of the issuance or sale of
such Shares, such award shall not be consummated unless and until such listing,
registration, qualification, consent, approval or agreement is effected or
obtained in form satisfactory to the Board or the Committee.


 


14.          Employment
Rights.  Nothing in this Plan, or in
any instrument issued hereunder, shall confer upon any person the right to
continue to provide services to the Company or an Affiliate as a director,
officer, employee, consultant or other service provider, or affect the right of
the Company or Affiliate to terminate such person’s service at any time, with
or without cause.


 


15.          Withholding.
 If the Company proposes or is
required to issue Shares pursuant to the Plan, it may require the recipient to
remit, or it may withhold from such award or from the recipient’s other
compensation, an amount, in the form of cash


 





















 


or Shares, sufficient to
satisfy any applicable federal, state or local tax withholding requirements
prior to the delivery of any Shares.


 


16.          Amendments.  The Board may at any time, and from time to
time, amend the Plan in any respect, except that no amendment:


 


a.             materially
increasing the benefits accruing to participants under the Plan;


 


b.             increasing
the number of Shares available for issuance or sale pursuant to the Plan (other
than as permitted by Sections 8 and 9);


 


c.             materially
modifying the requirements as to eligibility for participation in the Plan;


 


shall be made without the
affirmative vote of the holders of at least a majority of the voting stock of
the Company.


 


17.          Shareholder
Approval.  The Plan is subject to
approval by the holders of at least a majority of the voting stock of the
Company, and any award granted under the Plan prior to the date of such
approval shall be contingent upon such approval.


 


18.          Effective
Date; Duration.  This Plan shall be
effective as of July 15, 2004, subject to shareholder approval of the Plan
as described above on or before August 31, 2004, 2004. No awards shall be
granted under the Plan after the earlier of (a) the date on which the Plan
is terminated by the Board; or (b) July 14, 2014. Awards outstanding
at the termination of the Plan may continue to be exercised in accordance with
their terms after such termination.