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;


 

















 


(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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