Document:

Exhibit 10.1

 

MARTIN HANAKA

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

WITH

GOLFSMITH INTERNATIONAL HOLDINGS, INC.

 

This is an Amended and
Restated Employment Agreement (this “Employment
Agreement”), dated
as of December 28, 2009, entered into between Golfsmith International
Holdings, Inc., a Delaware corporation (the “Company”),
and Martin Hanaka (“Executive”).

 

RECITALS:

 

WHEREAS, the Company
and Executive entered into that certain written employment agreement dated June 13,
2008, pursuant to which the Company employed Executive as its Chairman and
Chief Executive Officer (the “Original Agreement”);
and

 

WHEREAS, the Company
and Executive have agreed to amend and restate the Original Agreement.

 

NOW,
THEREFORE, in consideration of the promises and mutual covenants
contained herein, the parties, intending to be legally bound, agree to amend
and restate the Original Agreement, effective December 28, 2009, 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 five-year period starting on June 13, 2008
(such date being the “Effective Date”) and ending June 30,
2013.

 

(b)           Term. 
Subject to earlier termination pursuant to Section 5, the
initial five-year term of this Employment Agreement is subject to automatic one
year extensions starting on July 1, 2013 and on each subsequent yearly
anniversary date, unless, at least 90 days before any such subsequent
anniversary date, Executive or the Company cancels the automatic extension by
giving written notice to the other party of its election to cancel such
extension, in which case the term of Executive’s employment hereunder shall
terminate as of such anniversary date.

 

SECTION 2.  DEFINITIONS

 

“Affiliate” as used in this
Employment Agreement is defined in Rule 405 under the Federal Securities
Act of 1933, as amended.

 

 

“Cause” means:

 

(1)           Executive’s
(i) fraud, (ii) embezzlement, or (iii) misappropriation of
material funds or other material Property (as defined in Section 6(a)),
in each case involving or against the Company or any of its Affiliates;

 

(2)           Executive’s
indictment for or conviction of any felony or any crime which involves
dishonesty or a breach of trust;

 

(3)           Executive’s
gross negligence or willful misconduct with respect to the Company or any of
its Affiliates which causes material detriment to the Company or any of its
Affiliates;

 

(4)           Executive
commits a violation of the United States’ Foreign Corrupt Practices Act of
1977, as amended, and such violation is not cured, or is not capable of being
cured, within thirty days of written notice to Executive from the Company;

 

(5)           the
debarment of Executive from engaging in contracting or sub-contracting
activities with the United States Government if such debarment is the result of
a final determination by an agency of such government that Executive knowingly
acted in a manner justifying such debarment;

 

(6)           Executive
commits a violation of the Company’s code of ethics or code of business
conduct, including but not limited to the Company’s Code of Business Conduct
and Ethics for Directors, Officers and Employees and Code of Ethics for Senior
Executive and Financial Officers, which the Board of Directors of the Company
reasonably determines makes him no longer able or fit to fulfill his
responsibilities under this Employment Agreement, and which is not cured, or is
not capable of being cured, within thirty days after written notice thereof is
given to the Executive by the Company;

 

(7)           Executive
engages in any material breach of the terms of this Employment Agreement or
fails to fulfill his duties under this Employment Agreement and such breach or
failure, as the case may be, is not cured, or is not capable of being cured,
within thirty days after written notice thereof is given to the Executive by
the Company; or

 

(8)           Executive
(i) is censured by any agency of the United States Government or (ii) fails
to satisfy any requirement of any agency of the United States Government which
the Board of Directors of the Company reasonably determines has a material and
adverse effect on his ability to fulfill his duties under this Employment
Agreement and such failure is not cured within thirty days after written notice
thereof is given to the Executive by the Company.

 

“Change of Control”  means an event described in Section 2.9(a) of
the ISP, excluding, for this purpose, any acquisition by First Atlantic
Capital, Ltd.  or Atlantic Equity
Partners III.

 

“Competing Business”
means any business which designs, distributes, sells or markets golf
equipment and golf related products, or any other business in which the Company
or any of its Affiliates is substantially engaged, (1) at any time during
the Term, or (2) for purposes of the 

 

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Restricted
Period, at any time during the one-year period immediately preceding the
termination of Executive’s employment hereunder.  Notwithstanding the foregoing, a Competing
Business shall not include (i) suppliers of the Company or any of its
Affiliates, or (ii) any entity that receives less than 25% of its revenue
from the retail sales of golf equipment or golf related products, so long as,
in the case of either clause (i) or (ii), Executive does not engage in the
design, distribution, sales or marketing of golf equipment or golf related
products.

 

“Date
of Termination”  means the date
that Executive’s employment with the Company terminates.

 

“Disability”  means a condition which
renders Executive unable (as determined by the Board of Directors of the
Company in good faith after consultation with a health care provider selected
by the Board of Directors of the Company after good faith consultation with
Executive or his legal representative) to regularly perform his duties
hereunder by reason of illness or injury for a period of more than six
consecutive months.

 

“Earned
Bonus”  means the
Annual Bonus, determined based on the actual performance of the Company for the
full fiscal year in which Executive’s employment terminates, that Executive
would have earned for such fiscal year had he remained employed for the entire
year, prorated based on the ratio of the number of days during such year that
Executive was employed to 365.  Such
Earned Bonus will be determined and paid to Executive (or his estate, if
applicable) in accordance with Section 4(b), if he is entitled to
such Earned Bonus under Section 5(b), Section 5(d) or Section 5(e),
as if no such termination had occurred.

 

“Good
Reason”  means (i) a
material and continuing failure to pay to Executive compensation or benefits
(as described in Section 4) that have been earned, if any, by
Executive, (ii) a material reduction in Executive’s compensation or
benefits (as described in Section 4), (iii) a material
reduction, without Executive’s written consent, in Executive’s title, position
or duties, or (iv) any breach by the Company of this Employment Agreement
which is material; provided, however, that
the occurrence of any event described in this sentence may only constitute Good
Reason if (a) Executive gives the Company written notice of his intention
to terminate his employment for Good Reason and, in reasonable detail, of the
event constituting grounds for such termination within sixty (60) days of the
occurrence of such event and (b) the relevant circumstances or conditions
are not remedied by the Company within thirty (30) days after receipt by the
Company of such written notice from Executive.

 

“ISP”  means the Golfsmith
International Holdings, Inc. 2006 Incentive Compensation Plan, in each
case as amended from time to time.

 

“Release”  means a full and final
general release agreement executed by Executive releasing the Company, its
affiliated companies, its predecessors, successors and assigns, and each of
their officers, directors, agents, and employees from any and all claims, with
the exception of the Company’s breach of its post-employment obligations
arising under this Employment Agreement.

 

“Restricted
Period”  means the two
(2)-year period following the Date of Termination.

 

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“Term” means the
five-year period following the Effective Date and any and all subsequent full
or partial one-year extensions thereto until terminated pursuant to the
provisions of this Employment Agreement.

 

SECTION 3.  TITLE, POWERS AND DUTIES

 

(a)           Title. 
Executive shall be the Chairman and Chief Executive Officer of the
Company.

 

(b)           Powers and Duties. 
Executive in fulfilling his duties shall have such powers as are
normally and customarily associated with a president and chief executive
officer in a company of similar size and operating in a similar industry,
including the power to hire and fire employees and executives of the Company reporting
to Executive and such other powers as authorized by the Board of Directors of
the Company.

 

Executive, as a condition to
his employment under this Employment Agreement, represents and warrants that he
can assume and fulfill the duties described in this Employment Agreement
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)           Full Time Basis. 
Executive shall serve the Company faithfully and to the best of his
ability and will devote his full business time, energy, experience and talents
to the business of the Company and its Affiliates.

 

(e)           Geographic Area. 
Executive shall perform his duties principally in the Austin, Texas
metropolitan area and shall be required to travel outside of that area as
necessary or appropriate to the performance of his duties hereunder.

 

SECTION 4.  COMPENSATION AND BENEFITS

 

(a)           Annual Base Salary. 
Executive’s base salary shall be $600,000 per year through December 31,
2009 and $700,000 per year thereafter. 
Notwithstanding this provision, Executive’s Base Salary may be reviewed
and increased at the discretion of the Board of Directors of the Company or any
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 executives and shall be subject to such withholdings as required
by law or as otherwise permissible under such practices or policies.

 

(b)           One Time Bonus. 
The Company shall pay Executive a one-time bonus of $150,000 on December 29,
2009 to cover any and all costs of relocation.

 

(c)           Annual Bonus.  During the Term, Executive shall be eligible
to receive an annual performance-based cash bonus (“Annual
Bonus”).  The
target Annual Bonus that Executive may earn is a minimum of 75% of Executive’s
then-current Annual Base Salary, based on the Company’s attainment of such
annual earnings before interest, depreciation, income tax, and 

 

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amortization (“EBITDA”) goals as are
established by the Board of Directors of the Company and communicated to
Executive on an annual basis.  Any Annual
Bonus shall be paid in a single lump sum between February 1 and December 31
of the Company’s fiscal year immediately following the fiscal year to which
such Annual Bonus relates.

 

(d)                                 Employee
Benefit Plans.  Executive
shall be eligible to participate, on terms no less favorable to Executive than
the terms for participation of any other senior executive of the Company, in
the 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. 
The employee benefit plans described in this paragraph shall include (if
and for as long as the Company sponsors such plans):

 

(1)           401(k) retirement
savings plan;

 

(2)           disability
plan;

 

(3)           health
plan; and

 

(4)           ISP.

 

(e)                                  Stock Options.  Executive shall receive stock options to
purchase 1,000,000 shares of common stock of the Company, provided, however, that such options to
purchase an amount of shares equal to 800,000 shares shall only be exercisable
if the shareholders of the Company approve an increase in the number of shares
available under the ISP at least equal to such amount of shares.  The exercise price of such options shall be
the fair market value at the closing of the market of such common stock on the
grant date of such options.  Such options
shall become exercisable in equal annual installments on each of the first five
anniversaries of the grant date of such options, provided, however, that such options shall become fully
exercisable in the event of a Change of Control.  Such options shall be subject to the terms
and conditions set forth in the ISP and the applicable option agreement granted
to Executive under the ISP.

 

(f)                                    Vacation.  Executive shall have the right to four weeks
of vacation during each successive one year period in the Term, which vacation
time shall be taken at such time or times in each such one year period so as
not to materially and adversely interfere with the performance of his duties under
this Employment Agreement.  Executive in
addition shall have the right to the same holidays as other employees of the
Company.

 

(g)                                 Expense
Reimbursements.  Executive
shall have the right to reasonable expense reimbursements consistent with the
Company’s practice immediately prior to the execution of this Employment
Agreement.

 

(h)                                 Residence and
Transportation Expenses.

 

(1)           Until
February 28, 2010, while Executive maintains his permanent residence in
Fort Lauderdale, Florida, the Company will pay or reimburse: (A) reasonable
residential rental and living expenses (including meals) incurred by Executive
during the Term for his temporary residence in the Austin, Texas, metropolitan
area, and 

 

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(B) reasonable airfare incurred by Executive during the Term for
commuting up to once per week between Austin, TX and Fort Lauderdale, FL,
subject to the Company’s receipt of such appropriate documentation as the
Company may reasonably require and compliance with the Company’s expense
reimbursement policy.  The Company will
also pay or reimburse reasonable airfare incurred by Executive during the Term
for business purposes.  For purposes of
the preceding sentences, (i) the amount of such expenses eligible for such payment
or reimbursement provided during one calendar year shall not affect the amount
of such expenses eligible for such payment or reimbursement in any other
calendar year, (ii) any such payment or reimbursement of an eligible
expense shall be made on or before the last day of the calendar year following
the calendar year in which such expense was incurred, (iii) no such
payment or reimbursement may be liquidated or exchanged for another benefit,
and (iv) all such payments or reimbursements shall be treated as separate
payments for purpose of Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”).  To the extent any amounts payable
or reimbursed under this Section 4(g) are taxable to
Executive, the Company shall pay Executive an additional cash sum to place
Executive in the same after-tax position Executive would have occupied absent
the taxes attributable to such amounts; provided, however, that
any such payment shall be made by the end of the calendar year next following
the calendar year in which Executive remits such taxes.

 

(2)           Executive
shall establish his principal residence in the Austin, TX, metropolitan area by
June 30, 2010.  If this condition
has not been met by December 31, 2010, the Company reserves the right to
adjust the Executive’s compensation accordingly; and such adjustment would not
be deemed “Good Reason,” under this Agreement.

 

(i)                                     Indemnification.  With respect to Executive’s acts or failures
to act during his employment in his capacity as a director, officer, 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 directors and officers of the Company.

 

SECTION 5.  TERMINATION OF EMPLOYMENT

 

(a)                                  General.  The Board of Directors of the Company shall
have the right to terminate Executive’s employment at any time with or without
Cause, and Executive shall have the right to terminate his employment at any
time with or without Good Reason.  Except
as otherwise provided in this Employment Agreement, Executive’s participation
in and entitlement to all fringe benefits or employee benefit plans or programs
shall cease upon the Date of Termination; however, nothing in this Employment
Agreement is intended to waive or abridge any right or benefit which was vested
under the terms and conditions of the applicable plan or program on or before
the Date of Termination.

 

(b)                                 Termination by
Board of Directors without Cause, by cancellation, or by Executive for Good
Reason, or Change of Control.

 

(i)            If, prior to the occurrence of a Change of Control, (A) the
Board of Directors of the Company terminates Executive’s employment without
Cause or cancels an 

 

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automatic extension of this Employment
Agreement under Section 1(b), or (B) Executive resigns for
Good Reason, in exchange for Executive executing, delivering and not revoking a
Release (such Release to be delivered on or before the end of the fifty (50)
day period following the Date of Termination), shall pay Executive: (1) his
earned but unpaid base salary and earned but unpaid Annual Bonus for any
completed fiscal year; (2) his Earned Bonus (payable in accordance with Section 4(b));
and (3) 200% of an amount equal to his then-current total Annual Base
Salary, payable, commencing no later than sixty (60) days following the Date of
Termination, in equal installments in accordance with the Company’s payroll
procedures during the twenty-four month period immediately following commencement
of such installment payments.  This
obligation shall remain in effect even if Executive accepts other employment.

 

(ii)           If, on or following the occurrence of a Change of Control,
(A) the Board of Directors of the Company terminates Executive’s employment
without Cause or cancels an automatic extension of this Employment Agreement
under Section 1(b), or (B) if Executive resigns under any
circumstances, the Company, in exchange for Executive executing, delivering and
not revoking a Release (such Release to be delivered on or before the end of
the fifty (50) day period following the Date of Termination), shall pay
Executive: (1) his earned but unpaid base salary and earned but unpaid
Annual Bonus for any completed fiscal year; (2) his Earned Bonus (payable
in accordance with Section 4(b)); and (3) 200% of an amount
equal to the sum of his then-current total Annual Base Salary plus his
then-current target Annual Bonus (as described in Section 4(b)),
payable, commencing no later than sixty (60) days following the Date of
Termination, in equal installments in accordance with the Company’s payroll
procedures during the twenty-four month period immediately following
commencement of such installment payments. 
This obligation shall remain in effect even if Executive accepts other
employment.  For the avoidance of doubt,
if Executive is entitled to payment under this Section 5(b)(ii), he
shall not be entitled to payment under Section 5(b)(i).

 

(iii)          In case of a termination or resignation described in Section 5(b)(i) or
5(b)(ii), the Company shall additionally make any COBRA continuation
coverage premium payments (not only for Executive, but for Executive’s
dependents), for the two year period following the Date of Termination or, if
earlier, until Executive is eligible to be covered under another substantially
equivalent medical insurance plan by a subsequent employer; provided, however, that the applicable
period of “continuation coverage” for purposes of COBRA shall be deemed to
commence on the Date of Termination.

 

(iv)          Notwithstanding the provisions of this Section 5(b) or
those of Section 5(d) or 5(e), if the Release has not
been executed and delivered as described in this Section 5(b), or Section 5(d) or
5(e), as applicable, and become irrevocable within the statutory
revocation period, no amounts or benefits under this Section 5(b),
or Section 5(d) or 5(e), as applicable, shall be or
become payable.

 

(v)           Notwithstanding the foregoing provisions of this Section 5(b) or
those of Section 5(d), to the extent required in order to comply
with Section 409A of the Code, cash amounts that would otherwise be
payable under this Section 5(b) or Section 5(d) during
the six-month period immediately following the Date of Termination shall
instead be paid, with interest on any delayed payment at the applicable federal
rate provided for in Section 7872(f)(2)(A) of the Code, on the first
business day after the date that is six (6) months following the Executive’s

 

7

 

“separation from service” within the meaning
of Section 409A of the Code.  In
addition, for purposes of Section 409A of the Code (including, without
limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)),
each payment that Executive may be eligible to receive under this Employment
Agreement shall be treated as a separate and distinct payment and shall not
collectively be treated as a single payment.

 

(vi)          Notwithstanding the foregoing provisions of this Section 5(b) or
those of Sections 5(d) or 5(e), the continued health
coverage available to Executive and, if applicable, to Executive’s dependents,
pursuant to the Company’s payment of COBRA continuation coverage premiums,
shall be provided by the Company in a manner such that Executive will not be
taxable on any reimbursements to or on behalf of Executive and, if applicable,
to or on behalf of Executive’s dependents. 
In addition, such health coverage shall be provided at no cost to
Executive; provided, however, that if the Company
reasonably determines, based on the advice of its legal counsel, that Executive
must be taxed on the Company’s actual cost of providing such health coverage to
Executive (the “Coverage
Cost”) to avoid causing Executive to be taxed on the
reimbursements relating to such health coverage, the Company and Executive
agree that the Company will deliver timely to Executive appropriate tax
information returns to cause Executive to include the Coverage Cost in
Executive’s income.  If the health
coverage provided to Executive under Section 5 of this Employment
Agreement is subject to the provisions of Section 409A of the Code at any
relevant time, (A) payment or reimbursement of health expenses shall be
made on or before December 31 of the year following the year in which such
expenses are incurred, (B) Executive’s right to payment or reimbursement
of such expenses shall not be subject to liquidation or exchange for any other
benefit, and (C) the amount of expenses eligible for payment or
reimbursement during any calendar year shall not affect the amount of expenses
eligible for payment or reimbursement in any other calendar year, except as may
be required to comply with limitations included in the arrangement under which
such health coverage is provided.

 

(c)           Termination by the Board of Directors for Cause or by
Executive without Good  Reason. 
If the Board of Directors of the Company terminates Executive’s
employment for Cause or Executive resigns without Good Reason other than on or
following the occurrence of a Change of Control, the Company’s only obligation
to Executive under this Employment Agreement shall be to pay Executive: (i) his
earned but unpaid base salary up to the Date of Termination; and (ii) his
earned but unpaid Annual Bonus for any completed fiscal year, and Executive
shall have no right to any Earned Bonus or any bonus payment prorated for a
partial year in which such termination occurs. 
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 of
Termination.  For the avoidance of doubt,
if Executive is entitled to payment under this Section 5(c), he
shall not be entitled to payment under Section 5(b).

 

(d)           Termination for Disability.  The Board of Directors of the Company shall
have the right to terminate Executive’s employment on or after the date
Executive has a Disability, and such a termination shall not be treated as a
termination without Cause under this Employment Agreement.  If Executive’s employment is terminated on
account of a Disability, the Company, in exchange for Executive executing,
delivering and not revoking a Release (such

 

8

 

Release to be delivered on or before the end of the
fifty (50) day period following the Date of Termination), shall pay Executive,
shall:

 

(1)                                  pay Executive
his base salary through the last day of the month containing his Date of
Termination (payable in a lump-sum within sixty (60) days following the Date of
Termination);

 

(2)                                  pay Executive
his earned but unpaid Annual Bonus for any completed fiscal year (payable in a
lump-sum within sixty (60) days following the Date of Termination);

 

(3)                                  pay Executive
his Earned Bonus for the fiscal year in which the Date of Termination occurs
(payable in accordance with Section 4(b));

 

(4)                                  pay or cause
the payment of benefits to which Executive is entitled under the terms of the
disability plan of the Company covering the Executive at the time of such
Disability;

 

(5)                                  make such
payments and provide such benefits as otherwise called for under the terms of
the ISP and each other employee benefit plan, program and policy in which
Executive was a participant; and

 

(6)                                  make any COBRA
continuation coverage premium payments (not only for Executive, but also for
Executive’s dependents), for the one year period following the Date of
Termination or, if earlier, until Executive is eligible to be covered under
another substantially equivalent medical insurance plan by a subsequent
employer; provided, however, that
the applicable period of “continuation coverage” for purposes of COBRA shall be
deemed to commence on the Date of Termination.

 

(e)                                  Death.  If Executive’s employment terminates as a
result of his death, the Company, in exchange for the legal representative of
Executive’s estate executing, delivering and not revoking a Release (such
Release to be delivered on or before the end of the fifty (50) day period
following the Date of Termination), shall:

 

(1)                                  pay Executive’s
estate Executive’s base salary through the last day of the month containing the
Date of Termination (payable in a lump sum within sixty (60) days following the
Date of Termination);

 

(2)                                  pay Executive’s
estate Executive’s earned but unpaid Annual Bonus for any completed fiscal year
(payable in a lump sum within sixty (60) days following the Date of
Termination);

 

(3)                                  pay Executive’s
estate Executive’s his Earned Bonus, when actually determined, for the year in
which Executive’s death occurs (payable in accordance with Section 4(b)),

 

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(4)                                  make such
payments and provide such benefits as otherwise called for under the terms of
the each employee benefit plan, program and policy in which Executive was a
participant; and

 

(5)                                  make any COBRA
continuation coverage premium payments for Executive’s dependents, for the one
year period following Executive’s death or, if earlier, until such dependents
are eligible to be covered under another substantially equivalent medical
insurance plan; provided, however, that
the applicable period of “continuation coverage” for purposes of COBRA shall be
deemed to commence on the Date of Termination.

 

SECTION 6.  COVENANTS BY EXECUTIVE

 

(a)                                  Company
Property.  Executive
upon the Date of Termination or, if earlier, upon the Company’s request shall
promptly return all 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
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 (including, but not limited to, Confidential Information as defined in
Section 6(c)) conceived, made, developed or acquired at any time by
Executive individually or, with others during Executive’s employment which
relate to the Company, its business 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, its Affiliates or any of their 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 (i) 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 (ii) 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 at all times thereafter
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 Affiliates or
their 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 

 

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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 or entrusted to the Company or any of its
Affiliates, including, without limitation, trade secrets, customer or supplier
lists, details of client or consultant 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 other than through disclosure by Executive, 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.  The
Confidential Information as described above may be in any form, including, but
not limited to, any intangible form such as unrecorded knowledge, information,
ideas, concepts, mental impressions, or may be embodied in equipment or other
tangible form, such as a document, drawings, photographs, computer code,
software or other printed or electronic media. 
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.

 

(d)                                 Non-solicitation
of Customers or Employees. 
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 or
attempt to solicit on behalf of a Competing Business customers of the Company
or any of its Affiliates, or induce or attempt to induce any such customers or
suppliers of the Company or any of its Affiliates to cease or reduce business
with the Company or any of its Affiliates, or knowingly interfere with the
relationship between any such customer, supplier or any other business relation
and the Company or any such Affiliate, 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 or attempt to solicit on behalf of a Competing Business
customers of the Company or any of its Affiliates with whom Executive had
contact or made contact within the course of Executive’s employment by the
Company or an Affiliate within the twenty-four month period immediately
preceding the beginning of the Restricted Period, or induce or attempt to
induce any such customers or suppliers of the Company or any of its Affiliates
to cease or reduce business with the Company or any of its Affiliates, or
knowingly interfere with any relationship between any such customer, supplier
or any other business relation and the Company or any such Affiliate.

 

Executive (i) while
employed by the Company or any of its Affiliates shall not, either directly or
indirectly, except in the interest of the Company or any of its Affiliates,
call on, solicit or attempt to induce any other officer, employee or
independent contractor of the Company or 

 

11

 

any
of its Affiliates to terminate his or her employment or relationship with the
Company or any such Affiliate 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 person who is
or, during the twelve month period immediately preceding the beginning of the
Restricted Period, was an officer, employee or independent contractor of the
Company or any of its Affiliates to terminate his or her employment or
relationship 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 herein shall prohibit any person
from independently contacting Executive about employment during the Restricted
Period provided that Executive does not solicit or initiate such contact.

 

(e)                                  Non-competition
Obligation.  Executive,
while employed by the Company or any of its Affiliates and thereafter during
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 engaged
in, or otherwise engage in, a Competing Business.  Notwithstanding the preceding sentence, Executive
will not be prohibited from owning less than two percent (2%) of any publicly
traded corporation, whether or not such corporation is in a Competing Business.

 

(f)                                    Nondisparagement.  During the Term and at all times thereafter,
Executive shall not disparage or defame to third parties the Company or any of
its Affiliates or their respective officers or directors, or their respective
employees or owners who were such employees or owners during the Term, or,
during the Term and the Restricted Period only, their respective customers who
were such customers during the Term. 
During the Term and at all times thereafter, the Company and its
Affiliates and their respective officers and directors shall not disparage or
defame Executive to third parties. 
Nothing contained in this Section 6(f) shall preclude
Executive or the Company or any of the Company’s Affiliates from enforcing his
or their respective rights under this Employment Agreement.

 

(g)                                 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, fair and equitable in
scope, terms and duration, are necessary to protect the Company’s legitimate
business interests and are a material inducement to the Company to enter into
this Employment.  Agreement.

 

(h)                                 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 (i) cease or withhold payment to Executive of
any severance payments or benefits described in Section 5 for which
he otherwise qualifies under Section 5, and/or (ii) 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 

 

12

 

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 to give Executive, and, if known, Executive’s attorney, 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.

 

(i)                                     Scope of
Covenants.  The Company
and Executive further acknowledge that the time, scope, geographic area and
other provisions of this Section 6 have been specifically
negotiated by sophisticated parties and agree that they consider the
restrictions and covenants contained in this Section 6 to be
reasonable and necessary for the protection of the interests of the Company and
its Affiliates, but if any such restriction or covenant shall be held by any
court of competent jurisdiction to be void but would be valid if deleted in
part or reduced in application, such restriction or covenant shall apply with
such deletion or modification as may be necessary to make it valid and
enforceable.

 

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 the
following address or a more recent address provided in writing by the Company
to Executive:

 

GOLFSMITH
INTERNATIONAL HOLDINGS, INC.

11000 North IH 35

Austin,
TX 78753

Attention:  Chair, Compensation Committee

Facsimile:  (512) 821-4829

 

Notices and communications
to Executive shall be sent to the following address or a more recent address
provided in writing by Executive to the Chair of the Board of Directors of the
Company:

 

Martin Hanaka

1627 Southeast 7th Street 

Fort Lauderdale, FL 33316

 

(b)                                 No Waiver.  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.

 

13

 

(c)                                  Withholding
Taxes.  All amounts payable hereunder
shall be subject to the withholding of all applicable taxes and deductions
required by any applicable law.

 

(d)                                 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.

 

(e)                                  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 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.

 

(f)                                    Other
Agreements.  Upon the
date of execution hereof, this Employment Agreement replaces and merges any and
all previous agreements and understandings regarding all the terms and
conditions of Executive’s employment, or other service provider, relationship
with the Company, and this Employment Agreement constitutes the entire
agreement between the Company and Executive with respect to such terms and
conditions.

 

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

 

(h)                                 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.

 

(i)                                     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.

 

IN WITNESS
WHEREOF, the Company and Executive have executed this Employment Agreement in
multiple originals to be effective as of December 28, 2009.

 

 

	
  GOLFSMITH INTERNATIONAL

  	
   

  	
  EXECUTIVE

  
	
  HOLDINGS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert Allen

  	
   

  	
  /s/ Martin Hanaka

  
	
  Name: Robert Allen

  	
   

  	
  Name: Martin Hanaka

  
	
  Title: Chairman,
  Compensation Committee

  	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
  Date: December 28,
  2009

  	
   

  	
  Date: December 28,
  2009

  
				

 

14Exhibit 10.2

 

SUE GOVE

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

WITH

GOLFSMITH INTERNATIONAL HOLDINGS, INC.

 

This is an Amended and
Restated Employment Agreement (this “Employment Agreement”),
dated as of December 28, 2009, entered into between Golfsmith International
Holdings, Inc., a Delaware corporation (the “Company”),
and Sue Gove (“Executive”).

 

RECITALS:

 

WHEREAS, the Company
and Executive entered into that certain written employment agreement dated September 29,
2008, pursuant to which the Company employed Executive as its Executive Vice
President and Chief Operating Officer (the “Original
Agreement”); and

 

WHEREAS, the Company
and Executive have agreed to amend and restate the Original Agreement.

 

NOW,
THEREFORE, in consideration of the promises and mutual
covenants contained herein, the parties, intending to be legally bound, agree
to amend and restate the Original Agreement, effective December 28, 2009,
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 a three-year period starting
on September 29, 2008 (such date being the “Effective Date”).

 

(b)                                 Term.  Subject to earlier termination pursuant to Section 5,
the initial three-year term of this Employment Agreement is subject to
automatic one year extensions starting on the anniversary of the Effective Date
and on each subsequent anniversary date, unless, at least 90 days before any
such subsequent anniversary date, Executive or the Company cancels the
automatic extension by giving written notice to the other party of its election
to cancel such extension, in which case the term of Executive’s employment hereunder
shall terminate as of such anniversary date.

 

SECTION 2.  DEFINITIONS

 

“Affiliate”
as used in this Employment Agreement is defined in Rule 405 under the
Federal Securities Act of 1933, as amended.

 

 

“Cause” means:

 

(1)                                  Executive’s (i) fraud, (ii) embezzlement,
or (iii) misappropriation of material funds or other material Property (as
defined in Section 6(a)), in each case involving or against the
Company or any of its Affiliates;

 

(2)                                  Executive’s indictment for
or conviction of any felony or any crime which involves dishonesty or a breach
of trust;

 

(3)                                  Executive’s gross negligence
or willful misconduct with respect to the Company or any of its Affiliates
which causes material detriment to the Company or any of its Affiliates;

 

(4)                                  Executive commits a
violation of the United States’ Foreign Corrupt Practices Act of 1977, as
amended, and such violation is not cured, or is not capable of being cured,
within thirty days of written notice to Executive from the Company;

 

(5)                                  the debarment of Executive
from engaging in contracting or sub-contracting activities with the United
States Government if such debarment is the result of a final determination by
an agency of such government that Executive knowingly acted in a manner
justifying such debarment;

 

(6)                                  Executive commits a
violation of the Company’s code of ethics or code of business conduct,
including but not limited to the Company’s Code of Business Conduct and Ethics
for Directors, Officers and Employees and Code of Ethics for Senior Executive
and Financial Officers, which the Board of Directors of the Company reasonably
determines makes him no longer able or fit to fulfill her responsibilities
under this Employment Agreement, and which is not cured, or is not capable of
being cured, within thirty days after written notice thereof is given to the
Executive by the Company;

 

(7)                                  Executive engages in any
material breach of the terms of this Employment Agreement or fails to fulfill
her duties under this Employment Agreement and such breach or failure, as the case
may be, is not cured, or is not capable of being cured, within thirty days
after written notice thereof is given to the Executive by the Company; or

 

(8)                                  Executive (i) is
censured by any agency of the United States Government or (ii) fails to
satisfy any requirement of any agency of the United States Government which the
Board of Directors of the Company reasonably determines has a material and
adverse effect on her ability to fulfill her duties under this Employment
Agreement and such failure is not cured within thirty days after written notice
thereof is given to the Executive by the Company.

 

“Change
of Control” means an event described in Section 2.9(a) of
the ISP, excluding, for this purpose, any acquisition by First
Atlantic Capital, Ltd.  or Atlantic
Equity Partners III.

 

“Competing
Business” means any business which designs, distributes, sells
or markets golf equipment and golf related products, or any other business in
which the Company or any of its Affiliates is substantially engaged, (1) at
any time during the Term, or (2) for purposes of the 

 

2

 

Restricted
Period, at any time during the one-year period immediately preceding the
termination of Executive’s employment hereunder.  Notwithstanding the foregoing, a Competing
Business shall not include (i) suppliers of the Company or any of its
Affiliates, or (ii) any entity that receives less than 25% of its revenue
from the retail sales of golf equipment or golf related products, so long as, in
the case of either clause (i) or (ii), Executive does not
engage in the design, distribution, sales or marketing of golf equipment or
golf related products.

 

“Date of
Termination” means the date that Executive’s employment
with the Company terminates.

 

“Disability”
means a condition which renders Executive unable (as determined by the Board of
Directors of the Company in good faith after consultation with a health care
provider selected by the Board of Directors of the Company after good faith
consultation with Executive or her legal representative) to regularly perform
her duties hereunder by reason of illness or injury for a period of more than
six consecutive months.

 

“Earned
Bonus” means the Annual Bonus, determined based on the actual
performance of the Company for the full fiscal year in which Executive’s
employment terminates, that Executive would have earned for such fiscal year
had she remained employed for the entire year, prorated based on the ratio of
the number of days during such year that Executive was employed to 365.  Such Earned Bonus will be determined and paid
to Executive (or her estate, if applicable) in accordance with Section 4(b),
if she is entitled to such Earned Bonus under Section 5(b), Section 5(d) or
Section 5(e), as if no such termination had occurred.

 

“Good
Reason” means (i) a material and continuing failure to pay
to Executive compensation or benefits (as described in Section 4)
that have been earned, if any, by Executive, (ii) a material reduction in
Executive’s compensation or benefits (as described in Section 4), (iii) a
material reduction, without Executive’s written consent, in Executive’s title,
position or duties, or (iv) any breach by the Company of this Employment
Agreement which is material; provided,
however, that the occurrence of
any event described in this sentence may only constitute Good Reason if (a) Executive
gives the Company written notice of her intention to terminate her employment
for Good Reason and, in reasonable detail, of the event constituting grounds
for such termination within sixty (60) days of the occurrence of such event and
(b) the relevant circumstances or conditions are not remedied by the
Company within thirty (30) days after receipt by the Company of such written
notice from Executive.

 

“ISP”
means the Golfsmith International Holdings, Inc. 2006 Incentive
Compensation Plan, in each case as amended from time to time.

 

“Release” means a full
and final general release agreement executed by Executive releasing the
Company, its affiliated companies, its predecessors, successors and assigns,
and each of their officers, directors, agents, and employees from any and all
claims, with the exception of the Company’s breach of its post-employment
obligations arising under this Employment Agreement.

 

“Restricted
Period” means the two (2)-year period following the Date of
Termination.

 

3

 

“Term”
means the three-year period following the Effective Date and any and all
subsequent full or partial one-year extensions thereto until terminated
pursuant to the provisions of this Employment Agreement.

 

SECTION 3.  TITLE, POWERS AND DUTIES

 

(a)                                  Title.  Executive shall be the Executive Vice
President and Chief Operating Officer of the Company.

 

(b)                                 Powers and
Duties.  Executive in fulfilling her
duties shall have such powers as are normally and customarily associated with
an executive vice president and chief operating officer in a company of similar
size and operating in a similar industry, including the power to hire and fire
employees of the Company reporting to Executive and such other powers as
authorized by the chief executive officer of the Company.

 

Executive, as a condition to
her employment under this Employment Agreement, represents and warrants that
she can assume and fulfill the duties described in this Employment Agreement
without any risk of violating any non-compete or other restrictive covenant or
other agreement to which she is a party.

 

(c)                                  Reporting
Relationship.  Executive
shall report to the chief executive officer of the Company.

 

(d)                                 Full Time Basis.  Executive shall serve the Company faithfully
and to the best of her ability and will devote her full business time, energy,
experience and talents to the business of the Company and its Affiliates.

 

(e)                                  Geographic Area.  Executive shall perform her duties
principally in the Austin, Texas metropolitan area and shall be required to
travel outside of that area as necessary or appropriate to the performance of
her duties hereunder.

 

SECTION 4.  COMPENSATION AND BENEFITS

 

(a)                                  Annual Base
Salary.  From the Effective Date until May 14,
2009 Executive’s base salary shall be $400,000 per year.  Effective May 15, 2009 (the “Increase Date”),
Executive’s base salary shall be $450,000 per year, which amount may be
reviewed and increased at the discretion of the chief executive officer or
Board of Directors of the Company or any 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
executives and shall be subject to such withholdings as required by law or as
otherwise permissible under such practices or policies.

 

(b)                           Annual Bonus.  During the Term, Executive shall be eligible to
receive an annual performance-based cash bonus (“Annual Bonus”).  The target Annual Bonus that Executive may
earn is 75% of Executive’s then-current Annual Base Salary, based on the
Company’s attainment of such annual earnings before interest, depreciation,
income tax, and amortization (“EBITDA”) goals as are established by the Board of
Directors of the Company and 

 

4

 

communicated to Executive on
an annual basis.  Any Annual Bonus shall
be paid in a single lump sum between February 1 and December 31 of
the Company’s fiscal year immediately following the fiscal year to which such
Annual Bonus relates.

 

(c)                                  Retention Bonus.  Executive shall receive a one-time cash bonus
of $50,000 (the “Retention
Bonus”), payable on the Increase Date (other than in the case of
termination by the Company with Cause or by the Executive for Good Reason (as
such terms are defined herein)).  The
Retention Bonus is taxable, and all regular payroll taxes will be withheld.

 

(d)                                 Employee
Benefit Plans.  Executive
shall be eligible to participate, on terms no less favorable to Executive than
the terms for participation of any other senior executive of the Company, in
the 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. 
The employee benefit plans described in this paragraph shall include (if
and for as long as the Company sponsors such plans):

 

(1)                                  401(k) retirement
savings plan;

 

(2)                                  disability plan;

 

(3)                                  health plan; and

 

(4)                                  ISP.

 

(e)                                  Stock Options.  On Executive’s start date, which is expected
to be [September 29, 2008], Executive shall receive stock options to
purchase 200,000 shares of common stock of the Company.  On the Increase Date, Executive shall receive
stock options to purchase 100,000 shares of common stock of the Company.  The exercise price of such options shall be
the fair market value at the closing of the market of such common stock on the
grant date of such options.  Such options
shall become exercisable in equal annual installments on each of the first five
anniversaries of the grant date of such options, provided, however,
that such options shall become fully exercisable if Executive’s employment is
terminated following a Change of Control. 
Such options shall be subject to the terms and conditions set forth in
the ISP and the applicable option agreement granted to Executive under the ISP.

 

(f)                                    Vacation.  Executive shall have the right to four weeks
of vacation during each successive calendar year period in the Term, which
vacation time shall be taken at such time or times in each such one year period
so as not to materially and adversely interfere with the performance of her
duties under this Employment Agreement. 
Executive in addition shall have the right to the same holidays as other
employees of the Company.

 

(g)                                 Expense
Reimbursements.  Executive
shall have the right to reasonable expense reimbursements consistent with the
Company’s practice immediately prior to the execution of this Employment
Agreement.

 

(h)                                 Residence and
Transportation Expenses. 
During the first full twelve months of the Term or while Executive
maintains her permanent residence in Dallas, Texas, whichever is shorter, the
Company will pay or reimburse:  (A) reasonable
residential rental and living 

 

5

 

expenses (including meals) incurred by
Executive for her temporary residence in the Austin, Texas, metropolitan area,
and (B) reasonable airfare or mileage incurred by Executive for business
purposes and commuting up to once per week between Austin, Texas and Dallas,
Texas, subject to the Company’s receipt of such appropriate documentation as
the Company may reasonably require and compliance with the Company’s expense
reimbursement policy.  For purposes of
the preceding sentence, (i) the amount of
such expenses eligible for such payment or reimbursement provided during one
calendar year shall not affect the amount of such expenses eligible for such
payment or reimbursement in any other calendar year, (ii)any such payment or reimbursement of an eligible expense shall be made
on or before the last day of the calendar year following the calendar year in
which such expense was incurred, (iii) no such payment or reimbursement
may be liquidated or exchanged for another benefit, and (iv) all such
payments or reimbursements shall be treated as separate payments for purpose of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).   To the extent any of the
foregoing amounts payable or reimbursed under this Section 4(h) are
taxable to Executive, the Company shall pay Executive an additional cash sum to
place Executive in the same after-tax position Executive would have occupied
absent the taxes attributable to such amounts; provided,
however, that any such payment
shall be made by the end of the calendar year next following the calendar year
in which Executive remits such taxes. 
Executive shall also be eligible to participate in the Company’s
relocation program at the Executive Vice President level when she relocates to
Austin, TX.

 

(i)                                     Indemnification.  With respect to Executive’s acts or failures
to act during her employment in her capacity as a director, officer, 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 directors and officers of the Company.

 

SECTION 5.  TERMINATION OF EMPLOYMENT

 

(a)                                  General.  The chief executive officer of the Company
shall have the right to terminate Executive’s employment at any time with or
without Cause, and Executive shall have the right to terminate her employment
at any time with or without Good Reason. 
Except as otherwise provided in this Employment Agreement, Executive’s
participation in and entitlement to all fringe benefits or employee benefit
plans or programs shall cease upon the Date of Termination; however, nothing in
this Employment Agreement is intended to waive or abridge any right or benefit
which was vested under the terms and conditions of the applicable plan or
program on or before the Date of Termination.

 

(b)                                 Termination by
Chief Executive Officer or Board of Directors without Cause, by Cancellation,
or by Executive for Good Reason, or Change of Control.

 

(i)                                     If, prior to
the occurrence of a Change of Control (A) the chief executive officer or
Board of Directors of the Company terminates Executive’s employment without
Cause or cancels an automatic extension of this Employment Agreement under Section 1(b),
or (B) Executive resigns for Good Reason, in exchange for Executive
executing, delivering and not revoking a Release (such Release to be delivered
on or before the end of the fifty (50) day period following the Date of
Termination), shall pay Executive: (1) her earned but unpaid base salary
and earned but unpaid Annual Bonus for any completed fiscal year (payable in a
lump-sum 

 

6

 

within sixty (60) days following the Date of
Termination); (2) her Earned Bonus (payable in accordance with Section 4(b));
and (3) an amount equal to (a) 50% of her then-current total Annual
Base Salary if such termination occurs prior to the 6 month anniversary of the
Effective Date, or (b) 100% of her then-current total Annual Base Salary
payable if such termination occurs at any time between the 6-month anniversary
of the Effective Date and the twenty-four month anniversary of the Effective
Date, or (c) 200% of her then-current total Annual Base Salary if such
termination occurs at any time during the Term after the second annual
anniversary of the Effective Date, payable, commencing no later than sixty (60)
days following the Date of Termination, in equal installments in accordance
with the Company’s payroll procedures during the 6 month, 12 month or 24 month
periods immediately following commencement of such installment payments for
each of Section 5(b)(i)(3)(a), (b) or (c) as
applicable.  This obligation shall remain
in effect only until Executive accepts other employment.

 

(ii)                                  If, on or
following the occurrence of a Change of Control, (A) the chief executive
officer or Board of Directors of the Company terminates Executive’s employment
without Cause or cancels an automatic extension of this Employment Agreement
under Section 1(b), or (B) Executive resigns for Good Reason,
the Company, in exchange for Executive executing, delivering and not revoking a
Release (such Release to be delivered on or before the end of the fifty (50)
day period following the Date of Termination), shall pay Executive:   (1) her earned but unpaid base salary
and earned but unpaid Annual Bonus for any completed fiscal year (payable in a
lump-sum within sixty (60) days following the Date of Termination); (2) her
Earned Bonus (payable in accordance with Section 4(b)); and (3) an
amount equal to 200% of her then-current total Annual Base Salary, payable,
commencing no later than sixty (60) days following the Date of Termination, in
equal installments during a twenty-four month period after commencement of such
payments in accordance with the Company’s payroll procedures.  This obligation shall remain in effect only
until Executive accepts other employment. 
For the avoidance of doubt, if Executive is entitled to payment under
this Section 5(b)(ii), she shall not be entitled to payment under Section 5(b)(i).

 

(iii)                               In case of a
termination or resignation described in Section 5(b)(i) or 5(b)(ii) the
Company shall additionally make any COBRA continuation coverage premium
payments (not only for Executive, but for Executive’s dependents), either (a) for
a six-month period following the Date of Termination if such termination or
resignation occurs at any time prior to the first anniversary of the Effective
Date, or (b) for a twelve-month period following the Date of Termination
if such termination or resignation occurs at any time prior between the first
and second anniversary of the Effective Date, or (c) for a twenty-four
month period following the Date of Termination if such Termination occurs at
any time prior after the second anniversary of the Effective Date, or (d) until
Executive is eligible to be covered under another substantially equivalent
medical insurance plan by a subsequent employer as applicable; provided, however, that
the applicable period of “continuation coverage” for purposes of COBRA shall be
deemed to commence on the Date of Termination.

 

(iv)                              Notwithstanding
the provisions of this Section 5(b) or those of Section 5(d) or
5(e), if the Release has not been executed and delivered as described in
this Section 5(b), or Section 5(d) or 5(e),
as applicable, and become irrevocable within the statutory revocation 

 

7

 

period, no amounts or benefits under this Section 5(b),
or Section 5(d) or 5(e), as applicable, shall be or
become payable.

 

(v)                                 Notwithstanding
the foregoing provisions of this Section 5(b) or those of Section 5(d),
to the extent required in order to comply with Section 409A of the Code,
cash amounts that would otherwise be payable under this Section 5(b) or
Section 5(d) during the six-month period immediately following
the Date of Termination shall instead be paid, with interest on any delayed
payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of
the Code, on the first business day after the date that is six (6) months
following the Executive’s “separation from service” within the meaning of Section 409A
of the Code.  In addition, for purposes of Section 409A of the Code (including,
without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)),
each payment that Executive may be eligible to receive under this Employment
Agreement shall be treated as a separate and distinct payment and shall not
collectively be treated as a single payment.

 

(vi)                              Notwithstanding
the foregoing provisions of this Section 5(b) or those of Sections
5(d) or 5(e), the continued health coverage available to
Executive and, if applicable, to Executive’s dependents, pursuant to the
Company’s payment of COBRA continuation coverage premiums, shall be provided by
the Company in a manner such that Executive will not be taxable on any
reimbursements to or on behalf of Executive and, if applicable, to or on behalf
of Executive’s dependents.  In addition,
such health coverage shall be provided at no cost to Executive; provided, however, that if the Company reasonably
determines, based on the advice of its legal counsel, that Executive must be
taxed on the Company’s actual cost of providing such health coverage to
Executive (the “Coverage
Cost”) to avoid causing Executive to be taxed on the
reimbursements relating to such health coverage, the Company and Executive
agree that the Company will deliver timely to Executive appropriate tax
information returns to cause Executive to include the Coverage Cost in
Executive’s income.  If the health
coverage provided to Executive under Section 5 of this Employment
Agreement is subject to the provisions of Section 409A of the Code at any
relevant time, (A) payment or reimbursement of health expenses shall be
made on or before December 31 of the year following the year in which such
expenses are incurred, (B) Executive’s right to payment or reimbursement
of such expenses shall not be subject to liquidation or exchange for any other
benefit, and (C) the amount of expenses eligible for payment or
reimbursement during any calendar year shall not affect the amount of expenses
eligible for payment or reimbursement in any other calendar year, except as may
be required to comply with limitations included in the arrangement under which
such health coverage is provided.

 

(c)                                  Termination by
the Chief Executive Officer or Board of Directors for Cause or by Executive
without Good Reason.  If the
chief executive officer or Board of Directors of the Company terminates
Executive’s employment for Cause or Executive resigns without Good Reason other
than on or following the occurrence of a Change of Control, the Company’s only
obligation to Executive under this Employment Agreement shall be to pay
Executive:  (i) her earned but
unpaid base salary up to the Date of Termination; and (ii) her earned but
unpaid Annual Bonus for any completed fiscal year, and Executive shall have no
right to any Earned Bonus or any bonus payment prorated for a partial year in
which such termination occurs.  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

 

8

 

required to be paid to Executive by the terms
of any such benefit plan, program or policy following the Date of
Termination.  For the avoidance of doubt,
if Executive is entitled to payment under this Section 5(c), she
shall not be entitled to payment under Section 5(b).

 

(d)                                 Termination for
Disability.  The Board
of Directors of the Company shall have the right to terminate Executive’s
employment on or after the date Executive has a Disability, and such a
termination shall not be treated as a termination without Cause under this
Employment Agreement.  If Executive’s
employment is terminated on account of a Disability, the Company,  in exchange for Executive executing,
delivering and not revoking a Release (such Release to be delivered on or
before the end of the fifty (50) day period following the Date of Termination),
shall pay Executive, shall:

 

(1)                                  pay Executive her base
salary through the last day of the month containing her Date of Termination
(payable in a lump-sum within sixty (60) days following the Date of
Termination);

 

(2)                                  pay Executive her earned but
unpaid Annual Bonus for any completed fiscal year (payable in a lump-sum within
sixty (60) days following the Date of Termination);

 

(3)                                  pay Executive her Earned
Bonus for the fiscal year in which the Date of Termination occurs (payable in
accordance with Section 4(b));

 

(4)                                  pay or cause the payment of
benefits to which Executive is entitled under the terms of the disability plan
of the Company covering the Executive at the time of such Disability;

 

(5)                                  make such payments and
provide such benefits as otherwise called for under the terms of the ISP and
each other employee benefit plan, program and policy in which Executive was a
participant; and

 

(6)                                  make any COBRA continuation
coverage premium payments (not only for Executive, but also for Executive’s
dependents), for the one year period following the Date of Termination or, if
earlier, until Executive is eligible to be covered under another substantially
equivalent medical insurance plan by a subsequent employer; provided, however, that
the applicable period of “continuation coverage” for purposes of COBRA shall be
deemed to commence on the Date of Termination.

 

(e)                                  Death.  If Executive’s employment terminates as a
result of her death, the Company, in exchange for the legal representative of
Executive’s estate executing, delivering and not revoking a Release (such
Release to be delivered on or before the end of the fifty (50) day period
following the Date of Termination), shall:

 

(1)                                  pay Executive’s estate
Executive’s base salary through the last day of the month containing the Date
of Termination (payable in a lump-sum within sixty (60) days following the Date
of Termination);

 

9

 

(2)                                  pay Executive’s estate
Executive’s earned but unpaid Annual Bonus for any completed fiscal year
(payable in a lump-sum within sixty (60) days following the Date of
Termination);

 

(3)                                  pay Executive’s estate
Executive’s her Earned Bonus, when actually determined, for the year in which
Executive’s death occurs (payable in accordance with Section 4(b)),

 

(4)                                  make such payments and
provide such benefits as otherwise called for under the terms of the each
employee benefit plan, program and policy in which Executive was a participant;
and

 

(5)                                  make any COBRA continuation
coverage premium payments for Executive’s dependents, for the one year period
following Executive’s death or, if earlier, until such dependents are eligible
to be covered under another substantially equivalent medical insurance plan; provided, however, that
the applicable period of “continuation coverage” for purposes of COBRA shall be
deemed to commence on the Date of Termination.

 

SECTION 6.  COVENANTS BY EXECUTIVE

 

(a)                                  Company
Property.  Executive
upon the Date of Termination or, if earlier, upon the Company’s request shall
promptly return all 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
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 (including, but not limited to, Confidential Information as defined in
Section 6(c)) conceived, made, developed or acquired at any time by
Executive individually or, with others during Executive’s employment which
relate to the Company, its business 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, its Affiliates or any of their 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 (i) 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 (ii) 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.

 

10

 

(c)                                  Confidential
Information.  Executive
while employed by the Company or its Affiliates and at all times thereafter
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 Affiliates or their
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 her 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 or entrusted to
the Company or any of its Affiliates, including, without limitation, trade
secrets, customer or supplier lists, details of client or consultant 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 other than through disclosure by Executive, 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.  The
Confidential Information as described above may be in any form, including, but
not limited to, any intangible form such as unrecorded knowledge, information,
ideas, concepts, mental impressions, or may be embodied in equipment or other
tangible form, such as a document, drawings, photographs, computer code,
software or other printed or electronic media. 
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.

 

(d)                                 Non-solicitation
of Customers or Employees. 
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 or
attempt to solicit on behalf of a Competing Business customers of the Company
or any of its Affiliates, or induce or attempt to induce any such customers or
suppliers of the Company or any of its Affiliates to cease or reduce business
with the Company or any of its Affiliates, or knowingly interfere with the
relationship between any such customer, supplier or any other business relation
and the Company or any such Affiliate, 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 or attempt to solicit on behalf of a Competing Business
customers of the Company or any of its Affiliates with whom Executive had
contact or made contact within the course of Executive’s employment by the
Company or an Affiliate within the twenty-four month period immediately
preceding the beginning of the Restricted Period, or induce or attempt to 

 

11

 

induce any such customers or suppliers of the
Company or any of its Affiliates to cease or reduce business with the Company
or any of its Affiliates, or knowingly interfere with any relationship between
any such customer, supplier or any other business relation and the Company or
any such Affiliate.

 

Executive (i) while
employed by the Company or any of its Affiliates shall not, either directly or
indirectly, except in the interest of the Company or any of its Affiliates,
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 or relationship with the Company or any such Affiliate 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 person who is or, during the twelve month
period immediately preceding the beginning of the Restricted Period, was an
officer, employee or independent contractor of the Company or any of its
Affiliates to terminate his or her employment or relationship 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 herein shall prohibit any person from independently
contacting Executive about employment during the Restricted Period provided
that Executive does not solicit or initiate such contact.

 

(e)                                  Non-competition
Obligation.  Executive,
while employed by the Company or any of its Affiliates and thereafter during
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 engaged in, or
otherwise engage in, a Competing Business. 
Notwithstanding the preceding sentence, Executive will not be prohibited
from owning less than two percent (2%) of any publicly traded corporation,
whether or not such corporation is in a Competing Business.

 

(f)                                    Nondisparagement.  During the Term and at all times thereafter,
Executive shall not disparage or defame to third parties the Company or any of
its Affiliates or their respective officers or directors, or their respective
employees or owners who were such employees or owners during the Term, or,
during the Term and the Restricted Period only, their respective customers who
were such customers during the Term. 
During the Term and at all times thereafter, the Company and its
Affiliates and their respective officers and directors shall not disparage or
defame Executive to third parties. 
Nothing contained in this Section 6(f) shall preclude
Executive or the Company or any of the Company’s Affiliates from enforcing her
or their respective rights under this Employment Agreement.

 

(g)                                 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, fair and equitable in
scope, terms and duration, are necessary to protect the Company’s legitimate
business interests and are a material inducement to the Company to enter into
this Employment Agreement.

 

12

 

(h)                                 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 (i) cease or withhold payment to Executive of
any severance payments or benefits described in Section 5 for which
she otherwise qualifies under Section 5, and/or (ii) 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 to give
Executive, and, if known, Executive’s attorney, 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.

 

(i)                                     Scope of
Covenants.  The Company
and Executive further acknowledge that the time, scope, geographic area and
other provisions of this Section 6 have been specifically
negotiated by sophisticated parties and agree that they consider the
restrictions and covenants contained in this Section 6 to be
reasonable and necessary for the protection of the interests of the Company and
its Affiliates, but if any such restriction or covenant shall be held by any
court of competent jurisdiction to be void but would be valid if deleted in
part or reduced in application, such restriction or covenant shall apply with
such deletion or modification as may be necessary to make it valid and
enforceable.

 

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 the
following address or a more recent address provided in writing by the Company
to Executive:

 

GOLFSMITH INTERNATIONAL HOLDINGS, INC.

11000 North IH 35

Austin, TX 78753

Attention: 
Chief Executive Officer

Facsimile: 
(512) 821-4829

 

With a copy to General Counsel at the same
address

 

Notices and communications
to Executive shall be sent to the following address or a more recent address
provided in writing by Executive to the Chair of the Board of Directors of the
Company:

 

13

 

Sue Gove

2830 Miramar Drive

Carrolton, TX 75007

 

(b)                                 No Waiver.  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)                                  Withholding
Taxes.  All amounts payable hereunder
shall be subject to the withholding of all applicable taxes and deductions
required by any applicable law.

 

(d)                                 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.

 

(e)                                  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 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.

 

(f)                                    Other
Agreements.  Upon the
date of execution hereof, this Employment Agreement replaces and merges any and
all previous agreements and understandings regarding all the terms and
conditions of Executive’s employment, or other service provider, relationship
with the Company, and this Employment Agreement constitutes the entire
agreement between the Company and Executive with respect to such terms and
conditions.

 

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

 

(h)                                 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.

 

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

 

14

 

IN WITNESS WHEREOF, the Company and Executive
have executed this Employment Agreement in multiple originals to be effective
as of December 28, 2009.

 

 

	
  GOLFSMITH
  INTERNATIONAL HOLDINGS, INC.

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Martin Hanaka

  	
   

  	
  /s/ Sue Gove 

  
	
  Name:

  	
  Martin Hanaka

  	
   

  	
  Name:

  	
  Sue E. Gove

  	 

	
  Title:

  	
  Chief Executive Officer

  	
   

  	
  Title: 

  	
  Executive Vice President,
  Chief Operating Officer and 

  	 

	
   

  	
   

  	
   

  	
  Chief Financial Officer 

  	 

	
   

  	
   

  	
   

  
	
  Date: December 28,
  2009

  	
   

  	
  Date: December 28,
  2009

  

 

15

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