Document:

EX-10.1

 

Exhibit 10.1

SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

     SECOND AMENDMENT, dated as of February 13, 2007, to the Second Amended and Restated Credit
Agreement referred to below (this “Amendment”), by and among DICK’S SPORTING GOODS, INC., a
Delaware corporation (“Borrower”), GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, as Agent for the Lenders (in such capacity “Agent”), and the Lenders signatory
hereto.

W I T N E S S E T H:

     WHEREAS, Borrower, the other Loan Parties signatory thereto, Agent and Lenders are parties to
that certain Second Amended and Restated Credit Agreement, dated as of July 28, 2004 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);
and

     WHEREAS, Borrower, Agent and Required Lenders have agreed to amend certain provisions of the
Credit Agreement, in the manner, and on the terms and conditions, provided for herein;

     NOW THEREFORE, in consideration of the premises and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, Borrower, Agent and
Required Lenders hereby agree as follows:

     1. Definitions. Capitalized terms not otherwise defined herein (including in the
Recitals hereto) shall have the meanings ascribed to them in the Credit Agreement as amended hereby
(the “Amended Credit Agreement”).

     2. Amendment to Section 1.3 of the Credit Agreement.

Section 1.3 of the Credit Agreement is hereby amended and restated in its entirety as
of the Second Amendment Effective Date (as hereinafter defined) to read as follows:

“1.3 Use of Proceeds. Borrower shall use the proceeds of the Revolving
Credit Loan only for (a) payment of Fees, expenses and other costs incurred in
connection with the Transaction, (b) funding a portion of the Acquisition
(including, if applicable, providing the funds for the Acquirer Loan and the
Galyan’s Loan), (c) funding a portion of the Golf Acquisition, (d) refinancing
certain indebtedness of Golf Galaxy and GolfWorks, (e) refinancing certain
indebtedness of Galyan’s and (f) providing (i) working capital financing for
Borrower and its Subsidiaries, (ii) funds for other general corporate purposes of
Borrower and its Subsidiaries and (iii) funds for the purposes otherwise permitted
hereunder, including those referred to in Recital D hereof; and for these

 

 

purposes, Lenders are willing to make certain loans and other extensions of credit
to Borrower of up to such amount upon the terms and conditions set forth herein.”

     3. Amendment to Section 5.8 of the Credit Agreement.

Section 5.8 of the Credit Agreement is hereby amended as of the Second Amendment
Effective Date by adding a new sentence at the end thereof to read as follows:

“Notwithstanding anything to the contrary contained herein, the Loan Parties shall
be permitted to amend, supplement or otherwise modify the Schedules hereto or to
the other Loan Documents in connection with the Golf Acquisition to the extent
contemplated by the Joinder Agreement (Credit Agreement), dated as of the Second
Amendment Effective Date, made by Golf Galaxy and Agent, and the Joinder Agreement
(Credit Agreement), dated as of the Second Amendment Effective Date, made by
GolfWorks and Agent.”

     4. Amendment to Section 5.12 of the Credit Agreement.

Section 5.12 of the Credit Agreement is hereby amended and restated in its entirety as
of the Second Amendment Effective Date to read as follows:

“5.12 Landlord’s Waiver and Other Agreements. Except as otherwise agreed
to in writing by Agent, each Loan Party shall use commercially reasonable best
efforts to obtain (a) a Landlord’s Waiver in form and substance acceptable to Agent
from the landlord of any present or future leased premises of any Loan Party where
Inventory is located in the United States of America and where such landlord has a
contractual, statutory or common law Lien which is superior or “primes” Agent’s
Lien in such Inventory; and (b) a waiver and license agreement in form and
substance acceptable to Agent from any Person (other than Borrower) which owns,
operates or manages a warehouse or other location not owned by Borrower where
Inventory is located. With respect to such locations or warehouse space leased as
of the Closing Date or thereafter, if Agent has not received a Landlord’s Waiver or
waiver and license agreement, as applicable, as of the Closing Date (or, if later,
as of the date such location is leased), any Eligible Inventory at that location
shall, in Agent’s discretion, be subject to the Lease Payment Reserve.”

     5. Amendment to Section 5.14 of the Credit Agreement.

Section 5.14 of the Credit Agreement is hereby amended as of the Second Amendment
Effective Date by adding a new clause (c) at the end thereof to read as follows:

“(c) Borrower shall deliver or cause to be delivered to Agent no later than ninety
(90) days after the Golf Acquisition Closing Date, duly executed blocked account
agreements referred to in Annex B with respect to the

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Golf Galaxy Concentration Account and Golf Disbursement Accounts, which blocked
account agreements shall be in form and substance satisfactory to Agent and its
counsel.”

     6. Amendment to Section 5.16 of the Credit Agreement.

Section 5.16 of the Credit Agreement is hereby amended as of the Second Amendment
Effective Date by adding a new sentence at the end thereof to read as follows:

“GolfWorks Canada shall not be subject to the requirements of this Section
5.16, provided, however, that upon the reasonable request of Agent at any time
following an Event of Default GolfWorks shall cause sixty-five percent (65%) of the
Stock of GolfWorks Canada to be pledged to Agent for the benefit of Agent and
Lenders to secure the Obligations.”

     7. Amendment to Section 6.3 of the Credit Agreement.

Section 6.3 of the Credit Agreement is hereby amended as of the Second Amendment
Effective Date by deleting clause (j) thereof in its entirety and inserting a new clause (j) to
read as follows:

“(j) Indebtedness consisting of intercompany loans and advances made by any Loan
Party to any other Loan Party; provided, that: (i) each Loan Party shall
have executed and delivered to each other Loan Party, a demand note (collectively,
the “Intercompany Notes”) to evidence any such intercompany Indebtedness
owing at any time by such Loan Party to such other Loan Party which Intercompany
Notes shall be in form and substance reasonably satisfactory to Agent and shall be
pledged and delivered to Agent pursuant to the applicable Pledge Agreement,
Borrower Security Agreement or Subsidiary Security Agreement as additional
collateral security for the Obligations; (ii) each Loan Party shall record all
intercompany transactions on its books and records in a manner reasonably
satisfactory to Agent; (iii) the obligations of each Loan Party under any such
Intercompany Notes shall be subordinated to the Obligations of such Loan Party
hereunder or under the other Loan Documents in a manner reasonably satisfactory to
Agent; (iv) at the time any such intercompany loan or advance is made by any Loan
Party to any other Loan Party and after giving effect thereto, each such Loan Party
shall be Solvent; (v) no Default or Event of Default would occur and be continuing
after giving effect to any such proposed intercompany loan; and (vi) other than
investments outstanding as of the Second Amendment Effective Date and other
investments not to exceed $500,000 at any one time outstanding, no Loan Party may
make loans, advances or other investments to or in GolfWorks Canada;”

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     8. Amendment to Section 6.21 of the Credit Agreement.

Section 6.21 of the Credit Agreement is hereby amended as of the Second Amendment
Effective Date by deleting clause (b) thereof in its entirety and inserting in lieu thereof a new
clause (b) to read as follows:

“(b) enter into any new lease of real property or similar agreement unless to the
extent required by Section 5.12 such Loan Party has used commercially
reasonable best efforts to enter into a Landlord’s Waiver and other documentation
deemed appropriate by Agent, in each case in form and substance satisfactory to
Agent, with the owner of such real property (to the extent Inventory is located or
will be located at such property).”

     9. Amendments to Annex A of the Credit Agreement.

Annex A of the Credit Agreement is hereby amended as of the Second Amendment Effective
Date by:

	 	(a)	 	amending and restating in its entirety the following definitions to read as
follows:

“‘Borrowing Base’ shall mean, as of any date of determination by Agent,
from time to time,

the lesser of (A) seventy percent (70%) of Eligible Inventory on a cost basis, or
(B) eighty-five percent (85%) of Eligible Inventory net realizable liquidation
valuation, as determined by an appraisal acceptable to Agent, minus (1)
the Lease Payment Reserve, and (2) the amount of any other Reserves (including
Reserves for sales and use taxes and payroll withholding taxes) as Agent may deem
necessary or appropriate from time to time in its discretion.

‘Eligible Inventory’ shall mean such Inventory of Borrower, Galyan’s, Golf
Galaxy and GolfWorks that is not ineligible as the basis for Revolving Credit
Advances or Letter of Credit Obligations based on the criteria set forth below. In
determining whether Inventory constitutes Eligible Inventory, Agent does not intend
to include Inventory which:

(a) is not owned by Borrower, Galyan’s, Golf Galaxy or GolfWorks free and clear of
all Liens and rights of others, except the Liens in favor of Agent and Lenders
pursuant to the Collateral Documents and statutory or common law landlord Liens in
favor of landlords;

(b) is not located on premises owned or operated by Borrower, Galyan’s, Golf Galaxy
or GolfWorks referenced on Schedule 3.6;

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(c) is Inventory in transit (other than Eligible L/C Inventory and Inventory in
transit from one of Borrower’s, Galyan’s, Golf Galaxy’s or GolfWorks’ distribution
centers to one of Borrower’s, Galyan’s, Golf Galaxy’s or GolfWorks’ stores provided
that such Inventory is being shipped in the normal course of business and
consistent with Borrower’s, Galyan’s, Golf Galaxy’s or GolfWorks’ past practice, as
applicable, and Agent continues to maintain a first priority perfected security
interest in such Inventory subject only (but without limiting the provisions of
Section 5.12 hereof) to statutory or common law landlord Liens);

(d) is Inventory held on or at leased premises where, to the extent contemplated by
Section 5.12, the landlord thereof has either not executed a Landlord
Waiver in form and substance satisfactory to Agent or reserves (including, without
limitation, a Lease Payment Reserve) related thereto satisfactory to Agent in its
discretion have not been established against Borrowing Availability;

(e) is in the possession or control of a bailee, warehouseman, processor, converter
or other Person other than Borrower, Galyan’s, Golf Galaxy or GolfWorks, unless
Agent is in possession of such agreements, instruments and documents as Agent may
require (each in form and content acceptable to Agent and duly executed, as
appropriate by the bailee, warehouseman, processor, converter or other Person in
possession or control of such Inventory, as applicable) including but not limited
to warehouse receipts in Agent’s name covering such Inventory;

(f) is covered by a negotiable document of title unless such document has been
delivered to Agent;

(g) is not covered by insurance required by the terms of Section 5.5 and
Annex E;

(h) is obsolete, unsalable, shopworn, damaged, unfit for further processing, or is
of substandard quality;

(i) consists of display items or packing and shipping materials or samples, bags,
packaging, labels and other similar non-merchandise categories;

(j) consists of discontinued or slow-moving items;

(k) does not meet all standards imposed by any Governmental Authority;

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(l) is placed by Borrower, Galyan’s, Golf Galaxy or GolfWorks on consignment or
held by Borrower, Galyan’s, Golf Galaxy or GolfWorks on consignment from another
Person;

(m) is not a type held for sale in the ordinary course of Borrower’s, Galyan’s,
Golf Galaxy’s or GolfWorks’ business, including goods to be returned to the vendor;

(n) is Inventory produced in violation of the Fair Labor Standards Act and subject
to the “hot goods” provisions contained in Title 29 U.S.C. § 215 or any successor
statute or section;

(o) is Inventory which in any way fails to meet or violates any warranty,
representation or covenant contained in this Agreement or any other Loan Document;
or

(p) is not otherwise acceptable in the discretion of Agent, based upon such credit
and collateral considerations as Agent may deem appropriate from time to time.

‘Eligible L/C Inventory’ shall mean all finished goods inventory owned by
Borrower, Galyan’s, Golf Galaxy or GolfWorks and covered by Documentary Letters of
Credit, which finished goods Inventory is in transit to one of Borrower’s,
Galyan’s, Golf Galaxy’s or GolfWorks’ locations and which finished goods Inventory
(a) is owned by Borrower, Galyan’s, Golf Galaxy or GolfWorks, (b) is fully insured,
(c) is subject to a first priority security interest in and lien upon such goods in
favor of Agent (except for any possessor lien upon such goods in the possession of
a freight carrier or shipping company securing only the freight charges for the
transportation of such goods to Borrower, Galyan’s, Golf Galaxy or GolfWorks), (d)
is evidenced or deliverable pursuant to documents, notices, instruments, statements
and bills of lading that have been delivered to Agent or an agent acting on its
behalf, and (e) is otherwise deemed to be “Eligible Inventory” hereunder.

‘Gift Certificate and Merchandise Credit Liability’ shall mean, at any
time, the aggregate face value at such time of (a) outstanding gift certificates
and gift cards of Borrower, Galyan’s, Golf Galaxy or GolfWorks entitling the holder
thereof to use all or a portion of the certificate to pay all or a portion of the
purchase price for any Inventory, and (b) outstanding merchandise credits of
Borrower, Galyan’s, Golf Galaxy or GolfWorks.

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‘Lease Payment Reserve’ shall mean a reserve against the Borrowing Base in
an amount determined by Agent in its discretion including an amount equal to the
aggregate amount of a number of months (as determined by Agent) rent and utility
costs payable by Borrower with respect to each Lease of real property where
Eligible Inventory is located and with respect to which Borrower, Galyan’s, Golf
Galaxy or GolfWorks, as the case may be, has failed to obtain in accordance with
Section 5.12 a Landlord’s Waiver from the landlord thereof in form and
substance satisfactory to Agent. The Lease Payment Reserve may, in Agent’s
discretion, be in addition to any other reserve against the Borrowing Base
established by Agent, but in no event shall the Lease Payment Reserve per any
single location where there has been a failure to obtain a Landlord’s Waiver exceed
the greater of (i) an amount equal to the base rental payments under the then
current lease for such location over the immediately preceding three month period,
and (ii) the amount of any obligations owing or potentially owing to the applicable
landlord secured by the assets of any Loan Party, provided that such amount
shall not exceed the sum of the base rental payments under the then current lease
for such location over the immediately preceding twelve month period.”

	 	(b)	 	adding the following new definitions in appropriate alphabetical order therein:

“‘GolfWorks’ shall mean Golf Galaxy GolfWorks, Inc., an Ohio corporation.

‘Golf Acquisition Closing Date’ shall mean the date on which the Golf
Acquisition is consummated in accordance with the terms hereof and the Golf Merger
Agreement.

‘GolfWorks Canada’ shall mean Criterion Golf Technologies, Inc., a Canadian
corporation and wholly owned subsidiary of GolfWorks.

‘Golf Deposit Accounts’ shall have the meaning assigned to it in Annex
B.

‘Golf Disbursement Accounts’ shall have the meaning assigned to it in
Annex B.

‘Golf Galaxy Concentration Account’ shall have the meaning assigned to it
in Annex B.

‘Golf Galaxy Concentration Account Bank’ shall have the meaning assigned to
it in Annex B.

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‘Golf Merger Agreement’ shall mean that certain Agreement and Plan of
Merger, dated as of November 13, 2006, among Golf Galaxy, Yankees Acquisition Corp.
and Borrower.

‘Second Amendment Effective Date’ shall mean February 9, 2007. ”

	 	(c)	 	Deleting the definition “Disbursement Account” and adding the following definition in
appropriate alphabetical order therein:

“‘Borrower Disbursement Account’ shall have the meaning assigned to it in
Annex B.”

	 	(d)	 	The definition of “Permitted Acquisition” is hereby amended as of the Second Amendment
Effective Date by: (i) inserting the phrase “or GolfWorks Canada” after the second
parenthetical contained therein and (ii) inserting the parenthetical “(other than assets of
GolfWorks Canada)” after the word “assets” the first place it appears in clause (e) of such
definition.

     10. Amendment to Annex B of the Credit Agreement.

Annex B of the Credit Agreement is hereby amended as of the Second Amendment Effective
Date by amending and restating such Annex in its entirety as provided in Exhibit A attached
hereto.

     11. Representations and Warranties. To induce Required Lenders and Agent to enter
into this Amendment, Borrower hereby represents and warrants that:

	 	(a)	 	Each of the execution, delivery and performance by Borrower and each other
Loan Party which is party to the Guaranty of this Amendment and the performance of the
Amended Credit Agreement are (i) within Borrower’s and each such Loan Party’s
corporate power and have been duly authorized by all necessary corporate and
shareholder action; (ii) do not contravene any provision of any Loan Party’s charter
or bylaws or equivalent organizational or charter or other constituent documents;
(iii) do not violate any law or regulation, or any order or decree of any court or
Governmental Authority; (iv) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the acceleration of
any performance required by, any indenture, mortgage, deed of trust, lease, agreement
or other instrument to which any Loan Party is a party or by which any Loan Party or
any of its property is bound; (v) do not result in the creation or imposition of any
Lien upon any of the property of any Loan Party other than those in favor of Agent, on
behalf of itself and the Lenders, pursuant to the Loan Documents; and (vi) do not
require the consent or approval of any Governmental Authority or any other Person.

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	 	(b)	 	This Amendment has been duly executed and delivered by or on behalf of
Borrower and each other Loan Party which is party to the Guaranty.

	 	(c)	 	Each of this Amendment and the Amended Credit Agreement constitutes a legal,
valid and binding obligation of Borrower and each such Loan Party enforceable against
Borrower and such Loan Party in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).

	 	(d)	 	No Default or Event of Default has occurred and is continuing both before and
after giving effect to this Amendment.

	 	(e)	 	No action, claim or proceeding is now pending or, to the knowledge of any
Loan Party signatory hereto, threatened against such Loan Party, at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal, state, or local government or of any agency or subdivision thereof, or before
any arbitrator or panel of arbitrators, which challenges such Loan Party’s right,
power, or competence to enter into this Amendment or, to the extent applicable,
perform any of its obligations under this Amendment, the Amended Credit Agreement or
any other Loan Document, or the validity or enforceability of this Amendment, the
Amended Credit Agreement or any other Loan Document or any action taken under this
Amendment, the Amended Credit Agreement or any other Loan Document or which if
determined adversely could have or result in a Material Adverse Effect. To the
knowledge of each Loan Party, there does not exist a state of facts which is
reasonably likely to give rise to such proceedings.

	 	(f)	 	As of the Golf Acquisition Closing Date, Borrower has delivered to Agent a
complete and correct copy of the Golf Merger Agreement (including all schedules,
exhibits, amendments, supplements, modifications, assignments and all other material
documents delivered pursuant thereto or in connection therewith). No Loan Party and
no other Person party thereto is in default in the performance or compliance with any
provisions of the Golf Merger Agreement. The Golf Merger Agreement is in full force
and effect as of the Golf Acquisition Closing Date, and, if applicable, as of the date
of the consummation of the Golf Acquisition, and has not been terminated, rescinded or
withdrawn. All requisite approvals by Governmental Authorities having jurisdiction
over Golf Galaxy, any Loan Party and other Persons referenced therein with respect to
the transactions contemplated by the Golf Merger Agreement have been obtained, and no
such approvals impose any conditions to the consummation of the

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	 	 	 	transactions contemplated by the Golf Merger Agreement or to the conduct by any
Loan Party of its business thereafter. To the best of each Loan Party’s knowledge,
none of Golf Galaxy’s representations or warranties in the Golf Merger Agreement
contain any untrue statement of a material fact or omit any fact necessary to make
the statements therein not misleading. Each of the representations and warranties
given by each applicable Loan Party in the Golf Merger Agreement is true and
correct in all material respects.

	 	(g)	 	All representations and warranties of the Loan Parties contained in the
Credit Agreement and the other Loan Documents are true and correct as of the date
hereof with the same effect as though such representations and warranties had been
made on and as of the date hereof, except to the extent that any such representation
or warranty expressly relates to an earlier date.

     12. Remedies. This Amendment shall constitute a Loan Document. The breach by any
Loan Party of any representation, warranty, covenant or agreement in this Amendment shall
constitute an immediate Event of Default hereunder and under the other Loan Documents.

     13. No Other Amendments/Waivers. Except as expressly amended herein, the Credit
Agreement and the other Loan Documents shall be unmodified and shall continue to be in full force
and effect in accordance with their terms. In addition, this Amendment shall not be deemed a
waiver of any term or condition of any Loan Document by the Agent or the Lenders with respect to
any right or remedy which the Agent or the Lenders may now or in the future have under the Loan
Documents, at law or in equity or otherwise or be deemed to prejudice any rights or remedies which
the Agent or the Lenders may now have or may have in the future under or in connection with any
Loan Document or under or in connection with any Default or Event of Default which may now exist or
which may occur after the date hereof. The Credit Agreement and all other Loan Documents are
hereby in all respects ratified and confirmed.

     14. Waiver of Claims. Borrower hereby waives, releases, remises and forever
discharges Agent, Lenders and each other Indemnified Person from any and all Claims of any kind or
character, known or unknown, which Borrower ever had, now has or might hereafter have against Agent
or any Indemnified Person which relates, directly or indirectly, to any acts or omissions of Agent
or such Lender or any other Indemnified Person on or prior to the Second Amendment Effective Date.

     15. Expenses. Borrower hereby reconfirms its obligations pursuant to Section
11.2 of the Credit Agreement to pay and reimburse Agent for all reasonable out-of-pocket
expenses (including, without limitation, reasonable fees of counsel) incurred in connection with
the negotiation, preparation, execution and delivery of this Amendment and all other documents and
instruments delivered in connection herewith.

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     16. Effectiveness. This Amendment shall become effective as of February 9, 2007 (the
“Second Amendment Effective Date”) only upon satisfaction in full in the judgment of the
Agent of each of the following conditions:

	 	(a)	 	Amendment. Agent shall have received eight (8) original copies of
this Amendment duly executed and delivered by Agent, Lenders and Borrower and
acknowledged by the other Loan Parties.

	 	(b)	 	Payment of Expenses. Borrower shall have paid to Agent all costs and
expenses owing in connection with this Amendment and the other Loan Documents and due
to Agent and Lenders (including, without limitation, reasonable legal fees and
expenses).

	 	(c)	 	Representations and Warranties. All representations and warranties
contained in this Amendment shall be true and correct on and as of the Amendment
Effective Date.

	 	(d)	 	Golf Acquisition. The Golf Acquisition shall have been consummated
in accordance with the terms of the Golf Merger Agreement and Golf Galaxy and
GolfWorks shall have entered into joinder and other documents in respect of the Loan
Documents in form and substance satisfactory to Agent and Agent shall have received
such opinions, certificates, lien search results and other documents reasonably
requested by Agent and the Golf Acquisition shall constitute a Permitted Acquisition.

     17. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK. THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE
DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL, PURSUANT TO NEW YORK
GENERAL OBLIGATIONS LAW 5-1401, FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     18. Counterparts. This Amendment may be executed by the parties hereto on any number
of separate counterparts and all of said counterparts taken together shall be deemed to constitute
one and the same instrument.

     [SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered as of the day and year first above written.

	 	 	 	 	 
	 	 	BORROWER:
	 
	 	 	 	 
	 	 	DICK’S SPORTING GOODS, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ William R. Newlin
	 

	 	 	 	 
	 

	 	Name:
	 	William R. Newlin
	 

	 	Title:
	 	Executive Vice President and

Chief Administrative Officer

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	 	 	AGENT:
	 
	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL

CORPORATION, as Agent
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Joseph H. Burt
	 

	 	 	 	 
	 

	 	Name:
	 	Joseph H. Burt
	 

	 	Its:
	 	Duly Authorized Signatory

13

 

	 	 	 	 	 
	 	 	LENDERS:
	 
	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL

CORPORATION
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Joseph H. Burt
	 

	 	 	 	 
	 

	 	Name:
	 	Joseph H. Burt
	 

	 	Its:
	 	Duly Authorized Signatory

14

 

	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	/s/ James M. Steffy 
	 

	 	 	 	 
	 

	 	Name:	 	James M. Steffy 
	 

	 	Title:	 	Vice President 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	FLEET RETAIL GROUP, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Andrew Cerassi
	 

	 	 	 	 
	 

	 	Name:
	 	Andrew Cerassi
	 

	 	Title:
	 	VP
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	NATIONAL CITY BUSINESS CREDIT, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Joseph L. Kwasny
	 

	 	 	 	 
	 

	 	Name:
	 	Joseph L. Kwasny
	 

	 	Title:
	 	Director
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Anthony D. Braxton
	 

	 	 	 	 
	 

	 	Name:
	 	Anthony D. Braxton
	 

	 	Title:
	 	Director
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	CITIZEN’S BANK OF PENNSYLVANIA
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Don Cmar
	 

	 	 	 	 
	 

	 	Name:
	 	Don Cmar
	 

	 	Title:
	 	Vice President

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	 	 	JP MORGAN CHASE BANK
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ James M. Barbato
	 

	 	 	 	 
	 

	 	Name:
	 	James M. Barbato
	 

	 	Title:
	 	Vice President

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     Each of the undersigned Loan Parties hereby (i) acknowledges each of the amendments to the Credit
Agreement effected by this Amendment and (ii) confirms and agrees that its obligations under its
Guaranty shall continue without any diminution thereof and shall remain in full force and effect on
and after the effectiveness of this Amendment.

ACKNOWLEDGED,
CONSENTED and AGREED

to as of the date first written above.

	 	 	 	 	 
	AMERICAN SPORTS LICENSING, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	/s/ John Wolfe	 	 
	 

	 	 	 	 
	Name:

	 	John Wolfe	 	 
	Title:

	 	Treasurer	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	DSG OF VIRGINIA, LLC
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	/s/ Jeffrey R. Hennion	 	 
	 

	 	 	 	 
	Name:

	 	Jeffrey R. Hennion	 	 
	Title:

	 	President	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	GALYAN’S TRADING COMPANY, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	/s/ William R. Newlin	 	 
	 

	 	 	 	 
	Name:

	 	William R. Newlin	 	 
	Title:

	 	Vice President and Chief Administrative Officer	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	GALYAN’S NEVADA, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	/s/ William R. Newlin	 	 
	 

	 	 	 	 
	Name:

	 	William R. Newlin	 	 
	Title:

	 	President	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	GALYAN’S OF VIRGINIA, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	/s/ William R. Newlin	 	 
	 

	 	 	 	 
	Name:

	 	William R. Newlin	 	 
	Title:

	 	President	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	GOLF GALAXY, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	/s/ John Wolfe	 	 
	 

	 	 	 	 
	Name:

	 	John Wolfe	 	 
	Title:

	 	Vice President and Secretary	 	 

17

 

	 	 	 	 	 
	GOLF GALAXY GOLFWORKS, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	By:

	 	/s/ Joseph R. Oliver	 	 
	 

	 	 	 	 
	Name:

	 	Joseph R. Oliver	 	 
	Title:

	 	Vice President and Assistant Secretary	 	 

18

 

Exhibit A

ANNEX B

to

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

CASH MANAGEMENT SYSTEM

     Each Loan Party (other than GolfWorks Canada) shall, and shall cause its Subsidiaries to,
establish and maintain the Cash Management Systems described below:

     (a) On or before the Closing Date (or such later date set forth in Section 5.14(b),
Section 5.14(c) or as Agent shall consent in writing, as applicable) and until the
Termination Date, Borrower and Galyan’s shall (i) enter into blocked account agreements as set
forth in clause (c) (each a “Blocked Account” and collectively, the “Blocked
Accounts”) below for each account set forth on Schedule 3.20 with the banks identified
on such Schedule 3.20 (each, a “Relationship Bank”) and (ii) deposit and cause its
Subsidiaries to deposit or cause to be deposited promptly, and in any event no later than the first
Business Day after the date of receipt thereof, all cash, checks, drafts or other similar items of
payment relating to or constituting payments made in respect of any and all Collateral of such Loan
Parties into one or more Blocked Accounts in such Loan Party’s name or any such Subsidiary’s name
at a Relationship Bank. On or before the Closing Date, Borrower shall have established a
concentration account in its name (the “Concentration Account”) at the bank which shall be
designated as the Concentration Account bank for Borrower on Schedule 3.20 (the
“Borrower Concentration Account Bank”), which bank shall be satisfactory to Agent. On or
before the Golf Acquisition Closing Date, Golf Galaxy shall have established a concentration
account in its name (the “Golf Galaxy Concentration Account”) at the bank which shall be
designated as the Concentration Account bank for Golf Galaxy and GolfWorks (the “Golf Galaxy
Concentration Account Bank”), which bank shall be satisfactory to Agent.

     (b) Borrower may maintain, in its name, an account (each a “Borrower Disbursement
Account” and collectively, the “Borrower Disbursement Accounts”) at a bank acceptable
to Agent into which Agent shall, from time to time, deposit proceeds of Revolving Credit Advances
pursuant to Section 1.1 for use by Borrower solely in accordance with the provisions of
Section 1.3. Each of Golf Galaxy and GolfWorks may maintain, in their respective names, an
account (each a “Golf Disbursement Account” and collectively, the “Golf Disbursement
Accounts”) at a bank acceptable to Agent into which Golf Galaxy and GolfWorks shall, from time
to time, deposit proceeds received from the Golf Galaxy Concentration Account prior to an
Activation Notice (as defined below) and from intercompany advances permitted pursuant to the terms
of the Agreement.

 

 

     (c) On or before the Closing Date (or such later date set forth in Section 5.14(b) or
as Agent shall consent in writing), the Borrower Concentration Account Bank, each Relationship Bank
and each bank where a Borrower Disbursement Account is maintained, shall have entered into
tri-party blocked account agreements with Agent, for the benefit of itself and Lenders, and the
applicable Loan Party, in form and substance acceptable to Agent, which shall become operative on
or prior to the Closing Date (or such later date as set forth in Section 5.14(b) or as
Agent shall consent in writing, as applicable); provided that the balance in each Blocked
Account or Borrower Disbursement Account held by such banks identified on Schedule 3.20 for
which blocked account agreements have not been obtained shall be swept on a daily basis to the
Concentration Account. Each such blocked account agreement shall provide, among other things, that
(i) all items of payment deposited in such account and proceeds thereof deposited in the
Concentration Account, Borrower Disbursement Account or Blocked Account are held by such bank as
agent or bailee-in-possession for Agent, on behalf of itself and Lenders, (ii) the bank executing
such agreement has no rights of setoff or recoupment or any other claim against such account, as
the case may be, other than for payment of its service fees and other charges directly related to
the administration of such account and for returned checks or other items of payment, (iii) from
and after the date of execution of such agreement with respect to a Blocked Account, such bank
agrees to sweep on a daily basis all amounts in such Blocked Account to the Concentration Account
and (iv) from and after the date of execution of such agreement with respect to the Borrower
Concentration Account Bank or each bank where a Borrower Disbursement Account is held, such bank
agrees, from and after the receipt of a notice (an “Activation Notice”) from Agent (which
Activation Notice may be given by Agent at any time at which (1) a Default or Event of Default
shall have occurred and be continuing or (2) Excess Availability has at any time been less than
$30,000,000 (each of the foregoing being referred to herein as an “Activation Event”)), to
immediately forward all amounts received in the Concentration Account or the applicable Borrower
Disbursement Account to the Collection Account through daily sweeps from the Concentration Account
or such Borrower Disbursement Account into the Collection Account. From and after the date Agent
has delivered an Activation Notice to any bank with respect to the Concentration Account or any
Borrower Disbursement Account(s), no Loan Party (including GolfWorks and Golf Galaxy, but excluding
GolfWorks Canada) shall, or shall cause or permit any Subsidiary thereof to, accumulate or maintain
cash in disbursement or payroll accounts as of any date of determination in excess of checks
outstanding against such accounts as of that date and amounts necessary to meet minimum balance
requirements. In the event the Agent shall have delivered an Activation Notice to bank at which
the Concentration Account is held, and thereafter the Borrower has Excess Availability in excess of
$50,000,000 for a period of ninety consecutive Business Days, at the written request of Borrower,
the Agent, subject to no Default or Event of Default existing at such time, shall deliver a written
notice to such bank rescinding the Activation Notice previously delivered.

 

 

     (d) From and after the Golf Acquisition Closing Date, Golf Galaxy and GolfWorks shall cause,
on a daily basis, all monies deposited (other than up to $5,000 in any individual deposit account)
into their deposit accounts identified on Schedule 3.20 (the “Golf Deposit
Accounts”) to be swept into the Golf Galaxy Concentration Account. No later than ninety (90)
days after the Golf Acquisition Closing Date, the Golf Galaxy Concentration Account Bank and each
bank where a Golf Disbursement Account is maintained shall have entered into tri-party blocked
account agreements with Agent, for the benefit of itself and Lenders, and the applicable Loan
Party, in form and substance acceptable to Agent. Each such blocked account agreement shall
provide, among other things, that (i) all items deposited in such account are held by the
applicable account bank as agent or bailee-in-possession for Agent, on behalf of itself and
Lenders, (ii) the bank executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its service fees and
other charges directly related to the administration of such account and for returned checks or
other items of payment, and (iii) from and after the date of execution of such agreement with
respect to the Golf Galaxy Concentration Account Bank or each bank where a Golf Disbursement
Account is held, such bank agrees, from and after the receipt of an Activation Notice from Agent
(which Activation Notice may be given by Agent at any time when an Activation Event has occurred
and is continuing), to immediately forward all amounts received in the Golf Galaxy Concentration
Account or the applicable Golf Disbursement Account to the Collection Account through daily sweeps
from the Golf Galaxy Concentration Account or such Golf Disbursement Account into the Collection
Account. In the event Agent shall have delivered an Activation Notice to the Golf Galaxy
Concentration Account Bank, and thereafter the Borrower has Excess Availability in excess of
$50,000,000 for a period of ninety consecutive Business Days, at the written request of Borrower,
the Agent, subject to no Default or Event of Default existing at such time, shall deliver a written
notice to such bank rescinding the Activation Notice previously delivered.

     (e) So long as no Default or Event of Default has occurred and is continuing, Borrower may
amend Schedule 3.20 to add or replace a Relationship Bank or Blocked Account or to replace
the Concentration Account, Golf Galaxy Concentration Account, any Borrower Disbursement Account,
any Golf Disbursement Account or any Golf Deposit Account; provided, however, that
(i) Agent shall have consented in writing in advance to the opening of such account with the
relevant bank and (ii) prior to the time of the opening of such account, the applicable Loan Party
and/or the Subsidiaries thereof, as applicable, and such bank shall have executed and delivered to
Agent a tri-party blocked account agreement or such other agreement, in form and substance
satisfactory to Agent (it being understood that no such agreement shall be required in respect of
any Golf Deposit Account). The Loan Parties shall close any of their accounts (and establish
replacement accounts in accordance with the foregoing sentence) promptly and in any event within
thirty (30) days of notice from Agent that the creditworthiness of any bank holding an account is
no longer acceptable in Agent’s reasonable judgment, or as promptly as practicable and in any event
within sixty (60) days of notice from Agent that

 

 

the operating performance, funds transfer and/or availability procedures or performance with
respect to accounts or lockboxes of the bank holding such accounts or Agent’s liability under any
tri-party blocked account agreement or such other agreement with such bank is no longer acceptable
in Agent’s reasonable judgment.

     (f) The Blocked Accounts, Borrower Disbursement Accounts, Golf Disbursement Accounts, the Golf
Galaxy Concentration Account and the Concentration Account shall be cash collateral accounts, with
all cash, checks and other similar items of payment in such accounts securing payment of the
Revolving Credit Loan and all other Obligations, and in which the Loan Parties shall have granted a
Lien to Agent, on behalf of itself and Lenders, pursuant to the Borrower Security Agreement or the
Subsidiary Security Agreement, as applicable.

     (g) All amounts deposited in the Collection Account shall be deemed received by Agent in
accordance with Section 1.8 of the Agreement and shall be applied (and allocated) by Agent
in accordance with Section 1.10 of the Agreement. In no event shall any amount be so
applied unless and until such amount shall have been credited in immediately available funds to the
Collection Account.

Each Loan Party (other than GolfWorks Canada) shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with such Loan Party (each
a “Related Person”) to (i) hold in trust for Agent, for the benefit of itself and Lenders,
all checks, cash and other items of payment received by such Loan Party or any such Related Person
on behalf of any such Loan Party, and (ii) within one (1) Business Day after receipt by such Loan
Party or any such Related Person of any checks, cash or other items or payment received on behalf
of any Loan Party, deposit the same into a Blocked Account or Golf Deposit Account, as applicable,
of such Loan Party. Each Loan Party and each Related Person thereof acknowledges and agrees that
all cash, checks or items of payment constituting proceeds of Collateral are the property of Agent
and Lenders. All proceeds of the sale or other disposition of any Collateral, shall be deposited
directly into the applicable Blocked Accounts or the Concentration Account if required by
Section 6.8 of the Agreement.EX-10.2

 

Exhibit 10.2

	 	 	 
	

	 	300 Industry Drive – RIDC Park West, Pittsburgh, PA 15275
	www. DicksSportingGoods.com

	 	Main Phone: 724-273-3400 Main Fax: 724-227-1900

November 13,
2006

Mr. Randall
K. Zanatta
 Golf Galaxy, Inc.
 7275 Flying Cloud Drive
 Eden Prairie, MN
55344

     Re: Employment Agreement

Dear Randy:

     Based on and in connection with the Merger Agreement, enclosed is your employment agreement
(the “Employment Agreement”) with the Company that
Dick’s Sporting Goods, Inc. (“Dick’s”) agrees to
make effective as of the Closing. Please understand the effectiveness of the Employment Agreement
(and your receipt of the compensation and benefits provided thereunder) is pre-conditioned upon the
occurrence of the Closing under this exact Merger Agreement (at the Closing, Dick’s will execute
and cause the Company to execute the Employment Agreement and thereafter it will become effective
upon your execution thereof (which you are also agreeing to do at
Closing)).

     Defined terms used herein that are not otherwise defined shall have the meaning ascribed to
them in the Merger Agreement. The Merger Agreement is defined to mean the Agreement and Plan of
Merger dated as of November 13, 2006 among the Company, Yankees
Acquisition Corp. and Dick’s
Sporting Goods, Inc., as executed on the date hereof, without amendment or modification. This
letter shall terminate and be of no force and effect (i) if the Closing has not occurred by April
27, 2007, (ii) if the Merger Agreement is terminated in accordance with Section 7 thereof, (iii) if
you are not an employee in good standing of the Company on the Closing Date and/or (iv) upon any
amendment or modification to the Merger Agreement.

     This
letter will only become effective upon us both executing it and it may be executed in
counterparts.

	 	 	 
	 

	 	Very truly yours,
	 

	 	
	 

	 	William R. Newlin
	 

	 	Executive Vice President and
	 

	 	Chief Administrative Officer

 

November 13, 2006

Page 2

I acknowledge that I have carefully read and fully understand all of provisions of this letter and
the attached Employment Agreement and at the Closing I will automatically and without further
consideration and/or inducement enter into the Employment Agreement and agree be bound by its terms
and conditions at the Closing. I understand and acknowledge that my acceptance of this letter and
my promises contained herein and under the Employment Agreement are a material Inducement for
Dick’s to enter into the Merger Agreement and the transactions contemplated thereby.

	 	 	 
	ACCEPTED AND AGREED:
	 	 
	 
	 	 
	
 

	 	 
	Name: Randall K. Zanatta
	 	 
	Date: Nov. 13th 2006
	 	 

Attachment

			
	cc:	 	Bruce Parker, Esq.

Edward W. stack

 

SECOND AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

     THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and
entered into this 13th day of February, 2007 by and among Dick’s Sporting Goods, Inc., a
Delaware corporation (“Parent”) (as the parent entity of the Company), Golf Galaxy, Inc., a
Minnesota corporation (the “Company”) and Randall K. Zanatta (the “Executive”).

WITNESSETH:

     WHEREAS, the Company retained the services of Executive pursuant to the terms of that certain
Employment Agreement between Company and Executive dated December 31, 1997, as amended and restated
on October 9, 2006 and pursuant to the terms of that certain Retention Agreement between Company
and Executive dated December 31, 1997, as amended and restated on October 9, 2006, and any other
agreements related to employment, retention, compensation or severance that Executive has with the
Company (collectively, the “Prior Employment Agreement”);

     WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of November 13, 2006,
by and among Dick’s Sporting Goods, Inc., a Delaware corporation (“Parent”), its wholly
owned subsidiary Yankees Acquisition Corp., a Minnesota corporation (“Subsidiary”) and the
Company (the “Merger Agreement”), Subsidiary merged with and into the Company with the
Company as the surviving corporation (the “Merger”);

     WHEREAS, the Company desires to amend the terms of Executive’s employment pursuant to the
terms of this Agreement;

     WHEREAS, following both the execution of this Agreement and at the Closing Date (as defined in
the Merger Agreement), the Prior Employment Agreement shall terminate and be of no further force or
effect and

     WHEREAS, defined terms used herein that are not otherwise defined shall have the meanings
ascribed to them in the Merger Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein, the sufficiency of
which is hereby acknowledged, the parties, intending to be legally bound hereby, agree as follows:

 

 

ARTICLE I

EMPLOYMENT AND TERM

     1.1 EMPLOYMENT. Upon the terms and subject to the conditions herein contained, the Company
hereby employs Executive as President and Chief Executive Officer of the Company or in such other
capacity as may be agreed upon by the Executive and by the Chairman and Chief Executive Officer of
Parent, and Executive hereby accepts such employment.

     1.2 TERM. Except as otherwise provided in this Agreement, the term of this Agreement shall
commence as of the Closing Date (as defined in the Merger Agreement, the “Closing Date”)
and shall continue through and until the last day of the third fiscal year of Parent to end
following the Closing Date, or until this Agreement is earlier terminated by either party pursuant
to the terms hereof (the “Term”).

ARTICLE II

COMPENSATION

     2.1 SALARY. During the Term, as compensation for his services to the Company and as
compensation for his post-employment restrictions, including, but not limited to, his
confidentiality, non-competition and non-solicitation obligations provided in Article III of this
Agreement, Executive shall receive an annual base salary in the amount of Three Hundred Fifty Five
Thousand Dollars ($355,000), less standard income and payroll tax withholding and other authorized
deductions (the “Base Salary”) payable in accordance with the Parent’s then normal payroll
practices. The Base Salary shall be reviewed by the Chairman and Chief Executive Officer of Parent
on the first business day of each fiscal year occurring during the Term (the “Review Date”)
and in a manner consistent with the reviews of the President and Executive Vice Presidents of
Parent, the first such review to take place during the first quarter of Parent’s 2007 fiscal year
(the “Parent Fiscal Year 2007”) in accordance with Parent’s customary practices and as a
result thereof the Chairman and Chief Executive Officer of the Parent may (but shall not be
obligated to) increase the Executive’s Base Salary as of the Review Date by such amount as the
Chairman and Chief Executive Officer of Parent deems appropriate; provided that, there
shall not be any decrease in Base Salary after giving effect to any increase.

     2.2 BENEFITS. Executive shall be entitled to participate in any stock option plan, employee
stock purchase plan, retirement savings plan, profit sharing plan, life insurance, health
insurance, dental insurance, disability insurance or any other fringe benefit plan which Parent
and/or Company may from time to time make available to its salaried senior executives to the extent
that Executive’s age, tenure and title (at the equivalent of the Executive Vice President level of
Parent) make him eligible to receive those benefits. Any of such benefits may be modified or
withdrawn by Parent in its discretion during the Term to the extent the same are withdrawn or
modified or supplemented for other employees similarly situated.

     2.3 BONUS. During each full fiscal year of the Parent during the Term, beginning with Parent
Fiscal Year 2007, Executive is entitled to an annual bonus opportunity equal to 0-150% of
Executive’s Base Salary, with the target equal to 75% of Executive’s Base Salary (the
“Incentive Bonus”), to be granted pursuant to and in accordance with the terms of Parent’s
2002 Stock Plan (the “Plan”), based on the achievement of annual performance goals
established for

2

 

the respective fiscal year that are weighted 75% for achievement of the performance goals of
the Company (for Company senior management) and 25% for achievement of the performance goals of
Parent (at the equivalent of the Executive Vice President level of Parent), all of which goals are
established under the Plan and shall be determined at the same time and in accordance with the
Parent’s customary practices with regard to such goals for Executive Vice Presidents of Parent (the
“Performance Targets”). Subject to Section 4.5(a)(i) of this Agreement, the Incentive
Bonus shall be deemed earned on the last day of each such fiscal year so long as this Agreement has
not been terminated by Employee without Good Reason or by Company for Cause.

     2.4 STOCK OPTIONS. Parent shall grant to Executive a non-qualified stock option (the
“Special Options”) to purchase up to 165,000 shares of Parent common stock, par value $0.01
per share (“Parent Common Stock”) to be granted pursuant to and in accordance with the
terms of the Plan and Parent’s standard form stock option agreement, which Special Options shall
vest in three equal increments over three years, beginning on the first anniversary of the Closing
Date. The date of grant of the Special Options under the Plan shall be November 16, 2006 (which
date is 48 hours after the Parent’s earnings release has been made public for the quarterly period
ending October 28, 2006) and therefore the exercise price per share of the Special Options shall be
in accordance with the Plan the closing sale price for Parent common stock as quoted on the NYSE
for November 15, 2006 as reported in the The Wall Street Journal). In any event, the vested
portion of the Special Option shall be exercisable for five (5) years from the Closing Date,
whether or not Executive is still employed by the Company. If after such five-year period
Executive remains employed by the Company, the vested portion shall be exercisable in accordance
with applicable periods set forth under the Plan. Executive agrees to execute any documents that
are reasonably necessary to give effect to the forgoing. In addition, during the Term, Executive
shall be eligible to receive grants of non-qualified stock options under the Plan consistent with
annual grants made at the Executive Vice President level of Parent, which for all executives takes
performance into account.

     2.5 RESTRICTED STOCK. Parent shall grant to Executive 75,000 shares of restricted Parent
Common Stock (the “Restricted Stock”), to be granted pursuant to and in accordance with the
terms of the Plan, pursuant to a restricted stock agreement containing customary terms and
conditions and that meet the requirements of applicable law and the Plan. The date of grant of the
Restricted Stock shall be the Closing Date. On the third anniversary of the Closing Date if
Executive is still employed by the Company: (i) 37,500 shares of the Restricted Stock shall vest
(the “Time Vested Restricted Stock”), and (ii) an additional 37,500 shares of the
Restricted Stock shall vest, if and to the extent, that the performance targets of the Company as
set forth on Schedule I hereto (the “Performance Target for the Vested Restricted Stock”)
are met, in accordance with the vesting schedule attached hereto as Schedule I (the
“Performance Vested Restricted Stock”).

     2.6 PAID TIME OFF. Executive shall be entitled to twenty (20) days Paid Time Off (PTO) per
calendar year, which shall be prorated during any partial year during the Term. Any additional PTO
that is unused as of the last day of the calendar year shall be forfeited. Any unused PTO shall be
paid to Executive at termination.

3

 

     2.7 EXPENSES. The Company shall reimburse Executive for all reasonable expenses properly
incurred by Executive in the discharge of his duties hereunder upon production of evidence therefor
in accordance with Parent’s then current policy.

ARTICLE III

DUTIES OF EXECUTIVE

     3.1 SERVICES; DUTIES. Executive shall have the normal duties, responsibilities and authority
of a President and Chief Executive Officer of the Company and shall faithfully and to the best of
his abilities perform such duties and services reporting to the Chairman and Chief Executive
Officer of the Parent. Executive shall devote Executive’s full time and best efforts to the
business of the Company. Executive shall perform the duties and obligations required of Executive
hereunder in a competent, efficient and satisfactory manner at such hours and under such conditions
as the performance of such duties and obligations may require. During the Term, subject to
reporting to the Chairman and Chief Executive Officer of the Parent, the Executive will have the
authority to run the day-to-day operations of the Company, consistent with past practice, using
sound and reasonable business judgment and methods (as judged from the standpoint of a reasonably
prudent person acting in golf retail industry in the capacity of the Executive and having the
Executive’s years of knowledge and experience). This authority will be subject to applicable law
and regulation, the Executive acting in good faith, the Company being operated pursuant to
commercially reasonable and sound business practices (as judged from the standpoint of a reasonably
prudent person acting in golf retail industry in the capacity of the Executive and having the
Executive’s years of knowledge and experience), and the Executive’s fiduciary duties to the Company
and its shareholder.

     3.2 CONFIDENTIALITY AND LOYALTY. Executive acknowledges that, during the course of
Executive’s employment with the Company, Executive will produce and have access to trade secrets,
materials, records, data and information not generally available to the public regarding the
Company and Parent, their respective vendors, customers and affiliates (collectively,
“Confidential Information”). Accordingly, during and subsequent to the termination of this
Agreement, Executive shall hold in confidence and not, directly or indirectly disclose, use, copy
or make lists of any Confidential Information, except to the extent authorized in writing by the
Company, or as required by law or any competent administrative agency or as otherwise is reasonably
necessary or appropriate in connection with the performance by Executive of his duties pursuant to
this Agreement. Upon termination of Executive’s employment for any reason, Executive shall
promptly deliver to the Company (i) all records, manuals, books, documents, client lists, letters,
reports, data, tables, calculations and all copies of any of the foregoing which are the property
of the Company or Parent or which relate in any way to the business or practices of the Company
and/or Parent, and (ii) all other property of the Company and/or Parent and Confidential
Information which in any of these cases are in his possession or under his control.

     3.3 NON-COMPETITION AND NON-SOLICITATION.

          (a) Non-Competition. In further consideration of the compensation to be paid to
Executive hereunder, Executive acknowledges that during the course of his employment with the
Company he has become familiar with the Company’s and Parent’s trade secrets and

4

 

with other Confidential Information concerning the Company and Parent and that his services
have been and shall be of special, unique and extraordinary value to the Company, and therefore,
Executive agrees that, during the Term and for a period of two (2) years after his employment with
the Company is terminated (the “Noncompete Period”), he shall not, without the Company’s
prior written consent, directly or indirectly, own, manage, operate, join, control or participate
in the ownership, management, operation or control of, or be connected as a director, officer,
employee, partner, consultant or otherwise with, (i) any business or organization in the United
States, Canada or Mexico that sells or markets golf equipment, apparel, accessories or services
directly to consumers, whether through retail or direct marketing channels, including, but not
limited to, via catalogs and/or the internet and/or (ii) any entity that owns and/or operates Big
Box (as defined below) sporting goods retail stores within fifty (50) miles of where Parent or its
subsidiaries operates such a store or stores, or has specific plans to open such a store within one
year after the Termination Date (defined below), if the Employee had been informed of such store
opening plans prior to the Termination Date, specifically including, but not limited to, The Sports
Authority, Inc., Gart Sports Company, Gander Mountain/Holiday Companies, Bass Pro Shops and
Cabela’s, Inc. and their respective successors and affiliates. “Big Box” means a store
specializing in the sale of goods having at least twenty-five thousand (25,000) square feet of
selling space dedicated substantially to the retail sale of hard and soft line sporting goods and
apparel, including single stores, stores that are part of regional or nationwide chains, specialty
stores, the internet and any other sales establishments otherwise meeting the foregoing definition
(the entities defined in 3.3(a)(i) and (ii) each shall be referred to as a “Competitive
Business”); provided, however, that nothing herein shall prohibit Executive from being
a passive owner of not more than 2% of the outstanding stock of any class of a corporation which is
publicly traded, so long as Executive has no active participation in the business of such
corporation. If, at the time of enforcement of this Article III, a court shall hold that the
duration, scope or area restrictions stated herein are unreasonable under circumstances then
existing, the parties agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area and that the court shall
be allowed to revise the restrictions contained herein to cover the maximum period, scope and area
permitted by law. Executive acknowledges that the restrictions contained in this Article III are
reasonable and that he has reviewed the provisions of this Agreement with his legal counsel.

               (b) Non-Solicitation. During the Term and for a period of two (2) years after the end
of the Executive’s employment with the Company and/or Parent (the “Non-Solicit Period”),
Executive shall not directly or indirectly, himself or through another person or entity (i) induce
or attempt to induce any employee of the Company or Parent (or their affiliates) to leave the
employ of the Company or Parent (or their affiliates), as applicable, or in any way interfere with
the relationship between the Company and/or Parent and any employee thereof, (ii) hire, solicit for
hire or participate in the solicitation or hiring of any person who was an employee of the Company
or Parent at any time during the Term or the Non-Solicit Period or (iii) induce or attempt to
induce any customer, supplier, manufacturer, licensee, licensor, franchisee or other business
relation of the Company and/or Parent to cease doing business with the Company or Parent (or their
affiliates), or in any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company and/or Parent (or their affiliates) (including,
without limitation, making any negative or disparaging statements or communications regarding the
Company and/or Parent).

5

 

               (c) In the event of the breach or a threatened breach by Executive of any of the provisions of
this Article III, the Company and/or Parent would suffer irreparable harm, and in addition and
supplementary to other rights and remedies existing in its favor, the Company and/or Parent shall
be entitled to specific performance and/or injunctive or other equitable relief from a court of
competent jurisdiction in order to enforce or prevent any violations of the provisions hereof
(without posting a bond or other security). In addition, in the event of an alleged breach or
violation by Executive of this Article III, the Noncompete Period and the Non-Solicit Period shall
be tolled until such breach or violation has been duly cured.

     3.4 PATENT AND RELATED MATTERS.

          (a) Disclosure and Assignment. Executive agrees to promptly disclose in writing to
the Company complete information concerning each and every invention, discovery, improvement,
device, design, apparatus, practice, process, method or product, whether patentable or not, made,
developed, perfected, devised, conceived or first reduced to practice by Executive, either solely
or in collaboration with others, during the term of this Agreement, or within six (6) months
thereafter, whether or not during regular working hours, relating either directly or indirectly to
the business, products, practices or techniques of the Company and/or Parent (hereinafter referred
to as “Developments”). Executive, to the extent that he has the legal right to do so,
hereby acknowledges that any and all of said Developments are the property of the Company and
hereby assigns and agrees to assign to the Company any and all of Executive’s right, title and
interest in and to any and all of such Developments.

          (b) Future Developments. As to any future Developments made by Executive which relate
to the business, products or practices of the Company and/or Parent and which are first conceived
or reduced to practice during the term of this Agreement, but which are claimed for any reason to
belong to an entity or person other than the Company, Executive agrees to promptly disclose the
same in writing to the Company and shall not disclose the same to others if the Company, within
twenty (20) days thereafter, shall claim ownership of such Developments under the terms of this
Agreement.

          (c) Limitation on Sections 3.4(a) and (b). The provisions of Sections 3.4(a) and (b)
shall not apply to any Development meeting the following conditions:

	 	(i)	 	such Development was developed entirely on
Executive’s own time;
	 
	 	(ii)	 	such Development was made without the use of
any Company and/or Parent equipment, supplies, facility or trade secret
information;
	 
	 	(iii)	 	such Development does not relate (a) directly
to the business of the Company and/or Parent, or (b) to the Company’s
and/or Parent’s actual or demonstrably anticipated research or
development; and
	 
	 	(iv)	 	such Development does not result from any work
performed by Executive for the Company and/or Parent.

6

 

          (d) Assistance of Executive. Upon request and without further compensation therefore,
but at no expense to Executive, and whether during the term of this Agreement or thereafter,
Executive will do all lawful acts, including, but not limited to, the execution of papers and
lawful oaths and the giving of testimony, that in the opinion of the Company, its successors and
assigns, may be necessary or desirable in obtaining, sustaining, reissuing, extending and enforcing
United States and foreign patents, including, but not limited to, design patents, on any and all of
such Developments, and for perfecting, affirming and recording the Company’s and/or Parent’s
complete ownership and title thereto, and to cooperate otherwise in all proceedings and matters
relating thereto.

          (e) Records. Executive will keep complete, accurate and authentic accounts, notes,
data and records of all Developments in the manner and form requested by the Company. Such
accounts, notes, data and records shall be the property of the Company, and, upon its request,
Executive will promptly surrender same to it or, if not previously surrendered upon its request or
otherwise, Executive will surrender the same, and all copies thereof, to the Company upon the
conclusion of his employment.

     3.5 UNDERSTANDINGS. Executive acknowledges and agrees that (a) he has carefully considered
the restrictions contained in this Agreement and (b) the restrictions in this Agreement are
reasonable and will not unduly restrict him in securing other employment in the event of
termination.

     3.6 REMEDIES. Executive agrees and understands that any breach of any of the covenants or
agreements set forth in Article III of this Agreement will cause the Company irreparable harm for
which there is no adequate remedy at law, and, without limiting whatever other rights and remedies
the Company may have under this Agreement, Executive consents to the issuance of an injunction by
any court of competent jurisdiction in favor of the Company enjoining the breach of any of the
aforesaid covenants or agreements. If any or all of the aforesaid covenants or agreements are held
to be unenforceable because of the scope or duration of such covenant or agreement, the parties
agree that the court making such determination shall have the power to reduce or modify the scope
and/or duration of such covenant to the extent that allows the maximum scope and/or duration
permitted by applicable law.

     3.7 SURVIVAL. The obligations of this Article III shall survive the expiration or termination
of this Agreement and/or termination of Executive’s employment for any reason.

ARTICLE IV

TERMINATION

     4.1 TERMINATION FOR CAUSE. Notwithstanding anything contained in this Agreement to the
contrary, the Company and Parent shall have the right to terminate the employment of Executive upon
the occurrence of any of the following events (which events shall constitute “Cause” for
termination):

          (a) Executive shall commit any breach or violation of any of Executive’s representations or
covenants under this Agreement, which breach continues for a period of ten

7

 

(10) days following notice thereof from the Company (except in the event of a breach of any
provision of Article III, which shall require no notice to Executive prior to termination);

          (b) Executive shall willfully and continually fail to substantially perform Executive’s duties
with the Company (other than due to incapacity resulting from physical or mental illness) which
failure has continued for at least thirty (30) days following receipt by Executive of written
notice specifying the failure to substantially perform;

          (c) Executive shall willfully engage in conduct that is demonstrably and materially injurious
to the Company, monetarily or otherwise, which injurious conduct has continued for at least thirty
(30) days following Executive’s receipt of written notice specifying the injurious conduct and
offering Executive the opportunity to explain the conduct of the Chairman and Chief Executive
Officer of the Parent;

          (d) Executive shall, in the performance of Executive’s duties under this Agreement, engage in
any act of misconduct, including misconduct involving moral turpitude, which is injurious to, or
engage in any act of fraud or theft against, the Company or Parent;

          (e) Executive shall violate or willfully refuse to obey the lawful and reasonable instructions
of the Chairman and Chief Executive Officer of Parent, provided that such instructions are not in
violation of this Agreement;

          (f) Executive shall become disabled during the Term (Executive shall be deemed to be disabled
if Executive is eligible to receive disability benefits under any long-term disability plan that
Parent may then have in effect, or, if no such plan is then in effect, Executive shall be deemed to
be disabled if Executive is unable to perform the material functions of his position with the
Company, with or without reasonable accommodation, by reason of a physical or mental infirmity, for
a period of ninety (90) consecutive days within any 180-day period;

          (g) Executive shall die during the Term of this Agreement; or

          (h) The completion of the Term.

          An act or failure to act is considered “willful” if done or not done with an absence
of good faith and without a reasonable belief that the act or failure to act was in the best
interests of the Company. If the employment of Executive is terminated pursuant to this Section
4.1, such termination shall be effective upon the delivery of notice thereof to Executive, except
in the event of the death of Executive, in which case termination shall be effective immediately
upon death, and termination pursuant to subsection 4.1(a), (b) or (c) under circumstances in which
Executive is entitled to notice of breach (or failure) and an opportunity to cure, in which case
termination shall be effective immediately after the notice period if Executive fails to cure the
breach or failure to the reasonable satisfaction of the Company. In the event of termination for
“Cause”, Executive shall not be entitled to any severance payments or any other payments under this
Agreement.

     4.2 TERMINATION BY COMPANY FOR ANY OTHER REASON. Notwithstanding anything contained in this
Agreement to the contrary, the Company shall have the right to terminate the employment of
Executive for any reason, including reasons other than

8

 

those described in Section 4.1, upon thirty (30) days notice to Executive. Such termination
shall be effective upon the expiration of such 30 day period. In the event of termination by the
Company for any reason not constituting “Cause” (as defined above), Executive shall be entitled to
the severance payments described in Section 4.5 of this Agreement.

     4.3 TERMINATION BY EXECUTIVE FOR GOOD REASON. Notwithstanding anything contained in the
Agreement to the contrary, Executive shall have the right to terminate his employment at any time
for “Good Reason”. “Good Reason” shall exist if any of the following events or conditions
occurs:

          (a) a material change in Executive’s title, position or responsibilities which represents a
substantial reduction of the title, position or responsibilities in effect immediately prior to the
change; the assignment of Executive to a position which requires Executive to relocate permanently
to a site outside of the Minneapolis-St. Paul metropolitan area; the assignment to Executive of any
duties or responsibilities (other than due to a promotion) which are inconsistent with such title,
position or responsibilities; or any removal of Executive from or failure to reappoint or reelect
Executive to any of such positions, except in connection with the termination of employment for
Cause, as a result of permanent disability (as defined above), as a result of Executive’s death, or
by Executive other than for Good Reason; or

          (b) any material breach by the Company of any provision of this Agreement.

In the event of termination of employment by Executive for Good Reason, Executive shall be entitled
to the severance payments described in Section 4.5 of this Agreement.

     4.4 TERMINATION BY EXECUTIVE. Executive shall have the right to terminate his employment
under this Agreement for any reason upon sixty (60) days (or such longer period of time as may be
mutually agreed by the parties) prior written notice to the Parent. In the event of termination by
Executive for any reason not constituting a termination for “Good Reason” (as defined above),
Executive shall not be entitled to any severance payment or any other payments under this
Agreement.

     4.5 SEVERANCE PAYMENTS.

          (a) If during the Term, Executive’s employment is terminated by the Company for reasons other
than Cause, or, in the event that Executive terminates Executive’s employment for Good Reason, the
Company shall pay to Executive the Base Salary through the date of Executive’s termination of
employment with the Company (the “Termination Date”). Notwithstanding any amount of time
remaining in the Term, Executive shall be entitled only to the following:

     (i) Lump sump payments equal to (A) two (2) times the Executive’s then-current Base
Salary, less standard income and payroll tax withholding and other authorized deductions,
payable within five (5) business days after the expiration of the revocation period set
forth in the Release Agreement (as defined in Section 4.5(c) of this Agreement), plus (B)
two (2) times the Incentive Bonus (less standard income and payroll tax withholding and
other authorized deductions) for the fiscal year of Parent in which the termination occurred
and payable based on the actual achievement of the

9

 

Performance Targets for such fiscal year if, and to the extent, such Performance
Targets for such fiscal year are achieved (payment will be made at the same time as the
Parent makes payment of such bonuses to other similarly situated employees as the
Executive); and

     (ii) Except for medical and dental benefits (which in the case of medical and dental
benefits the Company shall pay the Executive’s COBRA Premiums for eighteen (18) months (this
payment by the Company will run concurrently with the benefit continuation period provided
by the Consolidated Omnibus Budget Reconciliation Act (COBRA)) from the Termination Date),
to the extent permitted by Parent’s and/or the Company’s benefit and/or welfare plans,
during the twenty-four (24) month period from the Termination Date (the “Severance
Period”), the Company shall continue on behalf of Executive (and Executive’s dependents
and beneficiaries), life insurance, disability insurance and any/all other benefits which
were being provided to Executive at the time of termination of employment and the expense
shall be allocated between the Company and Executive on the same basis as prior to
Termination Date. The benefits provided pursuant to this Section 4.5(a)(ii) shall be no less
favorable to Executive than the coverage provided to Executive under the plans providing
such benefits at the time notice of termination was given to or by Executive. The obligation
of the Company under this Section 4.5(a)(ii) shall be limited to the extent that Executive
obtains any such benefits pursuant to a subsequent Executive’s benefit plans, in which case
the Company may reduce the coverage of any benefit it is required to provide Executive under
this Section 4.5(a) as long as the aggregate coverage of the combined benefit plans is no
less favorable to Executive, in terms of amounts and deductibles and costs to Executive,
than the coverage required to be provided under this Section 4.5(a). This Section 4.5(a)
shall not be interpreted so as to limit any benefits to which Executive (or Executive’s
dependents or beneficiaries) are entitled under any of the Company’s Executive benefit
plans, programs or practices following Executive’s date of termination of employment. The
provision of continued benefits to Executive under this Section 4.5(a) shall not deprive
Executive of any independent statutory right to continue benefits coverage pursuant to
Sections 601 through 606 of Executive Retirement Income Security Act of 1974, as amended.
If Parent’s and/or the Company’s benefit and/or welfare plans (other than medical and
dental) do not permit such benefits to be given to Executive for the twenty-four (24) month
period from the Termination Date, Executive shall receive, in lieu thereof, an amount in
cash equal to the actual cost then paid by Parent and/or Company for such benefits for the
Executive individually (as measured at the time of the Termination Date) for the time period
equivalent to twenty-four (24) months less the time period for which Executive received
benefits pursuant to Parent’s and/or the Company’s benefit and/or welfare plans after the
Termination Date. In addition, in order to provide the Executive with the equivalent of
twenty-four (24) months of medical and dental coverage, Executive shall receive an amount in
cash equal to six (6) months of COBRA Premiums. “COBRA Premiums” mean the cost of
post-employment continuation of medical and dental coverage (if then provided by the Company
and/or Parent) substantially equivalent to that coverage which was provided to Executive as
an employee on the Termination Date.

10

 

          (b) Notwithstanding the Term, if, prior to the third anniversary of the Closing Date,
Executive’s employment is terminated by the Company for reasons other than Cause, or, in the event
that Executive terminates Executive’s employment for Good Reason: (i) Executive’s rights to
exercise the Special Options granted by Parent pursuant to Section 2.4 of this Agreement and held
by Executive upon termination of employment shall immediately vest resulting in the Special Options
becoming immediately exercisable, and (ii) any unvested portion of Executive’s Time Vested
Restricted Stock held on the Termination Date shall immediately vest. Notwithstanding the Term if,
prior to the third anniversary of the Closing Date, Executive’s employment is terminated by the
Company for reasons other than Cause, or, in the event that Executive terminates Executive’s
employment for Good Reason, any unvested portion of Executive’s Performance Vested Restricted Stock
held at the Termination Date shall vest (x) only when and to the extent that the Performance Target
for the Vested Restricted Stock for the three-year period have been met as set forth on Schedule I
hereto and/or (y) only, and to the extent, that as of the Termination Date, the Company is then on
target to achieve the Performance Target for the Vested Restricted Stock (measured at the
Termination Date). In addition, if Executive’s employment is terminated by the Company for
reasons other than Cause, or, in the event that Executive terminates Executive’s employment for
Good Reason, pursuant to and in accordance with the terms of the Plan, all of Executive’s
then-vested stock options (other than the Special Options which are governed by this Agreement) at
the Termination Date shall be exercisable for ninety (90) days following the Termination Date or as
otherwise set forth in the Plan after which time the options shall expire, except as otherwise
provided in Section 4.5(d) as to the Assumed Options (as defined below).

          (c) Notwithstanding anything contained in this Agreement to the contrary, Executive shall be
entitled to the severance pay and benefits described in this Section 4.5 only if (i) on or within
thirty (30) days following Executive’s Termination Date Executive signs and does not rescind a
release agreement in the form of Exhibit A attached hereto (the “Release Agreement”), (ii)
Executive fully complies with his confidentiality obligations under Section 3.2 herein, (iii)
Executive fully complies with his non-competition and non-inducement obligations under Section 3.3
herein, and (iv) Executive fully complies with his disclosure and assignment obligations under
Section 3.4 herein. Executive further understands and agrees that if he does not sign the Release
Agreement, if he rescinds the Release Agreement after signing, or if he does not fully comply with
the confidentiality, non-competition, non-inducement, and/or disclosure and assignment requirements
of Sections 3.2, 3.3 and 3.4 herein, he will not be entitled to the severance pay or benefits
described in Section 4.5 and will be obligated to return any severance pay and/or benefits already
received.

          (d) If Executive’s employment is terminated by the Company for reasons other than Cause, or,
in the event that Executive terminates Executive’s employment for Good Reason, then all of
Executive’s employee stock option(s) granted under the Company’s stock option plan prior to the
date of the date of the Merger Agreement which become Assumed Options (as defined in the Merger
Agreement (i.e., are converted in accordance with the Merger Agreement to become exercisable for
Parent Common Stock)) and held by Executive at the Termination Date shall vest upon the Termination
Date and result in such Assumed Options becoming exercisable for the period specified in the
section of the respective Company option agreement(s) relating to the vesting of such options in
the event of termination of employment, or, if no period is specified, then for six (6) months from
the Termination Date after which time

11

 

the option(s) shall expire, provided however, that any such Company option agreement
may not be amended or altered in any way without Parent’s prior written consent.

     4.6 PAYMENT OF COMPENSATION. Notwithstanding anything in this Agreement or elsewhere to the
contrary:

          (a) If payment or provision of any amount or other benefit that is “deferred compensation”
subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) at
the time otherwise specified in this Agreement or elsewhere would subject such amount or benefit to
additional tax pursuant to Section 409A(a)(1)(B) of the Code, and if payment or provision thereof
at a later date would avoid any such additional tax, then the payment or provision thereof shall be
postponed to the earliest date on which such amount or benefit can be paid or provided without
incurring any such additional tax. In the event this Article IV requires a deferral of any
payment, such payment shall be accumulated and paid in a single lump sum on such earliest date
together with interest for the period of delay, compounded annually, equal to the prime rate (as
published in The Wall Street Journal), and in effect as of the date the payment should otherwise
have been provided.

          (b) If any payment or benefit permitted or required under this Agreement, or otherwise, is
reasonably determined by either party to be subject for any reason to a material risk of additional
tax pursuant to Section 409A(a)(1)(B) of the Code, then the parties shall promptly agree in good
faith on appropriate provisions to avoid such risk without materially changing the economic value
of this Agreement to either party.

     4.7 SURVIVING RIGHTS. Notwithstanding the termination of Executive’s employment, the parties
shall be required to carry out any provisions hereof which contemplate performance subsequent to
such termination; and such termination shall not affect any liability or other obligation which
shall have accrued prior to such termination, including, but not limited to, any liability for loss
or damage on account of a prior default.

     4.8 NO DUTY TO MITIGATE. Payments due to Executive following his termination of employment
are not conditioned upon Executive’s attempting to mitigate his losses by seeking other employment
or taking other action, and Executive shall be under no obligation to do so.

ARTICLE V

SETTLEMENT BY ARBITRATION

     5.1 ARBITRATION. The Company and Executive agree that any claim or controversy arising out of
or relating to this Agreement, including but not limited to the making of it or the alleged breach
of it, and any alleged violation of any right created by statute, shall be discussed between the
disputing parties in a good faith effort to arrive at a mutual settlement of any such claim or
controversy. If, notwithstanding, such claim or controversy cannot be resolved, the Company and
Executive agree that any claim or controversy will be settled by arbitration in the City of
Minneapolis, Minnesota, in accordance with the provisions of this Agreement, and the arbitration
rules of the American Arbitration Association, unless such rules are inconsistent with the
provisions of this Agreement. Limited civil discovery shall be

12

 

permitted for the production of documents and taking of depositions. Unresolved discovery
disputes may be brought to the attention of the arbitrator who may dispose of such dispute. The
arbitrator shall have the authority to award any remedy or relief that a court of this state could
order or grant; provided, however, that punitive or exemplary damages shall not be awarded.
The award rendered pursuant to such arbitration shall be final, binding and conclusive as to the
Company and Executive, and judgment upon such award may be entered without notice and enforced in
any court having jurisdiction. Costs of arbitration (excluding the costs of each party’s own
counsel or advisors) shall be borne equally by the Company and Executive. Notwithstanding the
foregoing, the Company shall have the right to submit any claim against Executive arising out of
any provision of Article III hereof to any court of competent jurisdiction in Hennepin County,
Minnesota, in lieu of seeking arbitration pursuant to this Section.

ARTICLE VI

GENERAL PROVISIONS

     6.1 NOTICES. All notices, requests, and other communications shall be in writing and except
as otherwise provided herein, shall be considered to have been delivered if personally delivered or
when deposited in the United States Mail, first class, certified or registered, postage prepaid,
return receipt requested, addressed to the proper party at its address as set forth below, or to
such other address as such party may hereafter designate by written notice to the other party:

(a) If to the Company, to:

Golf Galaxy, Inc.

7275 Flying Cloud Drive

Eden Prairie, MN 55344

ATTN: President

With a copy to:

Dick’s Sporting Goods, Inc.

300 Industry Drive

RIDC Park West

Pittsburgh, PA 15275

ATTN: Chief Administrative Officer

(b) If to the Parent, to:

Dick’s Sporting Goods, Inc.

300 Industry Drive

RIDC Park West

Pittsburgh, PA 15275

ATTN: Chief Administrative Officer

13

 

(c) If to Executive, to:

Randall K. Zanatta

4721 White Oak Court

Eagan, Minnesota 55122

     6.2 NO CONFLICTION OBLIGATIONS. Executive represents and warrants to the Company that he is
not under, or bound to be under in the future, any obligation to any person, firm, or corporation
that is or would be inconsistent or in conflict with this Agreement or would prevent, limit, or
impair in any way the performance by him of his obligations hereunder.

     6.3 WAIVER, MODIFICATION OR AMENDMENT. No waiver, modification or amendment of any term,
condition or provision of this Agreement shall be valid or of any effect unless made in writing,
signed by the party to be bound or its duly authorized representative and specifying with
particularity the nature and extent of such waiver, modification or amendment. Any waiver by any
party of any default of the other shall not affect or impair any right arising from any subsequent
default. Nothing herein shall limit the rights and remedies of the parties hereto under and
pursuant to this Agreement, except as set forth above. Executive agrees to execute any documents
and/or instruments that are reasonably necessary to give effect to the forgoing.

     6.4 ENTIRE AGREEMENT. This Agreement contains the complete and entire understanding of the
parties hereto in respect of the subject matter hereof and supersedes all prior negotiations,
agreements and understandings, whether written or oral, between the parties with respect to such
subject matter hereof.

     6.5 INTERPRETATION. The provisions of this Agreement shall be applied and interpreted in a
manner consistent with each other so as to carry out the purposes and intent of the parties hereto,
but if for any reason any provision hereof is determined to be unenforceable or invalid, such
provision or such part thereof as may be unenforceable or invalid shall be deemed severed from this
Agreement and the remaining provisions shall be carried out with the same force and effect as if
the severed provision or part thereof had not been a part of this Agreement.

     6.6 GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the laws
of the State of Minnesota, without regard to its principles of conflict of laws.

     6.7 ASSIGNMENT. Executive acknowledges that Executive’s services are unique and personal.
Accordingly, Executive may not assign Executive’s rights or delegate Executive’s duties or
obligations under this Agreement. This Agreement shall inure to the benefit of and be enforceable
by the Company, Parent and any respective successor or permitted assignee, and may be assigned by
the Company and/or Parent to any purchaser of all or substantially all of the Company’s and/or
Parent’s business or assets (by merger, sale of assets, consolidation, acquisition of stock or
otherwise) without the consent of Executive, and may otherwise be assigned by the Company only with
Executive’s consent.

14

 

     6.8 CAPTIONS AND HEADINGS. The captions and section headings used in this Agreement are for
convenience of reference only, and shall not affect the construction or interpretation of this
Agreement or any of the provisions thereof.

     6.9 SHARE ADJUSTMENT. Subject to any required action by the shareholders of the Company, the
number of shares covered by any award described herein shall be proportionately adjusted for any
increase or decrease in the number of issued shares resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification or similar transaction involving the Parent
Common Stock. Such adjustment shall be made by the Parent’s Board of Directors, whose
determination in that respect shall be final, binding and conclusive.

     6.10 PRIOR EMPLOYMENT AGREEMENT. Effective on the date of this Agreement, the Prior
Employment Agreement shall be of no further force and effect and the Company shall have no
liability or obligations to Executive thereunder, and shall be superseded and replaced in its
entirety by this Agreement.

[Remainder of Page Intentionally Left Blank]

[Signature Page Follows]

15

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 
	COMPANY:	 	 	 	EXECUTIVE:	 	 
	 
	 	 	 	 	 	 	 	 
	GOLF GALAXY, INC.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ John Wolfe
	 	 	 	/s/ Randall K. Zanatta	 	 
	Name:

	 	 

John Wolfe
	 	 	 	 

Randall K. Zanatta
	 	 
	Title:

	 	Vice President and Secretary	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PARENT:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	DICK’S SPORTING GOODS, INC.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ William R. Newlin	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name:

	 	William R. Newlin	 	 	 	 	 	 
	Title:

	 	Executive Vice President and Chief	 	 	 	 	 	 
	 

	 	Administrative Officer	 	 	 	 	 	 

16

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