Document:

exv10w3

Exhibit 10.3

SUE GOVE

EMPLOYMENT AGREEMENT

WITH

GOLFSMITH INTERNATIONAL HOLDINGS, INC.

     This is an Employment Agreement (this “Employment Agreement”), dated as of September 29, 2008,
entered into between Golfsmith International Holdings, Inc., a Delaware corporation (the
“Company”), and Sue Gove (“Executive”).

RECITALS:

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

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

AGREEMENT:

SECTION 1. TERM OF EMPLOYMENT

     (a) Effective Date. Subject to the terms and conditions set forth in this Employment
Agreement, the Company agrees to employ Executive, and Executive agrees to be employed by the
Company for a three-year period starting upon the date hereof (such date being the “Effective
Date”).

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

SECTION 2. DEFINITIONS

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

     “Cause” means:

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

 

 

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

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

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

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

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

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

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

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

     “Competing Business” means any business which designs, distributes, sells or markets
golf equipment and golf related products, or any other business in which the Company or any
of its Affiliates is substantially engaged, (1) at any time during the Term, or (2) for
purposes of the Restricted Period, at any time during the one-year period
immediately preceding the termination of Executive’s employment hereunder.
Notwithstanding the foregoing, a Competing Business shall not include (i) suppliers of the
Company or any of its Affiliates, or (ii) any entity that receives less than 25% of its

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revenue from the retail sales of golf equipment or golf related products, so long as, in the
case of either clause (i) or (ii), Executive does not engage in the design, distribution,
sales or marketing of golf equipment or golf related products.

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

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

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

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

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

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

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

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

SECTION 3. TITLE, POWERS AND DUTIES

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

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

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

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

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

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

SECTION 4. COMPENSATION AND BENEFITS

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

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

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communicated to Executive on an annual
basis. Any Annual Bonus shall be paid during the Company’s fiscal year immediately following the
fiscal year to which such Annual Bonus relates and within 60 days following the delivery of the
Company’s independent auditors’ report for such fiscal year.

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

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

	 	(1)	 	401(k) retirement savings plan;
	 
	 	(2)	 	disability plan;
	 
	 	(3)	 	health plan; and
	 
	 	(4)	 	ISP.

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

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

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

     (h) Residence and Transportation Expenses.

     During the first full twelve months of the Term or while Executive maintains her permanent
residence in Dallas, Texas, whichever is shorter, the Company will pay or reimburse:

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

     (i) Indemnification. With respect to Executive’s acts or failures to act during her
employment in her capacity as a director, officer, employee or agent of the Company, Executive
shall be entitled to
indemnification from the Company, and to liability insurance coverage (if any), on the same
basis as other directors and officers of the Company.

SECTION 5. TERMINATION OF EMPLOYMENT

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

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

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

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

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

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

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

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

     (c) Termination by the
chief executive officer or Board of Directors for Cause or by
Executive without Good Reason. If the chief executive officer or Board of Directors of the
Company terminates Executive’s employment for Cause or Executive resigns without Good Reason other
than on or following the occurrence of a Change of Control, the Company’s only obligation to
Executive under this Employment Agreement shall be to pay Executive: (i) her earned but unpaid
base salary up to the Date of Termination; and (ii) her earned but unpaid Annual Bonus for any
completed fiscal year, and Executive shall have no right to any Earned Bonus or any bonus payment
prorated for a partial year in which such termination occurs. The Company shall only be obligated
to make such payments and provide such benefits under any employee benefit plan,
program or policy in which Executive was a participant as are explicitly required to be paid
to Executive by the terms of any such benefit plan, program or policy following the Date of
Termination. For the avoidance of doubt, if Executive is entitled to payment under this Section
5(c), she shall not be entitled to payment under Section 5(b).

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

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

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

     (3) pay Executive her Earned Bonus for the fiscal year in which the Date of
Termination occurs;

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

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

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

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

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

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

     (3) pay Executive’s estate Executive’s her Earned Bonus, when actually
determined, for the year in which Executive’s death occurs,

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

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

SECTION 6. COVENANTS BY EXECUTIVE

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

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Property) together with any
and all information, ideas, concepts, discoveries, and inventions and the like (including, but not
limited to, Confidential Information as defined in Section 6(c)) conceived, made, developed or
acquired at any time by Executive individually or, with others during Executive’s employment which
relate to the Company, its business or its products or services.

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

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

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not limited to, any intangible form such as unrecorded knowledge,
information, ideas, concepts, mental impressions, or may be embodied in equipment or other tangible
form, such as a document, drawings, photographs, computer code, software or other printed or
electronic media. Notwithstanding the provisions of this Section 6(c) to the contrary,
Executive shall be permitted to furnish this Employment Agreement to a subsequent employer or
prospective employer.

     (d) Non-solicitation of
Customers or Employees. (1) Executive (i) while employed
by the Company or any of its Affiliates, shall not, on Executive’s own behalf or on behalf
of any person, firm, partnership, association, corporation or business organization, entity
or enterprise (other than the Company or one of its Affiliates), solicit or attempt to
solicit on behalf of a Competing
Business customers of the Company or any of its Affiliates, or induce or attempt to
induce any such customers or suppliers of the Company or any of its Affiliates to cease or
reduce business with the Company or any of its Affiliates, or knowingly interfere with the
relationship between any such customer, supplier or any other business relation and the
Company or any such Affiliate, and (ii) during the Restricted Period shall not, on
Executive’s own behalf or on behalf of any person, firm, partnership, association,
corporation or business organization, entity or enterprise, solicit or attempt to solicit on
behalf of a Competing Business customers of the Company or any of its Affiliates with whom
Executive had contact or made contact within the course of Executive’s employment by the
Company or an Affiliate within the twenty-four month period immediately preceding the
beginning of the Restricted Period, or induce or attempt to induce any such customers or
suppliers of the Company or any of its Affiliates to cease or reduce business with the
Company or any of its Affiliates, or knowingly interfere with any relationship between any
such customer, supplier or any other business relation and the Company or any such
Affiliate.

     (2) Executive
(i) while employed by the Company or any of its Affiliates shall not,
either directly or indirectly, except in the interest of the Company or any of its
Affiliates, call on, solicit or attempt to induce any other officer, employee or independent
contractor of the Company or any of its Affiliates to terminate his or her employment or
relationship with the Company or any such Affiliate and shall not assist any other person or
entity in such a solicitation (regardless of whether any such officer, employee or
independent contractor would commit a breach of contract by terminating his or her
employment), and (ii) during the Restricted Period, shall not, either directly or
indirectly, call on, solicit or attempt to induce any person who is or, during the twelve
month period immediately preceding the beginning of the Restricted Period, was an officer,
employee or independent contractor of the Company or any of its Affiliates to terminate his
or her employment or relationship with the Company or any of its Affiliates and shall not
assist any other person or entity in such a solicitation (regardless of whether any such
officer, employee or independent contractor would commit a breach of contract by terminating
his or her employment). Notwithstanding the foregoing, nothing herein shall prohibit any
person from independently contacting Executive about employment during the Restricted Period
provided that Executive does not solicit or initiate such contact.

     (e) Non-competition
Obligation. Executive, while employed by the Company or any of its
Affiliates and thereafter during the Restricted Period will not, for himself or on behalf of any
other person, partnership, company or corporation, directly or indirectly, acquire any

-11-

 

financial or
beneficial interest in (except as provided in the next sentence), be employed by, or own, manage,
operate or control, or become a director, officer, partner, employee, agent or consultant of, any
entity which is engaged in, or otherwise engage in, a Competing Business. Notwithstanding the
preceding sentence, Executive will not be prohibited from owning less than two percent (2%) of any
publicly traded corporation, whether or not such corporation is in a Competing Business.

     (f) Nondisparagement.

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

     (g) Reasonable and
Continuing Obligations. Executive agrees that Executive’s
obligations under this Section 6 are obligations which will continue beyond the date
Executive’s employment terminates and that such obligations are reasonable, fair and equitable in
scope, terms and duration, are necessary to protect the Company’s legitimate business interests and
are a material inducement to the Company to enter into this Employment Agreement.

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

     (i) Scope of Covenants. 

     The Company and Executive further acknowledge that the time, scope, geographic area and other
provisions of this Section 6 have been specifically negotiated by sophisticated parties

-12-

 

and
agree that they consider the restrictions and covenants contained in this Section 6 to be
reasonable and necessary for the protection of the interests of the Company and its Affiliates, but
if any such restriction or covenant shall be held by any court of competent jurisdiction to be void
but would be valid if deleted in part or reduced in application, such restriction or covenant shall
apply with such deletion or modification as may be necessary to make it valid and enforceable.

SECTION 7. MISCELLANEOUS

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

GOLFSMITH INTERNATIONAL HOLDINGS, INC.,

11000 North IH 35

Austin, TX 78753

Attention: Chief Executive Officer

Facsimile: (512) 821-4829

With a copy to General Counsel at the same address

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

Sue Gove

2830 Miramar Drive

Carrolton, TX 75007

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

     (c) Withholding Taxes.

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

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

     (e) Assignment. This Employment Agreement shall be binding upon and inure to the benefit of the Company and
any successor in interest to the Company or any segment of such

-13-

 

business. The Company may assign
this Employment Agreement to any affiliate or successor that acquires all or substantially all of
the assets and business of the Company or a majority of the voting interests of the Company, and no
such assignment shall be treated as a termination of Executive’s employment under this Employment
Agreement. Executive’s rights and obligations under this Employment Agreement are personal and
shall not be assigned or transferred.

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

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

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

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

-14-

 

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

	 	 	 	 	 	 	 	 	 
	GOLFSMITH INTERNATIONAL HOLDINGS, INC.	 	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Martin Hanaka
 

	 	  
	 	/s/ Sue E. Gove
 

	 	  
	 

	 	Name: Martin Hanaka
	 	 	 	Name: Sue E. Gove	 	 
	 

	 	Title: Chief Executive Officer	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date: September 29, 2008	 	 	 	Date: September 29, 2008

-15-exv10w4

Exhibit 10.4

Nonqualified Stock Option Award Agreement — Schedule A

Notice of Option Grant

	 	 	 
	Participant:

	 	Sue E. Gove
	 
	 	 
	Company:

	 	Golfsmith International Holdings, Inc.
	 
	 	 
	Notice:

	 	You have been granted the following Nonqualified Stock Option to purchase
Shares in accordance with the terms of the Plan and the Nonqualified Stock Option Award Agreement attached hereto. 
	 
	 	 
	Plan:

	 	
Golfsmith International Holdings, Inc. 2006 Incentive Compensation Plan
	 
	 	 
	Grant:

	 	Date of Grant: September 29, 2008
	 
	 	 
	 

	 	Option Price per Share: $2.50

Number of Shares under Option: 200,000
	 
	 	 
	Exercisability:

	 	Subject to the terms of the Plan and this Agreement, your Option may be exercised on and after the dates
indicated below as to the number of Shares set forth below opposite each such date, plus any Shares as to which
your Option could have been exercised previously but was not so exercised.

	 	 	 	 	 
	Shares	 	Date
	40,000
	 	September 29, 2009
	40,000
	 	September 29, 2010
	40,000
	 	September 29, 2011
	40,000
	 	September 29, 2012
	40,000
	 	September 29, 2013

	 	 	 
	 
	 	 
	 

	 	Notwithstanding notwithstanding the foregoing, but subject to the
immediately preceding sentence, upon the occurrence of a Change of Control,
your Option shall become fully exercisable as to the full number of Shares
under your Option.
	 
	 	 
	Expiration Date:

	 	Your Option will expire ten years from the Date of Grant,
subject to earlier termination as set forth in the Plan
and this Agreement.
	 
	 	 
	Rejection:

	 	If you do not want to accept your Option, please return
this Agreement, executed by you on the last page of this
Agreement, at any time within ninety (90) days after the
Date of Grant to Golfsmith International Holdings, Inc.
11000 N. IH-35, Austin, TX 78753. Do not return a signed
copy of this Agreement if you accept your Option. If you
do not return a signed copy of this Agreement within
ninety (90) days after the Date of Grant, you will have
accepted your Option and agreed to the terms and
conditions set forth in this Agreement and the terms and
conditions of the Plan.

1

 

Nonqualified Stock Option Award Agreement

               This Nonqualified Stock Option Award Agreement (this “Agreement”) dated as of the Date of
Grant (the “Date of Grant”) set forth in the Notice of Option Grant attached as Schedule A hereto
(the “Grant Notice”) is made between Golfsmith International Holdings, Inc. (the “Company”) and the
Participant set forth in the Grant Notice. The Grant Notice is included in and made part of this
Agreement.

          1. Definitions.

               (a) Capitalized terms used but not defined herein have the meaning set forth in the Golfsmith
International Holdings, Inc. 2006 Incentive Compensation Plan (the “Plan”).

               (b) Disability. Disability shall have the meaning contained in Participant’s employment
agreement, if applicable. If no such employment agreement exists, Participant’s employment with
Golfsmith, a Subsidiary, or an Affiliate shall be treated as terminating by reason of a
“Disability” if the Committee determines that his or her employment terminated because he or she no
longer was able to perform the essential functions of his or her job as a result of a physical or
mental illness even with reasonable accommodation by Golfsmith or a Subsidiary, or an Affiliate.

               (d) Retirement. Participant’s employment shall be treated as terminating by reason of
Retirement if his or her employment with Golfsmith, a Subsidiary, or an Affiliate terminates for
any reason other than Cause on or after the date he or she reaches at least age 60.

          2. Grant of the Option.

               Subject to the provisions of this Agreement and the provisions of the Plan, the Company hereby
grants to the Participant, pursuant to the Plan, the right and option (the “Option”) to purchase
all or any part of the number of shares of common stock of the Company, par value $0.001 per share
(“Shares”), as set forth in the Grant Notice at an Option Price (“Option Price”) per Share and on
the other terms as set forth in the Grant Notice.

          3. Exercisability of the Option.

               The Option shall vest and become exercisable in accordance with the exercisability schedule
and other terms set forth in the Grant Notice. The Option shall terminate on the Expiration Date
(the “Expiration Date”) set forth in the Grant Notice, subject to earlier termination as set forth
in the Plan and this Agreement.

          4. Method of Exercise of the Option.

               (a) The Participant may exercise the Option, to the extent then exercisable, by delivering a
written notice to the Company in a form specified or accepted by the Company, specifying the number
of Shares with respect to which the Option is being exercised. Such notice must be signed by the
Participant or any other person then having the right to exercise the Option.

               (b) At the time the Participant exercises the Option, the Participant shall pay the Option
Price of the Shares as to which the Option is being exercised to the Company (i) in United States
dollars by personal check, bank draft or money order; (ii) subject to such terms, conditions and
limitations as the Committee may prescribe, by tendering (either by actual delivery or attestation)
unencumbered Shares previously acquired by the Participant having an aggregate Fair Market Value at
the time of exercise equal to the total Option Price of the Shares for which the Option is so
exercised; (iii) subject to such terms, conditions and limitations as the Committee may prescribe,
a cashless (broker-assisted) exercise that complies with all applicable laws; or (iv) by a
combination of the consideration provided for in the foregoing clauses (i), (ii) and (iii).

2

 

          5. Termination.

               The Option shall terminate upon the Participant’s Termination for any reason and no Shares may
thereafter be purchased under the Option except as provided below. Notwithstanding anything
contained in this Agreement, the Option shall not be exercised after the Expiration Date.

               (a) Termination without Cause or for Good Reason. If the Participant’s Termination is by the
Company, a Subsidiary or an Affiliate without Cause or by the Participant for Good Reason or due to
the Participant’s Retirement, the Option, to the extent exercisable as of the date of such
Termination, shall thereafter be exercisable for a period of three months from the date of such
Termination.

               (b) Death and Disability. If the Participant’s Termination is due to the Participant’s death
or Disability, the Option, to the extent exercisable as of the date of such Termination, shall
thereafter be exercisable until the one-year anniversary of the date of such Termination.

               (d) Termination for Cause or without Good Reason. If the Participant’s Termination is by the
Company, a Subsidiary or an Affiliate for Cause (even if on the date of such Termination the
Participant has met the definition of Retirement or Disability) or by the Participant without Good
Reason, then the portion of the Option that has not been exercised shall immediately terminate.

          6. Transferability of the Option.

               The Option shall not be transferable otherwise than by will or the laws of descent and
distribution, and is exercisable, during the lifetime of the Optionee, only by him; provided that
the Option may be exercised after the Optionee’s death by the beneficiary most recently named by
the Optionee in a written designation thereof filed by the Optionee with the Company, in accordance
with the Plan. No transfer of the Option by will or the laws of descent and distribution shall be
effective to bind the Company unless the Committee is furnished with (a) written notice thereof and
with a copy of the will and/or such evidence as the Committee may deem necessary to establish the
validity of the transfer and (b) an agreement by the transferee to comply with all the terms and
conditions of the Option that are or would have been applicable to the Participant and to be bound
by the acknowledgements made by the Participant in connection with the grant of the Option.

          7. Taxes and Withholdings.

               At the time of receipt of Shares upon the exercise of all or any part of the Option, the
Participant shall pay to the Company in cash (or make other arrangements, in accordance with
Article XVI of the Plan, for the satisfaction of) any taxes of any kind required by law to be
withheld with respect to such Shares; provided, however, that pursuant to any procedures, and
subject to any limitations as the Committee may prescribe and subject to applicable law, the
Participant may elect to satisfy, in whole or in part, such withholding obligations by (a)
directing the Company to withhold Shares otherwise deliverable to the Participant pursuant to the
Option (provided, however, that the amount of any Shares so withheld shall not exceed the amount
necessary to satisfy required Federal, state, local and non-United States withholding obligations
using the minimum statutory withholding rates for Federal, state, local and/or non-U.S. tax
purposes, including payroll taxes, that are applicable to supplemental taxable income) and/or (b)
tendering to the Company Shares owned by the Participant (or the Participant and the Participant’s
spouse jointly) and held by the Participant (or by the Participant and the Participant’s spouse
jointly) for not less than two months prior to the date of such tender based, in each case, on the
Fair Market Value of the Shares on the payment date as determined by the Committee. Any such
election made by the Participant must be irrevocable, made in writing, signed by the Participant,
and shall be subject to any restrictions or limitations that the Committee, in its sole discretion,
deems appropriate.

3

 

          8. No Rights as a Shareholder.

               Neither the Participant nor any other person shall become the beneficial owner of the Shares
subject to the Option, nor have any rights to dividends or other rights as a shareholder with
respect to any such Shares, until the Participant has actually received such Shares following the
exercise of the Option in accordance with the terms of the Plan and this Agreement.

          9. No Right to Continued Employment.

               Neither the Option nor any terms contained in this Agreement shall confer upon the Participant
any express or implied right to be retained in the employment or service of the Company or any
Subsidiary or Affiliate for any period, nor restrict in any way the right of the Company or any
Subsidiary or Affiliate, which right is hereby expressly reserved, to terminate the Participant’s
employment or service at any time for any reason. The Participant acknowledges and agrees that any
right to exercise the Option is earned only by continuing as an employee of the Company or a
Subsidiary or an Affiliate at the will of the Company or such Subsidiary or Affiliate, or
satisfaction of any other applicable terms and conditions contained in the Plan and this Agreement,
and not through the act of being hired, being granted the Option or acquiring Shares hereunder.

          10. The Plan.

               In consideration for this grant, you agree to comply with the terms of the Plan and this
Agreement. This Agreement is subject to all the terms, provisions and conditions of the Plan, which
are incorporated herein by reference, and to such regulations as may from time to time be adopted
by the Committee. In the event of any conflict between the provisions of the Plan and this
Agreement, the provisions of the Plan shall control, and this Agreement shall be deemed to be
modified accordingly. The Plan and the prospectus describing the Plan can be found on the
Company’s HR intranet. A paper copy of the Plan and the prospectus shall be provided to the
Participant upon the Participant’s written request to the Company at Golfsmith International
Holdings, Inc. 11000 N. IH-35, Austin, TX 78753.

          11. Compliance with Laws and Regulations.

               (a) The Option and the obligation of the Company to sell and deliver Shares hereunder shall be
subject in all respects to (i) all applicable Federal and state laws, rules and regulations and
(ii) any registration, qualification, approvals or other requirements imposed by any government or
regulatory agency or body which the Committee shall, in its discretion, determine to be necessary
or applicable. Moreover, the Option may not be exercised if its exercise, or the receipt of Shares
pursuant thereto, would be contrary to applicable law. If at any time the Company determines, in
its discretion, that the listing, registration or qualification of Shares upon any national
securities exchange or under any state or Federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable, the Company shall not be required to
deliver any certificates for Shares to the Participant or any other person pursuant to this
Agreement unless and until such listing, registration, qualification, consent or approval has been
effected or obtained, or otherwise provided for, free of any conditions not acceptable to the
Company.

               (b) It is intended that the Shares received upon the exercise of the Option shall have been
registered under the Securities Act. If the Participant is an “affiliate” of the Company, as that
term is defined in Rule 144 under the Securities Act (“Rule 144”), the Participant may not sell the
Shares received except in compliance with Rule 144. Certificates representing Shares issued to an
“affiliate” of the Company may bear a legend setting forth such restrictions on the disposition or
transfer of the Shares as the Company deems appropriate to comply with Federal and state securities
laws.

               (c) If at the time of exercise of all or part of the Option, the Shares are not registered
under the Securities Act, and/or there is no current prospectus in effect under the Securities Act
with respect to the Shares, the Participant shall execute, prior to the delivery of any Shares to
the Participant by the Company pursuant to this Agreement, an agreement (in such form as the
Company may specify) in which the Participant represents and warrants that the Participant is
purchasing or acquiring the shares acquired under this Agreement for the Participant’s own account,
for investment only and not with a view to the resale or distribution thereof, and represents and
agrees

4

 

that any subsequent offer for sale or distribution of any kind of such Shares shall be made
only pursuant to either (i) a registration statement on an appropriate form under the Securities
Act, which registration statement has become effective and is current with regard to the Shares
being offered or sold, or (ii) a specific exemption from the registration requirements of the
Securities Act, but in claiming such exemption the Participant shall, prior to any offer for sale
of such Shares, obtain a prior favorable written opinion, in form and substance satisfactory to the
Company, from counsel for or approved by the Company, as to the applicability of such exemption
thereto.

          12. Notices.

               All notices by the Participant or the Participant’s assignees shall be addressed to Golfsmith
International Holdings, Inc. 11000 N. IH-35, Austin, TX 78753, or such other address as the Company
may from time to time specify. All notices to the Participant shall be addressed to the
Participant at the Participant’s address in the Company’s records.

          13. Other Plans.

               The Participant acknowledges that any income derived from the exercise of the Option shall not
affect the Participant’s participation in, or benefits under, any other benefit plan or other
contract or arrangement maintained by the Company or any Subsidiary or Affiliate.

	 	 	 	 	 
	 	GOLFSMITH INTERNATIONAL HOLDINGS, INC.

 	 
	 	By:  	/s/ Noel Wilens 
 	 
	 	 	Printed:  	     Noel Wilens 	 
	 	 	Its: 	 Chairman, Compensation Committee

Golfsmith International Holdings, Inc.

Board of Directors 	 
	 

I DO NOT accept this Option:

	 	 	 	 	 
	 	 	 
	 Signature: 	
 	 	  
	  	Printed Name:  Sue. E. Gove 	 	 
	 	 	 

5

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