Document:

Exhibit
10.7

AMENDED
AND RESTATED

RETENTION AGREEMENT

	
  DATE:

  	
   

  	
  October 9, 2006

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  PARTIES:

  	
   

  	
  Golf Galaxy, Inc.

  	
  (“Company”)

  
	
   

  	
   

  	
  7275 Flying Cloud Drive

  	
   

  
	
   

  	
   

  	
  Eden Prairie, MN 55344

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Gregory B. Maanum

  	
  (“Employee”)

  
	
   

  	
   

  	
  8040 Acorn Lane

  	
   

  
	
   

  	
   

  	
  Chanhassen, Minnesota 55317

  	
   

  
						

 

RECITALS

A.           Employee
is employed by the Company;

B.             The
Board of Directors wishes to plan for the possibility of a change in control
and to ensure Employee’s continued dedication and efforts in such event without
undue concern for personal financial and employment security;

C.             The
Company wishes to provide Employee with an eighteen (18) - month severance
period rather than the six (6) month severance period provided in that certain
Retention Agreement between Company and Employee dated December 31, 1997 (the “1997
Retention Agreement”);

D.            The
parties hereto desire to fulfill the above purpose according to the terms set
forth in this Agreement; and

E.              Following
execution of this Agreement, the 1997 Retention Agreement shall terminate and
be of no further force or effect.

AGREEMENT

In consideration for the
mutual covenants set forth in this Agreement and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties to
this Agreement agree as follows:

1.                                       Definitions.
The following words and phrases as used in this Agreement shall have the
following respective meanings.

a)                                      a
termination of employment for Cause is a
termination precipitated by Employee’s:

 1
 

 

i)                                         The
Employee shall commit any breach or violation of any of the Employee’s
representations or covenants under this Agreement or under any employment
agreement with the Company, which breach continues for a period of ten (10)
days following notice thereof from the Company (except in the event of a breach
of any provisions of this Agreement or of any employment agreement or other
agreement relating to confidentiality, loyalty, noncompetition or
noninducement, which shall require no notice to Employee prior to termination;

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

iii)                                   The
Employee 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 30 days following Employee’s receipt of written notice
specifying the injurious conduct and offering Employee the opportunity to
explain the conduct to the Board.

iv)                                  The
Employee shall, in the performance of the Employee’s duties under any employment
agreement, engage in any act of misconduct, including misconduct involving
moral turpitude, which is injurious to the Company;

v)                                     The
Employee shall violate or willfully refuse to obey the lawful and reasonable
instructions of the Board of the Company, provided that such
instructions are not in violation of this Agreement or any employment agreement
between the Employee and the Company.

vi)                                  The
Employee shall become disabled during the Term (the Employee shall be deemed to
be disabled if the Employee is unable to perform the material functions of
Employee’s 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).

vii)                               The
Employee shall die during the Term of this Agreement.

b)            A Change
in Control shall be deemed to occur:

i)                                         if
any person other than persons owning more than five percent of the Company’s
securities on July 28, 2005 is or becomes the “beneficial owner” (as defined in
Rule 13d-3 of the Securities Exchange Act of 1934), directly or indirectly, of
securities of the Company representing 50% or

 2
 

 

more of the combined voting power of the Company’s
then outstanding securities;

ii)                                      upon
the approval by the Company’s stockholders and the consummation of a
Transaction; or

iii)                                   if,
during any period, members of the Incumbent Board cease for any reason to
constitute at least a majority of the Board.

Notwithstanding the foregoing, a Change in Control
pursuant to subparagraphs (ii) and (iii) above shall not be deemed to occur if
immediately following the consummation of a Transaction or other event approved
by the Incumbent Board, holders of the Company’s voting securities immediately
prior to a Transaction either continue to own at least 50% of the combined
voting power of the Company’s then outstanding voting securities representing
at least 50% of the combined voting power of each surviving entity after a
Transaction.

c)                                      Code means the Internal Revenue Code
of 1986, as amended.

d)                                     Termination
of employment by Employee for Good Reason is
a termination of employment due to the occurrence of any one of the following
events or conditions:

i)                                         a
material change in Employee’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 Employee to a
position which requires Employee to relocate permanently to a site outside of
the Minneapolis-St. Paul metropolitan area; the assignment to Employee of any
duties or responsibilities (other than due to a promotion) which are
inconsistent with such title, position or responsibilities; or any removal of
Employee from or failure to reappoint or reelect Employee to any of such
positions, except in connection with the termination of employment for Cause,
as a result of permanent disability (as determined by Employee’s eligibility to
receive disability benefits under any long-term disability plan the Company may
then have in effect), as a result of Employee’s death, or by Employee other
than for Good Reason; or

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

e)                                      The
Incumbent Board consists of the
members of the Board of Directors of the Company as of the date of this
Agreement, to the extent they continue to serve as Board members and any
individual who becomes a Board member after the date of this Agreement if (i)
his or her election or nomination as a director was approved by a vote of at
least two thirds of the then incumbent Board and such person does not own more
than 20% of the Company’s securities, or (ii) such

 3
 

 

individual is a representative of an institutional investor that either
owns less than 20% of the Company’s securities or was represented on the Board
as of the date of this Agreement.

f)                                        The
Severance Period is the eighteen
(18) - month period beginning on the date of termination of Employee’s
employment.

g)                                     A
Transaction means a merger or
consolidation, reorganization, distribution of assets to stockholders by
spin-off, split-up or otherwise, a sale or disposition of all or substantially
all of the Company’s assets or a liquidation or dissolution of the Company.

2.                                       Severance.

a)                                      Employee
shall be entitled to receive from the Company severance benefits in the amount
provided in subsection (b) below, if (x) in connection with a Change in
Control, (y) within 90 days prior to a Change in Control, or (z) within one
year after a Change in Control, Employee’s employment with the Company is
terminated; provided, however, that Employee will not be entitled to any
severance benefit if Employee’s termination of employment is (i) for Cause, or
(ii) initiated by Employee for other than Good Reason. Notwithstanding any
other provision of this Agreement, the consummation of a Transaction in itself
shall not be deemed a termination of employment entitling Employee to severance
benefits hereunder even if such event results in Employee being employed by a
different entity which assumes the Company’s obligations under this Agreement.

b)                                     If
Employee’s services are terminated, entitling Employee to severance benefits
pursuant to subsection a. above, Employee shall be entitled to the following
benefits:

i)                                         During
the Severance Period, the Company shall continue to pay to Employee the annual
base salary payable to Employee at the rate and according to the payment
schedule in place immediately prior to the termination of employment, subject
to federal and state withholding, FICA, FUTA and withholding for all other applicable
taxes;

ii)                                      During
the Severance Period, the Company shall continue on behalf of Employee (and
Employee’s dependents and beneficiaries), life insurance, disability insurance,
medical and dental benefits and any/all other benefits which were being provided
to Employee at the time of termination of employment and the expense shall be
allocated between the Company and Employee on the same basis as prior to the
date of termination of employment. The benefits provided pursuant to this
subsection (ii) shall be no less favorable to Employee than the coverage
provided to Employee under the plans providing such benefits at the time notice
of termination was given to Employee. The obligation of the Company under this

 4
 

 

subsection (ii) shall be limited to the extent that
Employee obtains any such benefits pursuant to a subsequent employee’s benefit
plans, in which case the Company may reduce the coverage of any benefit it is
required to provide Employee under this subsection (ii) as long as the
aggregate coverage of the combined benefit plans is no less favorable to
Employee, in terms of amounts and deductibles and costs to Employee, than the
coverage required to be provided under this subsection (ii) as long as the
aggregate coverage of the combined benefit plans is no less favorable to
Employee, in terms of amounts and deductibles and costs to Employee, than the
coverage required to be provided under this subsection (ii). This subsection
(ii) shall not be interpreted so as to limit any benefits to which Employee (or
Employee’s dependents or beneficiaries) are entitled under any of the Company’s
employee benefit plans, programs or practices following Employee’s date of
termination of employment. The provision of continued benefits to Employee
under this subsection (ii) shall not deprive Employee of any independent
statutory right to continue benefits coverage pursuant to Sections 601 through
606 of the Employee Retirement Income Security Act of 1974, as amended; and

iii)                                   For
the Company’s fiscal year in which Employee’s employment is terminated, the
Company shall pay Employee such bonus, if any, equal to the amount found by
multiplying (x) the lesser of (i) such amounts as Employee would have received
based on the Company’s actual results pursuant to any bonus plan in effect
during such fiscal year and (ii) such amounts as Employee would have received
based on the Company’s achieving 100% of its financial targets as reflected in
such bonus plan (in each case as though Employee had been employed the full
fiscal year) by (y) a fraction, the numerator of which is the number of days in
the applicable fiscal year through the date of Employee’s termination and the
denominator of which is 365.  All bonuses
payable pursuant to this subsection (iii) shall be payable to Employee at such
time as bonuses for such period are paid to Company employees under such bonus
plan generally.

iv)                                  In
the event the Employee is employed under any employment agreement with the
Company which also provides for severance payments upon termination of Employee’s
employment under certain circumstances, and if Employee is entitled to receive
severance payments and/or benefits thereunder, then the severance payments
and/or benefits provided hereunder shall be reduced on a dollar-for-dollar
basis by the severance payments and/or benefits provided under the employment
agreement; it being the intention of the parties hereto that the Employee shall
only be entitled to receive “one” set of severance payments and benefits under
any circumstances.

(c)                                  Notwithstanding
anything in this Agreement or elsewhere to the contrary:

 5
 

 

(a)           If
payment or provision of any amount or other benefit that is “deferred
compensation” subject to Section 409A of 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
Section 2 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.

3.                                       Acceleration
of Options. In the event the Employee is entitled to severance benefits
following the occurrence of a Change in Control, all of Employee’s rights to
exercise option(s) granted under Company’s stock option plan and held by
Employee at the time of the Change in Control shall immediately vest resulting
in these option(s) becoming immediately exerciseable for the period specified
in the section of the respective option(s) relating to vesting of options in
the event of termination of employment, or, if no period is so specified, then
for six (6) months, after which time the option(s) shall expire.

4.                                       Term
of Agreement (the “Term”). This Agreement shall continue in full force and
effect until terminated as provided in this section. This Agreement shall
terminate on the earlier of:

a)                                      the
April 1st of any year after 2007, if the Board by the affirmative vote of a
majority of its members prior to January 1 of such year and prior to the
occurrence or active consideration of a specific Change in Control has voted to
terminate this Agreement; or

b)                                     if
Employee’s services are terminated more than 90 days prior to the occurrence of
a Change in Control or after the first anniversary of a Change in Control, the
date of such termination of services; or

c)                                      if
Employee’s services are terminated upon or within the first year following a
Change in Control under circumstances where Employee would not be entitled to
severance benefits pursuant to this Agreement, the date of such termination of
services; or

 6
 

 

d)                                     after
a Change in Control, the date on which any successor to the Company has
performed all of its obligations under Section 2 of this Agreement and Employee
has performed all of Employee’s obligations under Section 5 of this Agreement.

5.                                       Agreement
not to Compete and not to Solicit.

a)              In further
consideration of the compensation to be paid to Employee hereunder, Executive
acknowledges that during the course of his employment with the Company he has
become familiar with the Company’s trade secrets and with other Confidential
Information (as defined herein) concerning the Company and that his services
have been and shall be of special, unique and extraordinary value to the
Company, and therefore, Employee agrees that, during the period of his
employment with the Company and for a period of eighteen (18) months thereafter
(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, 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 catalogs and the internet (a “Competitive Business”); provided,
however, that nothing herein shall prohibit Employee from (i) 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; or (ii) becoming involved
with a business or organization for which activities comprising a Competitive
Business do not represent  more than $10
million in revenues or more than 10% of such business or organization’s total
revenues. If, at the time of enforcement of this paragraph 5, 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. 
Employee acknowledges that the restrictions contained in this paragraph
5 are reasonable and that he has reviewed the provisions of this Agreement with
his legal counsel.

b)             During the period of Employee’s employment with the Company and for a
period of two (2) years thereafter (the “Non-Solicit Period”), Employee shall
not directly or indirectly through another person or entity (i) induce or
attempt to induce any employee of the Company to leave the employ of the
Company, or in any way interfere with the relationship between the Company and
any employee thereof, (ii) hire any person who was an employee of the Company
at any time during the period of Employee’s employment with the Company or
(iii) induce or attempt to induce any customer, supplier, licensee, licensor,
franchisee or other business relation of the Company to cease doing business
with the Company, or in any way interfere with the

 7
 

 

relationship between any such customer, supplier,
licensee or business relation and the Company (including, without limitation,
making any negative or disparaging statements or communications regarding the
Company).

c)              In the event of the breach or a threatened breach by Employee of any of
the provisions of this paragraph 5, the Company would suffer irreparable harm,
and in addition and supplementary to other rights and remedies existing in its
favor, the Company 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 Employee of this paragraph 5,
the Noncompete Period and the Non-Solicit Period shall be tolled until such
breach or violation has been duly cured.

6.                                       Confidentiality
and Loyalty. Employee acknowledges that, during the course of Employee’s
employment Employee will produce and have access to materials, records, data
and information not generally available to the public regarding the Company,
its customers and affiliates (collectively “Confidential Information”).
Accordingly, during and subsequent to the termination of this Agreement,
Employee 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 Employee of his duties pursuant to this
Agreement. Upon termination of Employee’s employment under this Agreement,
Employee 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 which
relate in any way to the business or practices of the Company, and (ii) all
other property of the Company and Confidential Information which in any of
these cases are in his possession or under his control.

7.                                       Remedies.
Employee agrees and understands that any breach of any of the covenants or
agreements set forth in Sections 5 or 6 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, Employee consents to the issuance of an injunction in favor of
the Company enjoining the breach of any of the aforesaid covenants or agreements
by any court of competent jurisdiction. 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.

8.                                       Successors.
This Agreement shall bind, and may be enforced by, any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, in the same manner
and to the same extent

 8
 

 

that the Company would be obligated under or entitled to enforce this
Agreement if no succession had taken place. In the case of any Transaction in
which a successor would not by the foregoing provision or by operation of law
be bound by this Agreement, the Company shall use its best efforts to require
such successor expressly and unconditionally to assume and agree to perform the
Company’s obligations under this Agreement, in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place unless the Company previously arranged to establish an escrow to
satisfy its obligations hereunder.

9.                                       Entire
Agreement. This Agreement contains the entire understanding of the parties
hereto in respect of the subject matter hereof and supersedes all prior
agreements and understandings between the parties with respect to such subject
matter; provided, that the parties acknowledge that they have also entered into
an employment agreement of even date herewith which also provides for severance
payments and/or benefits upon termination of Employee’s employment for certain
circumstances and that pursuant to Section 2.(b)(iv) of this Agreement, the
severance payments and/or benefits provided hereunder shall be reduced on a
dollar for dollar basis by the severance payments and/or benefits provided
under such Employment Agreement, it being the intention of the parties hereto
that they Employee shall only be entitled to receive “one” set of severance
payments and benefits under any circumstances.

10.                                 Assignment.
This Agreement shall not be assignable by Employee. Any and all assignments of
this Agreement or any interest therein not made in accordance with this
paragraph shall be void.

11.                                 No
Waiver. Any waiver of any term or condition of this Agreement by either
party shall not operate as a waiver of any continued breach of such term or
condition, or any other term or condition, nor shall any failure to enforce a
provision of this Agreement operate as a waiver of such provision or of any
other provision of this Agreement.

12.                                 Captions.
The captions and headings of this Agreement are for convenience only and shall
in no way limit or otherwise effect any of the terms or provisions contained
herein.

13.                                 Severability.
Should any provision of this Agreement, or its application, to any extent by
held invalid or unenforceable, the remainder of this Agreement and its
application, excluding such invalid or unenforceable provisions shall not be
affected by such exclusion and shall continue valid and enforceable to the
fullest extent permitted by law or equity.

14.                                 Governing
Law. This Agreement shall for all purposes be governed and interpreted in
accordance with the laws of the State of Minnesota, without regard to its
principles of conflicts of laws.

15.                                 Arbitration.
The Company and Employee agree that any claim or controversy that arises out of
or relates to this Agreement, or the breach of it by either party, will be
settled by arbitration in the City of Minneapolis, Minnesota, in accordance
with the rules then

 9
 

 

obtaining of the American Arbitration Association, and the award
rendered pursuant to such arbitration shall be final, binding and conclusive as
to the Company and Employee, 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 Employee. Notwithstanding the foregoing,
the Company shall have the right to submit any claim against Employee arising
out of any provision of Section 5 and 6 hereof to any court of competent
jurisdiction in Hennepin County, Minnesota, in lieu of seeking arbitration
pursuant to this Section.

16.                                 Termination
of 1997 Retention Agreement. Effective the date of this Agreement, the 1997
Retention Agreement shall terminate and be of no further force and effect, and
shall be superseded and replaced in its entirety by this Agreement.

Each of the
parties hereto have executed this Agreement in the manner appropriate to each,
all as of the date first above written.

	
  GOLF GALAXY, INC.

  	
   

  	
  EMPLOYEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ RANDALL K. ZANATTA

  	
   

  	
  /s/ GREGORY B. MAANUM

  
	
  Its:

  	
  President and Chief Executive Officer

  	
   

  	
  Gregory B. Maanum

  
					

 

 10Exhibit
10.8

RETENTION
AGREEMENT

	
  DATE:

  	
   

  	
  October 9, 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PARTIES:

  	
   

  	
  Golf Galaxy, Inc.

  	
  (“Company”)

  	
   

  
	
   

  	
   

  	
  7275 Flying Cloud Drive

  	
   

  	
   

  
	
   

  	
   

  	
  Eden Prairie, MN 55344

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Richard C. Nordvold

  	
   

  	
  (“Employee”)

  
	
   

  	
   

  	
  2960 Fairway Drive

  	
   

  	
   

  
	
   

  	
   

  	
  Chaska, MN 55318

  	
   

  	
   

  
						

 

RECITALS

A.           Employee
is employed by the Company;

B.             The
Board of Directors wishes to plan for the possibility of a change in control
and to ensure Employee’s continued dedication and efforts in such event without
undue concern for personal financial and employment security; and

C.             The
parties hereto desire to fulfill the above purpose according to the terms set
forth in this Agreement.

AGREEMENT

In consideration for the
mutual covenants set forth in this Agreement and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties to
this Agreement agree as follows:

1.                                       Definitions.
The following words and phrases as used in this Agreement shall have the
following respective meanings.

a)                                      a
termination of employment for Cause is a
termination precipitated by Employee’s:

i)                                         The
Employee shall commit any breach or violation of any of the Employee’s
representations or covenants under this Agreement or under any employment
agreement with the Company, which breach continues for a period of ten (10)
days following notice thereof from the Company (except in the event of a breach
of any provisions of this Agreement or of any employment agreement or other
agreement relating to confidentiality, loyalty, noncompetition or
noninducement, which shall require no notice to Employee prior to termination;

 1
 

 

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

iii)                                   The
Employee 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 30 days following Employee’s receipt of written notice
specifying the injurious conduct and offering Employee the opportunity to explain
the conduct to the Board.

iv)                                  The
Employee shall, in the performance of the Employee’s duties under any
employment agreement, engage in any act of misconduct, including misconduct
involving moral turpitude, which is injurious to the Company;

v)                                     The
Employee shall violate or willfully refuse to obey the lawful and reasonable
instructions of the Board of the Company, provided that such
instructions are not in violation of this Agreement or any employment agreement
between the Employee and the Company.

vi)                                  The
Employee shall become disabled during the Term (the Employee shall be deemed to
be disabled if the Employee is unable to perform the material functions of
Employee’s 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).

vii)                               The
Employee shall die during the Term of this Agreement.

b)            A Change
in Control shall be deemed to occur:

i)                                         if
any person other than persons owning more than five percent of the Company’s
securities on July 28, 2005 is or becomes the “beneficial owner” (as defined in
Rule 13d-3 of the Securities Exchange Act of 1934), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company’s then outstanding securities;

ii)                                      upon
the approval by the Company’s stockholders and the consummation of a
Transaction; or

iii)                                   if,
during any period, members of the Incumbent Board cease for any reason to
constitute at least a majority of the Board.

 2
 

 

Notwithstanding the foregoing, a Change in Control
pursuant to subparagraphs (ii) and (iii) above shall not be deemed to occur if
immediately following the consummation of a Transaction or other event approved
by the Incumbent Board, holders of the Company’s voting securities immediately
prior to a Transaction either continue to own at least 50% of the combined
voting power of the Company’s then outstanding voting securities representing
at least 50% of the combined voting power of each surviving entity after a
Transaction.

c)                                      Code means the Internal Revenue Code
of 1986, as amended.

d)                                     Termination
of employment by Employee for Good Reason is
a termination of employment due to the occurrence of any one of the following
events or conditions:

i)                                         a
material change in Employee’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 Employee to a position
which requires Employee to relocate permanently to a site outside of the
Minneapolis-St. Paul metropolitan area; the assignment to Employee of any
duties or responsibilities (other than due to a promotion) which are
inconsistent with such title, position or responsibilities; or any removal of
Employee from or failure to reappoint or reelect Employee to any of such
positions, except in connection with the termination of employment for Cause,
as a result of permanent disability (as determined by Employee’s eligibility to
receive disability benefits under any long-term disability plan the Company may
then have in effect), as a result of Employee’s death, or by Employee other
than for Good Reason; or

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

e)                                      The
Incumbent Board consists of the
members of the Board of Directors of the Company as of the date of this
Agreement, to the extent they continue to serve as Board members and any
individual who becomes a Board member after the date of this Agreement if (i)
his or her election or nomination as a director was approved by a vote of at
least two thirds of the then incumbent Board and such person does not own more
than 20% of the Company’s securities, or (ii) such individual is a representative
of an institutional investor that either owns less than 20% of the Company’s
securities or was represented on the Board as of the date of this Agreement.

f)                                        The
Severance Period is the twelve (12)
- month period beginning on the date of termination of Employee’s employment.

g)                                     A
Transaction means a merger or
consolidation, reorganization, distribution of assets to stockholders by
spin-off, split-up or otherwise, a sale or disposition of all

 3
 

 

or substantially all of the Company’s assets or a liquidation or
dissolution of the Company.

2.                                       Severance.

a)                                      Employee
shall be entitled to receive from the Company severance benefits in the amount
provided in subsection (b) below, if (x) in connection with a Change in
Control, (y) within 90 days prior to a Change in Control, or (z) within one
year after a Change in Control, Employee’s employment with the Company is
terminated; provided, however, that Employee will not be entitled to any
severance benefit if Employee’s termination of employment is (i) for Cause, or
(ii) initiated by Employee for other than Good Reason. Notwithstanding any
other provision of this Agreement, the consummation of a Transaction in itself
shall not be deemed a termination of employment entitling Employee to severance
benefits hereunder even if such event results in Employee being employed by a
different entity which assumes the Company’s obligations under this Agreement.

b)                                     If
Employee’s services are terminated, entitling Employee to severance benefits
pursuant to subsection a. above, Employee shall be entitled to the following
benefits:

i)                                         During
the Severance Period, the Company shall continue to pay to Employee the annual
base salary payable to Employee at the rate and according to the payment
schedule in place immediately prior to the termination of employment, subject
to federal and state withholding, FICA, FUTA and withholding for all other
applicable taxes;

ii)                                      During
the Severance Period, the Company shall continue on behalf of Employee (and
Employee’s dependents and beneficiaries), life insurance, disability insurance,
medical and dental benefits and any/all other benefits which were being
provided to Employee at the time of termination of employment and the expense
shall be allocated between the Company and Employee on the same basis as prior
to the date of termination of employment. The benefits provided pursuant to
this subsection (ii) shall be no less favorable to Employee than the coverage
provided to Employee under the plans providing such benefits at the time notice
of termination was given to Employee. The obligation of the Company under this
subsection (ii) shall be limited to the extent that Employee obtains any such
benefits pursuant to a subsequent employee’s benefit plans, in which case the
Company may reduce the coverage of any benefit it is required to provide
Employee under this subsection (ii) as long as the aggregate coverage of the
combined benefit plans is no less favorable to Employee, in terms of amounts
and deductibles and costs to Employee, than the coverage required to be
provided under this subsection (ii) as long as the aggregate coverage of the
combined benefit plans is no less favorable to Employee, in terms of amounts
and deductibles and costs to Employee,

 4
 

 

than the coverage required to be provided under this
subsection (ii). This subsection (ii) shall not be interpreted so as to limit
any benefits to which Employee (or Employee’s dependents or beneficiaries) are
entitled under any of the Company’s employee benefit plans, programs or
practices following Employee’s date of termination of employment. The provision
of continued benefits to Employee under this subsection (ii) shall not deprive
Employee of any independent statutory right to continue benefits coverage
pursuant to Sections 601 through 606 of the Employee Retirement Income Security
Act of 1974, as amended; and

iii)                                   For
the Company’s fiscal year in which Employee’s employment is terminated, the
Company shall pay Employee such bonus, if any, equal to the amount found by
multiplying (x) the lesser of (i) such amounts as Employee would have received
based on the Company’s actual results pursuant to any bonus plan in effect
during such fiscal year and (ii) such amounts as Employee would have received
based on the Company’s achieving 100% of its financial targets as reflected in
such bonus plan (in each case as though Employee had been employed the full
fiscal year) by (y) a fraction, the numerator of which is the number of days in
the applicable fiscal year through the date of Employee’s termination and the denominator
of which is 365.  All bonuses payable
pursuant to this subsection (iii) shall be payable to Employee at such time as
bonuses for such period are paid to Company employees under such bonus plan
generally.

iv)                                  In
the event the Employee is employed under any employment agreement with the
Company which also provides for severance payments upon termination of Employee’s
employment under certain circumstances, and if Employee is entitled to receive
severance payments and/or benefits thereunder, then the severance payments
and/or benefits provided hereunder shall be reduced on a dollar-for-dollar
basis by the severance payments and/or benefits provided under the employment
agreement; it being the intention of the parties hereto that the Employee shall
only be entitled to receive “one” set of severance payments and benefits under
any circumstances.

(c)                                  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 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 Section 2
requires a deferral of any payment, such payment shall be accumulated and paid
in a single lump sum on

 5
 

 

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.

3.                                       Acceleration
of Options. In the event the Employee is entitled to severance benefits
following the occurrence of a Change in Control, all of Employee’s rights to
exercise option(s) granted under Company’s stock option plan and held by
Employee at the time of the Change in Control shall immediately vest resulting
in these option(s) becoming immediately exerciseable for the period specified
in the section of the respective option(s) relating to vesting of options in
the event of termination of employment, or, if no period is so specified, then
for six (6) months, after which time the option(s) shall expire.

4.                                       Term
of Agreement (the “Term”). This Agreement shall continue in full force and
effect until terminated as provided in this section. This Agreement shall
terminate on the earlier of:

a)                                      the
April 1st of any year after 2007, if the Board by the affirmative vote of a
majority of its members prior to January 1 of such year and prior to the
occurrence or active consideration of a specific Change in Control has voted to
terminate this Agreement; or

b)                                     if
Employee’s services are terminated more than 90 days prior to the occurrence of
a Change in Control or after the first anniversary of a Change in Control, the
date of such termination of services; or

c)                                      if
Employee’s services are terminated upon or within the first year following a
Change in Control under circumstances where Employee would not be entitled to
severance benefits pursuant to this Agreement, the date of such termination of
services; or

d)                                     after
a Change in Control, the date on which any successor to the Company has
performed all of its obligations under Section 2 of this Agreement and Employee
has performed all of Employee’s obligations under Section 5 of this Agreement.

5.                                       Agreement
not to Compete and not to Solicit.

a)              In further
consideration of the compensation to be paid to Employee hereunder, Executive
acknowledges that during the course of his employment with the Company he has
become familiar with the Company’s trade secrets and with other Confidential

 6
 

 

Information (as defined herein) concerning the Company
and that his services have been and shall be of special, unique and
extraordinary value to the Company, and therefore, Employee agrees that, during
the period of his employment with the Company and for a period of twelve (12)
months thereafter (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, 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 catalogs and the internet (a “Competitive Business”); provided,
however, that nothing herein shall prohibit Employee from (i) 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; or (ii) becoming involved
with a business or organization for which activities comprising a Competitive
Business do not represent  more than $10
million in revenues or more than 10% of such business or organization’s total
revenues. If, at the time of enforcement of this paragraph 5, 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. 
Employee acknowledges that the restrictions contained in this paragraph
5 are reasonable and that he has reviewed the provisions of this Agreement with
his legal counsel.

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

c)              In the event of the breach or a threatened breach by Employee of any of
the provisions of this paragraph 5, the Company would suffer irreparable harm,
and in addition and supplementary to other rights and remedies existing in its
favor, the Company 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 Employee of this paragraph

 7
 

 

5, the Noncompete Period and the Non-Solicit Period
shall be tolled until such breach or violation has been duly cured.

6.                                       Confidentiality
and Loyalty. Employee acknowledges that, during the course of Employee’s
employment Employee will produce and have access to materials, records, data
and information not generally available to the public regarding the Company,
its customers and affiliates (collectively “Confidential Information”).
Accordingly, during and subsequent to the termination of this Agreement,
Employee 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 Employee of his duties pursuant to this
Agreement. Upon termination of Employee’s employment under this Agreement,
Employee 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 which
relate in any way to the business or practices of the Company, and (ii) all
other property of the Company and Confidential Information which in any of
these cases are in his possession or under his control.

7.                                       Remedies.
Employee agrees and understands that any breach of any of the covenants or
agreements set forth in Sections 5 or 6 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, Employee consents to the issuance of an injunction in favor of
the Company enjoining the breach of any of the aforesaid covenants or
agreements by any court of competent jurisdiction. 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.

8.                                       Successors.
This Agreement shall bind, and may be enforced by, any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, in the same manner
and to the same extent that the Company would be obligated under or entitled to
enforce this Agreement if no succession had taken place. In the case of any
Transaction in which a successor would not by the foregoing provision or by
operation of law be bound by this Agreement, the Company shall use its best
efforts to require such successor expressly and unconditionally to assume and
agree to perform the Company’s obligations under this Agreement, in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place unless the Company previously arranged to
establish an escrow to satisfy its obligations hereunder.

9.                                       Entire
Agreement. This Agreement contains the entire understanding of the parties
hereto in respect of the subject matter hereof and supersedes all prior
agreements and

 8
 

 

understandings between the parties with respect to such subject matter;
provided, that the parties acknowledge that they have also entered into an
employment agreement of even date herewith which also provides for severance
payments and/or benefits upon termination of Employee’s employment for certain
circumstances and that pursuant to Section 2.(b)(iv) of this Agreement, the
severance payments and/or benefits provided hereunder shall be reduced on a
dollar for dollar basis by the severance payments and/or benefits provided
under such Employment Agreement, it being the intention of the parties hereto
that they Employee shall only be entitled to receive “one” set of severance
payments and benefits under any circumstances.

10.                                 Assignment.
This Agreement shall not be assignable by Employee. Any and all assignments of
this Agreement or any interest therein not made in accordance with this
paragraph shall be void.

11.                                 No
Waiver. Any waiver of any term or condition of this Agreement by either
party shall not operate as a waiver of any continued breach of such term or
condition, or any other term or condition, nor shall any failure to enforce a
provision of this Agreement operate as a waiver of such provision or of any
other provision of this Agreement.

12.                                 Captions.
The captions and headings of this Agreement are for convenience only and shall
in no way limit or otherwise effect any of the terms or provisions contained
herein.

13.                                 Severability.
Should any provision of this Agreement, or its application, to any extent by
held invalid or unenforceable, the remainder of this Agreement and its
application, excluding such invalid or unenforceable provisions shall not be
affected by such exclusion and shall continue valid and enforceable to the
fullest extent permitted by law or equity.

14.                                 Governing
Law. This Agreement shall for all purposes be governed and interpreted in
accordance with the laws of the State of Minnesota, without regard to its
principles of conflicts of laws.

15.                                 Arbitration.
The Company and Employee agree that any claim or controversy that arises out of
or relates to this Agreement, or the breach of it by either party, will be
settled by arbitration in the City of Minneapolis, Minnesota, in accordance
with the rules then obtaining of the American Arbitration Association, and the
award rendered pursuant to such arbitration shall be final, binding and
conclusive as to the Company and Employee, 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 Employee. Notwithstanding the foregoing,
the Company shall have the right to submit any claim against Employee arising
out of any provision of Section 5 and 6 hereof to any court of competent
jurisdiction in Hennepin County, Minnesota, in lieu of seeking arbitration
pursuant to this Section.

 9
 

 

Each of the
parties hereto have executed this Agreement in the manner appropriate to each,
all as of the date first above written.

	
  GOLF GALAXY, INC.

  	
   

  	
  EMPLOYEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ RANDALL K. ZANATTA

  	
   

  	
  /s/ RICHARD C. NORDVOLD

  
	
  Its:

  	
  President and Chief Executive Officer

  	
   

  	
  Richard C. Nordvold

  
					

 

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