<PAGE>   1

                             SIXTEENTH AMENDMENT TO
                           THIRD AMENDED AND RESTATED
                              REVOLVING CREDIT AND
                              TERM LOAN AGREEMENT


     THIS SIXTEENTH AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING CREDIT
AND TERM LOAN AGREEMENT (this "Sixteenth Amendment") is made as of the 19th day
of July, 1996, by and between BANK ONE, MILWAUKEE, NA, as Bank and agent for
the Banks, FIRSTAR BANK MILWAUKEE, N.A., LASALLE NATIONAL BANK, NBD BANK,
formerly known as NBD BANK, N.A. and HARRIS TRUST AND SAVINGS BANK, as Banks,
and GANDER MOUNTAIN, INC., a Wisconsin corporation, as Borrower.

                                R E C I T A L S

     WHEREAS, pursuant to a Third Amended and Restated Revolving Credit and
Term Loan Agreement dated as of November 22, 1994 and amended by First
Amendment to Third Amended and Restated Revolving Credit and Term Loan
Agreement dated August 18, 1995, Eleventh Amendment to Third Amended and
Restated Revolving Credit and Term Loan Agreement dated May 17, 1996, Twelfth
Amendment to Third Amended and Restated Revolving Credit and Term Loan
Agreement dated June 14, 1996, Letter Agreement dated June 21, 1996, Letter
Agreement dated June 25, 1996 and Fifteenth Amendment to Third Amended and
Restated Revolving Credit and Term Loan Agreement dated June 28, 1996
(collectively, the "Loan Agreement"), the Banks and Borrower are parties to
existing credit facilities; and

     WHEREAS, Borrower and GRS are preparing to sell five of their stores to
Holiday Stationstores, Inc. ("Holiday") for consideration including a purchase
price of approximately $16,500,000 and a loan in the amount of $500,000 (the
"Holiday Sale"), and Borrower anticipates that they will close on such sale
(the "Holiday Closing") on or before August 2, 1996; and

     WHEREAS, Borrower is preparing to sell its Wilmot real estate to The
Pleasant Company for a purchase price of approximately $7,000,000 on terms that
include Borrower retaining the right to occupy the property for one year free
of rent and other expenses (the "Pleasant Company Sale"), and Borrower
anticipates that it will close on such sale (the "Pleasant Company Closing") 
on or before August 2, 1996; and

     WHEREAS, Borrower is preparing to close on a loan transaction (the
"Refinancing"), the proceeds of which will be used to pay the amounts owing to
the Banks in full, resulting in the termination of all obligations of the Banks
to extend further credit to the Borrower, and Borrower anticipates that it will
close on the Refinancing (the "Replacement Loan Closing") on or 

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before August 16, 1996; and
     WHEREAS, at Borrower's request, Banks are relying on Borrower's
expectation that the Holiday Closing, Pleasant Company Closing and Loan Closing
will occur on or before the dates set forth above, and Banks are not taking the
steps necessary to continue providing financing to Borrower beyond August 16,
1996; and

     WHEREAS, Borrower and its financial advisors have prepared Projections (as
defined hereinafter) and provided copies thereof to the Banks; and

     WHEREAS, Borrower has requested that Banks extend the July 20th date in
the Loan Agreement to August 16, 1996 as provided herein to allow Borrower
additional time to accomplish the Holiday Closing, Pleasant Company Closing and
Loan Closing; and

     WHEREAS, Based on the foregoing, and subject to Borrower's compliance with
all of the terms and conditions of the Loan Agreement as amended hereby, Banks
are willing to grant an extension of the maturity date of the Revolving Credit
Loans as provided herein.

                               A G R E E M E N T

     NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein and in the Loan Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

     1.  Definitions.  Capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Loan Agreement.

     a.  Projections.  As used herein and in the Loan Agreement, the term
"Projections" shall mean the projections prepared by Borrower and its financial
advisors, a copy of which is attached hereto as Exhibit A.  The term
"Projections" shall refer to Exhibit A hereto and shall not mean any updates
prepared by Borrower without the Banks' written consent.

     b.  Borrowing Base.  "Borrowing Base" shall mean that amount equal to the
sum of

           (a) eighty-five percent (85%) of Eligible Accounts Receivable; plus

           (b) (i) on the date hereof, sixty-nine percent (69%) of Eligible
      Inventory, (ii) at any time that the Holiday Closing has occurred, fifty
      percent (50%) of Eligible Inventory, or (iii) at any time that the
      Pleasant Company Closing or other sale of Borrower's Wilmot real estate
      has 

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      occurred but the Holiday Closing has not occurred, sixty-nine percent
      (69%) of Eligible Inventory less an amount equal to the difference
      between the proceeds of the Pleasant Company Sale applied to the
      Revolving Credit Loans and $5,500,000; plus

           (c) (i) prior to the Pleasant Company Closing or closing on another
      sale of Borrower's Wilmot real estate, $5,500,000, and (ii) after such
      sale, $0;

           (d) prior to the earlier of (i) the later to occur of the Pleasant
      Company Closing or the Holiday Closing, or (ii) August 2, 1996, forty
      percent (40%) of In Transit Inventory, up to a maximum amount of $500,000
      to be included in the Borrowing Base under this subsection (d).  For
      purposes of this section 2.2, "In Transit Inventory" shall mean newly
      purchased inventory for which Borrower has paid the full purchase price
      of such inventory to the vendor thereof but has not yet received delivery
      of such inventory; provided that "In Transit Inventory" shall include
      only inventory which Borrower expects will be delivered in the ordinary
      course of business and shall exclude inventory which Borrower has reason
      to believe will not be delivered due to vendor failure, shipping error,
      casualty or otherwise.  In Transit Inventory shall not be included in
      Eligible Inventory."

           c.  Revolving Credit Commitment Termination Date.  Section 1.87 of 
the Loan Agreement is amended to read as follows:

           "1.87  Revolving Credit Commitment Termination Date.  "Revolving
      Credit Commitment Termination Date" shall mean the earlier of (a) the
      date of an Automatic Event of Default, (b) the date of an Other Event of
      Default not expressly waived in writing by the Banks, (c) August 2, 1996
      if either the Pleasant Company Closing or the Holiday Closing has not
      occurred, or (d) August 16, 1996."

          d.  Revolving Credit Notes.  Section 1.90 of the Loan Agreement is 
amended to delete "June 28, 1996" and insert "July 19, 1996" in its place.

      2.  Waiver.  Banks temporarily waive the defaults previously disclosed to
Banks under sections 7.1(i), 7.1(k), 7.1(l), 7.1(n),  7.1(w) and 8.1(m) of the
Loan Agreement for the period from the date hereof until August 16, 1996.  The
waiver does not extend beyond August 16, 1996, and Banks do not waive any other
default or any increase in the level of noncompliance with sections 7.1(i),
7.1(k), 7.1(l), 7.1(n), 7.1(w) and 8.1(m) of the Loan Agreement, as amended.
The Banks reserve the right to exercise any rights and remedies available to
Agent or any Bank prior to the end of any waiver period if any other default
comes to the 




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<PAGE>   4

attention of Banks or if any information comes to the Banks'
attention showing that Borrower's level of noncompliance with section 7.1(i),
7.1(k), 7.1(l), 7.1(n), 7.1(w) or 8.1(m) of the Loan Agreement is greater than
that previously disclosed to Banks.

     3.  The Revolving Credit Loans.  Section 2.2(c) of the Loan Agreement is
amended in its entirety to read as follows:

           "(c)  Limitations on Borrowing.

           (i)  The maximum aggregate principal outstanding under the Revolving
      Credit Loans, including the amount of all unexpired letters of credit,

      shall not exceed the lesser of (A) (1) prior to the later of the Pleasant
      Company Closing and the Holiday Closing, $32,800,000 less any amounts     
      applied to permanently reduce the Revolving Credit Facility pursuant to
      section 2.2(c)(ii)(A)(y) below, or (2) after the later of the Pleasant
      Company Closing and the Holiday Closing, $11,000,000, or (B) the
      Borrowing Base.

           (ii) (A) all Receipts and other proceeds of Collateral or Subsidiary
      Collateral shall be paid to Agent (x) in the case of inventory sold or
      accounts paid in the ordinary course of business, to reduce the
      outstanding balance of the Revolving Credit Facility subject to
      reborrowing on all of the terms and conditions hereof, and (y) in the
      case of any other proceeds of Collateral, including all proceeds of the
      Holiday Sale (and all loans to Borrower from Holiday) and all proceeds of
      the Pleasant Company Sale, in each case, net of the reasonable expenses
      of such sale, to permanently reduce the outstanding balance of the
      Revolving Credit Facility, (B) the amount advanced from time to time
      under the Revolving Credit Facility shall not be greater than the
      projections of borrowing requirements made by the Borrower and reflected
      in the Projections, and (C) no renewal or additional letters of credit
      shall be issued on behalf of Borrower.

      In addition to all other remedies available to Banks upon the occurrence
      of an Event of Default, the Banks shall not be obligated to make any
      advance if after such advance or issuance Borrower would not be in
      compliance with this section 2.2(c).  In the event the amount outstanding
      under the Revolving Credit Facility (including the undrawn amount of all
      unexpired letters of credit) exceeds the amount permitted by this section
      2.2(c), Borrower shall immediately repay the Revolving Credit Loans to
      comply with this section 2.2(c)."

      4.  Use of Proceeds.  Section 2.2(e) of the Loan Agreement is amended in
its entirety to read as follows:

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           "(e)  Use of Proceeds.  Borrower shall use proceeds of the Revolving
      Credit Facility only in amounts and for purposes reflected in the
      Projections, and Borrower shall use such proceeds only for expenses
      incurred in the ordinary course of business, and in particular Borrower
      shall not use such proceeds for prepaid expenses or expenses in the
      category of "Contingency" on the Projections (other than reasonable
      expenses of the Holiday Sale and the Pleasant Company Sale), unless, in
      the case of any such expenditure for prepaid expenses, expenditure for
      Contingency or other expenditure outside of the ordinary course of
      business (other than reasonable expenses of the Holiday Sale and the
      Pleasant Company Sale), (a) the Pleasant Company Closing and the Holiday
      Closing have both occurred with the proceeds thereof paid to Agent
      pursuant to section 2.2(C)(ii)(A)(y), or (b) Borrower first receives the
      written consent of Agent."

      5.  Notes.  Section 2.2.2 of the Loan Agreement is amended in its entirety
to read as follows:

           "2.2.2  Notes.  The Revolving Loans are evidenced by five Revolving
      Credit Notes dated July 19, 1996 in the original aggregate principal
      amount of $32,800,000 payable to the order of the respective Banks."

      6.  Consent to Sale.  Banks' consent to the Pleasant Company sale is
contingent upon the Pleasant Company Closing occurring on or before August 2,
1996 upon terms and conditions satisfactory to Banks, including but not limited
to compliance with the terms and conditions previously disclosed to Banks and
the payment of all proceeds to Banks.  Banks' consent to the Holiday Sale is
contingent upon the Holiday Closing occurring on or before August 2, 1996 upon
terms and conditions satisfactory to Banks, including but not limited to
compliance with the terms and conditions previously disclosed to Banks and the
payment of all proceeds (including proceeds of any loans from Holiday) to
Banks.

      7.  Conditions to Amendment.  This Sixteenth Amendment shall not be
effective until it shall have been fully executed and delivered and all of the
following have been delivered to Banks, executed as appropriate, in form and
substance satisfactory to Banks:

      (a)  Revolving Credit Notes;

      (b)  Reaffirmation of Corporate Guaranty of GRS;

      (c)  Reaffirmation of Corporate Guaranty of GMO;

      (d)  Closing Certificates with Corporate Resolutions for Borrower,
           GRS and GMO; and




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     (e) Legal opinion of Borrower's counsel as to the enforceability of
         this Sixteenth Amendment and the Reaffirmations of Corporate
         Guaranty delivered herewith.

     8.  Continuation of Agreements.  Except as expressly amended and modified
herein, the Loan Agreement shall remain in full force and effect and except as
expressly amended and modified herein, the Notes shall remain in full force and
effect.  All of the Collateral Documents, including but not limited to the
Security Agreement, the Mortgage, the Collateral Pledge Agreement and
Assignment of Security Interest, the Amended and Restated General Intangibles
Mortgage, the Subsidiary Guaranties and the Subsidiary Security Documents shall
remain in full force and effect as security for the Obligations, including but
not limited to the Revolving Credit Notes dated July 19, 1996, and all of the
Collateral and Subsidiary Collateral as defined in the Loan Agreement, the real
estate encumbered by the Mortgage, the Subsidiary Notes, and the Stock of GRS
and GMO, shall secure all of the Obligations, including but not limited to the
Revolving Credit Notes dated July 19, 1996.

     9.  Banks Not to Continue Financing.  Borrower acknowledges that subject
to the terms of the Loan Agreement as amended hereby, Banks have agreed to
allow Borrower until August 2, 1996 to complete the Holiday Closing and the
Pleasant Company Closing and until August 16, 1996 to complete the Replacement
Loan Closing.  Borrower has asked Banks not to pursue due diligence,
underwriting or loan documentation, all of which would be necessary for Banks
to continue financing beyond August 16, 1996. At Borrower's request, Banks are
basing their actions on Borrower's anticipated payment in full of the
Obligations on or before August 16, 1996.  Payment in full of the Obligations
shall include (and release of the liens and security interests of Banks shall
be contingent on) either (a) surrender to Agent and cancellation of Letter of
Credit No. STI01015, or (b) deposit with Agent of $60,000 to secure
reimbursement of Bank for any amounts drawn under such letter of credit.

     10.  Release of Secured Party.  Each of Borrower, GRS and GMO hereby: (a)
acknowledges that its obligations under the documents listed in section 8
hereof exist and are enforceable in accordance with their terms; and    (b)
releases and waives any and all existing claims, counterclaims and causes of
action against Banks under the Loan Agreement, under any of the documents
listed in section 8 hereof, or otherwise relating to the Borrower as borrower,
GRS and GMO as subsidiaries of Borrower and guarantors, and Banks as lenders,
and which (i) are known to Borrower, GRS or GMO on the date hereof, or (ii)
exist on the date hereof based upon facts existing and known to Borrower, GRS
or GMO on the date hereof.




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     11.  Expenses.  Borrower shall pay the reasonable legal fees and expenses
of counsel for Bank One with respect to this Sixteenth Amendment and all
related documentation and, in addition, the reasonable legal fees and expenses,
not exceeding Five Thousand Dollars ($5,000) per Bank, for each of NBD, Harris,
LaSalle and Firstar.

     12.  Entire Agreement  This Sixteenth Amendment, together with the Loan
Agreement, as amended hereby, constitutes the entire agreement of the Banks and
Borrower pertaining to the subject matter hereof and supersedes all prior or
contemporaneous agreements of the Banks and Borrower, whether oral or written,
other than the Loan Agreement, in connection therewith.  This Sixteenth
Amendment may be amended or modified only in writing, executed by all of the
parties.  This Sixteenth Amendment shall not constitute, nor shall it be deemed
to constitute:

     (a)  The commitment or agreement of Banks to extend credit in any
          amount in the future, except as provided in this Sixteenth Amendment
          or in the Loan Agreement as amended hereby;

     (b)  an obligation on the part of any Bank to enter into any future 
          amendment of the Loan Agreement;

     (c)  except as expressly set forth herein and for the period provided 
          herein, the waiver of any existing Event of Default or of any 
          subsequent Event of Default under the Loan Agreement as amended
          hereby;

     (d)  the waiver of any right or remedy available to Banks under the Loan 
          Agreement or any of the Collateral Documents; or

     (e)  the commitment, agreement or obligation of any Bank to delay
          the exercise of any right or remedy available to a Bank in the
          future.

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

BANK ONE, MILWAUKEE, NA



By ___________________________


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<PAGE>   8



LASALLE NATIONAL BANK



By ___________________________



FIRSTAR BANK MILWAUKEE, N.A.



By ___________________________


HARRIS TRUST AND SAVINGS BANK




By ___________________________


NBD BANK




By ___________________________



GANDER MOUNTAIN, INC.



By ___________________________



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<PAGE>   9


The undersigned have read the foregoing and agree to be bound by all of the
terms and conditions contained therein except that the undersigned shall not be
directly obligated on any of the Loans except as otherwise provided in the Loan
Agreement as amended hereby, the Subsidiary  Documents, the Subsidiary
Guaranties or any other agreement to which Borrower, GRS or GMO is a party.
The undersigned reaffirm their respective guaranties of the Obligations.


GMO, INC.




By     ___________________________


GRS, INC.



By     ___________________________




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                             SIXTEENTH AMENDMENT TO

                                 THIRD AMENDED

                                  AND RESTATED

                                REVOLVING CREDIT

                                      AND

                              TERM LOAN AGREEMENT

                                 BY AND BETWEEN

                             GANDER MOUNTAIN, INC.,
                                  as Borrower

                                      AND

                            BANK ONE, MILWAUKEE, NA

                          FIRSTAR BANK MILWAUKEE, N.A.

                             LASALLE NATIONAL BANK,

                NBD BANK (formerly known as NBD BANK, N.A.), and

                         HARRIS TRUST AND SAVINGS BANK

                                    as Banks

                                      AND

                            BANK ONE, MILWAUKEE, NA,

                                    as Agent









                                 July 19, 1996