EXHIBIT 10.1


 


EMPLOYMENT AGREEMENT

(Mark R. Baker)


 


THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of March 1,
2006 (the “Effective Date”) by and between Gander Mountain Company, a Minnesota
corporation (the “Company”), and Mark R. Baker, a resident of Minnesota (“Executive”).


 


RECITALS


 


A.                                   The
Company engages in the business of the retail sale and distribution of hunting,
fishing, camping and other outdoor recreational and athletic goods, clothing,
equipment, and supplies.


 


B.                                     The
Company has employed Executive as its Chief Executive Officer (“CEO”) since August 30,
2002.


 


C.                                     The
Company and Executive entered into an Employment Agreement, dated February 2,
2004 (the “Prior Agreement”), which the Company and Executive desire to cancel
and replace with this Agreement.


 


D.                                    The
Company desires to employ Executive, and Executive wishes to be employed, as
CEO and President of the Company, on the terms and conditions set forth in this
Agreement.


 


AGREEMENT


 


NOW, THEREFORE, in consideration of the foregoing
premises and the respective agreements of the Company and Executive set forth
below, the Company and Executive, intending to be legally bound, agree as
follows:


 


1.                                       Employment.
Subject to all the terms and conditions of this Agreement, Executive’s period
of employment under this Agreement shall be the period commencing on the
Effective Date and ending on the second anniversary of the Effective Date (the “Initial
Term”), unless the Executive’s employment terminates earlier in accordance with
Section 8 hereof. Thereafter,
unless earlier terminated in accordance with Section 8 hereof, the term ofExecutive’s employment with the Company
shall be automatically extended for successive one-year periods following the
expiration of the Initial Term (each, a “Renewal Term” and, together with the
Initial Term, the “Term”), unless either party gives written notice to the
other party at least 90 days prior to the expiration of the Initial Term or any
Renewal Term that such party elects not to extend the term of Executive’s
employment.


 


2.                                       Position
and Duties; No Violations.


 


(a)                                  Employment
with the Company. While Executive is employed by the Company during the
Term, Executive shall be employed as CEO and President of the Company


 

















 


and perform such
duties and responsibilities as the Board of Directors of the Company (the “Board”)
shall assign to him from time to time.


 


(b)                                 Performance
of Duties and Responsibilities. Executive shall serve the Company
faithfully and to the best of his ability and shall devote his full working
time, attention and efforts to the business of the Company during his
employment with the Company hereunder. While Executive is employed by the
Company during the Term, Executive shall report to the Board. Executive hereby
represents and confirms that he is under no contractual or legal commitments
that would prevent him from fulfilling his duties and responsibilities as set
forth in this Agreement. During his employment with the Company, Executive
shall not accept other employment or engage in other material business
activity, except as approved in writing by the Board. Executive may participate
in charitable activities and personal investment activities to a reasonable
extent so long as such activities do not interfere with the performance of Executive’s
duties and responsibilities hereunder. Executive may serve as a director
of business organizations only as approved by the Board. The parties
acknowledge that, as of the date of this Agreement, Executive serves on the
board of directors of The Scotts Company.


 


(c)                                  No
Violation of Other Agreements. Executive hereby represents and agrees that
neither (i) Executive’s entering into this Agreement, (ii) Executive’s
employment with the Company, nor (iii) Executive’s carrying out the
provisions of this Agreement, will violate any other agreement (oral, written
or other) to which Executive is a party or by which Executive is bound.


 


(c)                                  Board
of Directors. As of the Effective Date, Executive is a director of the
Company. Executive’s continued service, nomination, and election as a director
of the Company shall be in accordance with the articles of incorporation and
by-laws of the Company as in effect from time to time. Executive shall
diligently perform the duties arising from his position as a director of the
Company without compensation except as set forth in this Agreement. Executive
agrees to resign from the Board promptly upon the termination of his employment
with the Company for any reason.


 


3.                                       Compensation.


 


(a)                                  Base
Salary. While Executive is employed by the Company during the Term, the
Company shall pay to Executive a base salary at the rate of Five Hundred Twenty
Five Thousand and no/100 Dollars ($525,000.00) per year, less deductions and
withholdings, which base salary shall be paid in accordance with the Company’s
normal payroll policies and procedures. On or before April 1 of each year
during the Term, commencing in fiscal year 2006, the Compensation Committee of
the Board (the “Compensation Committee”) shall review Executive’s performance
and may increase (but not reduce) Executive’s base salary in its sole
discretion; provided, however, that the Compensation Committee may reduce
Executive’s base salary by no more than 10% in any twelve-month period if such
reduction is part of a general reduction in the base salaries of all
executives of the Company and; provided further, that no such reduction shall
reduce Executive’s base salary below the initial base salary set forth in the
first sentence of this Section 3(a).


 


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(b)                                 Annual
Incentive Bonus. Commencing with fiscal year 2006 and for each full fiscal
year thereafter that Executive is employed by the Company during the Term,
Executive shall be eligible for an annual cash incentive bonus in an amount up
to 200% of the annual base salary paid to Executive for such fiscal year, based
upon achievement of defined goals mutually agreed upon by Executive and the
Compensation Committee and in accordance with the terms of any incentive plan
of the Company in effect from time to time (the “Annual Incentive Bonus”). The
level of achievement of the objectives each year and the amount payable as
Annual Incentive Bonus shall be determined in good faith by the Compensation
Committee. Any Annual Incentive Bonus earned in a fiscal year shall be paid to
Executive on or before the sixtieth (60th) day following the last
day of such fiscal year.


 


(c)                                  Equity-Based
Awards; Accelerated Vesting and Period to Exercise. From time to time,
Executive shall be eligible for awards under the Amended and Restated 2004
Omnibus Stock Plan (the “Plan”), and the Compensation Committee, in its sole
discretion, may grant Executive an award under the Plan in accordance with
the terms and conditions of the Plan or any successor plan, as may be
amended from time to time. Upon the
occurrence of a Change in Control (as defined in Section 9 hereof) while
Executive is employed by the Company, the vesting of all stock options, grants
of restricted stock and other equity-based awards (collectively, the “Equity
Awards”) subject to time or performance based vesting then held by Executive
shall be accelerated and all such Equity Awards shall become immediately fully
vested upon such Change in Control. Upon the occurrence of the termination of
Executive’s employment by the Company without Cause (as defined in Section 9
hereof), the vesting of all Equity Awards subject to time based vesting then
held by Executive that would otherwise vest on or before the second anniversary
of the Termination Date (as defined in Section 8 hereof) shall be
accelerated and such Equity Awards shall become immediately vested to such
extent upon such termination without Cause. Notwithstanding any shorter period
specified in the applicable award agreement or plan, if Executive is entitled
to a Severance Amount (as defined in Section 8 hereof), then all vested
Equity Awards held by Executive on Executive’s Termination Date (including all Equity Awards for which vesting
accelerates pursuant to this Section 3(c)) shall remain exercisable
through the date that Executive receives the last payment of the Severance
Amount; provided that the provisions of this sentence shall not apply to any
Equity Awards granted or awarded to Executive prior to the date of this
Agreement.


 


(d)                                 Benefits.
While Executive is employed by the Company during the Term, Executive shall be
entitled to participate in all employee benefit plans and programs of the
Company to the extent that Executive meets the eligibility requirements for
each individual plan or program. The Company provides no assurance as to the
adoption or continuance of any particular employee benefit plan or program, and
Executive’s participation in any such plan or program shall be subject to the
provisions, rules and regulations applicable thereto.


 


(e)                                  Company
Airplane; Personal Use. While Executive is employed by the Company during
the Term, he shall be permitted to use the Company’s Cessna Citation II
airplane for personal use up to 50 hours per fiscal year, subject to the
charges, policies, and practices of the Company as in effect from time to time
regarding use of the Company airplane.


 


(f)                                    Expenses.
While Executive is employed by the Company during the Term, the Company shall
reimburse Executive for all reasonable and necessary out-of-pocket


 


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business, travel and
entertainment expenses incurred by him in the performance of his duties and
responsibilities hereunder, subject to the Company’s normal policies and
procedures for expense verification and documentation.


 


4.                                       Affiliated
Entities. As used in Sections 5, 6 and 7 of this Agreement, “Company”
shall include the Company and each corporation, partnership, or other entity
that is controlled by the Company, or is under common control with the Company
(in each case “control” meaning the direct or indirect ownership of 50% or more
of all outstanding equity interests); but shall not include Holiday Companies
or any entities (other than the Company) controlled by or under common control
with Holiday Companies.


 


5.                                       Confidential
Information. Except as required in the performance of Executive’s duties as
an employee of the Company or as authorized in writing by the Board, Executive
shall not, either during Executive’s employment with the Company or at any time
thereafter, use, disclose or make accessible to any person any confidential
information for any purpose. “Confidential Information” means information
proprietary to the Company or its customers or prospective customers and not
generally known (including trade secret information) about the Company’s
customers, products, services, personnel, suppliers, pricing, sales strategies,
technology, computer software code, methods, processes, designs, research,
development systems, techniques, finances, accounting, purchasing, and plans. All
information disclosed to Executive or to which Executive obtains access,
whether originated by Executive or by others, during the period of Executive’s
employment by the Company, shall be presumed to be Confidential Information if
it is treated by the Company as being Confidential Information or if Executive
has a reasonable basis to believe it to be Confidential Information. Executive
acknowledges that the above-described knowledge and information constitutes a
unique and valuable asset of the Company and represents a substantial
investment of time and expense by the Company, and that any disclosure or other
use of such knowledge or information other than for the sole benefit of the
Company would be wrongful and would cause irreparable harm to the Company. During
Executive’s employment with the Company, Executive shall refrain from
committing any acts that would materially reduce the value of such knowledge or
information to the Company. The foregoing obligations of confidentiality shall
not apply to any knowledge or information that (i) is now or subsequently
becomes generally publicly known, other than as a direct or indirect result of
the breach of this Agreement by Executive, (ii) is independently made
available to Executive in good faith by a third party who has not violated a
confidential relationship with the Company, or (iii) is required to be
disclosed by law or legal process. Notwithstanding
the previous sentence, prior to disclosure of Confidential Information pursuant
to clause (iii) thereof, Executive shall give the Company prompt notice of
the legal requirement for disclosure so that the Company may seek an
appropriate protective order and at the Company’s request and expense,
Executive shall cooperate with the Company in seeking such an order. If
Executive is nonetheless compelled to disclose Confidential Information as
permitted by such clause (iii), Executive shall disclose only that portion of
the Confidential Information as Executive is legally compelled to disclose and,
at the Company’s request and expense, shall use commercially reasonable efforts
to obtain assurances that confidential treatment will be accorded such
Confidential Information. Executive acknowledges that the obligations
imposed by this Section 5 are in addition to, and not in place of, any
obligations imposed by applicable statutory or common law.


 


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6.                                       Noncompetition
Covenant.


 


(a)                                  Agreement
Not to Compete. During Executive’s employment with the Company and during
the Restricted Period (as defined below), Executive shall not, directly or
indirectly, on his own behalf or on behalf of any person or entity other than
the Company, including without limitation as a proprietor, principal, agent,
partner, officer, director, stockholder, employee, member of any association,
consultant or otherwise, engage in any business that is then competitive with
the business of the Company, including without limitation any business that
operates retail stores for the sale or distribution of hunting, fishing,
camping or other outdoor recreational and athletic goods, clothing, equipment
or supplies (such as Cabela’s Inc., Bass Pro Shops and Sportsman’s Warehouse). Ownership
by Executive, as a passive investment, of less than 0.5% of the outstanding
shares of capital stock of any corporation listed on a national securities
exchange or publicly traded in the over-the-counter market shall not constitute
a breach of this Section 6(a) or any other provisions of this Section 6.


 


(b)                                 Agreement
Not to Hire. Except as required in the performance of Executive’s duties as
an employee of the Company, during Executive’s employment with the Company and
during the Restricted Period, Executive shall not, directly or indirectly,
hire, engage or solicit, or induce or attempt to induce to cease working for
the Company, any person who is then an employee of the Company or who was an
employee of the Company during the six (6) month period immediately
preceding Executive’s termination of employment with the Company.


 


(c)                                  Agreement
Not to Solicit. Except as required in the performance of Executive’s duties
as an employee of the Company, during Executive’s employment with the Company
and during the Restricted Period, Executive shall not, directly or
indirectly, solicit, request, advise, induce or attempt to induce any
vendor, supplier or other business contact of the Company to cancel, curtail,
cease doing business with, or otherwise adversely change its relationship with
the Company.


 


(d)                                 Restricted
Period. “Restricted Period” hereunder means a period of twenty-four
consecutive months immediately following the last day of Executive’s employment
with the Company.


 


(e)                                  Acknowledgment.
Executive hereby acknowledges that the provisions of this Section 6 are
reasonable and necessary to protect the legitimate interests of the Company and
that any violation of this Section 6 by Executive shall cause substantial
and irreparable harm to the Company to such an extent that monetary damages
alone would be an inadequate remedy therefor. Therefore, in the event that
Executive violates any provision of this Section 6, the Company shall be
entitled to an injunction, in addition to all the other remedies it may have,
restraining Executive from violating or continuing to violate such provision.


 


(f)                                    Blue
Pencil Doctrine. If the duration of, the scope of or any business activity
covered by any provision of this Section 6 is in excess of what is
determined to be valid and enforceable under applicable law, such provision
shall be construed to cover only that


 


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duration, scope or
activity that is determined to be valid and enforceable. Executive hereby
acknowledges that this Section 6 shall be given the construction that renders
its provisions valid and enforceable to the maximum extent, not exceeding its
express terms, possible under applicable law.


 


7.                                       Intellectual
Property.


 


(a)                                  Disclosure
and Assignment. As of the Effective Date, Executive hereby transfers and
assigns to the Company (or its designee) all right, title, and interest of
Executive in and to every idea, concept, invention, and improvement (whether patented,
patentable or not) conceived or reduced to practice by Executive whether solely
or in collaboration with others while he is employed by the Company, and all
copyrighted or copyrightable matter created by Executive whether solely or in
collaboration with others while he is employed by the Company, in each case,
that relates to the Company’s business
(collectively, “Creations”). Executive shall communicate promptly and disclose
to the Company, in such form as the Company may request, all
information, details, and data pertaining to each Creation. Every copyrightable
Creation, regardless of whether copyright protection is sought or preserved by
the Company, shall be a “work made for hire” as defined in 17 U.S.C. § 101,
and the Company shall own all rights in and to such matter throughout the
world, without the payment of any royalty or other consideration to Executive
or anyone claiming through Executive.


 


(b)                                 Trademarks.
All right, title, and interest in and to any and all trademarks, trade names,
service marks, and logos adopted, used, or considered for use by the Company
during Executive’s employment (whether or not developed by Executive) to
identify the Company’s business or other goods or services (collectively, the “Marks”),
together with the goodwill appurtenant thereto, and all other materials, ideas,
or other property conceived, created, developed, adopted, or improved by
Executive solely or jointly during Executive’s employment by the Company and
relating to its business shall be owned exclusively by the Company. Executive
shall not have, and will not claim to have, any right, title, or interest of
any kind in or to the Marks or such other property.


 


(c)                                  Documentation.
Executive shall execute and deliver to the Company such formal transfers and
assignments and such other documents as the Company may request to permit
the Company (or its designee) to file and prosecute such registration
applications and other documents it deems useful to protect or enforce its
rights hereunder. Any idea, invention, copyrightable matter, or other property
relating to the Company’s business and disclosed by Executive prior to the
first anniversary of the effective date of Executive’s termination of
employment shall be deemed to be governed by the terms of this Section 7
unless proven by Executive to have been first conceived and made after such
termination date.


 


(d)                                 Non-Applicability.
Executive is hereby notified that this Section 7 does not apply to any
invention for which no equipment, supplies, facility, Confidential Information,
or other trade secret information of the Company was used and which was
developed entirely on Executive’s own time, unless (1) the invention
relates (a) directly to the business of the Company or (b) to the
Company’s actual or demonstrably anticipated research or development, or (2) the
invention results from any work performed by Executive for the Company.


 


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8.                                       Termination
of Employment.


 


(a)                                  Executive’s
employment with the Company shall terminate immediately upon:


 


(i)                                     The
effective date of termination of Executive’s employment specified in a written
notice of termination received by Executive from the Company;


 


(ii)                                  the Company’s receipt of Executive’s
written resignation from the Company;


 


(iii)                               Executive’s Disability
(as defined below); or


 


(iv)                              Executive’s
death.


 


(b)                                 The
date upon which Executive’s termination of employment with the Company occurs
shall be the “Termination Date.”


 


9.                                       Payments
upon Termination of Employment.


 


(a)                                  If
Executive’s employment with the Company is terminated by reason of:


 


(i)                                     Executive’s
abandonment of his employment or Executive’s resignation for any reason;


 


(ii)                                  termination
of Executive’s employment by the Company for Cause (as defined below); or


 


(iii)                               expiration of the Term
following notice by Executive of non-renewal, pursuant to Section 1 above,


 


the Company shall pay to
Executive his then-current base salary through the Termination Date and any
Annual Incentive Bonus earned but unpaid for the completed fiscal year
preceding the fiscal year in which the Termination Date occurs; provided that
such Annual Incentive Bonus payments shall be payable in the same manner and at
the same time that Annual Incentive Bonus payments are made to current
employees of the Company.


 


(b)                                 If
Executive’s employment with the Company is involuntarily terminated by the
Company for any reason other than for Cause (as defined below), including
without limitation the expiration of the Term following notice by the Company
of non-renewal pursuant to Section 1 above, then the Company shall,
subject to Sections 9(j) and 9(k) of this Agreement and in addition to any base
salary earned through the Termination Date and any Annual Incentive Bonus
earned but unpaid for the completed fiscal year preceding the fiscal year in
which the Termination Date occurs, pay to Executive:


 


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(i)                                     an
amount equal to two times Executive’s then-current annual base salary;


 


(ii)                                  an
amount equal to two times the Annual Incentive Bonus that Executive earned
under Section 3(b) for the last full fiscal year of Executive’s employment
with the Company; and


 


(iii)                               an additional $150,000.


 


(c)                                  If
Executive’s employment with the Company terminates by reason of Executive’s
death or Disability, the Company shall pay to Executive or his beneficiary or
his estate, as the case may be, his then-current base salary through the
Termination Date, any earned and unpaid Annual Incentive Bonus for the fiscal
year preceding the fiscal year in which the Termination Date occurs and a
pro-rated portion of any Annual Incentive Bonus for the fiscal year in which
the Termination Date occurs, based on the number of days during such fiscal
year Executive was employed by the Company, payable in the same manner and at
the same time that Annual Incentive Bonus payments are made to current
employees of the Company.


 


(d)                                 Notwithstanding
the provisions of Sections 9(a) and 9(b), if, within twelve months following the occurrence of a Change in Control
(as defined below), Executive’s employment with the Company is terminated by
either Executive or the Company for any reason, then the Company shall, subject
to Sections 9(j) and 9(k) of this Agreement and in addition to any base
salary earned through the Termination Date and any Annual Incentive Bonus
earned but unpaid for the preceding fiscal year, and in lieu of any payments required by Sections 9(a) or 9(b) of
this Agreement, pay to Executive:


 


(i)                                     an
amount equal to two times Executive’s then-current annual base salary;


 


(ii)                                  an
amount equal to two times the Annual Incentive Bonus that Executive earned
under Section 3(b) for the last full fiscal year of Executive’s
employment with the Company; and


 


(iii)                               an additional $150,000.


 


In the event that
Executive becomes eligible for payments under this Section 9(d), the
Company shall be released from its obligation to make any payments pursuant to
Sections 9(a) or 9(b) above.


 


(e)                                  Any
amount payable to Executive pursuant to Section 9(b)(i), 9(b)(ii) and
9(b)(iii), or pursuant to Section 9(d)(i), 9(d)(ii) and 9(d)(iii), as
applicable (the “Severance Amount”), shall be subject to deductions and
withholdings for applicable taxes but shall not be subject to deductions for
any other amounts received by Executive as a result of future employment or
otherwise. Twenty-five percent (25%) of the Severance Amount payable to
Executive pursuant to Section 9(b)(i) and 9(b)(ii) or Section 9(d)(i) and
9(d)(ii), as applicable,


 


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plus the entire Severance
Amount payable pursuant to Section 9(b)(iii) or Section 9(d)(iii),
as applicable, shall be paid to Executive by the Company in a lump sum on the
first day of the seventh month after the Termination Date. The remaining
balance of the Severance Amount shall be paid to Executive by the Company in
equal installments pursuant to the Company’s regular payroll practices and
procedures, commencing on the first normal payroll date of the Company
following the date of payment of the first lump sum payment and continuing for
18 months thereafter.


 


(f)                                    Cause.
“Cause” hereunder shall mean:


 


(i)                                     an
act or acts of dishonesty undertaken by Executive and intended to result in
substantial gain or personal enrichment of Executive at the expense of the
Company;


 


(ii)                                  unlawful
conduct or gross misconduct that is willful and deliberate on Executive’s part and
that, in either event, is materially injurious to the Company;


 


(iii)                               the conviction of
Executive of a felony;


 


(iv)                              material
and deliberate failure of Executive to perform his duties and
responsibilities hereunder or to satisfy his obligations as an officer or employee
of the Company, which failure has not been cured by Executive within 15 days
after written notice thereof to Executive from the Company; or


 


(v)                                 material
breach of any terms and conditions of this Agreement by Executive not caused by
the Company, which breach has not been cured by Executive within 15 days after
written notice thereof to Executive from the Company.


 


(g)                                 A
“Change in Control” of the Company shall be deemed to occur if any of the
following occur:


 


(i)                                     Any
“person” (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) after the
date of this Agreement first acquires or becomes a “beneficial owner” (as
defined in Rule 13d-3 or any successor rule under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or more
of the combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of directors (“Voting Securities”),
provided, however, that the following shall not constitute a Change in Control
pursuant to this Section 9:


 


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(A)                              any
acquisition of Shares or Voting Securities of the Company directly from the
Company;


 


(B)                                any
acquisition or beneficial ownership by the Company or a subsidiary;


 


(C)                                any
acquisition or beneficial ownership by any employee benefit plan (or related
trust) sponsored or maintained by the Company or one or more of its
subsidiaries;


 


(D)                               any
acquisition or beneficial ownership by any corporation with respect to which,
immediately following such acquisition, more than 50% of both the combined
voting power of the Company’s then outstanding Voting Securities and the Shares
of the Company is then beneficially owned by all or substantially all of the
persons who beneficially owned Voting Securities and Shares of the Company
immediately prior to such acquisition in substantially the same proportions as
their ownership of such Voting Securities and Shares, as the case may be,
immediately prior to such acquisition;


 


(ii)                                  A
majority of the members of the Board of Directors of the Company shall not be
Continuing Directors. “Continuing Directors” shall mean:  (A) individuals who, on the date hereof,
are directors of the Company, (B) individuals elected as directors of the
Company subsequent to the date hereof for whose election proxies shall have
been solicited by the Board of Directors of the Company, (C) individuals
elected as directors of the Company subsequent to the date hereof pursuant to a
nomination or board representation right of preferred stockholders of the
Company or (D) any individual elected or appointed by the Board of
Directors of the Company to fill vacancies on the Board of Directors of the
Company caused by death or resignation (but not by removal) or to fill newly-created
directorships;


 


(iii)                               Consummation of a
reorganization, merger or consolidation of the Company or a statutory exchange
of outstanding Voting Securities of the Company, unless, immediately following
such reorganization, merger, consolidation or exchange, all or substantially
all of the persons who were the beneficial owners, respectively, of Voting
Securities and Shares of the Company immediately prior to such reorganization,
merger, consolidation or


 


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exchange
beneficially own, directly or indirectly, more than 50% of, respectively, the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors and the then outstanding shares of
common stock, as the case may be, of the corporation that is the issuer of
such securities held by the stockholders of the Company after such
reorganization, merger, consolidation or exchange in substantially the same proportions
as their ownership, immediately prior to such reorganization, merger,
consolidation or exchange, of the Voting Securities and Shares of the Company,
as the case may be; or


 


(iv)                              Consummation
of (A) a complete liquidation or dissolution of the Company or (B) the
sale or other disposition of all or substantially all of the assets of the
Company (in one or a series of transactions), other than to a corporation
with respect to which, immediately following such sale or other disposition,
more than 50% of, respectively, the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors and the then outstanding shares of common stock of
such corporation is then beneficially owned, directly or indirectly, by all or
substantially all of the persons who were the beneficial owners, respectively,
of the Voting Securities and Shares of the Company immediately prior to such
sale or other disposition in substantially the same proportions as their
ownership, immediately prior to such sale or other disposition, of the Voting
Securities and Shares of the Company, as the case may be.


 


(h)                                 “Disability”
hereunder shall mean the inability of Executive to perform on a full-time
basis the duties and responsibilities of his employment with the Company by
reason of his illness or other physical or mental impairment or condition, if
such inability continues for an uninterrupted period of 90 days or more during
any 360-day period. A period of inability shall be “uninterrupted” unless and
until Executive returns to full-time work for a continuous period of at least
30 days.


 


(i)                                     In
the event of termination of Executive’s employment, the sole obligation of the
Company to make payments to Executive shall be its obligation to make the
payments called for by Sections 9(a), 9(b), 9(c), or 9(d) hereof, as
the case may be, and the Company shall have no other obligation to make
payments to Executive or to Executive’s beneficiary or Executive’s estate,
except as otherwise provided by law.


 


(j)                                     Notwithstanding
any other provision hereof, the Company shall not be obligated to make any
payments under Sections 9(b) or 9(d) of this Agreement unless
Executive has signed a full release of claims against the Company, in a form and
scope to be prescribed by the Board in its reasonable discretion, all
applicable consideration periods and rescission periods


 


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provided by law shall
have expired, and Executive is in compliance with the terms of this Agreement
as of the dates of the payments.


 


(k)                                  Certain
Reduction of Payments by the Company.


 


(i)                                     Notwithstanding
anything contained herein to the contrary, prior to the payment of any amounts
pursuant to Section 9(d) hereof, an independent national accounting
firm designated by the Company (the “Accounting Firm”) shall compute whether
there would be any “excess parachute payments” payable to Executive, within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”), taking into account the total “parachute payments,” within the
meaning of Section 280G of the Code, payable to Executive by the Company
or any successor thereto under this Agreement and any other plan, agreement or
otherwise. If there would be any excess parachute payments, the Accounting Firm
will compute the net after-tax proceeds to Executive, taking into account the
excise tax imposed by Section 4999 of the Code, if (i) the payments
hereunder were reduced, but not below zero, such that the total parachute
payments payable to Executive would not exceed three (3) times the “base
amount” as defined in Section 280G of the Code, less One Dollar ($1.00),
or (ii) the payments hereunder were not reduced. If reducing the payments
hereunder would result in a greater after-tax amount to Executive, such lesser
amount shall be paid to Executive. If not reducing the payments hereunder would
result in a greater after-tax amount to Executive, such payments shall not be
reduced. The determination by the Accounting Firm shall be binding upon the
Company and Executive subject to the application of Section 9(k)(ii) hereof.


 


(ii)                                  As
a result of uncertainty in the application of Sections 280G of the Code, it is
possible that excess parachute payments will be paid when such payment would
result in a lesser after-tax amount to Executive; this is not the intent hereof.
In such cases, the payment of any excess parachute payments will be void ab
initio as regards any such excess. Any excess will be treated as an overpayment
by the Company to Executive. Executive will return the overpayment to the
Company, within fifteen (15) business days of any determination by the
Accounting Firm that excess parachute payments have been paid when not so
intended, with interest at an annual rate equal to the rate provided in Section 1274(d) of
the Code (or 120% of such rate if the Accounting Firm determines that such rate
is necessary to avoid an excise tax under Section 4999 of the Code) from
the date Executive received the excess until it is repaid to the Company.


 


(iii)                               All
fees, costs and expenses (including, but not limited to, the cost of retaining
experts) of the Accounting Firm shall be borne by the Company and the Company
shall pay such fees, costs, and expenses as they become due. In performing the
computations required hereunder, the Accounting Firm shall assume that taxes
will be paid for state and federal purposes at the highest possible marginal
tax rates which could be applicable to Executive in the year of receipt of the
payments, unless Executive agrees otherwise.


 


10.                                 Return
Of Property. Upon termination of Executive’s employment with the Company,
Executive shall deliver promptly to the Company all records, files, manuals,
books, forms, documents, letters, memoranda, data, customer lists, tables,
photographs, video tapes, audio tapes, computer disks and other computer
storage media, and copies thereof, that are the


 


12

















 


property of the Company,
or that relate in any way to the business, products, services, personnel,
customers, prospective customers, suppliers, practices, or techniques of the
Company, and all other property of the Company (such as, for example,
computers, cellular telephones, pagers, credit cards, and keys), whether or not
containing Confidential Information, that are in Executive’s possession or
under Executive’s control.


 


11.                                 Remedies.
Executive acknowledges that it would be difficult to fully compensate the
Company for monetary damages resulting from any breach by him of the provisions
of Sections 5, 6, and 7 hereof. Accordingly, in the event of any actual or
threatened breach of any such provisions, the Company shall, in addition to any
other remedies it may have, be entitled to injunctive and other equitable
relief to enforce such provisions, and such relief may be granted without
the necessity of proving actual monetary damages.


 


12.                                 Termination of Prior Agreement. The parties agree that simultaneously with
the execution of this Agreement on the Effective Date, the Prior Agreement
shall terminate and be of no further force or effect.


 


13.                                 Taxes.
This Agreement is intended to satisfy the requirements of Section 409A(a)(2),
(3) and (4) of the Internal Revenue Code of 1986, as amended (“Code”),
including current and future guidance and regulations interpreting such
provisions. To the extent that any provision of this Agreement fails to satisfy
those requirements, the provision shall automatically be modified in a manner
that, in the good-faith opinion of the Company, brings the provisions into
compliance with those requirements while preserving as closely as possible the
original intent of the provision and this Agreement. In particular, and without
limiting the preceding sentence, if Executive is a “specified employee” under Section 409A(a)(2)(B)(i) of
the Code, then any payment under this Agreement that is treated as deferred
compensation under Section 409A of the Code shall be delayed until the
date which is six months after the date of “separation from service” under the
Code (without interest or earnings).


 


14.                                 Miscellaneous.


 


(a)                                  Governing
Law. This Agreement shall be governed by, subject to, and construed in
accordance with the laws of the State of Minnesota without regard to conflict
of law principles. Any action relating to this Agreement shall only be brought
in a court of competent jurisdiction in the State of Minnesota, and the parties
consent to the jurisdiction, venue and convenience of such courts.


 


(b)                                 Jurisdiction
and Law. Executive and the Company consent to jurisdiction of the courts of
the State of Minnesota and/or the federal district courts, District of
Minnesota, for the purpose of resolving all issues of law, equity, or fact,
arising out of or in connection with this Agreement. Any action involving
claims of a breach of this Agreement shall be brought in such courts. Each
party consents to personal jurisdiction over such party in the state and/or
federal courts of Minnesota and hereby waives any defense of lack of personal
jurisdiction or forum non conveniens. Venue, for
the purpose of all such suits, shall be in Hennepin County, State of Minnesota.


 


13

















 


(c)                                  Entire
Agreement. This Agreement contains the entire agreement of the parties
relating to Executive’s employment with the Company and supersedes all prior
agreements and understandings with respect to such subject matter and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this Agreement that are not set forth herein.


 


(d)                                 Amendments.
No amendment or modification of this Agreement shall be deemed effective unless
made in writing and signed by the parties hereto.


 


(e)                                  No
Waiver. No term or condition of this Agreement shall be deemed to have been
waived, except by a statement in writing signed by the party against whom
enforcement of the waiver is sought. Any written waiver shall not be deemed a
continuing waiver unless specifically stated, shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such
term or condition for the future or as to any act other than that specifically
waived.


 


(f)                                    Assignment.
This Agreement shall not be assignable, in whole or in part, by either party
without the prior written consent of the other party, except that the Company
may, without the consent of Executive, assign its rights and obligations under
this Agreement (i) to any entity with which the Company may merge or
consolidate, or (ii) to any corporation or other person or business entity
to which the Company may sell or transfer all or substantially all of its
assets; provided that such assignee is a successor in interest to the Company’s
business and assumes all obligations of the Company under this Agreement. After
any such assignment by the Company, the Company shall be discharged from all
further liability hereunder and such assignee shall thereafter be deemed to be
the “Company” for purposes of all terms and conditions of this Agreement,
including this Section 14.


 


(g)                                 Counterparts.
This Agreement may be executed in any number of counterparts, and such
counterparts executed and delivered, each as an original, shall constitute but
one and the same instrument.


 


(h)                                 Severability.
Subject to Section 6(f) hereof, to the extent that any portion of any
provision of this Agreement shall be invalid or unenforceable, it shall be
considered deleted herefrom and the remainder of such provision and of this
Agreement shall be unaffected and shall continue in full force and effect. The
parties agree to negotiate in good faith to replace any provision deleted as a
result of this Section 14(h) with a valid and enforceable provision
intended to have a substantially similar economic effect.


 


(i)                                     Survival.
The terms and conditions set forth in Sections 4, 5, 6, 7, 8, 10, 11, 12,
13 and 14 of this Agreement, and any other provision that continues by its
terms, shall survive expiration of the Term or termination of Executive’s
employment for any reason.


 


14

















 


(j)                                     Captions
and Headings. The captions and paragraph headings used in this Agreement
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement or any of the provisions hereof.


 


* * * * *


 


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15

















 


IN
WITNESS WHEREOF, Executive and the Company have executed this Agreement as of
the date set forth in the first paragraph.


 


 


	
   

  	
  GANDER
  MOUNTAIN COMPANY

  
	
   

  	
   

  
	
   

  	
  180 East Fifth
  Street

  
	
   

  	
  Suite 1300

  
	
   

  	
  St. Paul, MN
  55101

  
	
   

  	
   

  
	
   

  	
  By

  	
     
  /s/ Richard C. Dell

  	
   

  
	
   

  	
   

  	
  Richard C. Dell

  
	
   

  	
  Its

  	
  Chairman of the
  Compensation

  
	
   

  	
   

  	
  Committee of the
  Board of Directors

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mark R.
  Baker

  	
   

  
	
   

  	
  MARK R.
  BAKER

  
					



 


[signature page to Employment Agreement]