**Exhibit 10.1**

 

**TERM LOAN AGREEMENT**

** **

ThisTerm Loan Agreement (this “*Agreement*”),dated as of June 9, 2008 is made by and among Gander Mountain Company, aMinnesota corporation (the “*Company*”), andthe lenders named on the signature pages hereto (the “*Lenders*”).

 

**RECITALS**

 

A.            The Company desires to borrow moneyfrom the Lenders, upon the terms and conditions stated in this Agreement, up toan aggregate amount of $10,000,000.00.

 

B.            The capitalized terms used hereinand not otherwise defined have the meanings given them in ARTICLE VIII.

 

**TERMS AND CONDITIONS**

 

Inconsideration of the premises and the mutual covenants contained herein andother good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the Company and the Lenders hereby agree as follows:

 

**ARTICLE IISSUANCE OF PROMISSORY NOTES**

 

1.1           **TERM LOANS**.  In accordance with the terms of thisAgreement, the Lenders, at the written request of the Company, will make aseries of term loans (the “*Term Loans*”) tothe Company, on a ratable basis in accordance with the pro rata percentages setforth on Schedule I, from time to time from the date hereof to andincluding December 31, 2008 or the earlier termination of this Agreementby the mutual agreement of the parties hereto, in an aggregate principal amountnot to exceed $10,000,000.00, with a maximum portion of the principal amountfor each Lender as is set forth on Schedule I.  The Company may prepay the Notes ratably inaccordance with the pro rata percentages set forth on Schedule I and theterms of such Notes and may reborrow such prepaid amounts ratably under thisAgreement.

 

1.2           **THE TERM NOTES**.  The Term Loans made by the Lenders shall eachbe evidenced by a promissory note (the “*Note*”) that isin substantially the form of Exhibit A and is delivered to theLenders pursuant to the Agreement.  AnyNote issued pursuant to this Agreement shall have a maturity date of December 31,2008 (the “*Maturity Date*”).

 

1.3           **MAKING OF TERM LOANS**.  The Company may request Term Loans under thisAgreement by giving at least five Business Days’ prior written notice to theLender, specifying the date of the requested Term Loan and the amountthereof.  Any request for a Term Loanshall be deemed to be a representation that the Borrower’s representations andwarranties contained in ARTICLE II are true and correct as of the date of theTerm Loan and as the date of the Note evidencing such Term Loan as though madeon and as of such dates and that no event has occurred and is continuing, orwill result from such Term Loan, that constitutes an Event of Default or wouldconstitute an Event of Default but for the requirement that notice be given ortime elapse or both; provided that any such request must be made of the Lenderson a ratable basis in accordance with their pro rata percentages set forth on ScheduleI.

 

1.4           **INTEREST**.  The Notes will bear interest as described inthe Notes.  The interest will be payableas set forth in the Notes.

 

1.5           **PAYMENT**.  Each Lender will pay the principal amount forthe Notes as is set forth in the notice provided under SECTION 1.3, bywire transfer of immediately available funds in accordance with the Company’swritten wire instructions, simultaneously with delivery by the Company to eachLender of the Note(s) in the principal amount(s) so purchased by suchLender, and the Company will deliver such Notes against delivery of thepurchase price as described above.

 

 

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**ARTICLE IIREPRESENTATIONS AND WARRANTIES OF LENDERS**

 

EachLender represents and warrants to the Company, severally and solely withrespect to itself and its purchase hereunder and not with respect to any otherLender, that:

 

2.1           **ORGANIZATION ANDQUALIFICATION**.  To the extentthe Lender is an entity, the Lender is duly incorporated, validly existing andin good standing under the laws of the state of organization, with full powerand authority (corporate and other) to own, lease, use and operate itsproperties, if any, and to carry on its business as and where now owned,leased, used, operated and conducted.  Tothe extent the Lender is an entity, the Lender is duly qualified to do businessand is in good standing in every jurisdiction in which the nature of thebusiness conducted by it makes such qualification necessary, except where thefailure to be so qualified or in good standing would not have a MaterialAdverse Effect.

 

2.2           **AUTHORIZATION; ENFORCEMENT**.  To the extent the Lender is an entity, (a) theLender has all requisite corporate power and authority to enter into and toperform its obligations under this Agreement and its Note, to consummate thetransactions contemplated hereby and thereby and to purchase the Notes inaccordance with the terms hereof; (b) the execution, delivery andperformance of this Agreement and the Lender’s Note by the Lender and theconsummation by it of the transactions contemplated hereby and thereby havebeen duly authorized by all required parties and no further consent orauthorization of Lender, its board of directors or its shareholders or membersis required; (c) this Agreement has been duly executed and delivered bythe Lender; and (d) assuming the valid and binding execution of thisAgreement and the Notes by the Company and compliance with the terms of thisAgreement and the Notes by the Company, each of this Agreement and the Lender’sNote constitutes a legal, valid and binding obligation of the Lenderenforceable against the Lender by the Company in accordance with theirrespective terms, except as may be limited by any applicable bankruptcy,insolvency, reorganization, or moratorium or similar laws affecting the rightsof creditors generally and the application of general principles ofequity.  To the extent the Lender is anatural person, this Agreement has been duly and validly authorized, executedand delivered on behalf of the Lender and is a valid and binding agreement ofthe Lender, enforceable in accordance with its terms, subject to the effect ofany applicable bankruptcy, insolvency, reorganization, moratorium or similarlaws affecting the rights of creditors generally and the application of generalprinciples of equity.

 

2.3           **INVESTMENT PURPOSE**.  The Lender is purchasing the Note(s) forits own account and not with a present view toward the public sale ordistribution thereof, except pursuant to sales registered or exempted fromregistration under the Securities Act.

 

2.4           **ACCREDITED INVESTOR STATUS**.  The Lender is an “accredited investor” asdefined in Rule 501(a) of Regulation D.

 

2.5           **RELIANCE ON EXEMPTIONS**.  The Lender understands that the Note(s) arebeing offered and sold to it in reliance upon specific exemptions from theregistration requirements of United States federal and state securities lawsand that the Company is relying upon the truth and accuracy of, and the Lender’scompliance with, the representations, warranties, agreements, acknowledgmentsand understandings of the Lender set forth herein in order to determine theavailability of such exemptions and the eligibility of the Lender to acquirethe Note(s).

 

2.6           **INFORMATION ANDSOPHISTICATION**.  The Lenderand its advisors, if any, have been furnished with all materials relating tothe business, finances and operations of the Company, and materials relating tothe offer and sale of the Note(s), that have been requested by the Lender orits advisors, if any.  The Lender and itsadvisors, if any, have been afforded the opportunity to ask questions of theCompany.  The Lender acknowledges andunderstands that its investment in the Note(s) involves a significant degreeof risk, including the risks reflected in the SEC Documents.  The Lender is 

 

 

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experiencedand knowledgeable in financial and business matters, is capable of evaluatingthe merits and risks of investing in the Notes, and does not need or desire theassistance of a knowledgeable representative to aid in the evaluation of suchrisks who the Lender intends to use in connection with a decision as to whetherto purchase the Notes.

 

2.7           **GOVERNMENTAL REVIEW**.  The Lender understands that no United Statesfederal or state agency or any other government or governmental agency haspassed upon or made any recommendation or endorsement of the Notes or aninvestment therein.

 

2.8           **TRANSFER OR RESALE**. The Lender understands that:

 

                (a)           the Notes have not been and are notbeing registered under the Securities Act or any applicable state securitieslaws and, consequently, the Lender may have to bear the risk of owning theNotes for an indefinite period of time because the Notes may not be transferredunless (i) the resale of the Notes is registered pursuant to an effectiveregistration statement under the Securities Act; (ii) the Lender hasdelivered to the Company an opinion of counsel satisfactory to the Company (inform, substance and scope customary for opinions of counsel in comparabletransactions) to the effect that the Notes to be sold or transferred may besold or transferred pursuant to an exemption from such registration; or (iii) theNotes are sold or transferred pursuant to Rule 144;

 

                (b)           any sale of the Notes made in reliance on Rule 144may be made only in accordance with the terms of Rule 144 and, if Rule 144is not applicable, any resale of the Notes under circumstances in which theseller (or the person through whom the sale is made) may be deemed to be anunderwriter (as that term is defined in the Securities Act) may requirecompliance with another exemption under the Securities Act or the rules andregulations of the SEC thereunder; and

 

                (c)           neither the Company nor any other person is under anyobligation to register the Notes under the Securities Act or any statesecurities laws or to comply with the terms and conditions of any exemptionthereunder.

 

2.9           **LEGENDS**.  The Lender understands that until (a) theNotes may be sold by the Lender under Rule 144(k) or (b) suchtime as the resale of the Notes has been registered under the Securities Act,the Notes will bear a legend restricting transfer.

 

2.10         **RESIDENCY**.  The Lender is a resident of the jurisdictionset forth in the address for notice immediately below such Lender’s name on thesignature pages hereto.

 

2.11         **NO BROKER FEES**.  The Lender has not engaged any brokers,finders, or agents, and the Lender has not incurred, and neither the Lender northe Company will incur, directly or indirectly, as a result of any action takenby the Lender, any liability for brokerage or finders’ fees or agents’commissions or any similar charges in connection with this Agreement.

 

**ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF THE COMPANY**

 

The Company represents and warrants to the Lendersthat:

 

3.1           **ORGANIZATION ANDQUALIFICATION**. The Company is duly incorporated, validly existingand in good standing under the laws of the State of Minnesota, with full powerand authority (corporate and other) to own, lease, use and operate itsproperties, if any, and to carry on its business as and where now owned,leased, used, operated and conducted. The Company is duly qualified to do business and is in good standing inevery jurisdiction in which the nature of the business conducted by it makessuch qualification necessary, except where the failure to be so qualified or ingood standing would not have a Material Adverse Effect.

 

 

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3.2           **AUTHORIZATION; ENFORCEMENT**.  (a) The Company has all requisitecorporate power and authority to enter into and to perform its obligationsunder this Agreement and the Notes, to consummate the transactions contemplatedhereby and thereby and to issue the Notes in accordance with the terms hereofand thereof; (b) the execution, delivery and performance of this Agreementand the Notes by the Company and the consummation by it of the transactionscontemplated hereby and thereby (including without limitation the issuance ofthe Notes) have been duly authorized by the Company’s board of directors and nofurther consent or authorization of the Company, its board of directors or itsshareholders is required; (c) this Agreement and the Notes have been dulyexecuted and delivered by the Company; and (d) assuming the valid andbinding execution of this Agreement by the Lender and compliance with the termsof this Agreement and the Notes by such Lender, each of this Agreement and theNotes constitutes a legal, valid and binding obligation of the Companyenforceable against the Company by such Lender in accordance with theirrespective terms, except as may be limited by any applicable bankruptcy,insolvency, reorganization, or moratorium or similar laws affecting the rights ofcreditors generally and the application of general principles of equity.

 

3.3           **ISSUANCE OF NOTES**.  The Note(s) have been duly authorizedand, upon issuance in accordance with the terms of this Agreement, will bevalidly issued, fully paid and non-assessable and free from all taxes, liens,claims, encumbrances and charges with respect to the issuance thereof (otherthan liens imposed by an Lender).

 

3.4           **NO CONFLICTS; NO VIOLATION**.

 

(a)           The execution, delivery andperformance of this Agreement and the Notes by the Company, and theconsummation by the Company of the transactions contemplated hereby and therebydo not and will not (i) conflict with or result in a violation of anyprovision of the Company’s Articles of Incorporation or Bylaws, (ii) violateor conflict with, or result in a breach of any provision of, or constitute adefault (or an event which with notice or lapse of time or both could become adefault) under, or give to others any rights of termination, amendment(including without limitation, the triggering of any anti-dilution provision),acceleration or cancellation of, any agreement, indenture or instrument towhich the Company is a party, or (iii) result in a violation of any law,rule, regulation, order, judgment or decree (including U.S. federal and statesecurities laws and regulations and regulations of any self-regulatoryorganizations to which the Company or its securities are subject) applicable tothe Company or by which any property or asset of the Company is bound oraffected (except, in the case of clauses (ii) and (iii), for suchconflicts, breaches, defaults, terminations, amendments, accelerations,cancellations and violations as would not, individually or in the aggregate,have a Material Adverse Effect).

 

(b)           The Company is not in violation ofits Articles of Incorporation, Bylaws or other organizational documents and theCompany is not in default (and no event has occurred which with notice or lapseof time or both could put the Company in default) under, and the Company has nottaken any action or failed to take any action that (and no event has occurredwhich, without notice or lapse of time or both) would give to others any rightsof termination, amendment, acceleration or cancellation of, any agreement,indenture or instrument to which the Company is a party or by which anyproperty or assets of the Company is bound or affected, except for possibledefaults as would not, individually or in the aggregate, have a MaterialAdverse Effect.  Without limiting theforegoing, the Company is not in breach of, or default under, the documentsevidencing the Senior Debt, and will not be in breach of, or default under, thedocuments evidencing the Senior Debt as a result of the consummation by theCompany of the transactions contemplated by this Agreement and the Notes,including the issuance and payment of such Notes.  The Company reasonably believes, as of thedate of this Agreement and as of the date of issuance of any Note contemplatedby this Agreement, that the Company is able to, and will, pay in full on theMaturity Date the principal sum of any Note, together with interest on theunpaid principal amount thereof, and that such payment will not cause or resultin a breach or default under any 

 

 

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documentsevidencing the Senior Debt or any other agreement, indenture or instrument towhich the Company is a party.

 

(c)           Except as specifically contemplatedby this Agreement and as required under the Securities Act and any applicablestate securities laws or any listing agreement with any securities exchange orautomated quotation system, the Company is not required to obtain any consent,authorization or order of (other than those obtained on or prior to the datehereof), or make any filing or registration with, any court or governmentalagency or any regulatory or self regulatory agency in order for it to execute,deliver or perform any of its obligations under this Agreement or the Notes ineach case in accordance with the terms hereof or thereof, or to issue and sellthe Notes in accordance with the terms hereof.

 

3.5           **SEC DOCUMENTS**.  Since the closing date of the Company’sinitial public offering, the Company has timely filed all reports, schedules,forms, statements and other documents required to be filed by it with the SECpursuant to the reporting requirements of the Exchange Act (all of theforegoing filed prior to the date hereof being referred to herein as the “*SEC Documents*”).  Asof their respective dates, the SEC Documents complied in all material respectswith the requirements of the Exchange Act or the Securities Act, as the casemay be, and the rules and regulations of the SEC promulgated thereunderapplicable to the SEC Documents, and none of the SEC Documents, at the timethey were filed with the SEC, contained any untrue statement of a material factor omitted to state a material fact required to be stated therein or necessaryin order to make the statements therein, in light of the circumstances underwhich they were made, not misleading, other than SEC Documents that have beenamended as of the date hereof.

 

3.6           **NO BROKER FEES**.  The Company has not engaged any brokers,finders, or agents, and the Company has not incurred, and neither the Companynor any Lender will incur, directly or indirectly, as a result of any actiontaken by the Company, any liability for brokerage or finders’ fees or agents’commissions or any similar charges in connection with this Agreement.

 

**ARTICLE IVCOVENANTS**

 

4.1           **USE OF PROCEEDS**.  The Company will use the proceeds from thesale of the Notes for general corporate purposes, which may include therepayment of debt to institutional lenders.

 

4.2           **EXPENSES**.  Except as otherwise set forth in thisSection, each party will pay its own fees and expenses, as well as the fees andexpenses of its own advisors and consultants, in connection with thetransactions contemplated by this Agreement. Upon the execution of this Agreement, the Company will pay thereasonable out-of-pocket expenses incurred by the Lenders in connection withthe transactions herein contemplated, including without limitation, the feesand out-of-pocket expenses of any legal counsel to the Lenders in connectionwith the transactions herein contemplated, up to an aggregate amount of $10,000for all such counsel.  The Company willalso pay all fees and expenses incurred by the Lenders with respect to anyamendments or waivers requested by the Company (whether or not the same becomeeffective) under or in respect of this Agreement.

 

4.3         **FINANCIAL INFORMATION**.  In the event the Company is no longer subjectto the reporting requirements of the Exchange Act, the Company will deliver tothe Lenders within 45 days after the end of each fiscal quarter other than theCompany’s fourth fiscal quarter and 90 days after the end of the Company’sfiscal year, the financial statements of the Company, prepared in accordancewith United States generally accepted accounting principles (subject to theabsence of footnotes and normal year-end adjustments for quarterly financialstatements), consistently applied, and audited by the Company’s independentpublic accountants in the case of year-end financial statements.

 

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4.4           **CORPORATE EXISTENCE**.  The Company will maintain its corporateexistence in good standing.  The Companywill conduct its business in compliance with all applicable laws, rules andregulations of the jurisdictions in which it is conducting business, including,without limitation, all applicable local, state and federal environmental lawsand regulations, except where the failure to comply with such laws, rules andregulations would not have a Material Adverse Effect.

 

4.5           **AFFILIATE TRANSACTIONS**.  Without the approval of the audit committeeof the Company’s board of directors, the Company will not enter into or commitdirectly or indirectly to any arrangement or transaction (i) in which theCompany purchases, rents or leases property or assets from, or sells,transfers, or disposes of any material properties or assets (regardless ofwhether in the ordinary course of business or not) to any Affiliate or (ii) inwhich the Company loans any money or other property to any Affiliate.

 

**ARTICLE VCONDITIONS TO THE LENDER’S OBLIGATION TO PURCHASE**

 

Theobligation of each Lender hereunder to purchase the Notes from the Company issubject to the satisfaction, on or before each Closing, of each of thefollowing conditions.  These conditionsare for each Lender’s respective benefit and may be waived by any Lender at anytime in its sole discretion:

 

5.1           The Company will have delivered tothe Lender the duly executed Notes in the amounts specified.

 

5.2           The representations and warranties ofthe Company must be true and correct in all material respects as of the Closingas though made at that time (except for representations and warranties thatspeak as of a specific date, which representations and warranties must be trueand correct as of such date) and the Company must have performed and compliedin all material respects with the covenants and conditions required by thisAgreement to be performed or complied with by the Company at or prior to theClosing.

 

5.3           No litigation, statute, rule,regulation, executive order, decree, ruling or injunction will have beenenacted, entered, promulgated or endorsed by or in any court or governmentalauthority of competent jurisdiction or any self-regulatory organization havingauthority over the matters contemplated hereby which prohibits the consummationof any of the transactions contemplated by this Agreement.

 

5.4           There shall exist at the time ofClosing no condition or event which would constitute an Event of Default (ashereinafter defined) or which, after notice or lapse of time or both, wouldconstitute an Event of Default.

 

5.5           Each other Lender shall havepurchased a Note in a principal amount reflecting such Lender’s ratableobligation under the applicable Term Loan request delivered by the Company inaccordance with SECTION 1.3.

 

5.6           The Lenders shall have received anopinion from Faegre & Benson LLP, counsel to the Company, in the formattached hereto as Exhibit B.

 

**ARTICLE VIDEFAULT**

 

                6.1           **EVENTS OF DEFAULT**.  Each of the following events shall be anevent of default (an “*Event of Default*”)for purposes of this Agreement:

 

                                (a)           if default shall be made in thepunctual payment of interest on the Notes, and such default shall havecontinued for a period of ten days after written notice thereof to the Companyby the holder of any of the Notes; or

 

 

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                                (b)           if default shall be made in thepunctual payment of any installment of the principal of the Notes and suchdefault shall have continued for a period of five days after written noticethereof to the Company by the holder of any of the Notes; or

 

                                (c)           if a trustee or receiver is appointedfor the Company or for substantially all of the Company’s assets and the orderof such appointment is not discharged, vacated or stayed within 60 days aftersuch appointment; or

 

                                (d)           if any judgment, writ or warrant ofattachment or of any similar process in an amount in excess of $10,000,000shall be entered or filed against the Company or against any of the property orassets of the Company and remains unpaid, unvacated, unbonded or unstayed for aperiod of 60 days; or

 

                                (e)           if an order for relief shall beentered in any Federal bankruptcy proceeding in which the Company is thedebtor; or if bankruptcy, reorganization, arrangement, insolvency, orliquidation proceedings, or other proceedings for relief under any bankruptcyor similar law or laws for the relief of debtors, are instituted by or againstthe Company and, if instituted against the Company, are consented to or, ifcontested by the Company, are not dismissed by the adverse parties or by an order,decree or judgment within 60 days after such institution; or

 

                                (f)            if the Company shall default in anymaterial respect in the due and punctual performance of any covenant oragreement in the Senior Debt and such default shall continue for more than theperiod of notice and/or grace, if any, therein specified and shall have therebycaused the acceleration of all amounts due under the Senior Debt, whichacceleration shall not have been cured or waived; or

 

                                (g)           if default shall be made in the dueand punctual performance or observance of any other term contained in thisAgreement or the Notes, and such default shall have continued for a period of30 days after the earlier of the Company’s knowledge thereof or written noticethereof to the Company by the holder of any Note.

 

                6.2           **REMEDIES UPON EVENTS OFDEFAULT**.  For so long as anyNote remains outstanding, upon the occurrence of an Event of Default as hereindefined, and so long as such Event of Default continues unremedied, then, eachholder of any Notes shall be entitled by notice to declare the principalof and any accrued interest on the Notes, to be immediately due and payable,and thereupon the Notes, including both principal and interest shall becomeimmediately due and payable; provided, however, that when any Event of Defaultdescribed in SECTION 6.1(e) has occurred, the Notes shall immediatelybecome due and payable without presentment, demand or notice of any kind.  In addition, from and after receipt ofwritten notice to the Company from the holder of a Note following theoccurrence of an Event of Default, and during the continuation thereof, therate per annum at which interest shall accrue on the unpaid principal balanceof the holder’s Note shall increase by 2%.

 

                6.3           **NOTICE OF DEFAULTS**.  When, to its knowledge, any Event of Defaulthas occurred or exists, the Company agrees to give written notice within tenBusiness Days of such Event of Default to the holders of all outstandingNotes.  If the holder of any Notes shallgive any notice or take any other actions in respect of a claimed Event ofDefault, the Company will forthwith give written notice thereof to all otherholders of Notes at the time outstanding, describing such notice or action andthe nature of the claimed Event of Default.

 

                6.4           **SUITS FOR ENFORCEMENT**.  In case any one or more Events of Defaultshall have occurred and be continuing, any holder of the Notes may proceed toprotect and enforce its rights under this Article by suit in equity oraction at law.  It is agreed that in theevent of such action such holders of Notes shall be entitled to receive allreasonable fees, costs and expenses incurred, including without 

 

 

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limitationsuch reasonable fees and expenses of attorneys (whether or not litigation iscommenced) and reasonable fees, costs and expenses of appeals.

 

                6.5           **REMEDIES CUMULATIVE**.  No right, power or remedy conferred upon anyholder of Notes shall be exclusive, and each such right, power or remedy shallbe cumulative and in addition to every other right, power or remedy, whetherconferred hereby or by any such security or now or hereafter available at lawor in equity or by statute or otherwise.

 

                6.6           **REMEDIES NOT WAIVED**.  No course of dealing between the Company andany Lender or the holder of any Notes, and no delay in exercising any right,power or remedy conferred hereby or by any such security or now or hereafterexisting at law or in equity or by statute or otherwise, shall operate as awaiver of or otherwise prejudice any such right, power or remedy; provided,however, that this SECTION 6.6 shall not be construed or applied so as tonegate the provisions and intent of any statute that is otherwise applicable.

 

**ARTICLE VIIINDEMNIFICATION**

 

7.1           **INDEMNIFICATION BY COMPANY**.  In consideration of each Lender’s executionand delivery of this Agreement and its acquisition of the Notes hereunder, andin addition to all of the Company’s other obligations under this Agreement andthe Notes, the Company will defend, protect, indemnify and hold harmless eachLender and each other holder of the Notes and all of their shareholders,officers, directors, employees, advisors and direct or indirect investors andany of the foregoing person’s agents or other representatives (including,without limitation, those retained in connection with the transactionscontemplated by this Agreement) (collectively, the “*Indemnitees*”)from and against any and all actions, causes of action, suits, claims, losses,costs, penalties, fees, liabilities and damages, and expenses in connectiontherewith (regardless of whether any such Indemnitee is a party to the actionfor which indemnification hereunder is sought), and including reasonableattorneys’ fees and disbursements (the “*Indemnified Liabilities*”),incurred or suffered by an Indemnitee as a result of, or arising out of, orrelating to (a) any breach of any representation or warranty made by theCompany herein or in any other certificate, instrument or document contemplatedhereby or thereby, (b) any breach of any covenant, agreement or obligationof the Company contained herein or in any other certificate, instrument ordocument contemplated hereby or thereby, or (c) any cause of action, suitor claim brought or made against such Indemnitee and arising out of orresulting from the execution, delivery, performance, breach or enforcement ofthis Agreement or the Notes by the Company. To the extent that the foregoing undertaking by the Company isunenforceable for any reason, the Company will make the maximum contribution tothe payment and satisfaction of each of the Indemnified Liabilities that ispermissible under applicable law.

 

7.2           **INDEMNIFICATION BY LENDERS**.  Each Lender, severally and not jointly, willdefend, protect, indemnify and hold harmless the Company all of itsshareholders, officers, directors, employees and direct or indirect investorsand any of the foregoing person’s agents or other representatives (including,without limitation, those retained in connection with the transactions contemplatedby this Agreement) (collectively, the “*Company Indemnitees*”)from and against any and all actions, causes of action, suits, claims, losses,costs, penalties, fees, liabilities and damages, and expenses in connectiontherewith (regardless of whether any such Company Indemnitee is a party to theaction for which indemnification hereunder is sought), and including reasonableattorneys’ fees and disbursements (the “*Indemnified CompanyLiabilities*”) incurred by a Company Indemnitee solely as a result of,or arising solely out of, or relating solely to (a) any breach of anyrepresentation or warranty made by such Lender herein or in any othercertificate, instrument or document contemplated hereby or thereby, (b) anybreach of any covenant, agreement or obligation of the Lender contained hereinor in any other certificate, instrument or document contemplated hereby orthereby, or (c) the failure of an Lender to comply with 

 

 

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therequirements of the Securities Act or any state securities laws, which failureis not caused by the negligence or willful misconduct of the Company.

 

**ARTICLE VIIIDEFINITIONS**

 

·      “*Affiliate*” has the meaning setforth in Rule 405 promulgated under the Securities Act.

 

·      “*Business Day*” means any dayexcept a Saturday, Sunday or other day on which either the New York StockExchange is closed, or on which commercial banks in New York or Minnesota areauthorized by law to close.

 

·      “*Change in Control*” means (a) the date that any person or group(excluding the Erickson Family, David C. Pratt, Gratco, LLC, the DavidC. Pratt Irrevocable Grantor Retained Annuity Trust, dated 12/1/92 and their Affiliates) becomes the beneficialowner of 40% or more of the equity securities of the Company entitled to votefor directors or (b) the last date of any period of 12 consecutive monthswhere a majority of the Company’s board of directors ceases to be composed ofindividuals who were members of the Company’s board of directors on the firstday of such period or whose election was approved by such continuing majorityof directors (in all cases, excluding any director whose election occurs as aresult of an actual or threatened solicitation of proxies or consents).

 

·      “*Closing*” means the closing of thepurchase and sale of the Note(s) under this Agreement.

 

·      “*Company*” means Gander MountainCompany, a Minnesota corporation.

 

·      “*Erickson Family*” means thedescendants of Arthur T. and Elsie P. Erickson and Alfred W. and Rose E.Erickson, or trusts established primarily for the benefit of such descendantsand/or their spouses or relatives.

 

·      “*Exchange Act*” means theSecurities Exchange Act of 1934, as amended, and the rules and regulationsthereunder, or any similar successor statute.

 

·      “*Indemnified Liabilities*” has themeaning set forth in ARTICLE VII.

 

·      “*Indemnitees*” has the meaning setforth in ARTICLE VII.

 

·      “*Lenders*” means the lenders whosenames are set forth on the signature pages of this Agreement, and theirpermitted transferees.

 

·      “*Material Adverse Effect*” means amaterial adverse effect on (a) the assets, liabilities, business,properties, financial condition or results of operations of the Company, or (b) theability of the Company to perform its obligations under this Agreement.

 

·      “*Nasdaq*” means the Nasdaq GlobalSelect Market, the Nasdaq Global Market or the Nasdaq Capital Market, or theirsuccessors.

 

·      “*Notes*” means the Promissory Notesissuable pursuant to this Agreement, in the form attached hereto as Exhibit A,and all promissory notes of the Company issued in exchange or substitutiontherefor.

 

·      “*Regulation D*” means Regulation Das promulgated by the SEC under the Securities Act.

 

·      “*Rule 144*” and “*Rule 144(k)*” mean Rule 144 and Rule 144(k),respectively, promulgated under the Securities Act, or any successor rule.

 

·      “*SEC*” means the United StatesSecurities and Exchange Commission.

 

 

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·      “*SEC Documents*” has the meaningset forth in SECTION 3.5.

 

·      “*Securities Act*” means theSecurities Act of 1933, as amended, and the rules and regulationsthereunder, or any similar successor statute.

 

·      “*Senior Debt*” means the Company’sindebtedness under that certain Fourth Amended and Restated Loan and SecurityAgreement, dated December 6, 2007, among Gander Mountain Company, Bank ofAmerica, N.A., as agent, Bank of America Securities, LLC, as the lead arranger,Wells Fargo Foothill, Inc., as the syndication agent, The CITGroup/Business Credit, Inc., as collateral agent, General Electric CapitalCorporation, as documentation agent, and the lenders named therein, as may beamended from time to time.

 

·      “*Term Loans*” has the meaning setforth in SECTION 1.1.

 

**ARTICLE IXGOVERNING LAW; MISCELLANEOUS**

 

9.1           **GOVERNING LAW;JURISDICTION**.  This Agreementwill be governed by and interpreted in accordance with the laws of the State ofMinnesota without regard to the principles of conflict of laws.  The parties hereto hereby submit to theexclusive jurisdiction of the United States federal and state courts located inthe State of Minnesota with respect to any dispute arising under thisAgreement, the agreements entered into in connection herewith or thetransactions contemplated hereby or thereby. The parties also agree that any disputes arising under this Agreementwill be exclusively venued in the United States federal and state courtslocated in the State of Minnesota, except for actions or proceedings regardingthe enforcement of awards or judgments.

 

9.2           **COUNTERPARTS; SIGNATURESBY FACSIMILE**.  This Agreementmay be executed in two or more counterparts, all of which are considered oneand the same agreement and will become effective when counterparts have beensigned by each party and delivered to the other parties.  This Agreement, once executed by a party, maybe delivered to the other parties hereto by facsimile transmission of a copy ofthis Agreement bearing the signature of the party so delivering this Agreement.

 

9.3           **HEADINGS**.  The headings of this Agreement are forconvenience of reference only, are not part of this Agreement and do not affectits interpretation.

 

9.4           **SEVERABILITY**.  If any provision of this Agreement is invalidor unenforceable under any applicable statute or rule of law, then suchprovision will be deemed modified in order to conform with such statute or rule oflaw.  Any provision hereof that may proveinvalid or unenforceable under any law will not affect the validity orenforceability of any other provision hereof.

 

9.5           **ENTIRE AGREEMENT**.  This Agreement and the Notes constitute theentire agreement among the parties hereto with respect to the subject matterhereof and thereof.  There are norestrictions, promises, warranties or undertakings, other than those set forthor referred to herein or therein.  ThisAgreement supersedes all prior agreements and understandings among the partieshereto with respect to the subject matter hereof.

 

                9.6           **CONSENTS; WAIVERS ANDAMENDMENTS**.  Except asotherwise specifically provided herein, in each case in which approval of theLenders is required by the terms of this Agreement, such requirement shall besatisfied only upon receipt of the written consent of the holders of a majorityof the outstanding principal amount of the Notes, which consent shall bind theholders of all of the outstanding Notes; provided, however, that no change ormodification to the maturity date, interest rate or payment dates shall beeffective as to a holder of Notes without the prior written consent of suchholder.

 

 

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                9.7           **CHANGES, WAIVERS, ETC.**  Neither this Agreement nor any provisionhereof may be changed, waived, discharged or terminated orally, but only by astatement in writing signed by the party against which enforcement of thechange, waiver, discharge or termination is sought.

 

9.8           **NOTICES**.  Any notices required or permitted to be givenunder the terms of this Agreement must be sent by certified or registered mail(return receipt requested) or delivered personally or by courier (including arecognized overnight delivery service) or by facsimile and will be effectivefive days after being placed in the mail, if mailed by regular U.S. mail, orupon receipt, if delivered personally, by courier (including a recognizedovernight delivery service) or by facsimile, in each case addressed to aparty.  The addresses for suchcommunications are:

 

| If to the Company: |   | Gander Mountain Company                |
|--------------------|--------|----------------------------------------|
|               |   | 180 East Fifth Street, Suite 1300 |
|               |   | Saint Paul, Minnesota 55107            |
|               |   | Attn: Chief Financial Officer          |
|               |   | Facsimile:  (651) 325-2001             |
|               |   |                                   |
| and                |   | 180 East Fifth Street, Suite 1300 |
|               |   | Saint Paul, Minnesota 55107            |
|               |   | Attn: General Counsel                  |
|               |   | Facsimile:  (651) 325-2001             |
|               |   |                                   |
| with  a copy to:   |   | Faegre &  Benson LLP          |
|               |   | 2200  Wells Fargo Center               |
|               |   | 90  South Seventh Street               |
|               |   | Minneapolis,  Minnesota 55402-3901     |
|               |   | Attn:  W. Morgan Burns                 |
|               |   | Facsimile:  (612) 766-1600             |

 

Ifto an Lender:  To the address set forthimmediately below such Lender’s name on the signature pages hereto.

 

Eachparty will provide written notice to the other parties of any change in itsaddress.

 

9.9           **SUCCESSORS AND ASSIGNS**.  This Agreement is binding upon and inures tothe benefit of the parties and their successors and assigns.  The Company will not assign this Agreement orany rights or obligations hereunder without the prior written consent of theLenders, and no Lender may assign this Agreement or any rights or obligationshereunder without the prior written consent of the Company, except that anyLender may assign this Agreement to an affiliate over which it maintainsmajority control.  This provision doesnot limit the Lender’s right to transfer the Notes pursuant to the terms ofthis Agreement or to assign the Lender’s rights hereunder to any suchtransferee pursuant to the terms of this Agreement.

 

9.10         **THIRD PARTY BENEFICIARIES**.  This Agreement is intended for the benefit ofthe parties hereto and their respective permitted successors and assigns, andis not for the benefit of, nor may any provision hereof be enforced by, anyother person.

 

9.11         **SURVIVAL**.  All representations and warranties containedherein shall survive the execution and delivery of this Agreement, anyinvestigation at any time made by the Lenders or on their behalf, and the saleand purchase of the Notes and payment therefor. All statements contained in any certificate, instrument or other writingdelivered by or on behalf of the Company pursuant hereto or in connection withor contemplation of the transactions herein contemplated shall constituterepresentations and warranties by the Company hereunder.

 

9.12         **PUBLICITY**.  The Company and each Lender have the right toreview, a reasonable period of time before issuance thereof, any pressreleases, or relevant portions of any SEC or Nasdaq filings or any other publicstatements, with respect to the transactions contemplated hereby.  However, the Company may make any pressrelease or SEC or Nasdaq filings with respect to such transactions as 

 

 

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arerequired by applicable law and regulations (including Financial IndustryRegulatory Authority requirements) without the prior approval of the Lenders(although the Company will make reasonable efforts to consult with the Lendersin connection with any such press release prior to its release and filing).

 

9.13         **FURTHER ASSURANCES**.  Each party will do and perform, or cause tobe done and performed, all such further acts and things, and will execute anddeliver all other agreements, certificates, instruments and documents, asanother party may reasonably request in order to carry out the intent andaccomplish the purposes of this Agreement and the consummation of thetransactions contemplated hereby.

 

9.14         **NO STRICT CONSTRUCTION**.  The language used in this Agreement is deemedto be the language chosen by the parties to express their mutual intent, and norules of strict construction will be applied against any party.

 

9.15         **EQUITABLE RELIEF**.  Each party recognizes that, if it fails toperform or discharge any of its obligations under this Agreement, any remedy atlaw may prove to be inadequate relief to the other parties.  Each of the parties therefore agrees that theother parties are entitled to temporary and permanent injunctive relief in anysuch case without the necessity of proving actual damages.

 

9.16         **INDEPENDENT NATURE OFLENDERS’ OBLIGATIONS AND RIGHTS**. The obligations of each Lender under either its Notes or this Agreementare several and not joint with the obligations of any other Lender, and noLender shall be responsible in any way for the performance of the obligationsof any other Lender under a Note or this Agreement.  Nothing contained herein or in any Note orthis Agreement, and no action taken by any Lender pursuant thereto, shall bedeemed to constitute the Lenders as a partnership, an association, a jointventure or any other kind of entity, or create a presumption that the Lendersare in any way acting in concert or as a group with respect to such obligationsor the transactions contemplated by this Agreement.  Each Lender shall be entitled toindependently protect and enforce its rights, including without limitation therights arising out of this Agreement, and it shall not be necessary for anyother Lender to be joined as an additional party in any proceeding for suchpurpose.  Each Lender has beenrepresented by its own separate legal counsel in their review and negotiationof their Notes or this Agreement.  TheCompany has elected to provide all Lenders with the same terms for theconvenience of the Company and not because it was required or requested to doso by the Lenders.

 

9.17         **TRUSTS AND OTHER ENTITYLENDERS**.  To the extent anyholder of Notes is a trust or other entity, the trustee or officers, directors,employees, partners, members or other control persons of such trust or entityshall be bound by the terms of this Agreement as it relates to the Notes heldby such trust or other entity.  EachLender agrees that it will cause such persons to execute and deliver to theCompany an acknowledgement of the obligations set forth in this Section tothe extent reasonably requested by the Company.

 

**[*Reminder of Page Left Blank Intentionally —Signature Pages Follow*]**

 

 

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INWITNESS WHEREOF, the undersigned Lenders and the Company have caused thisAgreement to be duly executed as of the date first above written.

 

| ** ** | ** ** | COMPANY:                     |
|------------|------------|------------------------------|
|       |       |                         |
|       |       | **GANDER  MOUNTAIN COMPANY** |
|       |       |                         |
|       |       |                         |
|       |       | By:                          |   |   |
|       |       |                         | Robert  J. Vold |
|       |       |                         | *Senior  Vice President and Chief Financial Officer* |

 

 

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| ** ** | ** ** | LENDERS:        |
|------------|------------|-----------------|
|       |       |            |
|       |       | **GRATCO  LLC** |
|       |       |            |
|       |       |            |
|       |       |            |   |   |
|       |       |            | David  C. Pratt |
|       |       |            | *Manager* |

 

ADDRESS:

 

GRATCO LLC

7701 Forsyth Boulevard, Suite 1125

St.Louis, Missouri 63105

 

(anynotice hereunder to this Lender shall also include a copy to):

 

Mark R. Gale, Esq.

7701 Forsyth Boulevard, Suite 1125

St.Louis, Missouri 63105

 

| ** ** | ** ** | **HOLIDAY  COMPANIES** |
|------------|------------|------------------------|
|       |       |                   |
|       |       |                   |
|       |       |                   |   |   |
|       |       |                   | Ronald  A. Erickson |
|       |       |                   | *Chief  Executive Officer* |

 

ADDRESS:

 

HolidayCompanies

4567American Boulevard West

Minneapolis,Minnesota 55437

Attention:President

 

(anynotice hereunder to this Lender shall also include a copy to):

 

HolidayCompanies

4567American Boulevard West

Minneapolis,Minnesota 55437

Attention:Legal Department

 

 

 

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**SCHEDULE I**

**TO TERM LOAN AGREEMENT**

 
| **MAXIMUM PRINCIPAL AMOUNT:** |   |   |   | $10,000,000.00 |   |
|-------------------------------|--------|--------|--------|----------------|--------|

                

 
| **Lender**        | ** ** | **Portion of Maximum Principal Amount** | ** **    | **Pro Rata Percentage** | ** ** |
|-------------------|------------|-----------------------------------------|---------------|-------------------------|------------|
| GRATCO LLC        |       | $                                       | 5,000,000.00  |                    | 50.0       | % |
| Holiday Companies |       | $                                       | 5,000,000.00  |                    | 50.0       | % |
| **Total**         |       | $                                       | 10,000,000.00 |                    | 100.0      | % |

 

 

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**EXHIBIT A**

**TO TERM LOAN AGREEMENT**

 

**FORM OF PROMISSORY NOTE**

 

THIS PROMISSORY NOTE HASNOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THESECURITIES LAWS OF ANY STATE OF THE UNITED STATES (COLLECTIVELY, THE “ACTS”).  THE PROMISSORY NOTE MAY NOT BE SOLD,DISTRIBUTED, OFFERED, PLEDGED, ENCUMBERED, ASSIGNED OR OTHERWISE TRANSFERRED INTHE ABSENCE OF THE FOLLOWING: (1) AN EFFECTIVE REGISTRATION STATEMENT FORTHE PROMISSORY NOTE UNDER THE ACTS COVERING THE TRANSACTION, (2) THECOMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANYTHAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACTS, OR (3) THE COMPANYOTHERWISE SATISFIES ITSELF THAT REGISTRATION IS NOT REQUIRED UNDER THE ACTS.

 

**GANDER MOUNTAIN COMPANY**

** **

**PROMISSORYNOTE**

 

| **Due: December 31,**2008                                             | ** ** | ** **                                                                            |
|----------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------|
| ** **                                                                 | ** ** | ** **                                                                            |
| **$[            ]** |       | Original Issue  Date: [           ] |
|                                                                       |       |                                                                                  |
|                                                                       |       | Promissory Note  No.: [        ]                   |

 

For value received, theundersigned, Gander Mountain Company, a Minnesota corporation (the “*Company*”), hereby promises to pay to the order of [                      ](the “*Lender*”), at the Company’s principaloffice in the City of Saint Paul, Minnesota, the principal sum of $[                  ],plus all accrued and unpaid interest thereon, in lawful money of the United Stateson December 31, 2008 (the “*Maturity Date*”),together with interest on the unpaid principal amount thereof, as more fullyprovided below.

 

                The interest rate per annum for this Promissory Note(the “*Note*”) will initially be as set forth onSCHEDULE I.  The amount of interest foreach day this Note is outstanding (the “*Daily Interest Amount*”)will be calculated by dividing the interest rate in effect for that day by 360and multiplying the result by the principal amount of this Note.  The amount of interest to be paid on thisNote for each Interest Period (as defined below) will be calculated by addingthe Daily Interest Amounts for each day in the Interest Period.

 

                Interest on this security will be paid on each October 31and April 30, commencing on the first of such dates following issuance ofthis security, and at maturity.  Each ofthese dates on which interest will be paid is referred to as an “*Interest Payment Date*.” If an Interest Payment Date wouldfall on a day that is not a Business Day, such Interest Payment Date will bepostponed to the following day that is a Business Day.

 

                On each Interest Payment Date, the Company will payinterest for the period commencing on the next day immediately following themost recent Interest Payment Date and ending on the then-current InterestPayment Date.  This period is referred toas an “*Interest Period*.”  The first Interest Period will begin on andinclude the date of issuance of this security and, subject to the immediatelypreceding paragraph, will end on and include the first Interest Payment Date.

 

                All percentages resulting from any of the abovecalculations will be rounded, if necessary, to the nearest one hundred-thousandthof a percentage point, with five one-millionths of a percentage point rounded upwards(e.g., 4.876545% (or .04876545) being rounded to 4.87655% (or .0487655)) andall dollar amounts used in or resulting from such calculations will be roundedto the nearest cent (with one-half cent being rounded upwards).

 

                The interest rate on this Note will in no event behigher than the maximum rate permitted by Minnesota law as the same may bemodified by United States law of general application.

 

                All calculations of the Company, in the absence ofmanifest error, shall be conclusive for all purposes.

 

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                Any amounts to be paid on this Note will be payableby the Company in cash, by check or by wire transfer to the holder of this Noteto such account as the holder may request.

 

                This Note has been issued under the terms andprovisions of a Term Loan Agreement (the “*Loan**Agreement*”), dated as of June 9, 2008, among theCompany and the Lenders named on the signature pages thereto, as may beamended from time to time.  Capitalizedterms used but not defined in this Note shall have the meanings ascribed tothem in the Loan Agreement.

 

                Upon the occurrence of any one or more of the Eventsof Default specified in Article VI of the Loan Agreement, all amounts thenremaining unpaid on this Note, including any accrued but unpaid interest, maybe declared to be or shall become immediately due and payable as provided inthe Loan Agreement.  In addition, fromand after receipt of written notice to the Company from the holder followingthe occurrence of an Event of Default, and during the continuation thereof, therate per annum at which interest shall accrue on the unpaid principal balancehereof shall increase by 2%.

 

                This Note is subject to the following additionalprovisions, terms and conditions:

 

                1.             **CHANGE IN CONTROL**.  Inthe event of a Change in Control, the holder hereof shall have the option (the “*Change in Control Option*”) to (a) have this Noteassumed by the surviving entity or (b) require that this Note be redeemedby the Company in whole (but not in part) at 100% of the outstanding unpaidprincipal amount, plus all unpaid interest accrued thereon to the effectivedate of the Change in Control.  TheCompany shall give the holder of this Note written notice of such impendingtransaction not later than 20 days prior to the shareholders’ meeting of theCompany called to approve such transaction, or 20 days prior to the closing ofsuch transaction, whichever is earlier. The notice shall give the proposed effective date of the transaction(the “*Effective Date*”) and shall describe thematerial terms and conditions of the transaction.  Any election to exercise the Change inControl Option shall be made by the holder hereof giving written notice thereofto the Company at least five days before the Effective Date (if no such noticeis given, the Company shall be entitled to elect one of these options).  Upon receipt of such notice, the Companyshall, on the Effective Date, take the action selected or applicable under thisSection.

 

                2.             **RESALE RESTRICTIONS**. The holder of this Note covenants and agrees that it is subject to theresale restrictions set forth in Section 2.8 of the Loan Agreement.

 

3.             **PREPAYMENT**.  The Company may prepay this Note, uponproviding the holder five calendar days written notice prior to the date ofprepayment, in whole or in part at any time without penalty; provided, that anysuch prepayment will be applied first to interest accrued and unpaid on theprincipal amount being repaid and second, if the amount of prepayment exceedsthe amount of all such accrued and unpaid interest, to the repayment of theunpaid principal amount.

 

4.             **WAIVER OFPRESENTMENT**.  Presentment or other demand for payment, noticeof dishonor and protest are expressly waived.

 

5.             **MISCELLANEOUS**.

 

                                (a)           NOTICES.  Any notice, request or other communicationrequired or permitted hereunder will be given in accordance with the LoanAgreement.

 

                                (b)           NO RIGHTS AS SHAREHOLDERS.  This Note will not entitle any holder hereofto any of the rights of a shareholder of the Company.

 

                                (c)           GOVERNING LAW; JURISDICTION.  This Agreement will be governed by andinterpreted in accordance with the laws of the State of Minnesota withoutregard to the principles of conflict of laws. The parties hereto hereby submit to the exclusive jurisdiction of theUnited States federal and state courts located in the State of Minnesota withrespect to any dispute arising under this Note. The parties also agree that any disputes arising under this Note will beexclusively venued in the United States federal and state courts located in theState of Minnesota, except for actions or proceedings regarding the enforcementof awards or judgments.

 

                (d)           HEADINGS.  The headings of this Note are for convenienceof reference only, are not part of this Note and do not affect itsinterpretation.

 

                (e)           SUITSFOR ENFORCEMENT.  In case any one or moreEvents of Default shall have occurred and be continuing, the holder of thisNote may proceed to protect and enforce its rights under this Note by suit in 

 

 

A-2

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equity or action atlaw.  It is agreed that in the event ofsuch action the holder of the Note shall be entitled to receive all reasonablefees, costs and expenses incurred, including without limitation such reasonablefees and expenses of attorneys (whether or not litigation is commenced) andreasonable fees, costs and expenses of appeals.

 

**[*Reminder of Page Left Blank Intentionally — Signature Page Follows*]**

 

 

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IN WITNESS WHEREOF, theundersigned has caused this Note to be duly executed as of the issue date.  Receipt of this Note constitutes the Lender’sacceptance of the terms hereof.

 

** **

| ** ** | ** ** | **GANDER MOUNTAIN COMPANY** |
|------------|------------|-----------------------------|
|       |       | a Minnesota corporation     |
|       |       |                        |
|       |       |                        |
|       |       | By:                         |   |   |
|       |       |                        | Robert J. Vold |
|       |       |                        | *Senior Vice President and Chief  Financial Officer* |

 

 

A-4

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**SCHEDULE I**

**TO PROMISSORY NOTE**

 

**INTERESTRATE SCHEDULE**

** **
| **Period**                                            | ** ** | **Interest Rate (per annum)**                                                                             |
|-------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------|
| June 9, 2008  through August 2, 2008        |       | 5.16%                                                                                                     |
| August 3, 2008  through November 1, 2008    |       | 1 year LIBOR as of  August 2, 2008, plus 1.0%                                                        |
| November 2, 2008  through December 31, 2008 |       | 1 year LIBOR as of  November 1, 2008, plus 1.0%                                                      |
| After December 31,  2008                         |       | 1 year LIBOR as of the  last day of the most recently completed fiscal quarter of the Company, plus  1.0% |

 

 

A-5

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**EXHIBIT B**

**TO TERM LOAN AGREEMENT**

 

**FORM OF LEGAL OPINION**

 

1.             The Company has been dulyincorporated and is validly existing as a corporation in good standing underthe laws of the State of Minnesota.

 

2.             The Company has corporate power andauthority to enter into and perform its obligations under the Agreement.

 

3.             The Agreement and the Notes havebeen duly authorized, executed and delivered by, and are valid and bindingagreements of, the Company, enforceable in accordance with their terms, exceptas rights to indemnification thereunder may be limited by applicable law andexcept as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization,moratorium or other similar laws relating to or affecting creditors’ rightsgenerally or by general equitable principles.

 

4.             No consent, approval, authorizationor other order of, or registration or filing with, any court or othergovernmental authority or agency, is required for the Company’s execution,delivery and performance of the Agreement and consummation of the transactionscontemplated thereby, except as required under the Securities Act of 1933 andthe Securities Exchange Act of 1934 and applicable state securities or blue skylaws.

 

5.             The execution and delivery of theAgreement and the Notes by the Company and the performance by the Company ofits obligations thereunder (other than performance by the Company of itsobligations under the indemnification sections of the Agreement, as to which noopinion is rendered) (i) will not result in any violation of theprovisions of the charter or bylaws of the Company; (ii) will notconstitute a breach of, or default under, or result in the creation orimposition of any lien, charge or encumbrance upon any property or assets ofthe Company pursuant to the documents evidencing the Senior Debt; or (iii) toour knowledge, will not result in any violation of any law, administrativeregulation or administrative or court decree applicable to the Company.

 

 

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