**Exhibit 4.1**

 

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** | ** ** | ** **                              |
|---------------------------------|------------|-----------------------------------------|
| ** **                      | ** ** | ** **                              |
| $5,000,000.00                   |       | Original Issue  Date: June 9, 2008 |
|                            |       |                                    |
|                            |       | Promissory Note  No.: 1                 |

 

For value received, theundersigned, Gander Mountain Company, a Minnesota corporation (the “*Company*”), hereby promises to pay to the order of **GRATCO LLC** (the “*Lender*”), atthe Company’s principal office in the City of Saint Paul, Minnesota, theprincipal sum of $5,000,000.00, plus all accrued and unpaid interest thereon,in lawful money of the United States on December 31, 2008 (the “*Maturity Date*”), together with interest on the unpaid principalamount thereof, as more fully provided below.

 

The interest rate perannum for this Promissory Note (the “*Note*”) willinitially be as set forth on SCHEDULE I. The amount of interest for each day this Note is outstanding (the “*Daily Interest Amount*”) will be calculated by dividing theinterest rate in effect for that day by 360 and multiplying the result by theprincipal amount of this Note.  Theamount of interest to be paid on this Note for each Interest Period (as definedbelow) will be calculated by adding the Daily Interest Amounts for each day inthe Interest Period.

 

Interest on this securitywill be paid on each October 31 and April 30, commencing on the firstof such dates following issuance of this security, and at maturity.  Each of these dates on which interest will bepaid is referred to as an “*Interest Payment Date*.”  If anInterest Payment Date would fall on a day that is not a Business Day, suchInterest Payment Date will be postponed to the following day that is a BusinessDay.

 

On each Interest PaymentDate, the Company will pay interest for the period commencing on the next dayimmediately following the most recent Interest Payment Date and ending on thethen-current Interest Payment Date.  Thisperiod is referred to as 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 resultingfrom any of the above calculations will be rounded, if necessary, to thenearest one hundred-thousandth of a percentage point, with five one-millionthsof a percentage point rounded upwards (e.g., 4.876545% (or .04876545) beingrounded to 4.87655% (or .0487655)) and all dollar amounts used in or resultingfrom such calculations will be rounded to the nearest cent (with one-half centbeing rounded upwards).

 

The interest rate on thisNote will in no event be higher than the maximum rate permitted by Minnesotalaw as the same may be modified by United States law of general application.

 

All calculations of theCompany, in the absence of manifest error, shall be conclusive for allpurposes.

 

Any amounts to be paid onthis Note will be payable by the Company in cash, by check or by wire transferto the holder of this Note to such account as the holder may request.

 

This Note has been issuedunder the terms and provisions of a Term Loan Agreement (the “*Loan**Agreement*”),dated as of June 9, 2008, among the Company and the Lenders named on thesignature pages thereto, as may be amended from time to time.  Capitalized terms used but not defined inthis Note shall have the meanings ascribed to them in the Loan Agreement.

 

 

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Upon the occurrence ofany one or more of the Events of Default specified in Article VI of theLoan Agreement, all amounts then remaining unpaid on this Note, including anyaccrued but unpaid interest, may be declared to be or shall become immediatelydue and payable as provided in the Loan Agreement.  In addition, from and after receipt ofwritten notice to the Company from the holder following the occurrence of anEvent of Default, and during the continuation thereof, the rate per annum atwhich interest shall accrue on the unpaid principal balance hereof shallincrease by 2%.

 

This Note is subject tothe following additional provisions, terms and conditions:

 

1.             **CHANGE IN CONTROL**.  In the event of a Change in Control, theholder hereof shall have the option (the “*Change in Control Option*”)to (a) have this Note assumed by the surviving entity or (b) requirethat this Note be redeemed by the Company in whole (but not in part) at 100% ofthe outstanding unpaid principal amount, plus all unpaid interest accruedthereon to the effective date of the Change in Control.  The Company shall give the holder of thisNote written notice of such impending transaction not later than 20 days priorto the shareholders’ meeting of the Company called to approve such transaction,or 20 days prior to the closing of such transaction, whichever is earlier.  The notice shall give the proposed effectivedate of the transaction (the “*Effective Date*”)and shall describe the material 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 agreesthat it is subject to the resale restrictions set forth in Section 2.8 ofthe 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 OF PRESENTMENT**.  Presentmentor other demand for payment, notice of 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 Loan Agreement.

 

(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)           SUITS FOR ENFORCEMENT.  In case any one or more Events of Defaultshall have occurred and be continuing, the holder of this Note may proceed toprotect and enforce its rights under this Note by suit in 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 LeftBlank 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* |

 

 

 

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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% |

 

 

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THIS PROMISSORY NOTE HAS NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWSOF 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 FOR THEPROMISSORY NOTE UNDER THE ACTS COVERING THE TRANSACTION, (2) THE COMPANYRECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCHREGISTRATION IS NOT REQUIRED UNDER THE ACTS, OR (3) THE COMPANY OTHERWISESATISFIES ITSELF THAT REGISTRATION IS NOT REQUIRED UNDER THE ACTS.

 

**GANDERMOUNTAIN COMPANY**

** **

**PROMISSORY NOTE**

** **

| **Due: December 31, 2008** | ** ** | ** **                             |
|----------------------------|------------|----------------------------------------|
| ** **                 | ** ** | ** **                             |
| $5,000,000.00              |       | Original Issue Date: June 9, 2008 |
|                       |       |                                   |
|                       |       | Promissory Note No.: 2                 |

 

For valuereceived, the undersigned, Gander Mountain Company, a Minnesota corporation(the “*Company*”), hereby promises to pay to theorder of **HOLIDAY COMPANIES**(the “*Lender*”), atthe Company’s principal office in the City of Saint Paul, Minnesota, theprincipal sum of $5,000,000.00, plus all accrued and unpaid interest thereon,in lawful money of the United States on December 31, 2008 (the “*Maturity Date*”), together with interest on the unpaidprincipal amount thereof, as more fully provided below.

 

The interest rate per annum for this Promissory Note(the “*Note*”) will initially be as set forth onSCHEDULE I.  The amount of interest for each day this Noteis 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 October31 and 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 onehundred-thousandth of 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)) and all dollar amountsused in or resulting from such calculations will be rounded to 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 calculationsof the Company, in the absence of manifest error, shall be conclusive for allpurposes.

 

Any amountsto be paid on this Note will be payable by the Company in cash, by check or bywire transfer to the holder of this Note to such account as the holder mayrequest.

 

This Note hasbeen issued under the terms and provisions of a Term Loan Agreement (the “*Loan**Agreement*”),dated as of June 9, 2008, among the Company and the Lenders named on thesignature pages thereto, as may be amended from time to time.  Capitalized terms used but not defined inthis Note shall have the meanings ascribed to them in the Loan Agreement.

 

 

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Upon theoccurrence of any one or more of the Events of Default specified in Article VIof the Loan Agreement, all amounts then remaining unpaid on this Note,including any accrued but unpaid interest, may be declared to be or shallbecome immediately due and payable as provided in the Loan Agreement.  In addition, from and after receipt of written notice to theCompany from the holder following the occurrence of an Event of Default, andduring the continuation thereof, the rate per annum at which interest shallaccrue on the unpaid principal balance hereof shall increase by 2%.

 

This Note issubject to the following additional provisions, terms and conditions:

 

1.             **CHANGE IN  CONTROL**.  In the event of a Change in Control, the holder hereofshall have the option (the “*Change in Control Option*”) to (a) have this Note assumed bythe surviving entity or (b) require that this Note be redeemed by the Companyin whole (but not in part) at 100% of the outstanding unpaid principal amount,plus all unpaid interest accrued thereon to the effective date of the Change inControl.  The Company shall give theholder of this Note written notice of such impending transaction not later than20 days prior to the shareholders’ meeting of the Company called to approvesuch transaction, or 20 days prior to the closing of such transaction,whichever is earlier.  The notice shallgive the proposed effective date of the transaction (the “*EffectiveDate*”) and shall describe the material terms and conditions of thetransaction.  Any election to exercisethe Change in Control Option shall be made by the holder hereof giving writtennotice thereof to the Company at least five days before the Effective Date (ifno such notice is given, the Company shall be entitled to elect one of theseoptions).  Upon receipt of such notice,the Company shall, on the Effective Date, take the action selected orapplicable under this Section.

 

2.             **RESALE****RESTRICTIONS**.  The holder of this Note covenants andagrees that it is subject to the resale restrictions set forth in Section 2.8of 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 OF PRESENTMENT**.  Presentmentor other demand for payment, notice of dishonor and protest are expresslywaived.

 

5.             **MISCELLANEOUS**.

* *

(a)           NOTICES. Any notice, request or other communication required or permittedhereunder will be given in accordance with the Loan Agreement.

 

(b)           NORIGHTS  AS  SHAREHOLDERS.  ThisNote will not entitle any holder hereof to any of the rights of a shareholderof the Company.

 

(c)           GOVERNING LAW; JURISDICTION.  This Agreement will be governed by andinterpreted in accordance with the laws of the State of Minnesota without regard to the principles of conflict oflaws.  The parties hereto hereby submitto the exclusive jurisdictionof the United States federal and state courts located in the State of Minnesota with respect to any dispute arisingunder this Note.  The parties also agreethat any disputes arising under this Note will be exclusivelyvenued in the United States federal and state courts located in the State ofMinnesota, except for actions or proceedings regarding the enforcement ofawards or judgments.

 

(d)           HEADINGS. The headings of this Note are for convenience of reference only, are notpart of this Note and do not affect its interpretation.

 

(e)           SUITS FOR ENFORCEMENT.  In case any one or more Events of Defaultshall have occurred and be continuing, the holderof this Note may proceed to protect and enforce its rights under this Note by suit in equityor action at law.  It is agreed that inthe event of such action the holder of the Note shall be entitled to receiveall reasonable fees, costs and expenses incurred, including without limitationsuch reasonable feesand expenses of attorneys (whether or not litigation is commenced) andreasonable fees, costs and expenses of appeals.

 

**[*Reminder of Page LeftBlank Intentionally – Signature Page Follows*]**

** **

 

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IN WITNESSWHEREOF, the undersigned has caused this Note to be duly executed as of theissue date.  Receipt of this Noteconstitutes the Lender’s acceptance of the terms hereof.

 

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

** **

 

 

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**SCHEDULE I**

**TO PROMISSORY NOTE**

** **

**INTEREST RATESCHEDULE**

** **
| **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% |

 

 

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