Exhibit 10(k)

 

FORM OF

ARCTIC CAT INC.

 

DIRECTOR

NON-QUALIFIED

STOCK OPTION AGREEMENT

 

THIS OPTION AGREEMENT is made as of the           day of            200    (the
“Option Date”), between ARCTIC CAT INC., a Minnesota corporation (the
“Company”), and                                         , a non-employee member
of the Board of Directors of the Company (the “Optionee”).

 

WHEREAS, the Company desires, by affording the Optionee an opportunity to
purchase shares of its Common Stock, $.01 par value (the “Common Stock”), as
hereinafter provided, to carry out the purpose of the 2002 Stock Plan of the
Company approved by its shareholders;

 

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth
and for other good and valuable consideration, the parties hereto have agreed,
and do hereby agree, as follows:

 

1.                                       Grant of Option.  The Company hereby
grants to the Optionee the right and Option (hereinafter called the “Option”) to
purchase from the Company all or any part of an aggregate amount of
              shares of the Common Stock of the Company on the terms and
conditions herein set forth.  This grant does not qualify as an incentive stock
option under Section 422 of the Internal Revenue Code of 1986, as amended.

 

2.                                       Purchase Price.  The purchase price of
the shares of the Common Stock covered by the Option shall be $         per
share.

 

3.                                       Term of Option.  The term of the Option
shall be for a period expiring five (5) years following the termination of the
Optionee’s service as a director of the Company.  In no event shall the Option
be exercisable after the expiration of the term of the Option.

 

4.                                       Exercise of Option.  The Option may be
exercised in whole or in part at any time from and after the Option Date until
expiration of the term specified in paragraph 3.

 

5.                                       Non-Transferability.  The Option shall
not be transferable otherwise than by will or the laws of descent and
distribution, and the Option may be exercised, during the lifetime of the
Optionee, only by the Optionee.  More particularly (but without limiting the
generality of the foregoing), the Option may not be assigned, transferred
(except as provided above), pledged, or hypothecated in any way; shall not be
assignable by operation of law; and shall not be subject to execution,
attachment, or similar process.  Any attempted assignment, transfer, pledge,
hypothecation, or other disposition of the Option contrary to the provisions
hereof, and the levy of any execution, attachment, or similar process upon the
Option, shall be null and void and without effect.

 

--------------------------------------------------------------------------------

 

6.                                       Method of Exercising Option.  Subject
to the terms and conditions of this Option Agreement, the Option may be
exercised by written notice to the Chief Financial Officer of the Company at the
principal office of the Company.  Such notice shall state the election to
exercise the Option and the number of shares in respect of which it is being
exercised, and shall be signed by the person so exercising the Option.  Such
notice shall be accompanied by payment of the full purchase price of such shares
which payment shall be made in cash or by certified check or bank draft payable
to the Company, by any other form of legal consideration deemed sufficient by
the Company and consistent with the purpose of the 2002 Stock Plan and
applicable law, or in the sole discretion of the Company, by delivery of shares
of unrestricted Common Stock of the Company with a fair market value equal to
the purchase price or by a combination of cash and such shares, whose fair
market value shall equal the purchase price.  For purposes of this paragraph the
“fair market value” of the Common Stock of the Company shall be established in
the manner set forth in Section 1(h) of the 2002 Stock Plan.  The certificate or
certificates for the shares as to which the Option shall have been so exercised
shall be registered in the name of the person so exercising the Option, or if
the Optionee so elects, in the name of the Optionee or one other person as joint
tenants, and shall be delivered as soon as practicable after the notice shall
have been received.  In the event the Option shall be exercised by any person
other than the Optionee, such notice shall be accompanied by appropriate proof
of the right of such person to exercise the Option.  All shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid
and nonassessable.

 

7.                                       Withholding Requirements.  Upon
exercise of the Option by the Optionee and prior to the delivery of shares
purchased pursuant to such exercise, the Company shall have the right to require
the Optionee to remit to the Company cash in an amount sufficient to satisfy
applicable federal and state tax withholding requirements.  The Company shall
inform the Optionee as to whether it will require the Optionee to remit cash for
withholding taxes in accordance with the preceding sentence within two
(2) business days after receiving from the Optionee notice that such Optionee
intends to exercise, or has exercised, all or a portion of the Option.

 

8.                                       Stock Plan.  This Option is subject to
certain additional terms and conditions set forth in the 2002 Stock Plan
pursuant to which this Option has been issued.  A copy of the 2002 Stock Plan is
on file with the Chief Financial Officer of the Company and each Option holder
by acceptance hereof agrees to and accepts this Option subject to the terms of
the 2002 Stock Plan.

 

9.                                       General.  The Company shall at all
times during the term of the Option reserve and keep available such number of
shares of Common Stock as will be sufficient to satisfy the requirements of this
Option Agreement, shall pay all original issue and transfer taxes with respect
to the issue and transfer of shares pursuant hereto and all other fees and
expenses necessarily incurred by the Company in connection therewith, and will
from time to time use its best efforts to comply with all laws and regulations
which, in the opinion of counsel for the Company, shall be applicable thereto.

 

10.                                 Investment Certificate.  Prior to the
receipt of the certificates pursuant to the exercise of the Option granted
hereunder, the Optionee shall, if required in the Company’s discretion,
demonstrate an intent to hold the shares acquired by exercise of the Option for
investment and not with a view to resale or distribution thereof to the public
by delivering to the Company an investment certificate or letter in such form as
the Company may require.

 

11.                                 Status.  Neither the Optionee nor the
Optionee’s executor, administrator, heirs, or legatees shall be or have any
rights or privileges of a shareholder of the Company in respect of the shares
transferable upon exercise of the Option granted hereunder, unless and until
certificates representing such shares shall be endorsed, transferred, and
delivered and the transferee has caused the Optionee’s name to be entered as the
shareholder of record on the books of the Company.

 

12.                                 Company Authority.  The existence of the
Option herein granted shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company’s capital
structure or its business or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred

 

--------------------------------------------------------------------------------

 

or prior preference stock ahead of or affecting the Common Stock of the Company
of the rights thereof, or dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.

 

13.                                 Disputes.  As a condition of the granting of
the Option herein granted, the Optionee agrees, for the Optionee and the
Optionee’s personal representatives, that any dispute or disagreement which may
arise under or as a result of or pursuant to this Option Agreement shall be
determined by the Board of Directors of the Company, in its sole discretion, and
that any interpretation by the Board of the terms of this agreement shall be
final, binding and conclusive.

 

14.                                 Binding Effect.  This Option Agreement shall
be binding upon the heirs, executors, administrators and successors of the
parties hereto.

 

IN WITNESS WHEREOF, the Company has caused this Option Agreement to be duly
executed by an officer thereunto duly authorized, and the Optionee has hereunto
set his or her hand, all as of the day and year first above written.

 

 

ARCTIC CAT INC.

 

 

 

 

 

By

 

 

 

 

 

Its

 

 

 

 

 

 

 

 

 

 

 

, Optionee

 

--------------------------------------------------------------------------------