Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT, is made and entered into as of this 25th day of August 2008, by
and between Arctic Cat Inc. (the “Company”) and Claude J. Jordan (the
“Executive”).

 

W I T N E S S E T H:

 

 WHEREAS, the Company desires to retain the services of Executive in the
capacity of President and Chief Operating Officer, and Executive desires to
accept such employment, subject to the supervision of the Chief Executive
Officer of the Company and the further terms and conditions set forth herein.

 

 WHEREAS, the Company and Executive acknowledge that they have also entered into
a Change of Control Agreement of even date herewith, and that such Change of
Control Agreement shall supersede this Agreement and understanding between the
parties with respect to termination upon a “Change of Control” as defined
therein and any compensation paid to Executive upon such termination.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
sufficiency of which is hereby acknowledged, the parties agree as follows:

 

ARTICLE I.
DEFINITIONS

 

1.1           EXECUTIVE means Claude J. Jordan.

 

1.2           COMPANY means Arctic Cat Inc. and all of its subsidiary and
affiliated entities and their divisions which now exist or may exist in the
future.

 

1.3           ARCTIC CAT PRODUCTS means any goods or services which the
Executive or those under his direct or indirect supervision designed, developed,
marketed, promoted, sold, serviced, or provided on behalf of the Company during
the last two years in which the Executive was employed by the Company.

 

1.4           COMPETITIVE PRODUCTS means any product, product line or service
(including any component thereof or research to develop information useful in
connection with a product or service) that is being designed, developed,
manufactured, marketed, or sold by the Company, or with respect to which the
Company has acquired Confidential Information which it intends to use in the
design, development, manufacture, marketing, or sale of a product or service.

 

1.5           CUSTOMER means any person or entity (regardless of the legal form
of the entity) with whom or with which Executive or those under his direct or
indirect supervision, had any direct or indirect contact on behalf of the
Company in connection with Arctic Cat Products. Without limiting the generality
of the foregoing, the term Customer includes, but is not limited to, dealers,
vendors, suppliers, and sponsors.

 

1.6           CONFLICTING ORGANIZATION means any person or entity (regardless of
its legal form) which is engaged in, or about to become engaged in, research or
development, production, marketing or selling a Competitive Product, including
the Executive if he is engaged in business for himself.

 

1.7           DISABILITY HAS TWO DIFFERENT MEANINGS IN THIS AGREEMENT.  FOR
PURPOSES OF BENEFITS DUE UNDER ANY COMPANY-SPONSORED DISABILITY INSURANCE POLICY
(WHETHER SHORT-TERM, LONG-TERM, OR ANY APPLICABLE SALARY CONTINUATION POLICY
PROVIDED DURING ANY ELIMINATION PERIOD), THE DEFINITION OF DISABILITY SHALL
CONFORM TO THE DEFINITION PROVIDED IN SUCH POLICY.   FOR PURPOSES OF ANY PAYMENT
MADE TO EXECUTIVE IN EXCESS OF THE BENEFITS DUE UNDER ANY SUCH COMPANY-SPONSORED
DISABILITY INSURANCE POLICY, THE DEFINITION OF DISABILITY SHALL BE AT LEAST AS
RESTRICTIVE AS THE APPLICABLE DEFINITION PROVIDED IN CODE SECTION 409A.

 

 

1

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

 

1.8           INVENTION means all inventions, discoveries, ideas, processes,
writings, designs, developments, and improvements, whether or not protectible
under the applicable patent, trademark or copyright statutes, of the Executive
while employed by the Company.

 

1.9           CONFIDENTIAL INFORMATION means any information or compilation of
information that the Executive learns or develops during the course of
Executive’s employment by the Company that derives independent economic value
from not being generally known, or readily ascertainable by proper means, by
other persons who can obtain economic value from its disclosure or use.  It
includes, but is not limited to, trade secrets and may relate to such matters as
research and development, engineering, drawings and specifications, strategic
plans, business methods, non-public financial information, proprietary
information pertaining to vendors and customers, product improvement efforts,
manufacturing processes, management systems, sales and marketing plans and
information, contracts, and pricing.

 

ARTICLE II.
EMPLOYMENT AND TERM

 

2.1           EMPLOYMENT.  Upon the terms and subject to the conditions set
forth in this Agreement, the Company hereby employs Executive as President and
Chief Operating Officer or in such other capacity as may be determined from time
to time by the Board of Directors of the Company, and Executive hereby accepts
such employment.

 

2.2           TERM.  Except as otherwise provided in this Agreement, the term of
this Agreement shall commence on the date of this Agreement, and shall continue
until this Agreement is terminated by either party pursuant to the terms hereof.

 

ARTICLE III.
COMPENSATION

 

3.1           BASE SALARY.  As compensation for his services to the Company and
as compensation for his confidentiality, non-competition and non-solicitation
agreement provided in Article IV of this Agreement, Executive shall receive an
annual base salary in the amount of Four Hundred Twenty Five Thousand Dollars
($425,000) payable in accordance with the Company’s regular payroll processes
(the “Base Salary”). Executive’s Base Salary shall be reviewed by the
Compensation and Human Resources Committee of the Company’s Board of Directors
on an annual basis, and such committee may (but shall not be obligated to)
adjust Executive’s base salary by an amount as it deems appropriate based on a
review of certain benchmarking information, including but not limited to,
general industry as well as industry specific and other peer company
compensation data, as well as recommendations from the Chief Executive Officer.

 

3.2           ANNUAL INCENTIVE AWARDS.   In addition to the Base Salary,
Executive shall be entitled to participate in the Company’s annual incentive
program offered to the Company’s senior executives. Executive’s annual incentive
payout shall range from zero percent (0%) to one hundred (100%) of his Base
Salary but shall not be less than $140,250 in his first year of employment. 
Executive has the choice of cash or stock the first year.  The target incentive
payout for Executive shall be fifty percent (50%) of his Base Salary.  Payouts
made pursuant to this Section 3.2 shall be paid no later than two and a half
(2.5) months after the end of the Company’s fiscal year or as soon thereafter as
practicable.

 

3.3           LONG-TERM INCENTIVE COMPENSATION.  Effective upon the commencement
of the term of this Agreement as set forth in Section 2.2, the Board of
Directors has approved grants to Executive of: (i) 20,000 shares of restricted
common stock of the Company at fair market value; and (ii) stock options to
purchase 70,000 shares of common stock of the Company in accordance with the
Company’s 2007 Omnibus Stock and Incentive Plan.  The restricted stock and the
options granted to Executive will vest in equal installments on the first,
second and third anniversaries of the grant date.  The stock options granted to
Executive will expire ten years from the grant date, provided that the vesting
of such restricted stock and stock options will accelerate if Executive is
terminated and is entitled to the severance payments described in Section 5.5. 
Additional stock options may be awarded

 

 

2

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

 

annually to Executive by the Stock Grant Subcommittee of the Compensation and
Human Resources Committee of the Company’s Board of Directors.

 

3.4           BENEFITS.  Except as the Board of Directors may otherwise provide,
Executive shall be entitled to participate in any retirement savings plan,
profit sharing plan, life insurance, health insurance, dental insurance,
disability insurance or any other fringe benefit plan which the Company may from
time to time make available to its salaried senior executives to the extent that
Executive’s age, tenure, and title make him eligible to receive those benefits.
In addition, Executive will be entitled to four weeks paid vacation and access
to the Company’s products at the same or similar level as the Company’s other
senior executives.  Any of such benefits may be modified or withdrawn by the
Company in its discretion during the term of this Agreement to the extent the
same are withdrawn or modified or supplemented for other Executives similarly
situated.

 

3.5           RELOCATION.  The Company will make available to Executive
relocation benefits and prerequisites generally provided to the Company’s senior
executives other than the Chief Executive Officer or Chief Financial Officer. 
The Company will pay closing costs associated with the sale of Executive’s home
in Georgia, including realtor fees of up to six percent (6%).

 

3.6           EXPENSES.  The Company shall reimburse Executive for all
reasonable expenses properly incurred by Executive in the discharge of his
duties hereunder upon production of evidence therefore.

 

ARTICLE IV.
DUTIES OF EXECUTIVE

 

4.1           SERVICES; DUTIES.  Executive shall have the general duties,
responsibilities and authority of a President, subject to the power of the Chief
Executive Officer and/or the Board of Directors to expand or limit such duties,
responsibilities and authority. In addition, Executive will have specific
responsibility for all operations and departments of Company except product
validation and CFO, and functions currently reporting to CFO.  Executive agrees
to loyally perform the duties assigned to Executive from time to time, and all
duties associated therewith, to the best of Executive’s abilities, to be
familiar with the Company’s policies as they exist from time to time which
relate to Executive’s duties, and to abide by the Company’s policies as they
exist from time to time.

 

4.2           CONFIDENTIALITY AND GOOD WILL.  Executive acknowledges that the
Company has provided or will provide Executive with information concerning its
business, products and customers and that the Company entrusts Executive with
business relationships, good will and Confidential Information of great value to
the Company.  Executive assigns to the Company all good will which Executive has
or develops with Customers while employed by the Company.  Executive agrees that
Executive shall treat all information, business relationships, and good will
entrusted to Executive by the Company as a fiduciary, and Executive undertakes
all of the obligations of a fiduciary to maintain, protect, and continue to
develop such information, business relationships, and good will for the benefit
of the Company.  All documents and tangible items provided to Executive by the
Company or created by the Executive for use in connection with Executive’s
employment are the property of the Company and shall be held by Executive as a
fiduciary on behalf of the Company.  Upon termination of Executive’s employment
for any reason, Executive shall promptly and without the requirement of a prior
demand by the Company, return to the Company all such documents and tangible
items, together with all copies, recordings, abstracts, notes, reproductions, or
electronic versions of any kind made from or about the documents and tangible
items or the information they contain.  Executive agrees not to directly or
indirectly use or disclose any Confidential Information belonging to the Company
for the benefit of anyone other than the Company, either during or after
employment, for as long as the information remains Confidential Information.

 

4.3           NON-SOLICITATION.  In recognition of the importance to the Company
of its personal relationships, during and for one (1) year following his
termination of employment by the Company, for any reason, the Executive agrees
that he will not directly or indirectly, on his own behalf or on behalf of any
other person, solicit: (i) any Customer with whom he had contact during the two
years preceding his termination of employment, for the purpose of directly or
indirectly (a) marketing, promoting, or encouraging the use of a Competitive
Product; (a) providing advice or assistance in connection with the marketing,
promotion or use of a Competitive Product; or

 

 

3

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

 

(c) attempting to interfere with, or preventing or diverting the sale or
purchase of products being designed, developed, sold or marketed by the Company;
(ii) the services of any person who is a Company employee or agent to terminate
his or her employment or agency with the Company; or (iii) any vendor or
supplier which provides an exclusive or unique service or product to the Company
for the purpose of obtaining similar products or services.

 

4.4           NON-COMPETITION.  Executive agrees that during the period of
Executive’s employment with the Company and for one (1) year following the
voluntary or involuntary termination of his employment with the Company for any
reason, Executive shall not, directly or indirectly, on his own account or in
the service of any other person, firm, corporation or other entity, be employed
by, or permit his name to be used by, or engage in or carry on business with, or
otherwise be associated in any way with, a Conflicting Organization as a
partner, shareholder, director, officer, executive, principal, agent, associate,
consultant, or in any other capacity.  This Non-Competition Covenant is
effective in each of the markets in which the Company markets, designs,
develops, promotes, sells, services, or provides the Company products at any
time during Executive’s employment with the Company.

 

4.5           INVENTIONS.

 

(a)                                  Disclosure and Assignment.  Executive
agrees to promptly disclose in writing to the Company complete information
concerning each and every Invention. Executive, to the extent that he has the
legal right to do so, hereby acknowledges that any and all of said Inventions
are the exclusive property of the Company and hereby assigns and agrees to
assign to the Company any and all of Executive’s right, title and interest in
and to any and all of such Inventions. If an Invention does not relate to the
existing or reasonably foreseeable business interests of the Company, the
Company may, in its sole and unreviewable discretion, release or license the
Invention to the Executive upon written request by the Executive.  No release or
license shall be valid unless in writing signed by an officer of the Company.

 

(b)                                 Future Inventions.  As to any future
Inventions made by Executive which relate to the business, products or practices
of the Company and which are first conceived or reduced to practice during the
term of this Agreement, but which are claimed for any reason to belong to an
entity or person other than the Company, Executive agrees to promptly disclose
the same in writing to the Company and shall not disclose the same to others if
the Company, within twenty (20) days thereafter, shall claim ownership of such
Inventions under the terms of this Agreement.

 

(c)                                  Limitation on Sections 4.5(a) and
(b).  Pursuant to Minnesota Statute Section 181.78, the provisions of Sections
4.5(a) and (b) shall not apply to any Invention meeting the following
conditions:

 

(i) such Invention was developed entirely on Executive’s own time;

 

(ii) such Invention was made without the use of any Company equipment, supplies,
facility or trade secret information;

 

(iii) such Invention does not relate (a) directly to the business of the
Company, or (b) to the Company’s actual or demonstrably anticipated research or
development; and

 

(iv) such Invention does not result from any work performed by Executive for the
Company.

 

(d)                                 Assistance of Executive.  Upon request and
without further compensation therefore, but at no expense to Executive, and
whether during the term of this Agreement or thereafter, Executive will do all
lawful acts, including, but not limited to, the execution of papers and lawful
oaths and the giving of testimony, that in the opinion of the Company, its
successors and assigns, may be necessary or desirable in obtaining, sustaining,
reissuing, extending and enforcing United States and foreign patents, including,
but not limited to, design patents, on any and all of such Inventions,

 

 

4

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

 

and for perfecting, affirming and recording the Company’s complete ownership and
title thereto, and to cooperate otherwise in all proceedings and matters
relating thereto.

 

(e)                               Records.  Executive will keep complete,
accurate and authentic accounts, notes, data and records of all Inventions in
the manner and form requested by the Company. Such accounts, notes, data and
records shall be the property of the Company, and, upon its request, Executive
will promptly surrender same to it or, if not previously surrendered upon its
request or otherwise, Executive will surrender the same, and all copies thereof,
to the Company upon the conclusion of her employment.

 

4.6           UNDERSTANDINGS.  Executive acknowledges and agrees that (a) the
Company informed him, as part of the offer of employment and prior to his
accepting employment with the Company, that a confidentiality, non-competition,
and non-solicitation agreement would be required as part of the terms and
conditions of his employment; (b) he has carefully considered the restrictions
contained in this Agreement; (c) the restrictions in this Agreement are
reasonable and will not unduly restrict him in securing other employment in the
event of termination.

 

4.7           REMEDIES.  Executive agrees and understands that any breach of any
of the covenants or agreements set forth in Article IV of this Agreement will
cause the Company irreparable harm for which there is no adequate remedy at law,
and, without limiting whatever other rights and remedies the Company may have
under this Agreement, Executive consents to the issuance of an injunction by any
court of competent jurisdiction in favor of the Company enjoining the breach of
any of the aforesaid covenants or agreements. If any or all of the aforesaid
covenants or agreements are held to be unenforceable because of the scope or
duration of such covenant or agreement, the parties agree that the court making
such determination shall have the power to reduce or modify the scope and/or
duration of such covenant to the extent that allows the maximum scope and/or
duration permitted by applicable law.

 

4.8           SURVIVAL.  The obligations of this Article IV shall survive the
expiration or termination of this Agreement.

 

ARTICLE V.
TERMINATION

 

5.1           TERMINATION FOR CAUSE.  Notwithstanding anything contained in this
Agreement to the contrary, the Company shall have the right to immediately
terminate the employment of Executive for “Cause” if the Executive shall:

 

(a)                                  Willfully or materially breach this
Agreement or continually fail to perform the duties that the Executive is
required to perform under the terms of this Agreement;

 

(b)                                 Willfully violate other reasonable and
substantial rules governing Executive’s performance, including, without
limitation, prohibitions against unauthorized use of drugs or alcohol without
treatment;

 

(c)                                  Violate or willfully refuse to obey 
reasonable instructions of the Chief Executive Officer and/or the Board of
Directors, provided that such instructions are not in violation of this
Agreement;

 

(d)                                 Willfully engage in conduct that is
demonstrably and materially injurious to the Company, monetarily or otherwise;

 

(e)                                  In the performance of Executive’s duties
under this Agreement, engage in any act of misconduct, including misconduct
involving moral turpitude, which is injurious to the Company; or

 

 

5

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

 

(f)                                    Be convicted of or plead guilty to any
criminal charge or indictment, the nature of which the Company determines, in
its sole discretion, has a detrimental impact on the general reputation of the
Company.

 

An act or failure to act is considered “willful” if done or not done with an
absence of good faith and without a reasonable belief that the act or failure to
act was in the best interests of the Company. In the event of termination for
“Cause”, Executive shall not be entitled to any severance payments or any other
payments under this Agreement. Executive shall not be terminated for Cause
unless and until the Company shall have delivered to Executive a copy of a
resolution duly adopted by the Board at a meeting of the Board called and held
for such purpose (after reasonable notice to Executive and an opportunity for
Executive, together with Executive’s counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, Executive’s conduct was
Cause and specifying the particulars thereof in detail.

 

5.2           TERMINATION FOR ANY OTHER REASON.   The Executive’s employment
shall terminate on the occurrence of any one of the following events:

 

(a)                                  The occurrence of circumstances that make
it impossible or impracticable for the business of the Company to be continued;

 

(b)                                 The death of the Executive;

 

(c)                                  The Disability of the Executive unless
waived by the Company, where the definition of Disability shall conform to the
definition of disability set forth in any Company-sponsored disability insurance
policy.

 

In the event of termination of employment for any reason set forth in
Section 5.2 (b) or (c) above, no further compensation or benefits other than any
applicable insurance benefits paid in accordance with any Company-sponsored
insurance policy shall be paid to Executive.  Any payment made to Executive in
excess of those provided by any Company-sponsored disability insurance policy
shall be paid in accordance with the requirements of and subject to the
applicable definitions of Code Section 409A.  Notwithstanding anything contained
in this Agreement to the contrary, the Company shall have the right to terminate
the employment of Executive for any reason, including reasons other than those
described in Sections 5.1 or 5.2.  In the event of termination by the Company
for any reason not constituting Cause or described in Section 5.2, and not in
connection with a Change of Control, Executive shall be entitled to the
severance payments described in Section 5.5.  In the event of a Change of
Control, the Change of Control Agreement shall supersede this Agreement and
understanding between the parties with respect to termination upon such Change
of Control and any compensation paid to Executive upon such termination.

 

5.3           TERMINATION BY EXECUTIVE FOR GOOD REASON.  Notwithstanding
anything contained in the Agreement to the contrary, Executive shall have the
right to terminate his employment at any time for “Good Reason.” “Good Reason”
shall exist if any of the following events or conditions occurs:

 

(a)                                  a material change in Executive’s title,
position or responsibilities which represents a substantial reduction of the
title, position or responsibilities in effect immediately prior to the change;
the assignment to Executive of any duties or responsibilities (other than due to
a promotion) which are inconsistent with such title, position or
responsibilities; any removal of Executive from or failure to reappoint or
reelect Executive to any of such positions;

 

(b)           any material breach by the Company of any provision of this
Agreement; or

 

(c)                                  any purported termination of Executive’s
employment which is not made pursuant to a Notice of Termination satisfying the
requirements Section 5.6 of this Agreement; for purposes of this Agreement, no
such purported termination shall be effective.

 

 

6

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

 

(d)                                 the relocation of the Company’s principal
executive offices to a location more than one hundred miles from Minneapolis/St.
Paul, Minnesota or the Company requiring Executive to be based anywhere other
than the Company’s principal executive offices except for requiring travel on
the Company’s business

 

In the event of termination of employment by Executive for Good Reason,
Executive shall be entitled to the severance payments described in Section 5.5
of this Agreement subject to the limitations contained in Section 5.5.

 

5.4           TERMINATION BY EXECUTIVE.  Executive shall have the right to
terminate his employment under this Agreement for any reason. In the event of
termination by Executive for any reason not constituting a termination for “Good
Reason” (as defined above), the Executive shall not be entitled to any severance
payment or any other payments under this Agreement.

 

5.5           SEVERANCE PAYMENTS.  In the event of termination by the Company
for any reason not constituting Cause or described in Section 5.2, and not in
connection with a Change of Control, or, in the event that the Executive
terminates his employment for Good Reason, the Company shall pay to Executive
his base salary as defined by Section 3.1 through such date of termination, and,
in lieu of any further compensation and benefits under this Agreement, Executive
shall be entitled to the following benefits during the “Severance Period” (which
Severance Period is defined herein to be the twelve-month period beginning on
the date of such termination of Executive’s employment), subject to the
limitations contained in this Section 5.5.

 

(a)                                  During the Severance Period, the Company
shall pay to Executive an amount equal to his average annual base salary
(exclusive of any bonuses, incentive compensation or income associated with
benefits, restricted stock, or stock options of Executive) over the three
(3) year period immediately preceding the date of termination or such lesser
period as Executive has been employed by the Company; provided that only the
amount permitted by Section 409A of the Code, inclusive of Section 401(a)(17) of
the Code, shall be paid in equal portions over the course of the first six
(6) months of the Severance Period in accordance with the Company’s regular
payroll practices, and the balance shall be paid in equal portions over the
course of the remaining six (6) months of the Severance Period in accordance
with the Company’s regular payroll practices; and

 

(b)                                 During the Severance Period, the Company
shall continue to pay benefits provided to Executive (and to Executive’s
dependents and beneficiaries) by the Company immediately prior to the date of
termination of employment; provided that if during such Severance Period another
employer provides Executive any benefits which are substantially comparable to
any of the benefits provided by the Company, the Company’s obligations with
respect to such comparable benefits shall cease; and

 

(c)                                  In the event Executive is entitled to
severance benefits, all of Executive’s restricted stock and unexpired stock
options, granted under this Agreement or pursuant to any future awards and held
by Executive upon termination of employment, shall immediately vest with the
options becoming immediately exercisable for one month, after which time the
option(s) shall expire.

 

(d)                                 Notwithstanding anything contained in this
Agreement to the contrary, Executive shall be entitled to the severance pay and
benefits described in this Section 5.5 only if (i) on or within thirty (30) days
following Executive’s last date of employment Employee signs and does not
rescind a Release Agreement in a form prepared by the Company, to include but
not be limited to a comprehensive release of all legal claims by Executive in
favor of the Company, (ii) Executive fully complies with his confidentiality
obligations under Section 4.2 herein, (iii) Executive fully complies with his
non-solicitation obligations under Section 4.3 herein, (iv) Executive fully
complies with his non-competition obligations under Section 4.4 herein, and
(v) Executive fully complies with his disclosure and assignment obligations
under Section 4.5 herein. Executive further understands and agrees that if he
does not sign the required Release Agreement, if he rescinds the required
Release Agreement after signing, or if he does not fully comply with the

 

 

7

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

 

confidentiality, non-solicitation, non-competition, and/or disclosure and
assignment requirements of Sections 4.2, 4.3, 4.4, and 4.5 herein, he will not
be entitled to the severance pay or benefits described in this Section 5.5 and
will be obligated to return any severance pay and/or benefits already received.

 

5.6           NOTICE OF TERMINATION. Any purported termination of Executive’s
employment by the Company or by Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 7.1.
For purposes of this Agreement, a “Notice of Termination” shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and shall set forth a summary of the facts and circumstances claimed to
provide a basis for termination of Executive’s employment.

 

5.7           SURVIVING RIGHTS. Notwithstanding the termination of Executive’s
employment, the parties shall be required to carry out any provisions hereof
which contemplate performance subsequent to such termination; and such
termination shall not affect any liability or other obligation which shall have
accrued prior to such termination, including, but not limited to, any liability
for loss or damage on account of a prior default.

 

ARTICLE VI.
GENERAL PROVISIONS

 

6.1           NOTICE.   FOR THE PURPOSE OF THIS AGREEMENT, NOTICES AND ALL OTHER
COMMUNICATIONS PROVIDED FOR SHALL BE IN WRITING AND SHALL BE DEEMED TO HAVE BEEN
DULY GIVEN WHEN DELIVERED OR MAILED BY UNITED STATES FIRST CLASS MAIL, POSTAGE
PRE-PAID, ADDRESSED TO THE LAST KNOWN RESIDENCE ADDRESS OF EXECUTIVE OR IN THE
CASE OF THE COMPANY, TO ITS PRINCIPAL OFFICE TO THE ATTENTION OF ITS THEN CHIEF
EXECUTIVE OFFICER, WITH A COPY TO ITS SECRETARY, OR TO SUCH OTHER ADDRESS AS
EITHER PARTY MAY HAVE FURNISHED TO THE OTHER IN WRITING IN ACCORDANCE HEREWITH,
EXCEPT THAT NOTICE OF CHANGE OF ADDRESS SHALL BE EFFECTIVE ONLY UPON RECEIPT.

 

6.2           COMPLIANCE WITH CODE 409A. If and to the extent that any provision
of this Agreement is required to comply with Code Section 409A, the Company
shall have the authority, without the consent of the Executive to interpret
and/or amend such provision to maintain to the maximum extent practicable the
original intent of the applicable provision without violating the provisions of
Code 409A.

 

6.3           NO CONFLICTION OBLIGATIONS.  Executive represents and warrants to
the Company that he is not under, or bound to be under in the future, any
obligation to any person, firm, or corporation that is or would be inconsistent
or in conflict with this Agreement or would prevent, limit, or impair in any way
the performance by him of his obligations hereunder.

 

6.4           WAIVER, MODIFICATION OR AMENDMENT.  No waiver, modification or
amendment of any term, condition or provision of this Agreement shall be valid
or of any effect unless made in writing, signed by the party to be bound or its
duly authorized representative and specifying with particularity the nature and
extent of such waiver, modification or amendment. Any waiver by any party of any
default of the other shall not affect or impair any right arising from any
subsequent default. Nothing herein shall limit the rights and remedies of the
parties hereto under and pursuant to this Agreement, except as set forth above.

 

6.5           ENTIRE AGREEMENT.  This Agreement contains the entire
understanding of the parties hereto in respect of the subject matter hereof and
supersedes all prior agreements and understandings between the parties with
respect to such subject matter, whether oral or written; provided that the
parties acknowledge that they have also entered into a Change of Control
Agreement of even date herewith and that the Change of Control Agreement shall
supersede this Agreement and understanding between the parties with respect to
termination upon a Change of Control and any compensation paid to Executive upon
such termination.  In all other respects, this Agreement shall remain in full
force and effect in the event of a Change of Control.

 

6.6           INTERPRETATION.  The provisions of this Agreement shall be applied
and interpreted in a manner consistent with each other so as to carry out the
purposes and intent of the parties hereto, but if for any reason any provision
hereof is determined to be unenforceable or invalid, such provision or such part
thereof as may

 

 

8

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

 

be unenforceable or invalid shall be deemed severed from this Agreement and the
remaining provisions shall be carried out with the same force and effect as if
the severed provision or part thereof had not been a part of this Agreement.

 

6.7           GOVERNING LAW.  This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.  Executive waives
Executive’s rights, if any, to have the laws, including conflict of laws
principles, of any jurisdiction other than the State of Minnesota apply to this
Agreement.  Any dispute arising out of or related to Executive’s employment by
the Company or arising out of or related to this Agreement, or any breach or
alleged breach hereof, shall be exclusively decided by a state or federal court
sitting in the State of Minnesota.  Executive hereby irrevocably consents to the
personal jurisdiction of the state and federal courts sitting in the State of
Minnesota for the purposes of any action arising out of or related to
Executive’s employment or this Agreement.  Executive waives Executive’s right,
if any, to have any disputes between Executive and the Company arising out of or
related to Executive’s employment or this Agreement decided in any jurisdiction
or venue other than a state or federal court in the State of Minnesota. 
Executive agrees not to assist, aid, abet, encourage, or participate in any
lawsuit or action by any third party arising out of or related to Executive’s
employment or this Agreement in any jurisdiction or venue other than a state or
federal court in the State of Minnesota.

 

6.8           SEVERABILITY.  In the event that any provision of this Agreement
is unenforceable under applicable law, that shall not affect the validity or
enforceability of the remaining provisions.  In the event that any provision of
this Agreement is unenforceable because it is overbroad, vague or otherwise,
that provision may be revised by a court sitting in the state of Minnesota to
the extent required by applicable law, and may be enforced as revised by the
court.

 

6.9           ASSIGNMENT.  Executive acknowledges that Executive’s services are
unique and personal. Accordingly, Executive may not assign Executive’s rights or
delegate Executive’s duties or obligations under this Agreement. This Agreement
shall inure to the benefit of and be enforceable by the Company and any
successor or permitted assignee, and may be assigned by the Company to any
purchaser of all or substantially all of the Company’s business or assets (by
merger, sale of assets, consolidation, acquisition of stock or otherwise)
without the consent of Executive, and may otherwise be assigned by the Company
only with Executive’s consent.

 

6.10         CAPTIONS AND HEADINGS.  The captions and section headings used in
this Agreement are for convenience of reference only, and shall not affect the
construction or interpretation of this Agreement or any of the provisions
thereof.

 

 

9

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

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective on
the date set forth in Section 2.2 of this Agreement.

 

 

 

COMPANY:

 

 

 

 

 

ARCTIC CAT INC.

 

 

 

 

 

By:

 

 

 

 

 

Its:  CEO

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

 

 

 

 

 

 

Claude J. Jordan

 

 

10

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