Document:

EX-10.2

 Exhibit 10.2 

ARCTIC CAT INC. CHANGE IN CONTROL AGREEMENT 
  

					
	Parties:		Arctic Cat Inc.		(“Company”)
			505 Hwy 169 North, Suite 1000		
			Plymouth, MN 55441		
			
			Christopher Eperjesy		(“Executive”)
			830 Waters Edge Road		
			Racine, WI 53402		

 Effective Date: February 16, 2015 

RECITALS: 
 1. Executive is a current executive
officer of the Company and has extensive knowledge and experience relating to the Company’s business. 
 2. The parties recognize that
it is in the best interests of the Company and its shareholders to provide certain benefits payable in certain circumstances upon a “Change in Control” to encourage Executive to continue in his position, although no such Change in Control
is now contemplated or foreseen. 
 3. [Intentionally omitted] 

AGREEMENTS: 
 1. Term of
Agreement. Except as otherwise provided herein, this Agreement shall become effective on February 16, 2015, and will automatically be extended for successive one-year periods on each January 1 thereafter, unless either the Company
or the Executive provides written notice to the other party no later than two months prior to the expiration of the initial term or any automatically extended term of this Agreement of the intent not to extend. If, however, a Change in Control has
occurred during the initial or any automatically extended term of this Agreement, this Agreement will continue in effect for a period of the later of: 

(a) the end of the Severance Protection Period; 

(b) if an event triggering the Company’s severance payment obligations to the Executive under Section 4 (and Section 5, if the
obligation arises from a covered termination within the Severance Protection Period) has occurred, until the benefits payable to the Executive hereunder have been paid in full; or 

(c) the date the Executive enters into a new employment agreement or change of control agreement with the Company or its successor. 

 This Agreement neither imposes nor confers any further rights or obligations on the Company or the Executive on
the day after the end of the term of this Agreement. Expiration of the term of this Agreement of itself and without separate action by the Company or the Executive will not end the employment relationship between the Company and the Executive. 

2. Certain Defined Terms.  

(a) “Cause.” For purposes of this Agreement, “Cause” shall mean that the Executive: 

(i) willfully or materially breaches his separate employment agreement or continually fails to perform the duties that Executive is required
to perform under the terms of his separate employment agreement; 
 (ii) willfully violates other reasonable and substantial rules
governing Executive’s performance, including, without limitation, prohibitions against unauthorized use of drugs or alcohol without treatment; 

(iii) violates or willfully refuses to obey reasonable instructions of the Chief Executive Officer and/or the Board, provided that such
instructions are not in violation of his separate employment agreement; 
 (iv) willfully engages in conduct that is demonstrably and
materially injurious to the Company, monetarily or otherwise; 
 (v) in the performance of Executive’s duties under his separate
employment agreement, engages in any act of misconduct, including misconduct involving moral turpitude, which is injurious to the Company; or 

(vi) is convicted of or pleads 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 affirmative vote of not less than three-quarters of the
entire membership of 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 constituted Cause and specifying the particulars thereof in detail. 

  
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 (b) “Change in Control.” For purposes of this Agreement, “Change in
Control” shall mean any one or more of the following events occurring after the date of this Agreement: 
 (i) The acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of (A) 50% of either the total fair market value or the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”), or (B) during a twelve-month period ending on the date of the most recent acquisition by such Person, 30% of the Outstanding Company Voting Securities; provided, however, that for purposes of
this subsection (i), the following acquisitions shall not constitute a Change in Control: (W) any acquisition directly from the Company, (X) any acquisition by the Company, including any acquisition which by reducing the number of shares
outstanding, is the sole cause for increasing the percentage of shares beneficially owned by any such Person to more than the applicable percentage set forth above, (Y) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company, or (Z) any acquisition by any corporation pursuant to a transaction which complies with subclauses (A), (B) and (C) of clause (iii) of this
Section 2(b); 
 (ii) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any
reason within any period of twelve (12) months to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; 
 (iii) Consummation by the Company of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation (a “Business Combination”), in each case, unless, following such Business Combination, all of the following conditions
are met: 
 (A) More than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the
election of directors of the corporation resulting from such Business Combination (including without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) is represented by Outstanding Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Outstanding
Company Voting Securities were converted pursuant to such Business Combination) and such voting power among the holders thereof is in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the
Outstanding Company Voting Securities; 

  
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 (B) No Person (excluding any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination; and 

(C) At least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination. 

Notwithstanding any other provision in this Agreement, any transaction defined above that does not constitute a “change in the ownership or effective
control” of the Company, or “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Treas. Reg. §§1.409A-3(a)(5) and 1.409A-3(i)(5) shall not be treated as a Change in Control.

 (c) “Date of Termination.” For purposes of this Agreement, “Date of Termination” shall mean the date specified
in the Notice of Termination. 
 (d) “Disability.” For purposes of this Agreement, the term “Disability” means
that the Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of
not less than 12 months, or (ii) is receiving income replacement benefits for a period of not less than three (3) months under the Company’s accident and health plans by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. 
 (e)
“Good Reason.” Good Reason will exist in the event that the Company, without the Executive’s written consent: 
 (i)
materially and adversely diminishes the authority, powers, functions, responsibilities or duties assigned to Executive, as compared to those in effect immediately prior to the Change in Control (except for any diminution that occurs solely as a
result of the fact that the Company ceases to be a public company); 
 (ii) materially reduces the Executive’s annual base salary,
annual bonus opportunity or long-term incentive opportunity, or any material reduction in the Executive’s aggregate benefits (other than base salary, annual bonus opportunity or long-term incentive opportunity) in effect immediately prior to a
Change in Control; 
 (iii) materially relocates (defined as more than fifty (50) miles) the Company’s principal executive
offices or requires Executive to be based anywhere other than the Company’s principal executive offices except for required travel on the Company’s business to an extent substantially consistent with Executive’s prior business travel
obligations; or 
 (iv) materially breaches this Agreement or his separate employment agreement. 

  
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 Within ninety (90) days following the Executive’s actual knowledge of the event that the Executive
determines constitutes Good Reason, the Executive must provide written notice to the Company that the Executive has determined that Good Reason exists and specify the event triggering Good Reason. Following receipt of such notice, the Company must
remedy the event within thirty (30) days. If the Company fails to remedy the event within such thirty-day period, the Executive must terminate for Good Reason within ten (10) days thereafter. 

(f) “Notice of Termination.” For purposes of this Agreement, a “Notice of Termination” shall mean a written 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. 

(g) “Severance Protection Period” shall mean the period commencing on the day on which a Change in Control occurs and ending
on the second anniversary following such date and shall be inclusive of both such dates. 
 3. Termination by the Company Other Than
for Cause or Resignation by the Executive for Good Reason During the Severance Protection Period. If during the Severance Protection Period, the Company terminates the Executive’s employment, unless such termination is (i) because
of Executive’s death or Disability, (ii) by the Company for Cause, or (iii) by Executive other than for Good Reason, then the terms of Section 4 will apply. If, during the Severance Protection Period, the Company terminates
Executive’s employment as a result of Executive’s Disability or Executive’s employment terminates due to his death, then Executive will be entitled to receive severance or other benefits as may then be available under the
Company’s then-existing written benefits plans and practices, including but not limited to any Company-sponsored disability insurance policy, or pursuant to other written agreements with the Company, but will not be eligible for the benefits
provided under Section 4. Nothing in this Agreement shall limit the benefits otherwise available under the agreements or programs of the Company for Disability, death or otherwise. 

4. Benefits Payable to Executive. In the event the Executive’s employment is terminated by the Company without Cause or by
the Executive for Good Reason during the Severance Protection Period, and provided in either case that the Executive has executed a written release of any and all claims arising during the Executive’s employment in form acceptable to the
Company and the rescission period specified therein has expired, the Company will pay or provide the following amounts or benefits to the Executive: 

(a) any accrued but unpaid annual base salary and any other form or type of compensation, benefit or perquisite that is vested or accrued at
the Date of Termination of the Executive’s employment with the Company for services rendered to such date, and payment for any accrued paid time off in accordance with Company policy, to be paid in cash in a single sum on the 30th day following the Date of Termination; 

  
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 (b) the annual incentive bonus for that fiscal year at target performance (or if the target goals
have not been set at the time of the Executive’s employment termination, then the target goals in effect for the prior fiscal year), waiving any other condition precedent, such as continued employment, multiplied by a fraction, the numerator of
which is the number of days worked by the Executive in the bonus period prior to the termination of employment, and the denominator of which is the number of days in the bonus period, less any amount of any such incentive bonus that has been paid,
to be paid in cash in a single sum on the 30th day following the Date of Termination; 

(c) a severance payment equal to 2.99 times the Executive’s annual incentive bonus for that fiscal year at target performance (or if the
target goals have not been set at the time of the Executive’s employment termination, then the target goals in effect for the prior fiscal year), waiving any other condition precedent, such as continued employment, to be paid in cash in a
single sum on the 30th day following the Date of Termination; 
 (d) a severance
payment equal to 2.99 times the Executive’s annual base salary, based upon the weekly equivalent of the Executive’s annual base salary in effect on the Date of Termination (without regard to any reduction that is in breach of this
Agreement), to be paid in cash in a single sum on the 30th day following the Date of Termination; 

(e) payment equal to the Company’s portion of the premium payable under the Company’s group health plans for providing health
benefits (i.e., medical, dental and vision benefits and group health and life insurance plans) to the Executive and to those family members covered through Executive under the Company’s group health plans immediately prior to the Date of
Termination, such coverage to be provided under the group health plans in which Executive and his covered family members are participating immediately prior to the Date of Termination or elect in accordance with the Company’s applicable
established procedures (reduced by any amounts which Executive is required to pay for such health benefit coverage). The Company shall pay or cause to have paid all amounts due under this Section 4(e) in 24 monthly installments, with the first
installment due or credited within 30 days after the Date of Termination; provided, however, that installments may be reduced or eliminated to the extent that Executive becomes eligible for other group health coverage through a subsequent employer;
and provided further that any group health benefits provided by the Company under this Section 4(e) shall run concurrently with any continuation coverage to which Executive or his dependents may be entitled under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and the regulations issued thereunder, or under comparable state law. 
 (f) outplacement services,
including counseling and guidance, to assist in securing subsequent employment, up to a maximum dollar value of twenty-five thousand dollars ($25,000) following Executive’s termination. Except as otherwise expressly provided herein, to the
extent any expense reimbursement under this clause (f) is determined to be subject to Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations, notices and other guidance of general applicability issued thereunder
(“Section 409A”), the amount of any such expenses eligible for reimbursement in one calendar year shall not affect the expenses 

  
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eligible for reimbursement in any other taxable year; in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Executive
incurred such expenses; and in no event shall any right to reimbursement be subject to liquidation or exchange for another benefit. 
 Except as provided in
(a) through (f) above and Section 5 below, the Company will have no further obligations under this Agreement. The purpose of providing the benefits pursuant to Section 4(e) shall be to provide the Executive and/or the
Executive’s covered family members with continued health benefits at least equal to those which would have been provided to them in accordance with the Company’s health plans, programs, practices and policies if the Executive’s
employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company (in each case with such contributions by the Executive as would have been
required had the Executive’s employment not been terminated). 
 Notwithstanding anything contained in this Agreement to the contrary, Executive shall
be entitled to the severance pay and benefits described in this Section 4 only if (i) on or within 30 days following the Date of Termination, Executive 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 (other than rights under this Agreement), and (ii) Executive fully complies with his confidentiality, non-solicitation,
non-competition and disclosure and assignment obligations under his employment agreement, as amended, with the Company. Such severance pay and benefits will be made or commence on the 30th day following the Date of Termination if the release
specified in (i) above has been executed and not revoked by that 30th day. 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 confidentiality, non-solicitation, non-competition, and/or disclosure and assignment requirements set forth in his employment agreement, he will not be entitled to the severance pay or benefits described in this
Section 4 and will be obligated to return any severance pay and/or benefits already received. 
 5. Accelerated Vesting of
Equity-Based Awards. If a Change in Control occurs, all unvested stock options and restricted stock and stock equivalent awards, including performance awards and stock-settled appreciation rights, that have been granted or sold to the
Executive by the Company and which have not otherwise vested, shall immediately accelerate and vest in full. With respect to stock equivalents, the acceleration and vesting described in this Section 5 shall be subject to any valid deferral
election which was made prior to that time by the Executive under any Company non-qualified deferred compensation plan, program or permitted deferral arrangement then in effect. 

6. Golden Parachute Excise Tax Best Results. In the event that the severance and other benefits provided for in this Agreement
or otherwise payable to Executive (a) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, (the “Code”) and (b) would be subject to the excise tax
imposed by Section 4999 of the Code, then such benefits shall be either be: (i) delivered in full, or (ii)

  
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delivered as to such lesser extent which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts,
taking into account the applicable federal, state and local income and employment taxes and the excise tax imposed by Section 4999, results in the receipt by Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding
that all or some portion of such benefits may be taxable under Section 4999 of the Code. 
 Unless the Company and Executive otherwise agree in
writing, any determination required under this Section 6 will be made in writing by an accounting firm selected by the Company or such other person or entity to which the parties mutually agree (the “Accountants”), whose determination
will be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 6, the Accountants may make reasonable assumptions and approximations concerning applicable taxes
and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 6. Any reduction in payments and/or benefits
required by this Section 6 shall occur in the following order: (A) cash payments shall be reduced first and in reverse chronological order such that the cash payment owed on the latest date following the occurrence of the event triggering
such excise tax will be the first cash payment to be reduced; (B) accelerated vesting of stock awards shall be cancelled/reduced next and in the reverse order of the date of grant for such stock awards (i.e., the vesting of the most recently
granted stock awards will be reduced first), with full-value awards reversed before any stock option or stock appreciation rights are reduced; and (C) deferred compensation amounts subject to Section 409A shall be reduced last. 

7. Withholding Taxes. The Company shall be entitled to deduct from all payments or benefits provided for under this Agreement
any federal, state or local income and employment-related taxes required by law to be withheld with respect to such payments or benefits. 

8. Successors and Assigns. This Agreement shall inure to the benefit of and shall be enforceable by Executive, his heirs and the
personal representative of his estate, and shall be binding upon and inure to the benefit of the Company and its successors and assigns. The Company will require the transferee of any sale of all or substantially all of the business and assets of
the Company or the survivor of any merger, consolidation or other transaction expressly to agree to honor this Agreement in the same manner and to the same extent that the Company would be required to perform this Agreement if no such event had
taken place. Failure of the Company to obtain such agreement before the effective date of such event shall be a breach of this Agreement and shall entitle Executive to the benefits provided in Section 4, subject to Section 6, as if
Executive had terminated employment for Good Reason following a Change in Control. 
 9. Notices. For the purpose of this
Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have 

  
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been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first
page of this Agreement 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. All notices to the Company shall be
directed to the attention of the Board of Directors of the Company. 
 10. Captions. The headings or captions set forth in
this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement. 
 11. Governing
Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Minnesota. 

12. Construction. Wherever possible, each term and provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law. If any term or provision of this Agreement is invalid or unenforceable under applicable law, (a) the remaining terms and provisions shall be unimpaired, and (b) the invalid or unenforceable term or
provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the unenforceable term or provision. 

13. Amendment; Waivers. This Agreement may not be modified, amended, waived or discharged in any manner except by an instrument
in writing signed by both parties hereto. The waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement. 
 14. 409A Compliance. Notwithstanding any other provision of this
Agreement to the contrary, the parties to this Agreement intend that this Agreement will satisfy the applicable requirements, if any, of Section 409A in a manner that will preclude the imposition of additional taxes and interest imposed under
Section 409A. The parties agree that this Agreement will be amended (as determined by the Company in its discretion) to the extent necessary to comply with Section 409A, as amended from time to time. Further, if all or any portion of the
payments described in this Agreement are subject to the requirements of Section 409A and the Company determines that the Executive is a “specified employee” as defined in Section 409A as of the Date of Termination (which will
have the same meaning as “separation from service” as defined in Section 409A), such payments will be paid on the first day following the six-month anniversary of the Date of Termination or, if earlier on the date of the
Executive’s death. Any payments that were originally scheduled to be paid after the six-month anniversary of the Date of Termination shall continue to be paid in accordance to their predetermined schedule. 

15. Entire Agreement. This Agreement supersedes all prior or contemporaneous negotiations, commitments, agreements (written or
oral) and writings between the Company and Executive with respect to the subject matter hereof, including but not limited to any negotiations, commitments, agreements or writings relating to any severance benefits payable to Executive, and
constitutes the entire agreement and understanding between the parties hereto. All such other negotiations, commitments, agreements and writings will have no further force or effect, and the parties to any such other negotiation, commitment,
agreement or writing will have no further rights or obligations thereunder. 

  
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 16. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 
 17. No Duty to
Mitigate. Executive shall not be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement, nor shall the amount of any payment
hereunder be reduced by any compensation earned by Executive as result of employment by another employer or by any retirement benefits which may be paid or payable to Executive except for those welfare benefits provided pursuant to
Section 4(e). 
 18. Enforcement. If Executive incurs legal, accounting, expert witness or other fees and expenses in an
effort to establish entitlement to compensation and benefits under this Agreement, the Company shall, regardless of the outcome of such effort, pay or reimburse Executive for such fees and expenses. The Company shall reimburse Executive for
such fees and expenses on a monthly basis within 10 days after its receipt of his request for reimbursement accompanied by reasonable evidence that the fees and expenses were incurred. If the Company fails to pay any amount provided under this
Agreement when due, the Company shall pay interest on such amount at a rate equal to 200 basis points over the prime commercial lending rate published from time to time in The Wall Street Journal; provided, however, that if the interest rate
determined in accordance with this Section shall in no event exceed the highest legally-permissible interest rate. 
 19.
Arbitration. Any dispute arising out of or relating to this Agreement or the alleged breach of it, or the making of this Agreement, including claims of fraud in the inducement, shall be discussed between the disputing parties in a good
faith effort to arrive at a mutual settlement of any such controversy. If, after 20 days of such discussions, such dispute cannot be resolved, such dispute shall be settled by binding arbitration. Judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. The arbitrator shall be a retired state or federal judge or an attorney who has practiced securities litigation or business litigation for at least 10 years. If the parties cannot agree on an
arbitrator within 20 days, any party may request that the chief judge of the District Court for Hennepin County, Minnesota, select an arbitrator. Arbitration will be conducted pursuant to the provisions of this Agreement, and the commercial
arbitration rules of the American Arbitration Association, unless such rules are inconsistent with the provisions of this Agreement; provided however, the arbitration shall not be administered by the American Arbitration Association. Discovery shall
be limited. The arbitrator shall have the authority to award any remedy or relief that a court of this state could order or grant; provided, however, that punitive or exemplary damages shall not be awarded. Unless otherwise ordered by the
arbitrator, the parties shall share equally in the payment of the fees and expenses of the arbitrator. The arbitrator may award to the prevailing party, if any, as determined by the arbitrator, all of the prevailing party’s costs and fees,
including the arbitrator’s fees, and expenses, and the prevailing party’s travel expenses, out-of-pocket expenses and reasonable attorneys’ fees. Unless otherwise agreed by the parties, the place of any arbitration proceedings shall
be Hennepin County, Minnesota. 

  
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 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered as of the day and year written below. 
  

							
		 		 	ARCTIC CAT INC.
				
	Date: January 30, 2015	 		 	By:	 	 /s/ CHRISTOPHER T. METZ

		 		 	Its:	 	 President and Chief Executive Officer

			
	Date: February 3, 2015	 		 	 /s/ CHRISTOPHER J. EPERJESY

		 		 	Christopher Eperjesy

  
 11Exhibit 10.1

 

AMENDMENT TO

AGREEMENT REGARDING CHANGE IN CONTROL

 

THIS AMENDMENT TO AGREEMENT REGARDING CHANGE IN CONTROL, dated as of February 4, 2015 (this “Amendment”), is entered into by and between Hospira, Inc. (the “Company”), and                                          (the “Executive”).

 

WHEREAS, the Company and the Executive are parties to that certain Agreement Regarding Change in Control, dated as of                                         , by and between the Company and the Executive (the “Agreement”); and

 

WHEREAS, upon the terms and subject to the conditions of this Amendment, the Board of Directors of the Company has determined that it is in the best interests of the Company and its stockholders to enter into this Amendment in order to ensure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat, or occurrence of a Change in Control (as defined in the Agreement) of the Company.

 

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                      Term.  Section 1 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

1.  AGREEMENT TERM. THE “AGREEMENT TERM” SHALL BEGIN ON THE EFFECTIVE DATE AND SHALL CONTINUE THROUGH DECEMBER 31, 2016. NOTWITHSTANDING THE FOREGOING, IF A CHANGE IN CONTROL (AS DEFINED IN SECTION 7 BELOW), OCCURS DURING THE AGREEMENT TERM, THE AGREEMENT TERM SHALL CONTINUE THROUGH AND TERMINATE ON THE SECOND ANNIVERSARY OF THE DATE ON WHICH THE CHANGE IN CONTROL OCCURS.

 

2.                                      Certain Payments by the Company.  Section 5 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

5.  Excise Tax Payments.

 

(a)                                 Gross-Up Payment.  If it is determined that any Payment (as defined below) would be subject to any Excise Tax (as defined below), then the Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  The Company’s obligation to make Gross-Up Payments under this

 

 

Section 5 shall not be conditioned upon the Executive’s termination of employment.

 

(b)                                 Determinations.  Subject to the provisions of Section 5(c), all determinations required to be made under this Section 5, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment, and the assumptions to be utilized in arriving at such determination, shall be made by PricewaterhouseCoopers LLP or such other nationally recognized certified public accounting firm as may be designated by the Executive (the “Accounting Firm”).  The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment (as defined below) or such earlier time as is requested by the Company.  In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity, or group effecting the Change in Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder).  The Company shall solely bear all fees and expenses of the Accounting Firm.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive.  As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (the “Underpayment”), consistent with the calculations required to be made hereunder.  In the event the Company exhausts its remedies pursuant to Section 5(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.  The Company and Executive shall each provide the Accounting Firm access to and copies of any books, records and documents in the possession of the Company or Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determination contemplated by this Section 5(b).

 

(c)                                  Claims by the IRS.  The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 30 business days after the Executive is informed in writing of such claim.  The Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).  If the Company notifies the Executive in writing prior to the expiration of such period that the Company desires to contest such claim, the Executive shall:

 

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(i)                                   give the Company any information reasonably requested by the Company relating to such claim;

 

(ii)                                take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;

 

(iii)                             cooperate with the Company in good faith in order effectively to contest such claim; and

 

(iv)                              permit the Company to participate in any proceedings relating to such claim;

 

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses.  Without limitation on the foregoing provisions of this Section 5(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings, and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either pay the tax claimed to the appropriate taxing authority on behalf of the Executive and direct the Executive to sue for a refund or to contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction, and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company pays such claim and directs the Executive to sue for a refund, the Company shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such payment or with respect to any imputed income in connection with such payment; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

 

(d)                                 Refunds.  If, after the receipt by the Executive of a Gross-Up Payment or payment by the Company of an amount on the Executive’s behalf pursuant to Section 5(c), the Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 5(c), if applicable) promptly pay to the Company the amount of such

 

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refund (together with any interest paid or credited thereon after taxes applicable thereto).  If, after payment by the Company of an amount on the Executive’s behalf pursuant to Section 5(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

 

(e)                                  Payment of the Gross-Up Payment.  Any Gross-Up Payment, as determined pursuant to this Section 5, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm’s determination or on such other date or dates as required to avoid the imposition on Executive of additional taxes under Section 409A of the Code; provided that the Gross-Up Payment shall in all events be paid no later than the end of the Executive’s taxable year next following the Executive’s taxable year in which the Excise Tax (and any income or other related taxes or interest or penalties thereon) on a Payment are remitted to the Internal Revenue Service or any other applicable taxing authority or, in the case of amounts relating to a claim described in Section 5(c) that does not result in the remittance of any federal, state, local, and foreign income, excise, social security, and other taxes, the calendar year in which the claim is finally settled or otherwise resolved.  Notwithstanding any other provision of this Section 5, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of any Gross-Up Payment, and the Executive hereby consents to such withholding.

 

(f)                                   Certain Definitions.  The following terms shall have the following meanings for purposes of this Agreement:

 

(i)                                   “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

 

(ii)                                The “Parachute Value” of a Payment shall mean the present value as of the date of the Change in Control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

 

(iii)                             A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

 

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3.                                      Conditions to Effectiveness.  The effectiveness of Section 2, above, is contingent upon the consummation of the transactions (the “Closing”) contemplated by the Agreement and Plan of Merger dated as of February 4, 2015, to which the Company is party (the “Merger Agreement”).  In the event (a) the Merger Agreement is terminated or (b) the Closing does not occur, Section 2, above, shall be null and void ab initio and of no force or effect.

 

4.                                      Miscellaneous.

 

(a)                                 Full Force and Effect.  Except as expressly amended by this Amendment, all terms and conditions of the Agreement shall remain in full force and effect.

 

(b)                                 Governing Law.  This Amendment shall be governed by and construed in accordance with the laws of the State of Illinois, without reference to principles of conflict of laws.

 

(c)                                  Counterparts.  This Amendment may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.

 

 

	
 
    	
HOSPIRA, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[Name]
    

 

[Signature Page to Amendment to Agreement Regarding Change in Control]

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