Document:

Exhibit 10.2

 

EXHIBIT
8.1

 

STORE CLOSING GUIDELINES

 

The following procedures
shall apply to the Sale(1) to be held at the closing Stores and the
disposal of the Owned FF&E in the closing Stores:

 

1.             The Sale shall be conducted so that the closing Stores in
which sales are to occur remain open no longer than the normal hours of
operation provided for in the respective leases or other occupancy agreements
for the closing Stores.

 

2.             The Sale shall be conducted in accordance with
applicable state and local “Blue Laws,” and thus, where applicable, no Sale
shall be conducted on Sunday unless the Merchant had been operating such Stores
on a Sunday.

 

3.             All display and hanging signs used by the Merchant and
the Agent in connection with Sale shall be professionally produced and all
hanging signs shall be hung in a professional manner. The Merchant and the
Agent may advertise the Sale as a “sale on everything”, “store closing”, or
similar theme sale at the closing Stores as provided by the Agency
Agreement.  Neither the Merchant, nor the
Agent shall advertise the Sale as a “going-out-of-business” sale.  The Merchant and the Agent shall not use neon
or day-glo signs. Furthermore, with respect to enclosed mall locations no
exterior signs or signs in common areas of a mall shall be used. Nothing
contained herein shall be construed to create or impose upon the Merchant and
the Agent any additional restrictions not contained in the applicable lease or
other occupancy agreement. In addition, the Merchant and the Agent shall be
permitted to utilize exterior banners at non-enclosed mall Stores; provided,
however, that such banners shall be located or hung so as to make clear
that the Sale is being conducted only at the affected store and shall not be
wider than the closing Storefront of the closing Store and such signage shall
not be larger than 4 feet by 40 feet. In addition, the Merchant and the Agent
shall be permitted to utilize sign walkers and street signage, notwithstanding
any state, county or local law or ordinance; provided  however the
use of sign walkers and use of street signage shall be done in a safe manner
and shall not be permitted on mall or shopping center property.

 

4.             Conspicuous signs shall be posted
in the cash register areas of each Store to the effect that all sales are “final”
and that customers with any questions or complaints subsequent to the
conclusion of the Sale may contact a named representative of the Merchant or
the Agent at a specified telephone number. 
Agent shall make available consumers inserts identifying that that the
manufacturer’s warranty, if any, may still exist and you should consult the
packaging materials to see what, if any, manufacturer’s warranties are
available, and Agent shall instruct the cashiers to place such inserts in the
consumer’s shopping bag.

 

(1)  Capitalized terms
used but not defined herein shall have the meanings ascribed to such terms in
the Agency Agreement.

 

1

 

5.             Within a “Shopping Center”, the
Agent shall not distribute handbills, leaflets or other written materials to
customers outside of any of the closing Stores, unless permitted by the
applicable lease or, if distribution is customary in the shopping center in
which the closing Store is located. Otherwise, the Agent may solicit customers
in the closing Stores themselves. The Agent shall not use any flashing lights
or amplified sound to advertise the Sale or solicit customers, except as
permitted under the applicable lease or agreed to by the landlord.

 

6.             At the conclusion of the Sale,
Agent shall vacate the closing Stores in “broom-clean” condition, and shall
otherwise leave the closing Stores in the same condition as on the commencement
of the Sale, ordinary wear and tear excepted; provided, however,
that the Merchant and Agent hereby do not undertake any greater obligation than
as set forth in an applicable lease with respect to a Stores. The Merchant may
abandon any FF&E or other materials (the “Abandoned Property”) not sold in
the Sale at the closing Store premises at the conclusion of the Sale. Any
Abandoned Property left in a Store after a lease is rejected shall be deemed
abandoned with the landlord having the right to dispose of the same as the
landlord chooses without any liability whatsoever on the part of the landlord
to any party and without waiver of any damage claims against the Merchant.

 

7.             Subject to the provisions of Section 15.9
of the Agency Agreement, the Agent shall have the right to sell Owned FF&E
located in the closing Stores; provided, however, Merchant shall
have the right (subject to the consent of the Indenture Trustee and the
Noteholders), at any time prior to the date that is fourteen days after the
Sale Commencement Date, to designate certain FF&E located in the closing
Stores that Merchant intends to keep for its own use and which Agent shall not
be permitted or entitled to sell. The Agent may advertise the sale of the Owned
FF&E consistent with the guidelines provided in paragraphs 4 and 6 hereof.
Additionally, the purchasers of any Owned FF&E sold during the Sale shall
only be permitted to remove the Owned FF&E either through the back shipping
areas or through other areas after store business hours.  For the avoidance of doubt, as of the Sale
Termination Date, Agent may abandon, in place, and without further
responsibility, any unsold FF&E located at the closing Stores.

 

8.             The Agent shall not make any
alterations to interior or exterior Store lighting. No property of any landlord
of a Store shall be removed or sold during the Sale. The hanging of exterior
banners or other signage shall not constitute an alteration to a Store.

 

9.             At the conclusion of the Sale at
each Store, pending assumption or rejection of applicable leases, the landlords
of the closing Stores shall have reasonable access to the closing Store
premises as set forth in the applicable leases. The Merchant, the Agent and
their agents and representatives shall continue to have exclusive and
unfettered access to the closing Stores.

 

10.           Post-petition rents shall be paid by
the Merchant as required by the Bankruptcy Code until the rejection or
assumption and assignment of each lease.

 

11.           The rights of the landlords for any
damages to the closing Stores shall be reserved in accordance with the
applicable leases.

 

2

 

12.           The Merchant shall notify a
representative of the relevant landlord of the date on which the Sale is
scheduled to conclude at a given Store, within three business days of the
Merchant’s receipt of such notice from the Agent.

 

13.           To the extent that any Store landlord
affected hereby contends that the Merchant is in breach or default under these
Store Closing Guidelines, such landlord shall provide at least five (5) days’
written notice, served by facsimile and overnight delivery, on the Merchant and
the Merchant’s counsel, and the Agent and the Agent’s counsel, at the following
facsimile numbers and addresses:

 

	
  If
  to the Merchant:

  	
  LINENS
  HOLDING CO.

  
	
   

  	
  6
  Brighton Road

  
	
   

  	
  Clifton,
  NJ 07012

  
	
   

  	
  Attn:

  	
  Frank
  Rowan

  
	
   

  	
   

  	
  Dave
  Coder

  
	
   

  	
  Fax:

  	
  (973)
  836-0309

  
	
   

  	
  Email:
  

  	
  frowan@lnt.com

  
	
   

  	
   

  	
  dcoder@lnt.com

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
  ASSET
  DISPOSITION ADVISORS, LLC

  
	
   

  	
  499
  Park Avenue

  
	
   

  	
  New
  York, NY 10022

  
	
   

  	
  Attn:

  	
  Paul
  Traub

  
	
   

  	
   

  	
  Steven
  Fox

  
	
   

  	
  Tel:

  	
  (212)
  573-9084

  
	
   

  	
  Fax:

  	
  (212)
  652-3863

  
	
   

  	
   

  	
   

  
	
   

  	
  RICHARDS,
  LAYTON, & FINGER, P.A.

  
	
   

  	
  920
  N. King Street

  
	
   

  	
  Wilmington,
  DE 19801

  
	
   

  	
  Attn:

  	
  Mark
  D. Collins

  
	
   

  	
   

  	
  Michael
  J. Merchant

  
	
   

  	
  Tel:

  	
  (302)
  651-7700

  
	
   

  	
  Fax:

  	
  (302)
  651-7701

  
	
   

  	
  Email:

  	
  Collins@rlf.com

  
	
   

  	
   

  	
  Merchant@rlf.com

  
	
   

  	
   

  	
   

  
	
  If to the Agent:

  	
  [insert]

  

 

If the parties are
unable to resolve the dispute between themselves, either the landlord or the
Merchant shall have the right to schedule a “status hearing” before the
Bankruptcy Court on no less than five (5) days notice to the other
parties.

 

3Exhibit 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

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