8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): February 3, 2015

ARCTIC CAT INC.

(Exact name of Registrant as Specified in its Charter)

Minnesota	0-18607	41-1443470
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

505 Hwy 169 North, Suite 1000 Plymouth, Minnesota	55441
(Address of Principal Executive Offices)	(Zip Code)

(763) 354-1800

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On February 3, 2015, Arctic Cat Inc. (the “Company”) entered into an employment agreement (the “Employment Agreement”) with, and previously the Board of Directors (the “Board”) had approved the appointment of, Christopher J. Eperjesy to the position of Chief Financial Officer, all effective February 16, 2015 (the “Employment Date”).

Mr. Eperjesy, age 47, has served as Vice President – Finance, Chief Financial Officer and Treasurer of Twin Disc, Inc. since 2002 and has extensive experience working in corporate finance. Prior to joining Twin Disc, Inc., Mr. Eperjesy served as Divisional Vice President - Corporate Finance for Kmart Corporation since 2001 and held various financial analyst and controller positions with DaimlerChrysler in both the United States and Europe, including the position of Senior Manager – Corporate Finance since 1999.

The Employment Agreement provides for an initial base salary of $360,000, which will be subject to annual review and adjustment beginning with the Company’s 2017 fiscal year (that begins April 1, 2016). Beginning in the Company’s 2016 fiscal year (that begins April 1, 2015), Mr. Eperjesy will be entitled to participate in the Company’s annual incentive program for senior executives. His annual incentive payout will range from 0% to 200% of his target incentive payout, with a target incentive payout equal to 55% of his base salary, subject to annual review and adjustment. Mr. Eperjesy will also be entitled to participate in the Company’s long-term incentive program, pursuant to which he will receive long-term incentive awards with an aggregate value of $360,000 on the Employment Date, which value shall be allocated 75% to stock options and 25% to restricted stock units, each of which will vest in equal installments on the first, second and third anniversaries of the Employment Date. Such long-term incentive awards will be granted under the Company’s 2013 Stock and Incentive Omnibus Plan.

As an inducement to his employment and to compensate Mr. Eperjesy for payments he would have received from his former employer, Mr. Eperjesy will receive a one-time cash bonus of $200,000 within 30 days of the Employment Date as well as a one-time grant of equity awards on the Employment Date. Such equity awards will consist of restricted stock units valued at $360,000 and stock options (with an exercise price equal to the closing price of the Company’s common stock on the NASDAQ Stock Market on the Employment Date) valued at $225,000 and will vest in equal installments on the first, second and third anniversaries of the Employment Date. The awards will be granted under the Company’s 2013 Stock and Incentive Omnibus Plan. In the event Mr. Eperjesy terminates employment with the Company without Good Reason (as such term is defined in the Employment Agreement) within one year of the Employment Date, Mr. Eperjesy will be required to repay the cash bonus in full and the one-time grants of restricted stock units and stock options awarded under the Employment Agreement will not vest.

Under the Employment Agreement, Mr. Eperjesy is subject to traditional non-competition and employee non-solicitation restrictions during the term of his employment with the Company and for one (1) year following his termination of employment with the Company for any reason. Mr. Eperjesy is also entitled to participate in any of the Company’s benefit plans which the Company makes available to its salaried senior executives to the extent that Mr. Eperjesy’s age, tenure, and title make him eligible to receive such benefits. Subject to certain notice requirements, either Mr. Eperjesy or the Company is entitled to terminate the Employment Agreement at any time. In the event the Company terminates Mr. Eperjesy’s employment for any reason not constituting Cause, discontinuation of the Company’s business, or Mr. Eperjesy’s death or Disability, and not in connection with a Change in Control, or, in the event that Mr. Eperjesy terminates his employment for Good Reason (as such terms are defined in the Employment Agreement or Change in Control Agreement (as defined below)), the Company will pay him his base salary through such date of termination and provide the following benefits during the 12-month period following Mr. Eperjesy’s termination: (i) his average annual base salary over the 3-year period immediately preceding the date of termination or such lesser period as Mr. Eperjesy has been employed by the Company and (ii) cash in an amount equal to Company premiums for benefits.

The Company has also entered into agreements with Mr. Eperjesy that are consistent with agreements maintained with other executive officers of the Company, including the Company’s form of indemnification agreement, which outlines the processes and conditions under which the Company will advance expenses and indemnify indemnitees against costs incurred in connection with certain proceedings resulting from the indemnitee’s official capacity with the Company, and a change in control agreement with

Mr. Eperjesy effective February 16, 2015 (the “Change in Control Agreement”). The Change in Control Agreement provides that if Mr. Eperjesy’s employment is terminated due to death or Disability upon or within two years following a Change in Control (as such terms are defined in the Change in Control Agreement), he will be entitled to receive the benefits to which he is entitled to under any Company-sponsored insurance policy and other severance or benefits plans and practices then in effect. If Mr. Eperjesy’s employment is terminated upon or within two years following a Change in Control for any reason other than death or Disability, or terminated by the Company without Cause or by Mr. Eperjesy for Good Reason, then Mr. Eperjesy is entitled to the following benefits: (i) his base salary through the date of termination; (ii) his annual incentive bonus at target performance for the then-current fiscal year, reduced in proportion to the number of days worked during the then-current bonus period prior to termination, less any amount that such incentive bonus has already been paid; (iii) any compensation, benefit or perquisite that is vested or accrued at the time of such termination for services rendered to such date, as well as payment for any accrued paid time off in accordance with Company policy; (iv) a severance payment in an amount equal to 2.99 times Mr. Eperjesy’s then-current base salary; (v) a severance payment in an amount equal to 2.99 times Mr. Eperjesy’s annual incentive bonus at target performance for the then-current fiscal year; (vi) cash in an amount equal to Company premiums for health benefits for 24 months, reduced by any amount Mr. Eperjesy is required to pay for such benefits; and (vii) executive-level transition services up to a maximum value of $25,000. In addition, in the event of a Change in Control, all unvested stock options and restricted stock units will immediately accelerate and vest in full.

The foregoing descriptions of Mr. Eperjesy’s Employment Agreement and Change in Control Agreement are qualified in their entirety by reference to the Employment Agreement attached hereto as Exhibit 10.1 and the Change in Control Agreement attached hereto as Exhibit 10.2, each of which are incorporated herein by reference to this Item 5.02. There are no family relationships or transactions in which Mr. Eperjesy has an interest requiring disclosure under Items 401(d) or 404(a) of Regulation S-K.

Item 8.01 Other Events.

The Company issued a press release dated February 9, 2015 announcing the employment of Mr. Eperjesy as the Company’s Chief Financial Officer. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

10.1	Employment Agreement, dated February 3, 2015, between the Company and Christopher J. Eperjesy.
10.2	Change in Control Agreement, dated February 3, 2015, between the Company and Christopher J. Eperjesy.
99.1	Press Release issued February 9, 2015.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ARCTIC CAT INC.

/s/ CHRISTOPHER T. METZ

Christopher T. Metz

President and Chief Executive Officer

Dated: February 9, 2015

ARCTIC CAT INC.

FORM 8-K CURRENT REPORT

INDEX TO EXHIBITS

Exhibit No.	Description
10.1	Employment Agreement, dated February 3, 2015, between the Company and Christopher J. Eperjesy.
10.2	Change in Control Agreement, dated February 3, 2015, between the Company and Christopher J. Eperjesy.
99.1	Press Release issued February 9, 2015.

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of this 3rd day of February, 2015 by and between Arctic Cat Inc. (the “Company”) and Chris Eperjesy (“Executive”).

WHEREAS, the Company desires to employ Executive on the terms and conditions set forth herein; and

WHEREAS, Executive desires to be employed by the Company on such terms and conditions.

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 “Arctic Cat Products” means any goods or services which 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 Executive was employed by the Company.

1.2 “Change in Control” has the same meaning as defined in that certain Change in Control Agreement of even or substantially even date of the Original Employment Agreement (the “Change in Control Agreement”), as such Change in Control Agreement may be amended from time to time.

1.3 “Code” means the Internal Revenue Code of 1986, as amended.

1.4 “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.

1.5 “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.

1.6 “Confidential Information” means any information or compilation of information that 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. Confidential Information 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.

1.7 “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 Executive if he is engaged in business for himself.

1.8 “Customer” means any person or entity (regardless of its legal form) 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.

1.9 “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 Section 409A of the Code.

1.10 “Invention” means all inventions, discoveries, ideas, processes, writings, designs, developments, and improvements, whether or not protectable under the applicable patent, trademark or copyright statutes, of Executive while employed by the Company.

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 Chief Financial Officer or in such other capacity as may be determined from time to time by the Company’s Chief Executive Officer or Board of Directors (the “Board”), and Executive hereby accepts such employment.

2.2 Term. The term of this Agreement shall commence on February 16, 2015 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 consideration for the confidentiality, non-competition and non-solicitation agreements provided in Article IV of this Agreement, Executive shall receive an annual base salary in the amount of Three Hundred Sixty Thousand Dollars ($360,000) payable in accordance with the Company’s regular payroll processes (the “Base Salary”) and the additional compensation set forth in this Agreement. Executive’s Base Salary shall be reviewed by the Compensation and/or Human

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Resources Committee of the Board on an annual basis, beginning with the fiscal year that begins April 1, 2016, and such committee may, but is 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, starting with the fiscal year that begins April 1, 2015 (“Fiscal 2016”) Executive shall be eligible 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 two hundred percent (200%) of his target incentive payout (the “Annual Bonus”). The target incentive payout (the “Target Bonus”) for Executive for the fiscal year ending March 31, 2016 shall be fifty five percent (55%) of his Base Salary. Thereafter, the Board, or an appropriate committee of the Board, may, but is not obligated to, adjust Executive’s Target Bonus as it deems appropriate and consistent with the Company’s then existing annual incentive program. 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. In addition to Base Salary and all other compensation provided in this Agreement, Executive shall be entitled to participate in the Company’s long-term incentive program (the “LTI”) beginning in Fiscal 2016. The Board has approved and will issue grants to Executive of stock options to purchase shares of common stock and shares of restricted stock units (“RSUs”) on Executive’s first day of employment. The stock options will have a fair market value at the end of the first day of Executive’s employment of $270,000 (at an assumed Black-Scholes ratio of 40%) and the RSUs will have a fair market value of $90,000 at the end of the first day of Executive’s employment. The grants are made in accordance with the Company’s 2013 Omnibus Stock and Incentive Plan. The grants will vest in equal installments on the first, second and third anniversaries of the grant date.

3.4 One-Time Grants; Restricted Stock Units and Stock Options. On Executive’s first day of employment Executive will receive a grant of RSUs valued at $360,000 as determined by the closing price of the Company’s stock on Executive’s first day of employment. Executive represents and warrants that this amount represents the approximate value of unvested restricted stock units he would have received from his current employer but for commencement of employment with the Company at this time. In addition, on Executive’s first day of employment Executive will receive stock options to purchase shares of common stock of the Company valued at $225,000 as determined by the closing price of the Company’s stock on the first day of Executive’s employment with the Company (at an assumed Black-Scholes ratio of 40%). Executive represents and warrants that this amount represents the approximate value of performance shares he would have received from his current employer but for commencement of employment with the Company at this time. The RSUs and stock options described in this Section 3.4 will vest in equal installments on the first, second and third anniversaries of the grant date. Executive understands and agrees that if he terminates employment with the Company without Good Reason, as defined in Section 5.3 of this Agreement, within one year of his first day of employment with the Company, the RSUs and stock options described in this Section 3.4 will not vest.

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3.5 Sign-on Bonus. In addition to the other payments described in this Agreement, Executive will be paid a cash bonus of $200,000, less applicable taxes and required withholdings, within 30 days following the first day of his employment. Executive represents and warrants that this amount represents the bonus compensation he would have received from his current employer but for commencement of employment with the Company prior to Executive’s first day of employment. Executive understands and agrees that if he terminates employment with the Company without Good Reason, as defined in Section 5.3 of this Agreement, within one year of his first day of employment with the Company, he shall repay this amount in full within 30 days of termination.

3.6 Benefits. Except as the Company 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 executives similarly situated. 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.

3.7 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.

3.8 Relocation Expenses. The Company will make available to Executive relocation benefits and prerequisites generally provided to the Company’s executive employees pursuant to the policies set forth in the “Relocation Handbook for Arctic Cat Employees,” a copy of which has been provided to Executive. To the extent not otherwise included in the “Relocation Handbook for Arctic Cat Employees,” Executive will also receive a lump sum gross payment of $11,000 to assist with temporary living, residence search, and travel to and from his home in Racine, Wisconsin. Executive understands and agrees that if he terminates employment with the Company without Good Reason, as defined in Section 5.3 of this Agreement, within one year of his first day of employment with the Company, he shall repay all amounts provided to him under this Section 3.8 within 30 days of termination and that if he terminates employment with the Company without Good Reason, as defined in Section 5.3 of this Agreement, within two years of his first day of employment with the Company he shall repay 50% of all amounts provided to him under this Section 3.8 within 30 days of termination.

ARTICLE IV.

DUTIES OF EXECUTIVE

4.1 Services; Duties. Executive shall have the general duties, responsibilities and authority of a Chief Financial Officer, subject to the power of the Chief Executive Officer and/or

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the Board to expand or limit such duties, responsibilities and authority. 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 By-laws, Board direction, and all policies and procedures as they exist from time to time, provided that in the event of a conflict between any Company policy or procedure and the terms of this Agreement, the terms of this Agreement shall control unless contrary to applicable law. While the Company employs Executive, Executive will not engage in any business activity or outside employment that might conflict with the Company’s interests or might adversely affect the performance of Executive’s duties for the Company.

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 (including, but not limited to, email) provided to Executive by the Company or created by 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 year following his termination of employment by the Company, for any reason, 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; (b) providing advice or assistance in connection with the marketing, promotion or use of a Competitive Product; or (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 year following the voluntary or involuntary termination of his employment with the Company for any reason, Executive shall not, directly or

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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 Company products (i) at any time during Executive’s employment with the Company or (ii) at any time within one year following termination of Executive’s employment that were under evaluation with Executive’s knowledge at the time of Executive’s termination of employment.

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 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 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 Executive upon written request by 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 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.

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(d) Assistance of Executive. Upon request and without further compensation therefor, 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, 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 his 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 Agreement that require performance by either party after the Term or the expiration or termination of this Agreement, including this Article IV, shall survive the Term and 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 Chief Executive Officer determines that Executive:

(a) willfully or materially breaches this Agreement or any other written agreement with the Company;

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(b) willfully violates or fails to comply with any reasonable rule or policy governing Executive’s performance or behavior, including, without limitation, the prohibition against the use of illegal drugs and the use of alcohol in a way that is materially harmful to the Company’s finances, general reputation, or other legitimate business interest;

(c) willfully violates or fails to comply with any reasonable instruction of the Chief Executive Officer and/or the Board, provided that such instruction is not in violation of this Agreement or any other written agreement between the Company and Executive and is legal;

(d) willfully engages in dishonesty, illegal conduct, or misconduct that is materially harmful to the Company’s finances, general reputation, or other legitimate business interest, as determined by the Board in its sole discretion;

(e) willfully engages in fraud, misappropriation or embezzlement, whether or not related to Executive’s employment with the Company;

(e) willfully and without authorization discloses Confidential Information; or

(f) is convicted of or pleads guilty to any criminal charge or indictment, the nature of which the Board determines, in its sole discretion, may have a detrimental impact on the general reputation of the Company, its finances, or other legitimate business interest.

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 except as may be required by law, but shall receive his Base Salary earned through the date of termination, any unused vacation or other time off earned through the date of termination, reimbursement for reasonable expenses incurred by Executive in the discharge of his duties before termination so long as he provides evidence thereof, and any additional benefits to which he is entitled under any applicable benefit plan of the Company that are not otherwise provided by this Agreement (collectively, the “Accrued Obligations”). Executive shall not be terminated for Cause unless and until Executive has been offered an opportunity to explain the circumstances forming the basis for the Company’s determination of Cause to the Chief Executive Officer except where the Chief Executive Officer determines that doing so would be futile.

5.2 Termination for Any Other Reason. 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;

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(b) Executive fails to perform the duties that Executive is reasonably expected to perform under this Agreement to the Company’s satisfaction after notice and opportunity to cure;

(c) Executive’s death; or

(d) Executive’s Disability unless waived by the Company, where Disability has the meaning 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), (c) or (d) above, no further compensation or benefits other than the Accrued Obligations set forth in Section 5.1 of this Agreement and any applicable insurance benefits in accordance with any Company-sponsored insurance policy shall be paid to Executive. 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, not described in Section 5.2, and not in connection with a Change in Control, Executive shall be entitled to the severance payments described in Section 5.5. In the event of a Change in Control, the Change in Control Agreement, as amended, shall supersede this Agreement and any understandings between the parties with respect to termination upon such Change in Control and any compensation paid to Executive upon such termination.

5.3 Termination by Executive for Good Reason. Notwithstanding anything contained in this Agreement to the contrary, Executive shall have the right to terminate his employment at any time for “Good Reason.” “Good Reason” exists if any of the following events or conditions occurs:

(a) any material reduction in Executive’s Base Salary unless consistent with the same percentage reduction to the base salaries for other similarly situated senior executives of the Company; or any removal of Executive from the position of, or failure to reappoint or reelect Executive as Chief Financial Officer of the Company;

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

(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; or

(d) the relocation of the Company’s principal executive offices to a location more than 50 miles from Minneapolis/St. Paul, Minnesota or the Company requiring Executive to be based more than 50 miles from the Company’s principal executive offices except for requiring travel on the Company’s business.

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Prior to any termination for “Good Reason,” Executive must give notice to the Chief Executive Officer of the existence of the condition for “Good Reason” and intent to terminate employment within 90 days of the occurrence of the condition and the Company shall not have eliminated the condition within 30 days thereafter. 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 for Any Other Reason. 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, Executive shall not be entitled to any severance payment or any other payments under this Agreement except the Accrued Obligations described in Section 5.1 of 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 in Control, or, in the event that Executive terminates his employment for Good Reason, the Company shall pay to Executive the Accrued Obligations described in Section 5.1 of this Agreement, and, in lieu of any further compensation and benefits under this Agreement, Executive shall be entitled to the following benefits during the 12-month period beginning on the date of such termination of Executive’s employment (the “Severance Period”), subject to the limitations contained in this Section 5.5.

(a) Severance Pay. 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 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 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 months of the Severance Period in accordance with the Company’s regular payroll practices. Each installment of severance pay shall be considered a separate payment for purposes of Section 409A of the Code.

(b) Benefits During Severance Period. During the Severance Period, the Company shall continue to pay to Executive an amount of cash equal to the Company’s portion of the premium payable under the Company’s group health and life insurance plans for health (i.e., medical, dental and vision benefits) and life insurance benefits provided to the Executive and to those family members covered through Executive under the Company’s group health and life insurance plans immediately prior to the date of termination of employment; provided that if during the Severance Period another employer provides Executive any benefits that are substantially comparable to any of the benefits provided by the Company, the Company’s obligations with respect to such comparable benefits shall cease.

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(c) Conditions to Severance Pay. 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 45 days following Executive’s last date of employment Executive signs and does not rescind a release agreement in a form prepared by the Company and given to Executive within 10 days after the date of termination, to include but not be limited to a comprehensive release of all legal claims by Executive in favor of the Company, which release shall be in the form customarily used by the Company for senior executives, (ii) Executive fully complies with his confidentiality obligations under Section 4.2, (iii) Executive fully complies with his non-solicitation obligations under Section 4.3, (iv) Executive fully complies with his non-competition obligations under Section 4.4, and (v) Executive fully complies with his disclosure and assignment obligations under Section 4.5. 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 Sections 4.2, 4.3, 4.4, and 4.5, 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 a Notice of Termination sent to the other party in accordance with Section 6.1. 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. No purported termination of Executive’s employment which is not made pursuant to a Notice of Termination shall be effective for purposes of this Agreement.

5.7 Surviving Rights. Notwithstanding the termination of Executive’s employment, the parties shall be required to carry out any provisions 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 Notices. 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.

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6.2 Compliance with Section 409A of the Code. If and to the extent that any provision of this Agreement is required to comply with Section 409A of the Code, the Company shall have the authority, without the consent of 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 Conflicting 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 under and pursuant to this Agreement, except as set forth above.

6.5 Entire Agreement. This Agreement contains the entire understanding of the parties 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 in Control Agreement (which has subsequently been amended) and that the Change in Control Agreement, and all amendments thereto shall supersede this Agreement and any understanding between the parties with respect to termination upon a Change in 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 in 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, but if for any reason any provision of this Agreement is determined to be unenforceable or invalid, such provision or such part thereof as may 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; Venue. 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

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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 hereof.

(Signature Page Follows)

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

COMPANY:

ARCTIC CAT INC.

/s/ CHRISTOPHER T. METZ

Christopher T. Metz

President and Chief Executive Officer

EXECUTIVE:

/s/ CHRISTOPHER J. EPERJESY

Chris Eperjesy

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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 30^th 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 30^th 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 30^th 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 30^th 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

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EX-99.1

Exhibit 99.1

News Release

CONTACT:	PadillaCRT
	Shawn Brumbaugh
	shawn.brumbaugh@padillacrt.com
	612-455-1754

ARCTIC CAT HIRES CHRISTOPHER J. EPERJESY AS CHIEF FINANCIAL OFFICER

MINNEAPOLIS, February 9, 2015 – Arctic Cat Inc. (NASDAQ: ACAT) today announced that Christopher J. Eperjesy, 47, will join the company as chief financial officer, effective February 16, 2015. Eperjesy brings 25 years of finance experience to his new role with Arctic Cat, including serving the past 12 years as CFO of a public company. Eperjesy succeeds Timothy Delmore, who retired at the end of December, as planned.

Commented Christopher T. Metz, Arctic Cat’s president and CEO: “After conducting a nationwide search, we are pleased that Chris Eperjesy will be joining us as CFO. Chris is a proven corporate finance leader with deep manufacturing and international experience in the power equipment and automotive industries, as well as retail. He also has a strong background in mergers and acquisitions, which is a new strategic focus for Arctic Cat, as we seek small, bolt-on acquisitions that can expand our capabilities and revenues. We look forward to Chris’ involvement, as we develop and implement our strategic growth plans.”

Since 2002, Eperjesy has been chief financial officer, vice president of finance and treasurer, at Twin Disc Inc., a publicly held company headquartered in Racine, Wis. Twin Disc is an international manufacturer and worldwide distributor of heavy-duty, off-highway and marine power transmission equipment and related products. While there, he was responsible for all public company reporting, finance and internal controls, treasury, IT and legal functions.

Prior to Twin Disc, Eperjesy served as a divisional vice president of corporate finance for Kmart from 2001 to 2002, where he helped build the company’s financial planning and analysis capability. Before that, he spent six years with the Chrysler Corporation/DaimlerChrysler AG in a variety of increasingly responsible corporate finance roles in the United States, Belgium and Germany. He began his career as an accountant, spending five years with Coopers & Lybrand, now PricewaterhouseCoopers, in the firm’s Detroit and Germany offices.

Eperjesy said: “I am excited to join Arctic Cat, which is a strong power sports brand with tremendous opportunities for improved performance. The company’s industry and its financial needs complement my skillset. I’m looking forward to working together with the Arctic Cat team to contribute to the company’s growth goals.”

Arctic Cat Names CFO – Page 2

Eperjesy earned a master of business administration degree from the Kelley School of Business at Indiana University, Bloomington, Ind. He received a bachelor’s degree in accounting from the University of Michigan, Ann Arbor, Mich. He is a certified public accountant.

About Arctic Cat

Arctic Cat Inc. designs, engineers, manufactures and markets all-terrain vehicles (ATVs), side-by-sides and snowmobiles under the Arctic Cat^® brand name, as well as related parts, garments and accessories. Its common stock is traded on the NASDAQ Global Select Market under the ticker symbol “ACAT.” More information about Arctic Cat and its products is available at www.arcticcat.com.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements. The Company’s Annual Report, as well as the Report on Form 10-K, its Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission, the Company’s press releases and oral statements made with the approval of an authorized executive officer, contain forward-looking statements that reflect the Company’s current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. The words “aim,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that indicate future events and trends identify forward-looking statements including statements related to our business strategy and growth prospects and anticipated contributions by Mr. Eperjesy. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to: availability of acquisition targets; unexpected expenses and delays relating to our strategic plans; and those set forth in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014, under heading “Item 1A. Risk Factors.” The Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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