Exhibit 10.2
CHANGE OF CONTROL
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”).
WHEREAS , the Company
considers the establishment and maintenance of a sound and vital
management to be essential to protecting and enhancing the best
interests of the Company and its shareholders; and
WHEREAS , Executive has made and is expected to make,
due to Executive’s intimate knowledge of the business and
affairs of the Company, its policies, methods, personnel and
problems, a significant contribution to the profitability, growth
and financial strength of the Company; and
WHEREAS , the Company recognizes that the possibility of
a Change in Control may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may
result in the departure of Executive or distraction in the
performance of Executive’s duties to the detriment of the
Company and its shareholders; and
WHEREAS , Executive is willing to remain in the employ
of the Company upon the understanding that the Company will provide
income security if Executive’s employment is terminated under
certain terms and conditions;
WHEREAS , it is in the best interests of the Company and
its shareholders to reinforce and encourage the continued attention
and dedication of management personnel, including Executive, to
their assigned duties without distraction and to ensure the
continued availability to the Company of Executive in the event of
a Change in Control; and
WHEREAS , the Company and Executive acknowledge that
they have signed an Employment Agreement of even date herewith, and
that this Agreement shall supersede such Employment Agreement with
respect to termination upon a Change of Control as defined herein
and any compensation paid to Executive upon such
termination.
THEREFORE , in consideration of the foregoing and other
respective covenants and agreements of the parties herein
contained, the parties hereto agree as follows:
1.
Term of Agreement . The term of this Agreement shall
commence on the date of this Agreement, and shall continue in
effect through December 31, 2009, and shall automatically be
extended for successive one-year periods thereafter unless the
Board of Directors of the Company (“the “Board”)
shall have determined, and Executive is notified in writing, prior
to December 31, 2008 and each December 31 thereafter,
that the term of this Agreement shall not be extended or further
extended from such date; provided , however , that if
a Change in Control shall have occurred during the original or any
extended term of this Agreement, this Agreement shall continue in
effect for a period of 36 months from the date the occurrence of a
Change in Control or, if an event triggering the Company’s
severance payment obligations to Executive under
Section 4(d) has occurred during such 36-month period,
this Agreement shall continue in effect until the benefits payable
to Executive hereunder have been paid in full. In the event
that more than one Change in Control shall occur during the
original or any extended term of this Agreement, the 36-month
period shall follow the last Change in Control. This
Agreement shall neither impose nor confer any further rights or
obligations on the Company or Executive on the day after the end of
the term of this Agreement.
2.
Change in Control . No benefits shall be payable hereunder
unless there shall have been a Change in Control, as set forth
below.
For purposes of this Agreement, a
“Change in Control” of the Company shall mean any of
the following events:
(i)
if any “person” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)) becomes a
“beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities
of
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the Company
representing 20% or more of the combined voting power of the
Company’s then outstanding securities, provided ,
however , it shall not be deemed a Change in Control if such
person becomes the beneficial owner of 20% or more of the combined
voting power as a result of an issuance of stock by the Company
which issuance has been approved by the Incumbent Directors (as
defined below) in response to an Unfriendly Change in Control (as
defined in Section 5) and provided further ,
however , that no Change in Control shall be deemed to have
occurred pursuant to this Section 2(i) as a result of
Suzuki Motor Corporation’s (“Suzuki”) ownership
of more than 20% of the combined voting power of the
Company’s outstanding securities unless and until such time
as Suzuki owns more than 40% of the combined voting power of the
Company’s outstanding securities;
(ii)
if the Incumbent Directors cease for any reason to constitute at
least a 75% of the Board. The term “Incumbent
Directors” shall mean those individuals who are members of
the Board on the effective date of this Agreement and any
individual who subsequently becomes a member of the Board (other
than a director designated by a person who has entered into
agreement with the Company to effect a transaction contemplated by
Section 2(iii)) whose election or nomination for
election by the Company’s shareholders was approved by a vote
of at least 75% of the then Incumbent Directors; or
(iii)
(A) the Company consummates a merger, consolidation, share
exchange, division or other reorganization of the Company with any
corporation or entity, other than an entity owned at least 80% by
the Company, unless immediately after such transaction, the
shareholders of the Company, other than Suzuki, immediately prior
to such transaction beneficially own, directly or indirectly 51% or
more of the combined voting power of resulting entity=s outstanding
voting securities as well as 51% or more of the Total Market Value
of the resulting entity, or in the case of a division, 51% or more
of the combined voting power of the outstanding voting securities
of each entity resulting from the division as well as 51% or more
of the Total Market Value of each such entity, in each case in
substantially the same proportion as such shareholders owned shares
of the Company prior to such transaction; (B) the shareholders
of the Company approve an agreement for the sale or disposition (in
one transaction or a series of transactions) of assets of the
Company, the total consideration of which is greater than 51% of
the Total Market Value of the Company, or (C) the Company
adopts a plan of complete liquidation or winding-up of the
Company. ATotal Market Value@ shall mean the aggregate market
value of the Company=s or the resulting entity=s outstanding
capital stock (on a fully diluted basis) plus the aggregate market
value of the Company=s or the resulting entity=s other outstanding
equity securities as measured by the exchange rate of the
transaction or by such other method as the Board determines where
there is not a readily ascertainable exchange rate; or
(iv)
if a change in control otherwise occurs which would be required to
be reported in response to the current Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Exchange Act, whether
or not the Company is then subject to such reporting
requirement.
3.
Termination Following Change in Control . If a Change in
Control shall have occurred and Executive is thereafter terminated
while this Agreement is in effect, Executive shall be entitled to
the benefits provided in subsection 4(d) unless such
termination is (A) because of Executive’s death,
(B) by the Company for Cause or Disability, or (C) by
Executive other than for Good Reason.
(a)
Disability . For purposes of this Agreement, the term
“Disability” shall have two different meanings.
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. The
Executive’s employment shall terminate upon 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.
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(b)
Cause . For purposes of this Agreement, the Company
shall have the right to immediately terminate the employment of
Executive for “Cause” if the Executive
shall:
(i)
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;
(ii)
Willfully violate other reasonable and substantial
rules governing Executive performance, including, without
limitation, prohibitions against unauthorized use of drugs or
alcohol without treatment;
(iii)
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;
(iv)
Willfully engage in conduct that is demonstrably and materially
injurious to the Company, monetarily or otherwise;
(v)
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
(vi)
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 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 was Cause and specifying the particulars thereof in
detail.
(c)
Good Reason . Executive shall be entitled to terminate his
or her employment for Good Reason following a Change in Control,
and in such case shall be entitled to the benefits provided in
subsection 4(d) of this Agreement. For purposes of this
Agreement, “Good Reason” shall mean, without
Executive’s express written consent, any of the
following:
(i)
the authority, powers, functions, responsibilities or duties
assigned to Executive, as compared to those in effect immediately
prior to the Change in Control, are materially and adversely
diminished (except for any diminution that occurs solely as a
result of the fact that the Company ceases to be a public
company);
(ii)
a reduction by the Company in Executive’s annual base salary
in effect immediately prior to a Change in Control;
(iii)
the relocation of the Company’s principal executive offices
to a location more than twenty-five miles from Thief River Falls,
Minnesota, or 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 to an extent substantially
consistent with Executive’s business travel obligations prior
to the Change in Control;
(iv)
the failure by the Company to
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