ARCTIC CAT INC. (NASDAQ:ACAT) Files An 8-K Entry into a Material Definitive Agreement

Item1.01

Merger Agreement

On January24, 2017 (the Agreement Date), Textron Inc., a
Delaware corporation (Parent), Aces Acquisition Corp., a
Minnesota corporation and an indirect wholly owned subsidiary of
Parent (Purchaser), and Arctic Cat Inc., a Minnesota
corporation (the Company), entered into an Agreement and
Plan of Merger (the Merger Agreement). The Merger
Agreement provides that, subject to the terms therein, Purchaser
will commence a tender offer (the Offer) to purchase all
of the issued and outstanding shares of the Companys common
stock, par value $0.01 per share (the Shares), at a price
of $18.50 per share in cash (the Offer Price), without
interest and subject to any applicable withholding taxes.

The consummation of the Offer, and the obligation of Purchaser to
accept for payment and pay for Shares tendered to the Offer, is
subject to various conditions set forth in the Merger Agreement,
including, but not limited to, (i)at least one Share more than
50% of the Shares (determined on a fully diluted basis) being
validly tendered in the Offer and not properly withdrawn, (ii)the
receipt of required regulatory approvals in the United States and
Germany or the expiration or termination of the applicable
waiting period with respect thereto, (iii)the absence of a
material adverse effect on the Company and (iv)the satisfaction
or, to the extent permitted by applicable law, waiver by Parent
or Purchaser of the other conditions and requirements set forth
in Annex I to the Merger Agreement.

The Offer will expire at 5:00 p.m. New York City time on the date
that is 20 business days (calculated in accordance with Rule
14d-1(g)(3) promulgated under the Securities Exchange Act of
1934) following the commencement of the Offer, unless extended in
accordance with the terms of the Merger Agreement and the
applicable rules and regulations of the Securities and Exchange
Commission (the SEC).

Depending on the number of Shares held by Purchaser after its
acceptance of the Shares properly tendered in connection with the
Offer, the Companys shareholders that remain after completion of
the Offer, including Purchaser, may be required to adopt the
Merger Agreement and approve the Merger at a special meeting of
the shareholders.

Following consummation of the Offer and, if applicable, a
shareholder vote to adopt the Merger Agreement and approve the
Merger, upon the terms and subject to the conditions set forth in
the Merger Agreement, Purchaser will merge with and into the
Company with the Company surviving as an indirect wholly owned
subsidiary of Parent (the Merger). At the effective time
of the Merger (the Effective Time), each Share that is not
tendered and accepted to the Offer (other than any Shares held
directly or indirectly by Parent or its subsidiaries and Shares
as to which dissenters rights have been perfected in accordance
with applicable law) will be cancelled and converted into the
right to receive cash in an amount equal to the Offer Price (the
Merger Consideration), without interest and subject to any
applicable withholding taxes, on the terms and conditions set
forth in the Merger Agreement.

In addition, at the Effective Time, (i)each option to purchase
Shares (each, an Option) that is outstanding and
unexercised as of the Effective Time, whether or not vested or
exercisable, will be cancelled and converted into the right to a
payment in cash, without interest and subject to any applicable
withholding taxes, of an amount equal to the product of (a)the
total number of Shares subject to such Option immediately prior
to such cancellation and (b)the excess, if any, of the Merger
Consideration over the exercise price per Share of such Option
immediately prior to such cancellation, (ii)each stock
appreciation right representing the right to receive a payment in
cash or Shares of the Company (each, a SAR) that is
outstanding and unexercised as of the Effective Time will be
cancelled and converted into the right to a payment in cash,
without interest and subject to any applicable withholding taxes,
of an

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amount equal to the product of (a)the total number of Shares
subject to such SAR and (b)the amount by which the Merger
Consideration exceeds the applicable exercise price per Share of
such SAR, if any, (iii)each restricted stock unit (each, an
RSU) that is subject to a RSU award that is outstanding as
of the Effective Time will be cancelled and exchanged for the
right to a payment in cash, without interest and subject to any
applicable withholding taxes, of an amount equal to the product
of (a)the total number of Shares subject to such RSU immediately
prior to such cancellation and (b)the Merger Consideration, and
(iv)each restricted stock award (each, an RSA) that is
outstanding as of the Effective Time will be cancelled and
exchanged for the right to a payment in cash, without interest
and subject to any applicable withholding taxes, of an amount
equal to the product of (a)the total number of Shares subject to
such RSA and (b)the Merger Consideration. Each Option and SAR
that is outstanding and unexercised as of the Effective Time that
has an exercise price per Share that is greater than the Merger
Consideration will be cancelled at the Effective Time without the
payment of any consideration.

The Company has also granted to Purchaser an option (the Top
Up Option) to purchase at a price per share equal to the
Offer Price, a number of newly issued Shares equal to the lowest
number of Shares that, when added to the number of Shares owned,
directly or indirectly, by Parent and Purchaser, in the
aggregate, at the time of exercise of the Top Up Option,
constitutes one Share more than 90% of the fully diluted Shares
(after giving effect to the issuance of all Shares subject to the
Top Up Option); provided that the Top Up Option will not be
exercisable (i)unless, immediately after the exercise of the Top
Up Option and the issuance of the Shares thereto, Purchaser would
own at least 90% of the outstanding Shares and (ii)for a number
of Shares in excess of the Companys authorized but unissued
Shares on a fully diluted basis. Purchaser may exercise the Top
Up Option once, for the full number of Shares purchasable under
the Top Up Option to reach one Share more than 90% of the fully
diluted Shares and not in part.

The Merger Agreement contains customary representations and
warranties by Parent, Purchaser and the Company. The Merger
Agreement also contains customary covenants and agreements,
including with respect to the operations of the business of the
Company and its subsidiaries between signing and closing,
restrictions on the Company regarding soliciting and responding
to alternative business combination transactions, governmental
filings and approvals and other matters.

Subject to certain limited exceptions, the Merger Agreement
prohibits the Companys solicitation of proposals relating to
alternative business combination transactions and restricts the
Companys ability to furnish non-public information to, or
participate in any discussions or negotiations with, any third
party with respect to any such transaction.

The Merger Agreement includes a remedy of specific performance
for the Company, Parent and Purchaser. The Merger Agreement also
contains termination rights for each of Parent, Purchaser and the
Company and further provides that upon termination of the Merger
Agreement under specified circumstances, including termination by
the Company to accept and enter into a definitive agreement with
respect to an unsolicited superior proposal, the Company will be
required to pay a termination fee of $7,400,000 (the Company
Termination Fee). A superior proposal is a bona fide written
proposal made by a third party after the Agreement Date, which
did not result from a material breach of the Merger Agreement,
(i) to which such third party would acquire, directly or
indirectly, 50% or more of the outstanding Shares or all or
substantially all the assets of the Company and its subsidiaries,
taken as a whole, (ii)is on terms that the board of directors of
the Company has determined in good faith (after consultation with
its financial advisor and outside legal counsel and after taking
into account all the terms and conditions of such bona fide
written proposal) are more favorable to the Companys shareholders
from a financial point of view than the terms and conditions of
the Merger Agreement (accounting for any amendment thereto
proposed by Parent in accordance with the terms thereof), and
(iii)that the board of directors of the Company has determined
(after consultation with its financial advisor and outside legal

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counsel) is reasonably capable of being consummated in accordance
with the terms proposed in a reasonable period of time, taking
into account all financial, regulatory, legal and other aspects
(including certainty of closing and certainty of financing) of
such proposal. Any such termination of the Merger Agreement by
the Company is subject to certain conditions, including the
Companys compliance with certain procedures set forth in the
Merger Agreement and a determination by the board of directors of
the Company that the failure to take such action would be
inconsistent with its fiduciary duties under applicable law, the
entrance into a definitive agreement by the Company with a third
party with respect to such alternative business combination
transaction and payment of the Company Termination Fee by the
Company to Parent.

Each of the board of directors of the Company and, as required by
the Minnesota Business Corporation Act, a special committee of
disinterested directors of the board of directors of the Company,
among other things, (i)determined that the Merger Agreement and
the transactions contemplated thereby are fair to and in the best
interests of the Company and its shareholders, (ii)approved and
adopted the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and (iii)recommended
that the Companys shareholders accept the Offer and tender their
Shares to Purchaser in the Offer and, if required to consummate
the Merger, such shareholders approve and adopt the Merger
Agreement and the Merger.

The foregoing description of the Merger Agreement does not
purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, which is filed as Exhibit 2.1
hereto, and which is incorporated herein by reference. The Merger
Agreement has been provided solely to inform investors of its
terms. The representations, warranties and covenants contained in
the Merger Agreement were made only for purposes of such
agreement and as of specific dates, were made solely for the
benefit of the parties to the Merger Agreement, and are intended
not as statements of fact, but rather as a way of allocating risk
to one of the parties if those statements prove to be inaccurate.
In addition, such representations, warranties and covenants may
have been qualified by certain disclosures not reflected in the
text of the Merger Agreement and may apply standards of
materiality in a way that is different from what may be viewed as
material by shareholders of, or other investors in, the Company.
Investors are not third-party beneficiaries under the Merger
Agreement and should not rely on the representations, warranties
and covenants or any descriptions thereof as characterizations of
the actual state of facts or condition of the Company, Parent,
Purchaser or any of their respective subsidiaries or affiliates.

Additional Information and Where to Find It

The Offer described in this Current Report on Form 8-K has not
yet commenced. The description contained herein is neither an
offer to purchase nor a solicitation of an offer to sell any
securities of the Company. At the time the Offer is commenced,
Textron and Purchaser will file a Tender Offer Statement on
Schedule TO containing an offer to purchase, forms of letters of
transmittal and other documents relating to the tender offer, and
the Company intends to file a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer. Textron,
Purchaser and the Company intend to mail these documents to the
shareholders of the Company. These
documents will
contain important
information about
the Offer, and
the shareholders
of the Company
are urged to
read them
carefully when
they become
available. These materials will be made
available free of charge on the Investor Relations section of the
Companys website at www.arcticcat.com when available. In
addition, all of these materials (and all other materials filed
by the Company with the SEC) will be available at no charge from
the SEC through its website at www.sec.gov. Shareholders may also
obtain free copies of the documents filed by Arctic Cat with the
SEC by contacting Investor Relations/CFO at Arctic Cat Inc., 500
North 3d Street, Minneapolis, MN 55401; telephone number (612)
350-1791.

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Forward-Looking Statements

Statements in this Current Report on Form 8-K regarding the
proposed transaction between the Company and Parent, the expected
timetable for completing the transaction, and any other
statements by management of the Company concerning future
expectations, beliefs, goals, plans or prospects constitute
forward-looking statements. Generally, forward-looking statements
include expressed expectations, estimates and projections of
future events and financial performance and the assumptions on
which these expressed expectations, estimates and projections are
based. Statements that are not historical facts, including
statements about the beliefs and expectations of the parties and
their management are forward-looking statements. All
forward-looking statements are inherently uncertain as they are
based on various expectations and assumptions about future
events, and they are subject to known and unknown risks and
uncertainties and other factors that can cause actual events and
results to differ materially from historical results and those
projected. Risks and uncertainties include the satisfaction of
closing conditions for the acquisition, including the tender of a
number of shares that constitutes a majority of the Companys
outstanding shares on a fully-diluted basis; the possibility that
the transaction will not be completed, or if completed, not
completed on a timely basis.

The Company cannot give any assurance that any of the
transactions contemplated by the Merger Agreement will be
completed or that the conditions to the Offer will be satisfied.
A further list and description of additional business risks,
uncertainties and other factors can be found in the Companys
Annual Report on Form 10-K for the fiscal year ended March31,
2016, as well as other Company SEC filings. Copies of these
filings, as well as subsequent filings, are available online at
www.sec.gov and www.arcticcat.com. Many of the factors that will
determine the outcome of the subject matter of this communication
are beyond the Companys ability to control or predict. 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

On January25, 2017, the Company issued a press release announcing
that it has entered into the Merger Agreement. The Company is
filing a copy of the press release as Exhibit 99.1 hereto.

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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.

– 6 –

COMPANY.

EXHIBIT INDEX

About ARCTIC CAT INC. (NASDAQ:ACAT)

Arctic Cat Inc. (Arctic Cat) designs, engineers, manufactures and markets snowmobiles and all-terrain vehicles (ATVs) and recreational off-highway vehicles (side-by-sides or ROVs), as well as related parts, garments and accessories (PG&A). The Company offers its products under the Arctic Cat and MotorFist brand names. The Company operates through two segments: snowmobile and ATV/ROV, and PG&A. The Company produces a line of snowmobiles, consisting of approximately 60 models, marketed under the Arctic Cat brand name. Its ATVs line includes approximately 30 models. The Company offers a total of approximately 16 models under ROVs. The Company provides Arctic Cat Snowmobile, ATV and ROV parts, garments and accessories. It markets its products through a network of independent dealers located throughout the United States, Canada and Europe, and through distributors representing dealers in Europe, Russia, South America, the Middle East, China, Asia and other international markets.

ARCTIC CAT INC. (NASDAQ:ACAT) Recent Trading Information

ARCTIC CAT INC. (NASDAQ:ACAT) closed its last trading session up +5.46 at 18.55 with 145,156 shares trading hands.