Exhibit 10.rr
 
POLARIS INDUSTRIES INC

 
2003 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

AMENDED AND RESTATED STOCK OPTION AGREEMENT
 

[Name] SSN: 000-00-0000

 
In accordance with the terms of the Polaris Industries Inc. 2003 Non-Employee
Director Stock Option Plan (as it may be amended from time to time, the “Plan”),
Polaris Industries Inc. (the “Company”) hereby grants to you (the
“Participant”), subject to the terms and conditions set forth in this Amended
and Restated Stock Option Agreement (including Annex A hereto and all documents
incorporated herein by reference) the rights and options (the “Options”) to
purchase from the Company shares of its common stock $.01 par value, as set
forth below:
 

     
Number of Options Granted:
   
Date of Grant:
   
Option Price:
   
Vesting:
  100% on the earliest of: (1) the date of the Company’s 20__ Annual Meeting of
Shareholders, (2) your Retirement or Early Retirement or (3) a Change in Control
     
Expiration Date:
  Close of business on     , 20  
Exercise Period
  Date of Vesting through Expiration Date

 
Further terms and conditions of the grant are set forth in Annex A hereto, which
is an integral part of this Amended and Restated Stock Option Agreement.
 
All terms, provisions and conditions applicable to the Options set forth in the
Plan and not set forth herein are hereby incorporated by reference herein. To
the extent any provision hereof is inconsistent with a provision of the Plan,
the provisions of the Plan will govern. The Participant hereby acknowledges the
receipt of a copy of this Amended and Restated Stock Option Agreement, including
Annex A hereto, and a copy of the Plan, and agrees to be bound by all the terms
and provisions hereof and thereof.
 
The Company and the Participant hereby acknowledge and agree that this Amended
and Restated Stock Option Agreement amends, restates and replaces that certain
Stock Option Agreement between the Company and the Participant with the Date of
Grant set forth above.
 
IN WITNESS WHEREOF, the Company has caused this Amended and Restated Stock
Option Agreement to be executed by its Vice President — Finance and Chief
Financial Officer, and the Participant has executed this Amended and Restated
Stock Option Agreement, both as of the Date of Grant.
 
POLARIS INDUSTRIES INC.
 
-s-Michael W. Malone [c56161c5616102.gif]
Michael W. Malone
Vice President — Finance and Chief Financial Officer
 
Agreed:
 

Participant
Attachment: Annex A

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ANNEX A

 
NON-QUALIFIED STOCK OPTIONS
 
You are the recipient of a stock option award under the Polaris Industries Inc.
2003 Non-Employee Director Stock Option Plan (as it may be amended from time to
time, the “Plan”). The Board of Directors and the shareholders of Polaris
Industries Inc. (the “Company”) adopted and approved the Plan for the purposes
of providing non-employee directors of the Company an opportunity to acquire
Common Stock, par value $.01 per share, of the Company (“Common Stock”) and to
create an incentive for such persons to serve on the Board of Directors of the
Company and to contribute to its long-term growth and profitability. A copy of
the Plan is enclosed herewith for your reference.
 
This stock option award was approved by the Compensation Committee of the Board
of Directors of the Company (the “Committee”). Section 5 of the Plan provides
that all awards under the Plan be made pursuant to an award agreement between
the recipient and the Company. This Annex A, together with the cover sheet
hereto, sets forth an Amended and Restated Stock Option Agreement (“Agreement”)
to confirm and formalize your agreement with the Company with respect to your
stock option award and is entered into under and pursuant to all of the terms
and provisions of the Plan. In conformity with the Plan, you and the Company
agree as follows:
 
1. Subject to the terms and conditions of this Agreement and the Plan, the
Company hereby grants to you the right and option to purchase from the Company
up to, but not exceeding in the aggregate, the number of shares of the Common
Stock of the Company set forth on the cover sheet to this Agreement (the
“Options”), at an exercise price of $      per share (the “Exercise Price”) and
for the period (the “Option Term”) beginning on          , 20   (the “Date of
Grant”) and ending on          , 20   (the “Expiration Date”), subject to
earlier termination as set forth in Section 5. The Exercise Price set forth
herein equals the fair market value, as defined in the Plan, on the Date of
Grant, of the shares of Common Stock subject to the Options.
 
2. All of the Options granted to you under this Agreement are not intended to be
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”), i.e. such Options are
non-qualified stock options.
 
3. The Options granted to you hereunder shall become exercisable (“vest”) as set
forth below. Once Options have vested, they may be exercised, in whole or in
part, at any time and from time to time during the Option Term. The Options will
vest in full and become exercisable on the earliest to occur of (a) the date of
the Company’s 20  Annual Meeting of Shareholders, (b) the termination of your
service on the Board of Directors of the Company at or after age sixty-five
(65) or as a result of the term limits applicable to members of the Board of
Directors of the Company (“Retirement”), (c) the termination of your service on
the Board of Directors of the Company prior to age sixty-five (65) if you have
served on the Board of Directors of the Company for a period of ten (10) years
or more (“Early Retirement”) or (d) the occurrence of a “Change in Control” of
the Company. A “Change in Control” shall be deemed to have occurred if:
 
(a) Any election has occurred of persons to the Board of Directors of the
Company that causes at least one-half of the Board of Directors to consist of
persons other than (x) persons who were members of the Board of Directors
on          , 20   and (y) persons who were nominated for election by the Board
of Directors as members of the Board of Directors at a time when more than
one-half of the members of the Board of Directors consisted of persons who were
members of the Board of Directors on          , 20  ; provided, however, that
any person nominated for election by the Board of Directors at a time when at
least one-half of the members of the Board of Directors were persons described
in clauses (x) and/or (y) or by persons who were themselves nominated by such
Board of Directors shall, for this purpose, be deemed to have been nominated by
a Board of Directors composed of persons described in clause (x) (persons
described or deemed described in clauses (x) and/or (y) are referred to herein
as (“Incumbent Directors”)); or
 
(b) The acquisition in one or more transactions, other than from the Company, 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”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of a number of Company Voting Securities equal to or
greater than 35% of the Company Voting Securities unless such acquisition has
been designated by the Incumbent Directors as an acquisition not constituting a
Change of Control for purposes hereof; or

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(c) Any of the following: (x) a liquidation or dissolution of the Company; (y) a
reorganization, merger or consolidation of the Company unless, following such
reorganization, merger or consolidation, (A) the Company is the surviving entity
resulting from such reorganization, merger or consolidation or (B) at least
one-half of the Board of Directors of the entity resulting from such
reorganization, merger or consolidation consists of Incumbent Directors; or
(z) a sale or other disposition of all or substantially all of the assets of the
Company unless, following such sale or disposition, at least one-half of the
Board of Directors of the transferee consists of Incumbent Directors.
 
As used herein, “Company Voting Securities” means the combined voting power of
all outstanding voting securities of the Company entitled to vote generally in
the election of the Board of Directors.
 
4. You may exercise the Options by delivering to the Company a Notice of
Exercise of Stock Options, in the form set forth as Exhibit A hereto, together
with (i) a check payable to the order of the Company and/or (ii) shares of
Common Stock that you have held for at least six months prior to the date of
exercise, with a stock power executed in blank, equal in value to the Exercise
Price of the shares of Common Stock being purchased. Shares of Common Stock
surrendered in exercise of an Option shall be valued at their fair market value,
as such term is defined in the Plan, on the date of exercise. With the approval
of, and under the terms and conditions specified by, the Committee, you also may
exercise the Options in accordance with a cashless exercise program through an
approved broker or dealer.
 
5. Upon your termination of service on the Board of Directors for any reason,
your rights to exercise your Options shall be only as follows:
 
(a) If you die (i) while a non-employee director of the Company or (ii) within
the five (5) year period specified in Section 5(b) below or the three (3) year
period specified in Section 5(c) below or the ninety (90) day period specified
in Section 5(d) below, your non-vested Options, if any, shall be forfeited, and
your vested Options may be exercised by the person or persons to whom your
rights under the Options pass by will or applicable law or if no person has that
right, by your executors or administrators, at any time, or from time to time,
within one (1) year of the date of your death, but in no event after the
Expiration Date.
 
(b) If you cease to be a non-employee director of the Company by reason of
Retirement, your Options shall be deemed vested in full as of the Retirement
date, and such vested Options may be exercised at any time, or from time to
time, within five (5) years of the date of such Retirement, but in no event
after the Expiration Date.
 
(c) If you cease to be a non-employee director of the Company by reason of Early
Retirement, your Options shall be deemed vested in full as of the Early
Retirement date, and such vested Options may be exercised at any time, or from
time to time, within three (3) years of the date of such Early Retirement, but
in no event after the Expiration Date.
 
(d) If you cease to be a non-employee director of the Company for any reason
other than those set forth in Sections 5(a), 5(b) and 5(c) above, your
non-vested Options shall be forfeited, and your vested Options may be exercised
at any time, or from time to time, within ninety (90) days of the date of such
cessation of service, but in no event after the Expiration Date.
 
6. In the event of any subdivision or combination of the outstanding shares of
Common Stock, stock dividend, recapitalization, reclassification of shares,
sale, lease or transfer of substantially all of the assets of the Company,
substantial distributions to shareholders, merger, consolidation or other
corporate transactions that would result in a substantial dilution or
enlargement of the rights or economic benefits inuring to you under the Plan,
the Committee shall make such equitable adjustments as it may deem appropriate
in the Options granted in this Agreement. Any such determination by the
Committee shall be final and binding on you.
 
7. Nothing contained in this Agreement or in the Plan shall be deemed to confer
upon you any right to prevent or to approve or vote upon any of the corporate
actions described in Section 6. The existence of the Options granted in this
Agreement shall not affect in any way the right or the power of the Company or
its shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stocks ahead of or affecting the
Common Stock or the rights thereof, or the dissolution

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or liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
 
8. Whenever you are referred to in any provision of this Agreement under
circumstances where the provision should logically be construed to apply to the
executors, the administrators, or the person or persons to whom Options may be
transferred by will or by the laws of descent and distribution, such references
will be deemed to include such person or persons.
 
9. You may not transfer the Options granted under this Agreement otherwise than
by will or the laws of descent and distribution and only you may exercise the
Options during your lifetime. No assignment or transfer of the Options granted
under this Agreement, or of the rights represented thereby, whether voluntary or
involuntary, by the operation of law or otherwise (except by will or the laws of
descent and distribution), shall vest in the assignee or transferee any interest
or right herein whatsoever, but immediately upon any such assignment or transfer
the Options shall terminate and become of no further effect.
 
10. You shall not be deemed for any purpose to be a shareholder of the Company
in respect of shares as to which the Options have not been exercised as provided
in this Agreement.
 
11. Notwithstanding any other provision of this Agreement to the contrary, you
hereby agree that you will not exercise the Options granted under this
Agreement, and that the Company will not be obligated to issue any shares to you
under this Agreement, if the exercise of such Options or the issuance of such
shares shall constitute a violation by you or the Company of any provision of
any law or regulation of any governmental authority. Any determination in this
connection by the Company shall be final and binding. The Company shall in no
event be obligated to register any securities pursuant to the Securities Act of
1933 (as the same shall be in effect from time to time) or to take any other
affirmative action in order to cause the exercise of the Options or the issuance
of the shares pursuant thereto to comply with any law or regulation of any
governmental authority.
 
12. No amounts of income received by you pursuant to this Agreement shall be
considered compensation for purposes of any compensation or benefit plan or
arrangement of the Company for non-employee directors unless otherwise provided
in such plan or arrangement.
 
13. Every notice or other communication relating to this Agreement shall be in
writing and shall be mailed to or delivered to the party for whom it is intended
at such address as may from time to time be designated by it in a notice mailed
or delivered to the other party as herein provided; provided, however, that
unless and until some other address be so designated, all notices or
communications by you to the Company shall be mailed or delivered to the Company
at its office at 2100 Highway 55, Medina, Minnesota 55340, and all notices or
communications by the Company to you may be given to you personally or may be
mailed to you at the address indicated in the Company’s records as your most
recent mailing address.
 
14. This Agreement shall be construed, governed, and interpreted under the laws
of the State of Minnesota, except the conflicts of laws provisions thereof.
 
15. This Agreement embodies the entire understanding of the parties hereof, and
supersedes all other oral or written agreements or understandings between you
and the Company regarding the subject matter hereof. No change, alteration or
modification hereof may be made except in a writing, signed by each of the
parties hereto.
 
16. If any provision of this Agreement or the application of any provision
hereof is declared to be illegal, invalid, or otherwise unenforceable by a court
of competent jurisdiction, the remainder of this Agreement shall not be affected
thereby.
 
17. This Agreement shall be binding upon and inure to the benefit of any
successor or successors of the Company and your heirs and personal
representatives.

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EXHIBIT A

 
NOTICE OF EXERCISE OF STOCK OPTIONS
 
Pursuant to the provisions of the Amended and Restated Stock Option Agreement
entered into as of          , 20   between Polaris Industries Inc. (the
“Company”) and me (the “Agreement”), I hereby exercise the non-qualified stock
options granted under the terms of the Agreement to the extent
of           shares of the Common Stock of the Company. I deliver to the Company
herewith the following in payment for such shares:
 

  •  $      in cash     •  Stock certificates for           shares of Common
Stock held for at least six months     •  Other consideration:           (i.e.
cashless exercise, if approved by the Company)

 

             
Date:
 

               

            Optionee (Print Name)                          

            Signature                          

            Address                          

            Social Security Number