EX-10.2








    EXHIBIT 10.2



 




    Polaris
    Industries Inc.

    2007 Omnibus Incentive Plan



 




    Article 1.  Establishment,
    Purpose, and Duration



 



    1.1 Establishment.  Polaris Industries
    Inc., a Minnesota corporation (hereinafter referred to as the
    “Company”), establishes an incentive compensation plan
    to be known as the Polaris Industries Inc. 2007 Omnibus
    Incentive Plan (hereinafter referred to as the
    “Plan”), as set forth in this document.



 



    This Plan permits the grant of Nonqualified Stock Options,
    Incentive Stock Options, Stock Appreciation Rights, Restricted
    Stock, Restricted Stock Units, Performance Shares, Performance
    Units, Cash-Based Awards, and Other Stock-Based Awards.



 



    The Plan was originally effective as of February 20, 2007
    (the “Effective Date”), which is the date on which the
    Plan was approved by the Board of Directors of the Company. The
    plan was amended and restated by the Board of Directors of the
    Company as of January 22, 2009. The Plan shall remain in
    effect as provided in Section 1.3 hereof.



 



    1.2 Purpose of This Plan.  The purpose of
    this Plan is to provide a means through which the Company may
    provide Employees, Directors, and Third-Party Service
    Providers of the Company and its Affiliates and Subsidiaries the
    opportunity to receive compensation consistent with the
    Company’s compensation goals.



 



    1.3 Duration of This Plan.  Unless sooner
    terminated as provided herein, this Plan shall terminate on the
    tenth (10th) anniversary of the Effective Date. After this Plan
    is terminated, no Awards may be granted but Awards previously
    granted shall remain outstanding in accordance with their
    applicable terms and conditions and this Plan’s terms and
    conditions.



 




    Article 2.  Definitions



 



    Whenever used in this Plan, the following terms shall have the
    meanings set forth below, and when the meaning is intended, the
    initial letter of the word shall be capitalized.



 



    2.1 “Affiliate” shall mean any corporation
    or other entity (including, but not limited to, a partnership or
    a limited liability company), that is affiliated with the
    Company through stock or equity ownership or otherwise, and is
    designated as an Affiliate for purposes of this Plan by the
    Committee.



 



    2.2 “Annual Award Limit” or
    “Annual Award Limits” have the meaning set
    forth in Section 4.3.



 



    2.3 “Award” means, individually or
    collectively, a grant under this Plan of Nonqualified Stock
    Options, Incentive Stock Options, Stock Appreciation Rights,
    Restricted Stock, Restricted Stock Units, Performance Shares,
    Performance Units, Cash-Based Awards, or Other Stock-Based
    Awards, in each case subject to the terms of this Plan.



 



    2.4 “Award Agreement” means either:
    (a) a written agreement entered into by the Company and a
    Participant setting forth the terms and provisions applicable to
    an Award granted under this Plan, or (b) a written or
    electronic statement issued by the Company to a Participant
    describing the terms and provisions of such Award, including, in
    each case, any amendment or modification thereof. The Committee
    may provide for the use of electronic, internet or other
    nonpaper Award Agreements, and the use of electronic, internet
    or other nonpaper means for the acceptance thereof and actions
    thereunder by a Participant.



 



    2.5 “Board” or “Board of
    Directors” means the Board of Directors of the Company.



 



    2.6 “Cash-Based Award” means an Award,
    denominated in cash, as described in Article 10.



 



    2.7 “Change of Control” means any of the
    following:



 



    (a) Any election has occurred of persons to the Board that
    causes at least one-half of the Board to consist of persons
    other than (i) persons who were members of the Board on the
    Effective Date and (ii) persons who were nominated for
    election by the Board as members of the Board at a time when
    more than one-half of the




    

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    members of the Board consisted of persons who were members of
    the Board on the Effective Date; provided, however, that any
    person nominated for election by the Board at a time when at
    least one-half of the members of the Board were persons
    described in clauses (i) and/or (ii) or by persons who
    were themselves nominated by such Board shall, for this purpose,
    be deemed to have been nominated by a Board composed of persons
    described in clause (i) (persons described or deemed described
    in clauses (i)
    and/or
    (ii) 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 Exchange Act
    of beneficial ownership (within the meaning of
    Rule 13d-3
    promulgated under the Exchange Act) of a number of Company
    Voting Securities (as defined below) 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 in Control for purposes hereof; or



 



    (c) Any of the following: (i) a liquidation or
    dissolution of the Company; (ii) 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
    (iii) 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.



 



    2.8 “Code” means the U.S. Internal
    Revenue Code of 1986, as amended from time to time. For purposes
    of this Plan, references to sections of the Code shall be deemed
    to include references to any applicable regulations thereunder
    and any successor or similar provision.



 



    2.9 “Committee” means the Compensation
    Committee of the Board or a subcommittee thereof, or any other
    committee designated by the Board to administer this Plan. The
    members of the Committee shall be appointed from time to time by
    and shall serve at the discretion of the Board.



 



    2.10 “Company” means Polaris Industries
    Inc., a Minnesota corporation, and any successor thereto as
    provided in Article 19 herein.



 



    2.11 “Covered Employee” means any Employee
    who is or may (as determined by the Committee in its sole
    discretion) become a “Covered Employee,” as defined in
    Code Section 162(m).



 



    2.12 “Director” means any individual who
    is a member of the Board.



 



    2.13 “Effective Date” has the meaning set
    forth in Section 1.1.



 



    2.14 “Employee” means any individual
    designated as an employee of the Company, its Affiliates,
    and/or its
    Subsidiaries on the payroll records thereof. An Employee shall
    not include any individual during any period he or she is
    classified or treated by the Company, Affiliate,
    and/or
    Subsidiary as an independent contractor, a consultant, or any
    employee of an employment, consulting, or temporary agency or
    any other entity other than the Company, Affiliate,
    and/or
    Subsidiary, without regard to whether such individual is
    subsequently determined to have been, or is subsequently
    retroactively reclassified as, a common-law employee of the
    Company, Affiliate,
    and/or
    Subsidiary during such period.



 



    2.15 “Exchange Act” means the Securities
    Exchange Act of 1934, as amended from time to time, or any
    successor act thereto.



 



    2.16 “Fair Market Value” or
    “FMV” means as of any applicable date:
    (i) if the Shares are listed on a national securities
    exchange or is authorized for quotation on the National
    Association of Securities Dealers Inc.’s NASDAQ National
    Market System (“NASDAQ/NMS”), the closing price,
    regular way, of the Shares on such exchange or NASDAQ/NMS, as
    the case may be, or if no such reported sale of the Shares shall
    have occurred on such date, on the next preceding date on which
    there was such a reported sale; or (ii) if the Shares are
    not listed for trading on a




    

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    national securities exchange or authorized for quotation on
    NASDAQ/NMS, the closing bid price as reported by the National
    Association of Securities Dealers Automated Quotation System
    (“NASDAQ”), or if no such prices shall have been so
    reported for such date, on the next preceding date for which
    such prices were so reported; or (iii) if the Shares are
    not listed for trading on a national securities exchange or
    authorized for quotation on NASDAQ, the last reported bid price
    published in the “pink sheets” or displayed on the
    NASD Electronic Bulletin Board, as the case may be; or
    (iv) if the Shares are not listed for trading on a national
    securities exchange, or are not authorized for quotation on
    NASDAQ/NMS or NASDAQ, or are not published in the “pink
    sheets” or displayed on the NASD Electronic
    Bulletin Board, the Fair Market Value of the Shares as
    determined in good faith by the Committee.



 



    2.17 “Full-Value Award” means an Award
    other than in the form of an ISO, NQSO, or SAR, and which is
    settled by the issuance of Shares.



 



    2.18 “Grant Price” means the price
    established at the time of grant of an SAR that is used to
    determine the amount of any payment due upon exercise of the SAR.



 



    2.19 “Incentive Stock Option” or
    “ISO” means an Option that is designated as an
    Incentive Stock Option and that meets the requirements of Code
    Section 422, or any successor provision.



 



    2.20 “Insider” shall mean an individual
    who is, on the relevant date, an officer or Director of the
    Company, or a more than ten percent (10%) beneficial owner
    (within the meaning of
    Rule 16a-1(a)
    promulgated under the Exchange Act) of any class of the
    Company’s equity securities that is registered pursuant to
    Section 12 of the Exchange Act, as determined by the Board
    in accordance with Section 16 of the Exchange Act.



 



    2.21 “Nonemployee Director” means a
    Director who is not an Employee.



 



    2.22 “Nonemployee Director Award” means
    any NQSO, SAR, or Full-Value Award granted, whether singly, in
    combination, or in tandem, to a Participant who is a Nonemployee
    Director pursuant to such applicable terms, conditions, and
    limitations as the Board or Committee may establish in
    accordance with this Plan.



 



    2.23 “Nonqualified Stock Option” or
    “NQSO” means an Option that is not an Incentive
    Stock Option.



 



    2.24 “Option” means an Award, as described
    in Article 6.



 



    2.25 “Option Price” means the price at
    which a Share may be purchased by a Participant pursuant to an
    Option.



 



    2.26 “Other Stock-Based Award” means an
    Award, denominated in Shares, as described in Article 10.



 



    2.27 “Participant” means any eligible
    individual as set forth in Article 5 to whom an Award is granted.



 



    2.28 “Performance-Based Compensation”
    means compensation under an Award that is intended to
    satisfy the requirements of Code Section 162(m) for certain
    performance-based compensation paid to Covered Employees.
    Notwithstanding the foregoing, nothing in this Plan shall be
    construed to mean that an Award which does not satisfy the
    requirements for performance-based compensation under Code
    Section 162(m) does not constitute performance-based
    compensation for other purposes, including Code
    Section 409A.



 



    2.29 “Performance Measures” means measures
    as described in Article 12 on which the performance goals
    are based in order to qualify Awards as Performance-Based
    Compensation.



 



    2.30 “Performance Period” means the period
    of time during which the performance goals must be met in order
    to determine the amount payable to,
    and/or the
    vested interest of a Participant, with respect to an Award.



 



    2.31 “Performance Share” means an Award,
    as described in Article 9, denominated in Shares, the value
    of which at the time it is payable is determined as a function
    of the extent to which corresponding performance criteria have
    been achieved.



 



    2.32 “Performance Unit” means an Award
    under Article 9 herein, denominated in units, the value of
    which at the time it is payable is determined as a function of
    the extent to which corresponding performance criteria have been
    achieved.




    

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    2.33 “Period of Restriction” means the
    period when Restricted Stock or Restricted Stock Units are
    subject to a substantial risk of forfeiture (based on the
    passage of time, the achievement of performance goals, or upon
    the occurrence of other events as determined by the Committee,
    in its discretion), as provided in Article 8.



 



    2.34 “Plan” means this Polaris Industries
    Inc. 2007 Omnibus Incentive Plan.



 



    2.35 “Plan Year” means the calendar year.



 



    2.36 “Prior Plans” mean the Polaris
    Industries Inc. 1995 Stock Option Plan, 1999 Broad-Based Stock
    Option Plan, Restricted Stock Plan, and 2003 Nonemployee
    Director Stock Option Plan.



 



    2.37 “Restricted Stock” means an Award, as
    described in Article 8, with respect to which Shares are
    awarded on the date of grant of Award.



 



    2.38 “Restricted Stock Unit” means an
    Award, as described in Article 8, with respect to which
    Shares are awarded upon the satisfaction or lapse of the
    restrictions applicable thereto.



 



    2.39 “Share” means a share of common stock
    of the Company, par value $.01 per share.



 



    2.40 “Stock Appreciation Right” or
    “SAR” means an Award, as described in
    Article 7.



 



    2.41 “Subsidiary” means any corporation or
    other entity, whether domestic or foreign, in which the Company
    has or obtains, directly or indirectly, a proprietary interest
    of more than fifty percent (50%) by reason of stock ownership or
    otherwise.



 



    2.42 “Third-Party Service Provider” means
    any consultant, agent, advisor, independent contractor, or other
    service provider who renders services to the Company, a
    Subsidiary, or an Affiliate that: (a) are not in connection
    with the offer and sale of the Company’s securities in a
    capital raising transaction, and (b) do not directly or
    indirectly promote or maintain a market for the Company’s
    securities.



 




    Article 3.  Administration



 



    3.1 General.  The Committee shall be
    responsible for administering this Plan, subject to this
    Article 3 and the other provisions of this Plan. All
    actions taken and all interpretations and determinations made by
    the Committee shall be final and binding upon the Participants,
    the Company, and all other interested individuals.



 



    3.2 Authority of the Committee.  The
    Committee shall have full and exclusive discretionary power to
    interpret the terms and the intent of this Plan and any Award
    Agreement or other agreement or document ancillary to or in
    connection with this Plan, to determine eligibility for Awards
    and to adopt such rules, regulations, forms, instruments, and
    guidelines for administering this Plan as the Committee may deem
    necessary or proper. Such authority shall include, but not be
    limited to, selecting Award recipients, establishing all Award
    terms and conditions, including the terms and conditions set
    forth in Award Agreements, granting Awards as an alternative to
    or as the form of payment for grants or rights earned or due
    under compensation plans or arrangements of the Company,
    construing any ambiguous provision of the Plan or any Award
    Agreement, and, subject to Article 17, adopting
    modifications and amendments to this Plan or any Award
    Agreement, including without limitation, any that are necessary
    to comply with the laws of the countries and other jurisdictions
    in which the Company, its Affiliates,
    and/or its
    Subsidiaries operate.



 



    3.3 Delegation.  The Committee may
    delegate to one or more of its members or to one or more
    officers or employees of the Company,
    and/or its
    Subsidiaries and Affiliates or to one or more agents or advisors
    such administrative duties or powers as it may deem advisable,
    and the Committee or any individuals to whom it has delegated
    duties or powers as aforesaid may employ one or more individuals
    to render advice with respect to any responsibility the
    Committee or such individuals may have under this Plan. The
    Committee may, by resolution, authorize one or more officers of
    the Company to do one or both of the following on the same basis
    as can the Committee: (a) designate Employees to be
    recipients of Awards; and (b) determine the number of
    Shares or amount of cash subject to any such Awards; provided,
    however, (i) the Committee shall not delegate such
    responsibilities to any such officer for Awards granted to an
    Employee who is an Insider; (ii) the resolution providing
    such authorization sets forth the total number of Shares
    and/or
    amount of cash subject to Awards that such officer(s) may grant;
    and (iii) the officer(s) shall report periodically to the
    Committee regarding the nature and scope of the




    

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    Awards granted pursuant to the authority delegated. In addition,
    the Board may exercise any of the powers and authority of the
    Committee under the Plan. In the event of any delegation of
    authority under this Section 3.3, or exercise of authority
    by the Board, references in the Plan to the Committee shall be
    deemed to refer, as applicable, to the delegate of the Committee
    or to the Board.



 




    Article 4.  Shares
    Subject to This Plan and Maximum Awards



 



    4.1 Number of Shares Available for Awards.



 



    (a) Subject to adjustment as provided in Section 4.4
    herein, the maximum number of Shares available for issuance to
    Participants under this Plan (the “Share
    Authorization”) shall be:



 



    (i) Two million seven hundred and fifty thousand
    (2,750,000) Shares, plus



 



    (ii) The number of Shares subject to outstanding awards
    under the Company’s Prior Plans as of the Effective Date to
    the extent that such Shares cease for any reason to be subject
    to such awards (other than by reason of exercise or settlement
    of the awards to the extent they are exercised for or settled in
    vested and nonforfeitable Shares). No further awards shall be
    made under the terms of the Prior Plans on or after the
    Effective Date.



 



    (b) No more than one hundred fifty thousand (150,000)
    Shares of the Share Authorization may be issued pursuant to
    Full-Value Awards; provided, however, to the extent that any
    Shares subject to outstanding Full-Value Awards under the Prior
    Plans as of the Effective Date cease for any reason to be
    subject to such awards as stipulated in Section 4.1(a)(ii)
    herein, shall also be grantable as Full-Value Awards.



 



    (c) The maximum number of Shares of the Share Authorization
    that may be issued pursuant to ISOs under this Plan shall be two
    million seven hundred and fifty thousand (2,750,000) Shares.



 



    4.2 Share Usage.  Shares covered by an
    Award shall only be counted against the Share Authorization to
    the extent they are issued; provided, however, the full number
    of Shares subject to a Stock Appreciation Right granted that are
    settled by the issuance of Shares shall be counted against the
    Share Authorization, regardless of the number of Shares actually
    issued upon settlement of such Stock Appreciation Right.
    Furthermore, any Shares withheld to satisfy tax withholding
    obligations on Awards issued under the Plan and Shares withheld
    to pay the exercise price of Awards under the Plan shall be
    counted against the Share Authorization. Any Shares related to
    Awards which terminate by expiration, forfeiture, cancellation,
    or otherwise without the issuance of such Shares, are settled in
    cash in lieu of Shares, or are exchanged with the
    Committee’s permission, prior to the issuance of Shares,
    for Awards not involving Shares, shall not reduce the Share
    Authorization. The Shares available for issuance under this Plan
    may be authorized and unissued Shares.



 



    4.3 Annual Award Limits.  Unless and until
    the Committee determines that an Award to a Covered Employee
    shall not be intended to qualify as Performance-Based
    Compensation, subject to the adjustment in accordance with
    Section 4.4, in any Plan Year, no Participant shall be
    granted Options in respect of more than 600,000 Shares,
    Full-Value Awards in respect of 125,000 Shares or
    Cash-Based Awards in respect of more than $7,000,000.



 



    4.4 Adjustments in Authorized Shares.  In
    the event of any corporate event or transaction (including, but
    not limited to, a change in the Shares of the Company or the
    capitalization of the Company) such as a merger, consolidation,
    reorganization, recapitalization, separation, partial or
    complete liquidation, stock dividend, stock split, reverse stock
    split, split up, spin-off, or other distribution of stock or
    property of the Company, combination of Shares, exchange of
    Shares, dividend in kind, or other like change in capital
    structure, number of outstanding Shares or distribution (other
    than normal cash dividends) to shareholders of the Company, or
    any similar corporate event or transaction, the Committee, in
    order to prevent dilution or enlargement of Participants’
    rights under this Plan, shall make equitable and appropriate
    adjustments and substitutions, as applicable, to or of the
    number and kind of Shares that may be issued under this Plan or
    under particular forms of Awards, the number and kind of Shares
    subject to outstanding Awards, the Option Price or Grant Price
    applicable to outstanding Awards, the Annual Award Limits, and
    other value determinations applicable to outstanding Awards.



 



    The Committee may also make appropriate adjustments in, or
    modify, the terms of any Awards under this Plan in connection
    with, or in anticipation of, any of the foregoing corporate
    events or transactions, including




    

    5








 






    adjustments
    and/or
    modifications of performance goals, changes in the length of
    Performance Periods and changes in the expiration dates of
    Options or SARs. The determination of the Committee as to the
    foregoing adjustments, if any, shall be conclusive and binding
    on Participants under this Plan.



 



    Subject to the provisions of Article 17 and notwithstanding
    anything else herein to the contrary, without affecting the
    Share Authorization, the Committee may authorize the issuance or
    assumption of benefits under this Plan in connection with any
    merger, consolidation, acquisition of property or stock, or
    reorganization upon such terms and conditions as it may deem
    appropriate (including, but not limited to, a conversion of
    equity awards into Awards under this Plan in a manner consistent
    with paragraph 53 of FASB Interpretation No. 44),
    subject to compliance with the rules under Code
    Sections 422 and 424, as and where applicable.



 




    Article 5.  Eligibility
    and Participation



 



    5.1 Eligibility.  Individuals eligible to
    participate in this Plan include all Employees, Directors,
    including Nonemployee Directors, and Third-Party Service
    Providers.



 



    5.2 Actual Participation.  Subject to the
    provisions of this Plan, the Committee may, from time to time,
    select from all eligible individuals, those individuals to whom
    Awards shall be granted and shall determine, in its sole
    discretion, the nature of, any and all terms permissible by law,
    and the amount of each Award.



 




    Article 6.  Stock
    Options



 



    6.1 Grant of Options.  Subject to the
    terms and provisions of this Plan, Options may be granted to
    Participants in such number, and upon such terms, and at any
    time and from time to time as shall be determined by the
    Committee, in its sole discretion, provided that ISOs may be
    granted only to eligible Employees of the Company or of any
    parent or subsidiary corporation (as permitted under Code
    Sections 422 and 424).



 



    6.2 Award Agreement.  Each Option grant
    shall be evidenced by an Award Agreement that shall specify the
    Option Price, the maximum duration of the Option, the number of
    Shares with respect to which the Option is exercisable, the
    conditions upon which the Option shall become vested
    and/or
    exercisable, and such other provisions as the Committee shall
    determine which are not inconsistent with the terms of this
    Plan. The Award Agreement also shall specify whether the Option
    is intended to be an ISO or an NQSO.



 



    6.3 Option Price.  The Option Price for
    each Option shall be determined by the Committee in its sole
    discretion and shall be specified in the Award Agreement;
    provided, however, the Option Price on the date of grant must be
    at least equal to one hundred percent (100%) of the FMV of the
    Shares with respect to which the Option is exercisable, as
    determined on the date of grant. For this purpose, the date of
    grant of an Option shall be the date on which the Committee (or,
    if authorized pursuant to Section 3.3, an authorized
    officer of the Company) approves such Option, or such later date
    as the Committee (or such officer) may specify in such
    authorization.



 



    6.4 Term of Options.  Each Option granted
    to a Participant shall expire at such time as the Committee
    shall determine, as specified in the Award Agreement; provided,
    however, that no Option shall be exercisable later than the
    tenth
    (10th)

    anniversary of the date of its grant.



 



    6.5 Exercise of Options.  Options granted
    under this Article 6 shall be exercisable at such times and
    be subject to such restrictions and conditions as the Committee
    shall in each instance approve, which terms and restrictions
    need not be the same for each grant or for each Participant.



 



    6.6 Payment.  Options granted under this
    Article 6 shall be exercised by the delivery of a notice of
    exercise to the Company or an agent designated by the Company in
    a form specified or accepted by the Committee, or by complying
    with any alternative procedures which may be authorized by the
    Committee, setting forth the number of Shares with respect to
    which the Option is to be exercised, accompanied by full payment
    for the Shares.



 



    A condition of the issuance of the Shares as to which an Option
    shall be exercised shall be the payment of the Option Price. The
    Option Price of any Option shall be payable to the Company, in
    full as determined by the Committee in its discretion, in the
    manner set forth in the Award Agreement, which shall be one or
    more of the following: (a) in cash or its equivalent;
    (b) by tendering (either by actual delivery or attestation)
    previously acquired Shares having an aggregate Fair Market Value
    at the time of exercise equal to the Option Price (provided that
    except




    

    6








 






    as otherwise determined by the Committee, the Shares that are
    tendered must have been held by the Participant for at least six
    (6) months (or such other period, if any, as the Committee
    may permit) prior to their tender to satisfy the Option Price if
    acquired under this Plan or any other compensation plan
    maintained by the Company or have been purchased on the open
    market); (c) by a cashless (broker-assisted) exercise;
    (d) by the withholding of a number of Shares having a Fair
    Market Value on the date of exercise equal to the Option Price;
    (e) any other method approved or accepted by the Committee
    in its sole discretion or (f) by a combination of (a), (b),
    (c), (d),
    and/or (e).



 



    Unless otherwise determined by the Committee, all payments under
    all of the methods indicated above shall be paid in United
    States dollars.



 



    6.7 Restrictions on Share
    Transferability.  The Committee may impose such
    restrictions on any Shares acquired pursuant to the exercise of
    an Option granted under this Article 6 as it may deem
    advisable, including, without limitation, minimum holding period
    requirements, restrictions under applicable federal securities
    laws or under the requirements of any stock exchange or market
    upon which such Shares are then listed
    and/or
    traded, or under any blue sky or state securities laws
    applicable to such Shares.



 



    6.8 Termination of Employment.  Each
    Participant’s Award Agreement shall set forth the extent to
    which the Participant shall have the right to exercise the
    Option following termination of the Participant’s
    employment with or provision of services to the Company, its
    Affiliates,
    and/or its
    Subsidiaries, as the case may be. Such provisions shall be
    determined in the sole discretion of the Committee, shall be
    included in the Award Agreement entered into with each
    Participant, need not be uniform among all Options issued
    pursuant to this Article 6, and may reflect distinctions
    based on the reasons for termination.



 



    6.9 Notification of Disqualifying
    Disposition.  If any Participant shall make any
    disposition of Shares issued pursuant to the exercise of an ISO
    under the circumstances described in Code Section 421(b)
    (relating to certain disqualifying dispositions), such
    Participant shall notify the Company of such disposition within
    ten (10) days thereof.



 



    6.10 Change in Control.  Unless otherwise
    provided by the Committee in the applicable Award Agreement, in
    the event of a Change in Control, all Options outstanding on the
    date of such Change in Control shall become immediately and
    fully exercisable.



 




    Article 7.  Stock
    Appreciation Rights



 



    7.1 Grant of SARs.  Subject to the terms
    and conditions of this Plan, SARs may be granted to Participants
    at any time and from time to time in such number, and upon such
    terms, and at any time and from time to time as shall be
    determined by the Committee, in its sole discretion.



 



    The Grant Price for each grant of an SAR shall be determined by
    the Committee and shall be specified in the Award Agreement;
    provided, however, the Grant Price on the date of grant must be
    at least equal to one hundred percent (100%) of the FMV of the
    Shares with respect to which the SAR is exercisable, as
    determined on the date of grant. For this purpose, the date of
    grant of an SAR shall be the date on which the Committee (or, if
    authorized pursuant to Section 3.3, an authorized officer
    of the Company) approves such SAR, or such later date as the
    Committee (or such officer) may specify in such authorization.



 



    7.2 SAR Agreement.  Each SAR grant shall
    be evidenced by an Award Agreement that shall specify the Grant
    Price, the term of the SAR, and such other provisions as the
    Committee shall determine.



 



    7.3 Term of SAR.  The term of an SAR
    granted under this Plan shall be determined by the Committee, in
    its sole discretion, and except as determined otherwise by the
    Committee and specified in the SAR Award Agreement, no SAR shall
    be exercisable later than the tenth
    (10th)

    anniversary date of its grant.



 



    7.4 Exercise of SARs.  SARs granted under
    this Article 7 shall be exercisable at such times and be
    subject to such restrictions and conditions as the Committee
    shall in each instance approve, which terms and restrictions
    need not be the same for each grant or for each Participant.




    

    7








 






    7.5 Settlement of SAR Amount.  Upon the
    exercise of an SAR, a Participant shall be entitled to receive
    payment from the Company in an amount determined by multiplying:



 



    (a) The excess of the Fair Market Value of a Share on the
    date of exercise over the Grant Price; by



 



    (b) The number of Shares with respect to which the SAR is
    exercised.



 



    At the discretion of the Committee, the payment upon SAR
    exercise may be in cash, Shares, or any combination thereof, or
    in any other manner approved by the Committee in its sole
    discretion. The Committee’s determination regarding the
    form of SAR payout shall be set forth in the Award Agreement
    pertaining to the grant of the SAR.



 



    7.6 Termination of Employment.  Each Award
    Agreement shall set forth the extent to which the Participant
    shall have the right to exercise the SAR following termination
    of the Participant’s employment with or provision of
    services to the Company, its Affiliates,
    and/or its
    Subsidiaries, as the case may be. Such provisions shall be
    determined in the sole discretion of the Committee, shall be
    included in the Award Agreement entered into with Participants,
    need not be uniform among all SARs issued pursuant to this Plan,
    and may reflect distinctions based on the reasons for
    termination.



 



    7.7 Other Restrictions.  The Committee may
    impose such restrictions on any Shares acquired pursuant to the
    exercise of an SAR granted under this Article 7 as it may
    deem advisable, including, without limitation, minimum holding
    period requirements, restrictions under applicable federal
    securities laws or under the requirements of any stock exchange
    or market upon which such Shares are then listed
    and/or
    traded, or under any blue sky or state securities laws
    applicable to such Shares.



 



    7.8 Change in Control.  Unless otherwise
    provided by the Committee in the applicable Award Agreement, in
    the event of a Change in Control, all SARs outstanding on the
    date of such Change in Control shall become immediately and
    fully exercisable.



 




    Article 8.  Restricted
    Stock and Restricted Stock Units



 



    8.1 Grant of Restricted Stock or Restricted Stock
    Units.  Subject to the terms and provisions of
    this Plan, Restricted Stock
    and/or
    Restricted Stock Units may be granted to Participants in such
    amounts and upon such terms as shall be determined by the
    Committee in its sole discretion.



 



    8.2 Restricted Stock or Restricted Stock Unit
    Agreement.  Each Restricted Stock
    and/or
    Restricted Stock Unit grant shall be evidenced by an Award
    Agreement that shall specify the Period(s) of Restriction, the
    number of Shares of Restricted Stock or the number of Restricted
    Stock Units granted, and such other provisions as the Committee
    shall determine.



 



    8.3 Other Restrictions.  The Committee
    shall impose such other conditions
    and/or
    restrictions on any Shares of Restricted Stock or Restricted
    Stock Units granted pursuant to this Plan as it may deem
    advisable including, without limitation, a requirement that
    Participants pay a stipulated purchase price for each Share of
    Restricted Stock or each Restricted Stock Unit, restrictions
    based upon the achievement of specific performance goals,
    time-based restrictions on vesting following the attainment of
    the performance goals, time-based restrictions,
    and/or
    restrictions under applicable securities laws or under the
    requirements of any stock exchange or market upon which such
    Shares are listed or traded, or under any blue sky or state
    securities laws applicable to such Shares or minimum holding
    requirements or sale restrictions placed on the Shares by the
    Company upon vesting of such Restricted Stock or Restricted
    Stock Units.



 



    To the extent deemed appropriate by the Committee, the Company
    may retain the certificates representing Shares of Restricted
    Stock in the Company’s possession until such time as all
    conditions
    and/or
    restrictions applicable to such Shares have been satisfied or
    lapse.



 



    Except as otherwise provided in this Article 8 or in the
    applicable Award Agreement, Shares of Restricted Stock covered
    by each Restricted Stock Award shall become freely transferable
    by the Participant after all conditions and restrictions
    applicable to such Shares have been satisfied or lapse
    (including satisfaction of any




    

    8








 






    applicable tax withholding obligations), and Restricted Stock
    Units shall be paid in cash, Shares, or a combination of cash
    and Shares as the Committee, in its sole discretion shall
    determine.



 



    The Company may place on any certificate representing Shares
    issued to a Participant pursuant to this Section 8.3 any
    such legend(s) as the Company or the Committee may deem
    appropriate.



 



    8.4 Certificate Legend.  In addition to
    any legends placed on certificates pursuant to Section 8.3,
    each certificate representing Shares of Restricted Stock granted
    pursuant to this Plan may bear a legend such as the following or
    as otherwise determined by the Committee in its sole discretion:



 



    The sale or transfer of Shares of stock represented by this
    certificate, whether voluntary, involuntary, or by operation of
    law, is subject to certain restrictions on transfer as set forth
    in the Polaris Industries Inc. 2007 Omnibus Incentive Plan, and
    in the associated Award Agreement. A copy of this Plan and such
    Award Agreement may be obtained from Polaris Industries Inc.



 



    8.5 Voting Rights.  Unless otherwise
    determined by the Committee and set forth in a
    Participant’s Award Agreement, to the extent permitted or
    required by law, Participants holding Shares of Restricted Stock
    granted hereunder shall have the right to exercise full voting
    rights with respect to those Shares during the Period of
    Restriction. A Participant shall have no voting rights with
    respect to any Restricted Stock Units granted hereunder.



 



    8.6 Termination of Employment.  Each Award
    Agreement shall set forth the extent to which the Participant
    shall have the right to retain Restricted Stock
    and/or
    Restricted Stock Units following termination of the
    Participant’s employment with or provision of services to
    the Company, its Affiliates,
    and/or its
    Subsidiaries, as the case may be. Such provisions shall be
    determined in the sole discretion of the Committee, shall be
    included in the Award Agreement entered into with each
    Participant, need not be uniform among all Shares of Restricted
    Stock or Restricted Stock Units issued pursuant to this Plan,
    and may reflect distinctions based on the reasons for
    termination.



 



    8.7 Section 83(b) Election.  The
    Committee may provide in an Award Agreement that the Award of
    Restricted Stock is conditioned upon the Participant making or
    refraining from making an election with respect to the Award
    under Code Section 83(b). If a Participant makes an
    election pursuant to Code Section 83(b) concerning a
    Restricted Stock Award, the Participant shall be required to
    file promptly a copy of such election with the Company.



 



    8.8 Change in Control.  Unless otherwise
    provided by the Committee in the applicable Award Agreement, in
    the event of a Change in Control, all restrictions applicable to
    Restricted Stock or Restricted Stock Units shall terminate fully.



 




    Article 9.  Performance
    Units/Performance Shares



 



    9.1 Grant of Performance Units/Performance
    Shares.  Subject to the terms and provisions of
    this Plan, Performance Units
    and/or
    Performance Shares may be granted to Participants in such
    amounts and upon such terms as shall be determined by the
    Committee in its sole discretion.



 



    9.2 Value of Performance Units/Performance
    Shares.  Each Performance Unit shall have an
    initial value that is established by the Committee at the time
    of grant. Each Performance Share shall have an initial value
    equal to the Fair Market Value of a Share on the date of grant.
    The Committee shall set performance goals in its discretion
    which, depending on the extent to which they are met, will,
    subject to the terms and conditions of this Plan, determine the
    value and/or
    number of Performance Units/Performance Shares that will be paid
    out to the Participant.



 



    9.3 Earning of Performance Units/Performance
    Shares.  Subject to the terms of this Plan, after
    the applicable Performance Period has ended, the holder of
    Performance Units/Performance Shares shall be entitled to
    receive payout on the value and number of Performance
    Units/Performance Shares earned by the Participant over the
    Performance Period, to be determined as a function of the extent
    to which the corresponding performance goals have been achieved.




    

    9








 






    9.4 Form and Timing of Payment of Performance
    Units/Performance Shares.  Payment of earned
    Performance Units/Performance Shares shall be as determined by
    the Committee and as evidenced in the Award Agreement. Subject
    to the terms of this Plan, the Committee, in its sole
    discretion, may pay earned Performance Units/Performance Shares
    in the form of cash or in Shares (or in a combination thereof)
    equal to the value of the earned Performance Units/Performance
    Shares at the close of the applicable Performance Period, or as
    soon as practicable after the end of the Performance Period. Any
    Shares may be granted subject to any restrictions deemed
    appropriate by the Committee. The determination of the Committee
    with respect to the form of payout of such Awards shall be set
    forth in the Award Agreement pertaining to the grant of the
    Award.



 



    9.5 Termination of Employment.  Each Award
    Agreement shall set forth the extent to which the Participant
    shall have the right to retain Performance Units
    and/or
    Performance Shares following termination of the
    Participant’s employment with or provision of services to
    the Company, its Affiliates,
    and/or its
    Subsidiaries, as the case may be. Such provisions shall be
    determined in the sole discretion of the Committee, shall be
    included in the Award Agreement entered into with each
    Participant, need not be uniform among all Awards of Performance
    Units or Performance Shares issued pursuant to this Plan, and
    may reflect distinctions based on the reasons for termination.



 



    9.6 Change in Control.  Unless otherwise
    provided by the Committee in the applicable Award Agreement, in
    the event of a Change in Control, all Performance Units and
    Performance Shares shall immediately become fully vested.



 




    Article 10.  Cash-Based
    Awards and Other Stock-Based Awards



 



    10.1 Grant of Cash-Based Awards.  Subject
    to the terms and provisions of the Plan, Cash-Based Awards may
    be granted to Participants in such amounts and upon such terms
    as shall be determined by the Committee in its sole discretion.



 



    10.2 Other Stock-Based Awards.  The
    Committee may grant other types of equity-based or
    equity-related Awards not otherwise described by the terms of
    this Plan (including the grant or offer for sale of unrestricted
    Shares) in such amounts and subject to such terms and
    conditions, as the Committee shall determine. Such Awards may
    involve the transfer of actual Shares to Participants, or
    payment in cash or otherwise of amounts based on the value of
    Shares and may include, without limitation, Awards designed to
    comply with or take advantage of the applicable local laws of
    jurisdictions other than the United States.



 



    10.3 Value of Cash-Based and Other Stock-Based
    Awards.  Each Cash-Based Award shall specify a
    payment amount or payment range as determined by the Committee.
    Each Other Stock-Based Award shall be expressed in terms of
    Shares or units based on Shares, as determined by the Committee.
    The Committee may establish performance goals in its discretion.
    If the Committee exercises its discretion to establish
    performance goals, the number
    and/or value
    of Cash-Based Awards or Other Stock-Based Awards that will be
    paid out to the Participant will depend on the extent to which
    the performance goals are met, subject to the terms and
    conditions of the Plan.



 



    10.4 Payment of Cash-Based Awards and Other Stock-Based
    Awards.  Payment, if any, with respect to a
    Cash-Based Award or an Other Stock-Based Award shall be made in
    accordance with the terms of the Award, in cash or Shares as the
    Committee determines.



 



    10.5 Termination of Employment.  The
    Committee shall determine the extent to which the Participant
    shall have the right to receive Cash-Based Awards or Other
    Stock-Based Awards following termination of the
    Participant’s employment with or provision of services to
    the Company, its Affiliates,
    and/or its
    Subsidiaries, as the case may be. Such provisions shall be
    determined in the sole discretion of the Committee, such
    provisions may be included in an agreement entered into with
    each Participant, but need not be uniform among all Awards of
    Cash-Based Awards or Other Stock-Based Awards issued pursuant to
    the Plan, and may reflect distinctions based on the reasons for
    termination.



 




    Article 11.  Transferability
    of Awards



 



    11.1 Transferability.  Except as provided
    in Section 11.2 below, during a Participant’s
    lifetime, his or her Awards shall be exercisable only by the
    Participant. Awards shall not be transferable other than by will
    or the laws of




    

    10








 






    descent and distribution; no Awards shall be subject, in whole
    or in part, to attachment, execution, or levy of any kind; and
    any purported transfer in violation hereof shall be null and
    void.



 



    11.2 Committee Action.  The Committee may,
    in its discretion, determine that notwithstanding
    Section 11.1, any or all Awards (other than ISOs) shall be
    transferable to and exercisable by such transferees, and subject
    to such terms and conditions, as the Committee may deem
    appropriate; provided, however, no Award may be transferred for
    value (as defined in the General Instructions to
    Form S-8).



 



    11.3 Domestic Relations Orders.  Without
    limiting the generality of Section 11.1, and
    notwithstanding Section 11.2, no domestic relations order
    purporting to authorize a transfer of an Award shall be
    recognized as valid.



 




    Article 12.  Performance
    Measures



 



    12.1 Performance Measures.  The
    performance goals upon which the payment or vesting of an Award
    to a Covered Employee that is intended to qualify as
    Performance-Based Compensation shall be limited to the following
    Performance Measures:



 



    (a) Net earnings or net income (before or after taxes);



 



    (b) Earnings per share or earnings per share growth, total
    units, or unit growth;



 



    (c) Net sales, sales growth, total revenue, or revenue
    growth;



 



    (d) Net operating profit;



 



    (e) Return measures (including, but not limited to, return
    on assets, capital, invested capital, equity, sales, or revenue);



 



    (f) Cash flow (including, but not limited to, operating
    cash flow, free cash flow, cash flow return on equity, and cash
    flow return on investment);



 



    (g) Earnings before or after taxes, interest, depreciation,
    and/or
    amortization;



 



    (h) Gross or operating margins;



 



    (i) Productivity ratios;



 



    (j) Share price or relative share price (including, but not
    limited to, growth measures and total shareholder return);



 



    (k) Expense targets;



 



    (l) Margins;



 



    (m) Operating efficiency;



 



    (n) Market share or change in market share;



 



    (o) Customer retention or satisfaction;



 



    (p) Working capital targets; and



 



    (q) Economic value added or
    EVA®

    (net operating profit after tax minus the sum of capital
    multiplied by the cost of capital).



 



    Any Performance Measure(s) may be used to measure the
    performance of the Company, Subsidiary,
    and/or
    Affiliate as a whole or any business unit of the Company,
    Subsidiary,
    and/or
    Affiliate or any combination thereof, as the Committee may deem
    appropriate, or any of the above Performance Measures as
    compared to the performance of a group of comparable companies,
    or published or special index that the Committee, in its sole
    discretion, deems appropriate, or the Company may select
    Performance Measure (j) above as compared to various stock
    market indices. The Committee also has the authority to provide
    for accelerated vesting of any Award based on the achievement of
    performance goals pursuant to the Performance Measures specified
    in this Article 12.




    

    11








 






    12.2 Evaluation of Performance.  The
    Committee may provide in any such Award that any evaluation of
    performance may include or exclude any of the following events
    that occurs during a Performance Period: (a) asset
    write-downs, (b) litigation or claim judgments or
    settlements, (c) the effect of changes in tax laws,
    accounting principles, or other laws or provisions affecting
    reported results, (d) any reorganization and restructuring
    programs, (e) extraordinary nonrecurring items as described
    in Accounting Principles Board Opinion No. 30
    and/or in
    management’s discussion and analysis of financial condition
    and results of operations appearing in the Company’s annual
    report to shareholders for the applicable year,
    (f) acquisitions or divestitures, and (g) foreign
    exchange gains and losses. To the extent such inclusions or
    exclusions affect Awards to Covered Employees, they shall be
    prescribed in a form that meets the requirements of Code
    Section 162(m) for deductibility.



 



    12.3 Adjustment of Performance-Based
    Compensation.  Awards that are intended to qualify
    as Performance-Based Compensation may not be adjusted upward.
    The Committee shall retain the discretion to adjust such Awards
    downward, either on a formula or discretionary basis or any
    combination, as the Committee determines.



 



    12.4 Committee Discretion.  In the event
    that applicable tax
    and/or
    securities laws change to permit Committee discretion to alter
    the governing Performance Measures without obtaining shareholder
    approval of such changes, the Committee shall have sole
    discretion to make such changes without obtaining shareholder
    approval. In addition, in the event that the Committee
    determines that it is advisable to grant Awards that shall not
    qualify as Performance-Based Compensation, the Committee may
    make such grants without satisfying the requirements of Code
    Section 162(m) and base vesting on Performance Measures
    other than those set forth in Section 12.1.



 




    Article 13.  Nonemployee
    Director Awards



 



    Nonemployee Directors may only be granted Awards under the Plan
    in accordance with this Article 13 and such Awards shall
    not be subject to management’s discretion. From time to
    time, the Board shall set the amount(s) and type(s) of equity
    awards that shall be granted to all Nonemployee Directors on a
    periodic, nondiscriminatory basis pursuant to the Plan, as well
    as any additional amount(s), if any, to be awarded, also on a
    periodic, nondiscriminatory basis, based on each of the
    following: the number of committees of the Board on which a
    Nonemployee Director serves, service of a Nonemployee Director
    as the chair of a Committee of the Board, service of a
    Nonemployee Director as Chair of the Board, or the first
    selection or appointment of an individual to the Board as a
    Nonemployee Director. Subject to the foregoing, the Board shall
    grant such Awards to Nonemployee Directors and any Nonemployee
    Chair of the Board, and grant New Nonemployee Director Awards,
    as it shall from time to time determine.



 




    Article 14.  Dividends
    and Dividend Equivalents



 



    Any Participant selected by the Committee may be granted
    dividends or dividend equivalents based on the dividends
    declared on Shares that are subject to any Award, other than an
    Option, SAR, unearned Performance Unit or unearned Performance
    Share, to be credited as of dividend payment dates, during the
    period between the date the Award is granted and the date the
    Award is exercised, vests or expires, as determined by the
    Committee. The dividends or dividend equivalents may be subject
    to any limitations
    and/or
    restrictions determined by the Committee. Such dividend
    equivalents shall be converted to cash or additional Shares by
    such formula and at such time and subject to such limitations as
    may be determined by the Committee.



 




    Article 15.  Beneficiary
    Designation



 



    Each Participant under this Plan may, from time to time, name
    any beneficiary or beneficiaries (who may be named contingently
    or successively) to whom any benefit under this Plan is to be
    paid in case of his death before he receives any or all of such
    benefit. Each such designation shall revoke all prior
    designations by the same Participant, shall be in a form
    prescribed by the Committee, and will be effective only when
    filed by the Participant in writing with the Company during the
    Participant’s lifetime. In the absence of any such
    beneficiary designation, benefits remaining unpaid or rights
    remaining unexercised at the Participant’s death shall be
    paid or exercised by the Participant’s executor,
    administrator, or legal representative.




    

    12








 







    Article 16.  Rights
    of Participants



 



    16.1 Employment.  Nothing in this Plan or
    an Award Agreement shall interfere with or limit in any way the
    right of the Company, its Affiliates,
    and/or its
    Subsidiaries, to terminate any Participant’s employment or
    service on the Board or to the Company or its Affiliates or
    Subsidiaries at any time or for any reason not prohibited by
    law, nor confer upon any Participant any right to continue his
    employment or service as a Director or Third-Party Service
    Provider for any specified period of time.



 



    Neither an Award nor any benefits arising under this Plan shall
    constitute an employment contract with the Company, its
    Affiliates,
    and/or its
    Subsidiaries and, accordingly, subject to Articles 3 and
    17, this Plan and the benefits hereunder may be terminated at
    any time in the sole and exclusive discretion of the Committee
    without giving rise to any liability on the part of the Company,
    its Affiliates,
    and/or its
    Subsidiaries.



 



    16.2 Participation.  No individual shall
    have the right to be selected to receive an Award under this
    Plan, or, having been so selected, to be selected to receive a
    future Award.



 



    16.3 Rights as a Shareholder.  Except as
    otherwise provided herein, a Participant shall have none of the
    rights of a shareholder with respect to Shares covered by any
    Award until the Participant becomes the record holder of such
    Shares.



 




    Article 17.  Amendment,
    Modification, Suspension, and Termination



 



    17.1 Amendment, Modification, Suspension, and
    Termination.  Subject to Section 17.3, the
    Committee may, at any time and from time to time, alter, amend,
    modify, suspend, or terminate this Plan and any Award Agreement
    in whole or in part; provided, however, that, without the prior
    approval of the Company’s shareholders and except as
    provided in Section 4.4, (i) neither the Option Price
    of an Option nor the Grant Price of an SAR may be lowered,
    (ii) a new Award may not be granted in exchange for the
    cancellation of an outstanding Award, and (iii) no Option
    or SAR for which the Option Price or Grant Price, as applicable,
    is less than the Fair Market Value of the Shares underlying the
    Option or SAR, may be cancelled in exchange for a cash payment.
    In addition, no material amendment of this Plan shall be made
    without shareholder approval if shareholder approval is required
    by law, regulation, or stock exchange rule.



 



    17.2 Adjustment of Awards Upon the Occurrence of Certain
    Unusual or Nonrecurring Events.  The Committee
    shall make equitable and appropriate adjustments in the terms
    and conditions of, and the criteria included in, Awards in
    recognition of unusual or nonrecurring events (including,
    without limitation, the events described in Section 4.4
    hereof) affecting the Company or the financial statements of the
    Company or of changes in applicable laws, regulations, or
    accounting principles, whenever the Committee determines that
    such adjustments are appropriate in order to prevent unintended
    dilution or enlargement of the benefits or potential benefits
    intended to be made available under this Plan. The determination
    of the Committee as to the foregoing adjustments, if any, shall
    be conclusive and binding on Participants under this Plan.
    Nothing in this Section 17.2 shall be construed to limit
    the Committee’s authority under Section 12.2.



 



    17.3 Awards Previously
    Granted.  Notwithstanding any other provision of
    this Plan to the contrary (other than Section 17.4), no
    termination, amendment, suspension, or modification of this Plan
    or an Award Agreement shall adversely affect in any material way
    any Award previously granted under this Plan, without the
    written consent of the Participant holding such Award.



 



    17.4 Amendment to Conform to
    Law.  Notwithstanding any other provision of this
    Plan to the contrary, the Committee may amend the Plan or an
    Award Agreement, to take effect retroactively or otherwise, as
    deemed necessary or advisable for the purpose of conforming the
    Plan or an Award Agreement to any present or future law relating
    to plans of this or similar nature (including, but not limited
    to, Code Section 409A), and to the administrative
    regulations and rulings promulgated thereunder.



 




    Article 18.  Withholding



 



    18.1 Tax Withholding.  The Company shall
    have the power and the right to deduct or withhold, or require a
    Participant to remit to the Company, the minimum statutory
    amount to satisfy federal, state, and local taxes,




    

    13








 






    domestic or foreign, required by law or regulation to be
    withheld with respect to any taxable event arising as a result
    of this Plan.



 



    18.2 Share Withholding.  With respect to
    withholding required upon the exercise of Options or SARs, upon
    the lapse of restrictions on Restricted Stock and Restricted
    Stock Units, or upon the achievement of performance goals
    related to Performance Shares or any other taxable event arising
    as a result of an Award granted hereunder, Participants may
    elect, subject to the approval of the Committee, as set forth in
    the applicable Award Agreement, to satisfy the withholding
    requirement, in whole or in part, by having the Company withhold
    Shares having a Fair Market Value on the date the tax is to be
    determined equal to the amount required to be withheld. All such
    elections shall be irrevocable, made in writing, and signed by
    the Participant, and shall be subject to any restrictions or
    limitations that the Committee, in its sole discretion, deems
    appropriate.



 




    Article 19.  Successors



 



    All obligations of the Company under this Plan with respect to
    Awards granted hereunder shall be binding on any successor to
    the Company, whether the existence of such successor is the
    result of a direct or indirect purchase, merger, consolidation,
    or otherwise, of all or substantially all of the business
    and/or
    assets of the Company.



 




    Article 20.  General
    Provisions



 



    20.1 Forfeiture Events.



 



    (a) The Committee may specify in an Award Agreement that
    the Participant’s rights, payments, and benefits with
    respect to an Award shall be subject to reduction, cancellation,
    forfeiture, or recoupment upon the occurrence of certain
    specified events, in addition to any otherwise applicable
    vesting or performance conditions of an Award. Such events may
    include, but shall not be limited to, termination of employment
    for cause, termination of the Participant’s provision of
    services to the Company, Affiliate,
    and/or
    Subsidiary, violation of material Company, Affiliate,
    and/or
    Subsidiary policies, breach of noncompetition, confidentiality,
    or other restrictive covenants that may apply to the
    Participant, or other conduct by the Participant that is
    detrimental to the business or reputation of the Company, its
    Affiliates,
    and/or its
    Subsidiaries.



 



    (b) If the Company is required to prepare an accounting
    restatement due to the material noncompliance of the Company, as
    a result of misconduct, with any financial reporting requirement
    under the securities laws, if the Participant knowingly or
    grossly negligently engaged in the misconduct, or knowingly or
    grossly negligently failed to prevent the misconduct, or if the
    Participant is one of the individuals subject to automatic
    forfeiture under Section 304 of the Sarbanes-Oxley Act of
    2002, the Participant shall reimburse the Company the amount of
    any payment in settlement of an Award earned or accrued during
    the twelve (12) month period following the first public
    issuance or filing with the United States Securities and
    Exchange Commission (whichever just occurred) of the financial
    document embodying such financial reporting requirement.



 



    20.2 Legend.  The certificates for Shares
    may include any legend which the Committee deems appropriate to
    reflect any restrictions on transfer of such Shares, including
    the legends described in Sections 8.3 and 8.4.



 



    20.3 Gender and Number.  Except where
    otherwise indicated by the context, any masculine term used
    herein also shall include the feminine, the plural shall include
    the singular, and the singular shall include the plural.



 



    20.4 Severability.  In the event any
    provision of this Plan shall be held illegal or invalid for any
    reason, the illegality or invalidity shall not affect the
    remaining parts of this Plan, and this Plan shall be construed
    and enforced as if the illegal or invalid provision had not been
    included.



 



    20.5 Requirements of Law.  The granting of
    Awards and the issuance of Shares under this Plan shall be
    subject to all applicable laws, rules, and regulations, and to
    such approvals by any governmental agencies or national
    securities exchanges as may be required.




    

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    20.6 Delivery of Title.  The Company shall
    have no obligation to issue or deliver evidence of title for
    Shares issued under this Plan prior to:



 



    (a) Obtaining any approvals from governmental agencies that
    the Company determines are necessary or advisable; and



 



    (b) Completion of any registration or other qualification
    of the Shares under any applicable national or foreign law or
    ruling of any governmental body that the Company determines to
    be necessary or advisable.



 



    20.7 Inability to Obtain Authority.  The
    inability of the Company to obtain authority from any regulatory
    body having jurisdiction, which authority is deemed by the
    Company’s counsel to be necessary to the lawful issuance
    and sale of any Shares hereunder, shall relieve the Company of
    any liability in respect of the failure to issue or sell such
    Shares as to which such requisite authority shall not have been
    obtained.



 



    20.8 Investment Representations.  The
    Committee may require any individual receiving Shares pursuant
    to an Award under this Plan to represent and warrant in writing
    that the individual is acquiring the Shares for investment and
    without any present intention to sell or distribute such Shares.



 



    20.9 Employees Based Outside of the United
    States.  Notwithstanding any provision of this
    Plan to the contrary, in order to comply with the laws in other
    countries in which the Company, its Affiliates,
    and/or its
    Subsidiaries operate or have Employees, Directors, or
    Third-Party Service Providers, the Committee, in its sole
    discretion, shall have the power and authority to:



 



    (a) Determine which Affiliates and Subsidiaries shall be
    covered by this Plan;



 



    (b) Determine which Employees, Directors, or Third-Party
    Service Providers outside the United States are eligible to
    participate in this Plan;



 



    (c) Modify the terms and conditions of any Award granted to
    Employees, Directors, or Third-Party Service Providers outside
    the United States to comply with applicable foreign laws;



 



    (d) Establish subplans and modify exercise procedures and
    other terms and procedures, to the extent such actions may be
    necessary or advisable. Any subplans and modifications to Plan
    terms and procedures established under this Section 20.9 by
    the Committee shall be attached to this Plan document as
    appendices; and



 



    (e) Take any action, before or after an Award is made, that
    it deems advisable to obtain approval or comply with any
    necessary local government regulatory exemptions or approvals.



 



    Notwithstanding the above, the Committee may not take any
    actions hereunder, and no Awards shall be granted, that would
    violate applicable law.



 



    20.10 Uncertificated Shares.  To the
    extent that this Plan provides for issuance of certificates to
    reflect the transfer of Shares, the transfer of such Shares may
    be effected on a noncertificated basis, to the extent not
    prohibited by applicable law or the rules of any stock exchange.



 



    20.11 Unfunded Plan.  Participants shall
    have no right, title, or interest whatsoever in or to any
    investments that the Company,
    and/or its
    Subsidiaries,
    and/or its
    Affiliates may make to aid it in meeting its obligations under
    this Plan. Nothing contained in this Plan, and no action taken
    pursuant to its provisions, shall create or be construed to
    create a trust of any kind, or a fiduciary relationship between
    the Company and any Participant, beneficiary, legal
    representative, or any other individual. To the extent that any
    individual acquires a right to receive payments from the
    Company, its Subsidiaries,
    and/or its
    Affiliates under this Plan, such right shall be no greater than
    the right of an unsecured general creditor of the Company, a
    Subsidiary, or an Affiliate, as the case may be. All payments to
    be made hereunder shall be paid from the general funds of the
    Company, a Subsidiary, or an Affiliate, as the case may be and
    no special or separate fund shall be established and no
    segregation of assets shall be made to assure payment of such
    amounts except as expressly set forth in this Plan.



 



    20.12 No Fractional Shares.  No fractional
    Shares shall be issued or delivered pursuant to this Plan or any
    Award. The Committee shall determine whether cash, Awards, or
    other property shall be issued or paid in lieu of fractional
    Shares or whether such fractional Shares or any rights thereto
    shall be forfeited or otherwise eliminated.




    

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    20.13 Retirement and Welfare
    Plans.  Neither Awards made under this Plan nor
    Shares or cash paid pursuant to such Awards, may be included as
    “compensation” for purposes of computing the benefits
    payable to any Participant under the Company’s or any
    Subsidiary’s or Affiliate’s retirement plans (both
    qualified and nonqualified) or welfare benefit plans unless such
    other plan expressly provides that such compensation shall be
    taken into account in computing a Participant’s benefit.



 



    20.14 Deferred
    Compensation.  Notwithstanding any other provision
    of the Plan, the Committee may cause any Award to comply with or
    to be exempt from Section 409A of the Code and may
    interpret this Plan in any manner necessary to ensure that
    Awards under the Plan comply with or are exempt from
    Section 409A of the Code. In the event that the Committee
    determines that an Award should comply with or be exempt from
    Section 409A and that a Plan provision or Award Agreement
    provision is necessary to ensure that such Award complies with
    or is exempt from Section 409A of the Code, such provision
    shall be deemed included in the Plan or such Award Agreement.



 



    20.15 Nonexclusivity of this Plan.  The
    adoption of this Plan shall not be construed as creating any
    limitations on the power of the Board or Committee to adopt such
    other compensation arrangements as it may deem desirable for any
    Participant.



 



    20.16 No Constraint on Corporate
    Action.  Nothing in this Plan shall be construed
    to: (a) limit, impair, or otherwise affect the
    Company’s or a Subsidiary’s or an Affiliate’s
    right or power to make adjustments, reclassifications,
    reorganizations, or changes of its capital or business
    structure, or to merge or consolidate, or dissolve, liquidate,
    sell, or transfer all or any part of its business or assets; or,
    (b) limit the right or power of the Company or a Subsidiary
    or an Affiliate to take any action which such entity deems to be
    necessary or appropriate.



 



    20.17 Governing Law.  The Plan and each
    Award Agreement shall be governed by the laws of the State of
    Minnesota, excluding any conflicts or choice of law rule or
    principle that might otherwise refer construction or
    interpretation of this Plan to the substantive law of another
    jurisdiction. Unless otherwise provided in the Award Agreement,
    recipients of an Award under this Plan are deemed to submit to
    the exclusive jurisdiction and venue of the federal or state
    courts of Minnesota, to resolve any and all issues that may
    arise out of or relate to this Plan or any related Award
    Agreement.




    

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