exv4w1



 


Exhibit 4.1


POLARIS INDUSTRIES INC.



2003 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN



     1.     Purpose. The Polaris Industries Inc. 2003 Non-Employee Director Stock
Option Plan (the “Plan”) is hereby established to grant to non-employee
directors of Polaris Industries Inc. (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. The Plan
was approved by the Board of Directors of the Company on January 23, 2003 and
shall become effective on the date it is approved by the Company’s shareholders
(the “Effective Date”).


     Masculine terms used herein may be read as feminine, singular terms as
plural and plural terms as singular, as necessary to give effect to the Plan.


     2.     Eligibility. Each member of the Board of Directors of the Company who is
not an officer or full-time salaried employee of the Company or one of its
subsidiaries shall be eligible to participate in the Plan. Each such person is
referred to in this Plan as a “Participant.”


     3.     Administration. The Plan shall be administered by the Compensation
Committee (the “Committee”) of the Board of Directors of the Company. The
Committee shall have the sole and absolute power, authority and discretion to
interpret the Plan, to prescribe, amend and rescind rules and regulations to
further the purposes of the Plan, and to make all other determinations
necessary for the administration of the Plan. All such actions by the
Committee shall be final and binding. To the extent permitted by law, members
of the Committee shall be indemnified and held harmless by the Company with
respect to any loss, cost, liability or expense that may be reasonably incurred
in connection with any claim, action, suit or proceeding which arises by reason
of any act or omission under the Plan so long as such act or omission is taken
in good faith and within the scope of the authority delegated herein.


     4.     Common Stock Subject to Plan. There shall be reserved for issue upon the
exercise of options granted under the Plan 100,000 shares of Common Stock. The
number and kind of shares available for issuance under the Plan are subject to
adjustment in accordance with the provisions of Section 8 hereof. If any stock
option shall cease to be exercisable in whole or in part for any reason, the
shares of Common Stock which were covered by such stock option but as to which
the stock option had not been exercised shall again be available under the
Plan. Shares issuable under the Plan shall be made available from authorized
and unissued or previously issued and outstanding shares of Common Stock
reacquired by the Company.


     5.     Grants and Terms of Options. Options granted under this Plan shall be
non-qualified stock options, i.e. they shall not be intended to qualify as
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended. Each option granted under the Plan shall be
evidenced by a stock option agreement between the person to whom such option is


 






 



granted and the Company or such other documentation as the Committee shall deem
appropriate. Such stock option agreement shall provide that the option is
subject to the following terms and conditions and to such other terms and
conditions not inconsistent therewith as the Committee may deem appropriate in
each case:


          (a) Option Exercise Price. The exercise price to be paid for each share
of Common Stock upon the exercise of an option shall be 100% of the fair market
value of the shares on the date the option is granted. As used in this Plan,
the term “date the option is granted” means the date as of which the option is
granted in accordance with Section 5(b). Fair market value of the shares shall
mean, as of any applicable date, the closing price, regular way, of the Common
Stock on the New York Stock Exchange, or if no such reported sale of the Common
Stock shall have occurred on such date, on the next preceding date on which
there was such a reported sale.



          (b) Annual Option Grants. On the date of each Annual Meeting of
Shareholders of the Company (“Annual Meeting”) that occurs after the Effective
Date, each Participant who is first elected at such meeting or who is
continuing as a director after such meeting shall receive an option grant for
2,000 shares of Common Stock.



          (c) Discretionary Grants. In addition to the automatic annual grants of
options provided for in subsection (b) above, the Committee shall have the
discretion, in special circumstances as determined by the Committee, to grant
options to Participants upon the terms and conditions of this Plan. The
maximum number of options that can be granted to any Participant in any single
discretionary grant shall not exceed 20,000 shares.



          (d) Period of Option. Options granted hereunder shall have a term of ten
(10) years from the date of grant; provided, however, that, in the event of the
termination of the Participant’s service on the Board of Directors
(“Termination of Service”), such term shall be determined in accordance with
Section 7.



          (e) Vesting and Exercisability of Options. Each option granted under this
Plan shall become vested and exercisable as of the earliest to occur of (i) the
Annual Meeting next following the Annual Meeting as of which such option was
granted, (ii) a Change in Control (as defined below) or (iii) the Participant’s
retirement from the Board 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”). Options shall be exercisable following cessation of a
Participant’s service on the Board of Directors only to the extent provided in
Section 7. The term “Change in Control” means any of the events set forth
below:




		
	 	      (A) Any election has occurred of persons to the Board of Directors
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 January 23, 2003 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 consisted of persons
who were members of the Board of Directors on January 23, 2003; 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



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	 	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) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1933, as amended) of a
number of voting securities of the Company equal to or greater than 35%
of the voting securities of the Company unless such acquisition has been
approved by the Incumbent Directors as an acquisition not constituting a
Change in Control for purposes hereof; or




		
	 	      (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, (1) the
Company is the surviving entity resulting from such reorganization,
merger or consolidation or (2) 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.



          (f) Method of Exercise of Options. Full payment for shares of Common
Stock purchased upon the exercise of a stock option shall be made at the time
the option is exercised in whole or in part. Payment of the purchase price
shall be made in cash or in such other form as the Committee may approve in the
applicable award agreement, including, without limitation, payment in
accordance with a cashless exercise program under which, if so instructed by
the Participant, shares may be issued directed to the participant’s broker or
dealer upon receipt of the purchase price in cash from the broker or dealer, or
by the delivery to the Company by the Participant of shares of Common Stock
that have been held by the participant for at least six months prior to
exercise of the option, valued at the fair market value of such shares on the
date of exercise. No shares of Common Stock shall be issued to the Participant
until such payment has been made, and a Participant shall have none of the
rights of a stockholder with respect to options held except to the extent such
options have been exercised. The tax liability associated with the exercise of
a stock option under this Plan shall, unless the Committee determines
otherwise, be the sole responsibility of the Participant.



     6.     Nontransferability. Options granted pursuant to the Plan shall be
nontransferable except by will or the laws of descent and distribution, and
shall be exercisable during the Participant’s lifetime only by him, and after
his death, by his personal representative or by the person entitled thereto
under his will or the laws of intestate succession.


     7.     Termination of Service. Upon termination of the Participant’s service on
the Board of Directors for any reason, his rights to exercise options then held
by him shall be only as follows:

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          (a) If a Participant shall die (i) while a non-employee director of the
Company or (ii) within the five (5) year period specified in Section 7(b) below
or the ninety (90) day period specified in Section 7(c) below, his or her
non-vested options shall be forfeited, and his or her vested options may be
exercised by the person or persons to whom the Participant’s rights under the
option pass by will or applicable law or if no person has that right, by his
executors or administrators, at any time, or from time to time, within one (1)
year of the date of his death, but in no event later than the expiration date
specified in Section 5(d).



          (b) If a Participant ceases to be a non-employee director of the Company
by reason of Retirement, his or her 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 later than the expiration date specified in Section 5(d).



          (c) If a Participant ceases to be a non-employee director of the Company
for any reason other than those set forth in Sections 7(a) and 7(b) above, his
or her non-vested options shall be forfeited, and his or her vested options may
be exercised by the person or persons to whom the Participant’s rights under
the option pass by will or applicable law or if no person has that right, by
his executors or administrators, at any time, or from time to time, within
ninety (90) days the date of such cessation of service, but in no event later
than the expiration date specified in Section 5(d).



     8.     Adjustment of Shares. 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 stockholders, merger,
consolidation or other corporate transactions which would result in a
substantial dilution or enlargement of the rights or economic benefits inuring
to Participants hereunder, the Committee shall make such equitable adjustments
as it may deem appropriate in the Plan and the outstanding stock options,
including, without limitation, any adjustment in the total number of shares of
Common Stock which may thereafter be available under the Plan and/or in the
number of shares annually granted to Participants pursuant to Section 5(b)
hereof.


     9.     Securities Law Requirements. The Company may require option holders, as a
condition of either the grant or the exercise of an option, to represent and
establish to the satisfaction of the General Counsel of the Company that all
shares of Common Stock acquired upon the exercise of such option will be
acquired for investment and not for resale. The Company may refuse to permit
the sale or other disposition of any shares acquired pursuant to any such
representation until it is satisfied that such sale or other disposition would
not be in contravention of applicable state or federal securities law.


     10.     Governing Law. The validity, construction, interpretation, administration
and effect of the Plan and of its rules and regulations, and rights relating to
the Plan, shall be determined solely in accordance with the laws of the State
of Minnesota, other than the conflict of law provisions of such laws.


     11.     Amendment. The Board of Directors may, by resolution, amend or revise the
Plan, except that such action shall not be effective without stockholder
approval if such stockholder approval is required by law or under the rules and
regulations of any stock exchange or other


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securities market on which the Common Stock is listed or authorized for
quotation. The Board of Directors may not alter or impair any options
previously granted under the Plan without the consent of the holders thereof,
except in accordance with the provisions of Section 8.


     12.     Termination. The Plan shall terminate on the tenth (10th) anniversary of
the Effective Date, unless it is sooner terminated by the Board of Directors.
The Board of Directors may terminate the Plan at any time, in whole or in part,
in its sole discretion. Termination of the Plan shall not affect options
previously granted under the Plan.


     13.     Effective Date. The Plan shall be effective on the date it is approved by
the Company’s shareholders.


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