Exhibit 10.2


 


HARLEY-DAVIDSON, INC.


 


1995 STOCK OPTION PLAN


 


(as amended through February 15, 2006)


 


ARTICLE I


 


PURPOSE


 


The purpose of
the Harley-Davidson, Inc. 1995 Stock Option Plan is to provide favorable
opportunities for certain selected employees of Harley-Davidson, Inc. and its
subsidiaries to purchase or receive shares of Common Stock of Harley-Davidson,
Inc., or to benefit from the appreciation thereof. Such opportunities should
provide an increased incentive for these employees to contribute to the future
success and prosperity of Harley-Davidson, Inc., thus enhancing the value of
the stock for the benefit of the shareholders, and increase the ability of
Harley-Davidson, Inc. to attract and retain individuals of exceptional skill
upon whom, in large


measure, its sustained
progress, growth and profitability depend.


 


ARTICLE II


 


DEFINITIONS


 


The following
capitalized terms used in the Plan shall have the respective meanings set forth
in this Article:


 


2.1. BOARD:   The Board of Directors of Harley-Davidson,
Inc.


 


2.2. CODE:   The Internal Revenue Code of 1986, as
amended.


 


2.3.
COMMITTEE:   The human Resources
Committee of the Board; provided that if any member of the Human Resources
Committee is not both a Disinterested Person and Outside Director, the
Committee shall be comprised of only those members of the Human Resources
Committee who are both Disinterested Persons and Outside Directors.


 


2.4. COMMON
STOCK:   The common stock of Harley-Davidson, Inc.


 


2.5. COMPANY:   Harley-Davidson, Inc. and any of its
Subsidiaries.


 


2.6.
DISABILITY:   Disability within the
meaning of Section 22(e)(3) of the Code, as determined by the Committee.


 


2.7.
DISINTERESTED PERSONS: Non-employee directors within the meaning of Rule 16b-3
as promulgated under the Securities Exchange Act of1934, as amended.


 


1

















 


2.8. EMPLOYER:
 The entity that employs the employee or
Optionee.


 


2.9. FAIR
MARKET VALUE:   The average of the high
and low reported sales prices of Common Stock on the New York Exchange
Composite Tape on the date for which fair market value is being determined.


 


2.10. ISO:   An incentive stock option within the meaning
of Section 422 of the Code and which is designated as an incentive option by
the Committee.


 


2.11. NON-ISO:
  A stock option which is not an ISO.


 


2.12. OPTION:   A stock option granted under the Plan.
Options include both ISOs and Non-ISOs.


 


2.13. OPTION
PRICE:   The purchase price of a share of
Common Stock under an Option.


 


2.14.
OPTIONEE:   A person who has been granted
one or more Options.


 


2.15. OUTSIDE
DIRECTORS:   Outside Directors within the
meaning of Section 162(m) of the Code and the regulations promulgated
thereunder.


 


2.16. PARENT
CORPORATION: The parent corporation, as define in Section 424(e) of the Code.


 


2.17. PLAN:  The Harley-Davidson, Inc. 1990 Stock Option
Plan.


 


2.18.
RETIREMENT:   Retirement on or after age
sixty-two or, with the consent of the Committee, at an earlier age.


 


2.19.
SUBSIDIARY:   A corporation, limited
partnership, general partnership, limited liability company, business trust or
other entity of which more than fifty percent (50%) of the voting power or
ownership interest is directly and/or indirectly held by the Harley-Davidson,
Inc.


 


2.20.
TERMINATION DATE:   A date fixed by the
Committee but not later than the day preceding the tenth anniversary of the
date on which the Option is granted.


 


ARTICLE III


 


ADMINISTRATION


 


3.1.  The Committee shall administer the Plan and
shall have full power to grant Options, construe and interpret the Plan,
establish and amend rules and regulations for its administration, and perform
all other acts relating to the Plan, including the delegation of administrative
responsibilities, which it believes reasonable and proper.


 


2

















 


3.2.  Subject to the provisions
of the Plan, the Committee shall, in its discretion, determine who shall be
granted Options, the number of shares subject to option under any such Options,
the dates after which Options, the dates after which Options may be exercise,
in whole or in part, whether Options shall be ISOs, and the terms and
conditions of the Options.


 


3.3.   Any decision  made, or action taken, by the Committee
arising out of or in connection  with
the  interpretation and  administration of the Plan shall be final and
conclusive.


 


3.4   To the extent permitted by
applicable law, the Committee may, in its discretion, delegate to the Chief
Executive Officer of the Company any or all of the authority and responsibility
of the Committee under the Plan to grant Options to employees of the Company or
its affiliates and/or persons who have been engaged to become employees of the
Company or its affiliates, in each case other than employees who are, or
persons engaged to become employees who upon employment will be, subject to the
provisions of Section 16 of the Securities and Exchange Act of 1934, as
amended, at the time any such delegated authority or responsibility is
exercised. To the extent that the committee has delegated to the Chief
Executive Officer the authority and responsibility of the Committee, all
references to the Committee in the Plan other than in this Section 3.4 shall
include the Chief Executive Officer with respect to the matters delegated. No
such delegation shall preclude the Committee from exercising the authority and responsibility
delegated.


 


ARTICLE IV


 


SHARES SUBJECT TO THE PLAN


 


4.1.  The total number of shares
of Common Stock available for grants of Options under the Plan shall be
15,200,000; provided that Options for not more than 800,000 shares of Common
Stock shall be granted to an Optionee in any calendar year under the Plan,
which amount shall be reduced by the amount of Common Stock subject to options
granted to such Optionee in such calendar year under any other stock option
plan of the Company. The foregoing amounts shall be subject to adjustment in
accordance with Article VIII of the Plan. If an Option or portion thereof shall
expire, be canceled or terminate for any reason without having been exercised
in full, the unpurchased shares covered by such Option shall be available for
future grants of Options. An Option, or portion thereof, exercised through the exercise
of a stock appreciation right pursuant to Section 6.7 of the Plan shall be treated,
for the purposes of this Article, as though the Option, or portion thereof, had
been exercised through the purchase, that was so exercised shall not be
available for future grants of Options.


 


3

















 


ARTICLE V


 


ELIGIBILITY


 


5.1.  Options may be granted to
key employees of the Company or to persons who have been engaged to become key
employees of the Company. Key employees will comprise, in general, those who
contribute to the management, direction and overall success of the Company,
including those who are members of the Board. Members of the Board who are not
employees of the Company shall not be eligible for Option grants.


 


ARTICLE VI


 


TERM OF OPTIONS


 


6.1. OPTION AGREEMENTS:  All
Options shall be evidenced by written agreements executed by the Company. Such
Options shall be subject to the applicable provisions of the Plan, and shall
contain such provisions as are required by the Plan and any other provisions
the Committee may prescribe. All agreements evidencing Options shall specify
the total number of shares subject to each grant, the Option Price and the
Termination Date. Those Options that comply with the requirements for an ISO
set forth in Section 422 of the Code and are designated ISOs by the Committee
shall be ISOs and all other Options shall be Non-ISOs.


 


6.2. OPTION PRICE:  The Option
Price shall be set by the Committee; provided, however, that the price per
share shall not be less than the Fair Market Value of a share of Common Stock
on the date the Option is granted.


 


6.3.  PERIOD OF EXERCISE:  The Committee shall determine the dates after which
Options may be exercised in whole or in part. If Options are exercisable in
installments, installments or portions thereof that are exercisable and not exercised
shall accumulate and remain exercisable. The Committee may also amend an Option
to accelerate the dates after which Options may be exercised in whole or in
part. How ever, no Option or portion thereof shall be exercisable after the
Termination Date.


 


6.4. SPECIAL RULES REGARDING ISOS GRANTED TO CERTAIN EMPLOYEES: Notwithstanding
any contrary provisions of Sections 6.2 and 6.3 of the Plan, no ISO shall be
granted to any employee who, at the time the Option is granted, owns (directly
or indirectly, within the meaning of Section 424(d) of the Code) more than ten
percent of the total combined voting power of all classes of stock of the
Employer or of any Subsidiary or Parent Corporation thereof, unless (a) the
Option Price under such Option is at least 110 percent of the Fair Market Value
of a share of Common Stock on the date the Option is granted and (b) the
Termination Date of such Option is a date not later than the day preceding the
fifth anniversary of the date on which the Option is granted.


 


6.5. MANNER OF EXERCISE AND PAYMENT: An Option, or portion thereof, shall
be exercised by delivery of a written notice of exercise to the Company and
payment of the full price of the shares being purchased pursuant to the Option.
An Optionee may exercise an Option with respect to less than the full number of
shares for which the Option may then be exercised, but an Optionee must
exercise the Option in full shares of Common Stock.


 


4

















 


The price of
Common Stock purchased pursuant to an Option, or portion thereof, may be paid:


 


a.               in
United States dollars in cash or by check, bank draft or money order payable to
the order of the Company.


 


b.              through
the delivery of shares of Common Stock with an aggregate Fair Market Value on
the date of exercise equal to the Option Price, or


 


c.               by
any combination of the above methods of payment.


 


The Committee
shall determine acceptable methods for tendering Common Stock as payment upon
exercise of an Options and may impose such limitations and prohibitions on the
use of Common Stock to exercise an Option as it deems appropriate, including,
without, limitation, any limitation or prohibition designed to avoid certain
accounting consequences which may result from the use of Common Stock as
payment upon exercise of an Option.


 


6.6. WITHHOLDING TAXES:  The
Company may, in its discretion, require an Optionee to pay to the Company at
the time of exercise the amount that the Company deems necessary to satisfy its
obligation to withhold Federal, state or local income or other taxes incurred
by reason of the exercise. Upon or prior to the exercise of an Option by the
Company from the shares otherwise to be received. The number of shares so
withheld shall have an aggregate Fair Market Value on the date of exercise
sufficient to satisfy the applicable withholding taxes. The exercise of an
Option does not give rise to an obligation to withhold Federal income taxes on
the date of exercise, the Company may, in it discretion, require an Optionee to
pay to the Company the amount that the Company deems necessary to satisfy its
obligation to withhold Federal, state or local income or other taxes incurred
by reason of the exercise of the Option, in which case the shares of Common
Stock will be released from escrow to a written election to have shares of
Common Stock held in escrow applied toward the Company’s obligation to withhold
Federal, state or local income or other taxes incurred by reason of the
exercise of the Option, based on the Fair Market Value of the shares on the
date of the termination of the escrow arrangement. Upon application of such
shares toward the Company’s withholding obligation, any shares of Common Stock
held in escrow and not, in the judgment of the Committee, necessary to satisfy such
obligation shall be released from escrow to the Optionee.


 


6.7. STOCK APPRECIATION RIGHTS: At or after the grant of an Option, the
Committee, in its discretion, may provide an Optionee with an alternate means
of exercising an Option, or a designated portion thereof, by granting the
Optionee a stock appreciation right. A “stock appreciation right: is a right to
receive, upon exercise of an Option or any portion thereof, in the Committee’s
sole discretion, an amount of cash equal to, and/or shares of Common Stock
having a Fair Market Value on the date of exercise equal to, the excess of the
Fair Market Value of a share of Common Stock on the date of exercise over the
Option Price, multiplied by the number of shares of Common Stock that the
Optionee would have received had the Option or portion thereof been exercised
through the purchase of shares of Common Stock at the Option Price, provided
that (a) such Option


 


5

















 


or portion
thereof has been designated as exercisable in this alternative manner, (s) such
Option or portion thereof is otherwise exercisable, and (c) the Fair Market
Value of a share of Common Stock on the date of exercise exceeds the Option
Price.


 


6.8.  NONTRANSFERABILITY OF
OPTIONS: Except as may otherwise be provided by the Committee, each Option
shall, during the Optionee’s lifetime, be exercisable only by the Optionee, and
neither it nor any right hereunder shall be transferable otherwise than by will
or the laws of descent and distribution or be subject to attachment, execution
or other similar process. In the event of any attempt by the Optionee to
alienate, assign, pledge, hypothecate or other wise dispose of an Option or of
any right hereunder, except as provided for herein, or in the event of any levy
or any attachment, execution or similar process upon the rights or interest
hereby conferred, the Company may terminate the Option by notice to the
Optionee and the Option shall thereupon become null and void. Transfers of
Options under the Plan pursuant to any judgment, decree, or order (including
approval of a property settlement agreement) which relates to the provision of
child support, alimony payments, or marital property rights to a spouse, former
spouse, child, or other dependent of a participant, and is made pursuant to a
State domestic relations law (including a community property law) and
satisfies, to the extent applicable, the provisions of Internal Revenue Code
Section 414(p) are allowed.


 


6.9.  CESSATION OF EMPLOYMENT OF
OPTIONEE:


 


a.               CESSATION
OF EMPLOYMENT OTHER THAN BY REASON OF RETIREMENT, DISABILITY OR DEATH. Except
as may be otherwise provided by the Committee, if an Optionee shall cease to be
employed by the Company otherwise than by reason of Retirement, Disability, or
death, (i) each     Option held by the
Optionee, together with all rights thereunder, that     is not vested shall terminate on the date
of cessation of employment,  to the
extent not previously exercised and (ii) the Optionee shall have a period of 90
days from the date of cessation of employment to exercise each Option held by
the Optionee that is vested on the date of cessation of employment. At the end
of such 90-day period, each such Option that has not been exercised, together
with all rights thereunder, shall terminate, to the extent not previously
exercised.


 


b.              CESSATION
OF EMPLOYMENT BY REASON OF RETIREMENT OR DISABILITY. If an Optionee shall cease
to be employed by the Company by      reason of Retirement or Disability, each
Option held by the Optionee shall remain exercisable, to the extent it was
exercisable at the time of cessation of employment, until the earliest of:


 


i.                  the
Termination Date,


 


6

















 


ii.               the
death of the  Optionee, or such later
date not more than one year after the death of the Optionee as the Committee,
in its discretion, may provide pursuant to Section 6.9(c) of the Plan,


 


iii.            the
third anniversary of the date of the cessation of the Optionee’s employment, if
employment ceased by reason of Retirement, or


 


iv.           the
first anniversary of the date of the cessation of the Optionee’s employment by
reason of Disability;


 


v.              and
thereafter all such Options shall terminate together with all     rights hereunder, to the extent not
previously exercised.


 


c.               CESSATION
OF EMPLOYMENT BY REASON OF DEATH. In the event of the death of the Optionee,
while employed by the Company, an Option may 
be exercised at any time or from time to time prior to the earlier
of  the Termination Date or the first anniversary
of the date of the Optionee’s death, by the person or persons to whom the
Optionee’s rights under each Option shall pass by will or by the applicable
laws of descent and death. In the event of the death of the Optionee while entitled
to exercise an Option pursuant to Section 6.9(b), the Committee, in its
discretion, may permit such Option to be exercised at any time or from time to
time prior to the Termination Date during a period of up to one year from the
death of the Optionee, as shall pass by will of by the applicable laws of
descent and distribution, to the extent that the Option was exercisable at the
time of cessation of the Optionee’s employment. Any person or person to whom an
Optionee’s rights under an Option have passed by will or by the applicable laws
of descent and distribution shall be subject to all terms and condition of the
plan and the Option applicable to the Optionee.


 


6.10. NOTIFICATION OF SALES OF COMMON STOCK: Any Optionee who disposes of
shares of Common Stock acquired upon the exercise of an ISO either (a) within
two years after the date of the grant of the ISO under which the  stock was acquired or (b) within one year
after the transfer of such shares  to the
Optionee, shall notify the Company of such disposition and of the  amount realized upon such disposition.


 


ARTICLE VII


 


LIMITATIONS AND ACCELERATIONS ON EXERCISABILITY


 


7.1. Notwithstanding any other provision of this Plan, in the case of an
ISO, the aggregate Fair Market Value (determined at the time the ISO is
granted) of the shares of Common Stock with respect to which all “incentive
stock options” (within the meaning of Section 422 of the Code) are first
exercisable by the Optionee during any calendar year (under this Plan and under
all other incentive stock option plans of the Employer, any Subsidiary and any
Parent Corporation) shall not exceed $100,000.


 


7

















 


7.2. Each Option granted under the Plan shall have a limited right of surrender
allowing the Optionee to surrender that Option within the 30-day period
following a Change of Control Event and to receive cash, in lieu of exercising
the Option, in the amount by which the highest “COC Fair Market Value” (as
hereinafter defined) of the number of shares of Common Stock covered by the
Option during the 60 days preceding the date on which the Change of Control
Event occurs exceeds the exercise price for the shares of Common Stock covered
by the Option. For this purpose, the “COC Fair Market     Value” of the Common Stock means the closing
price of one share of Common Stock as reported on the New York Stock Exchange
Composite Tape. If the Common Stock is not listed or admitted to trading on the
New York Stock Exchange, the COC Fair Market Value of the Common Stock shall be
the closing price of one share of Common Stock on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or, if the Common Stock is not listed or admitted to trading on any
national    securities exchange, the last
quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market of the Common Stock, as reported by
the National Association of Securities Dealers, Inc. Automated Quotations
System (“NASDAQ”) or such other system then in use, or, if on any such date the
Common Stock is not quoted by any such organization, the average of the closing
bid and asked prices of the Common Stock as furnished by a professional market
making a market in the    Common Stock
selected by the Board. If on any such date no market maker is making a market
in the Common Stock or other Stock, the COC Fair Market Value shall be
determined in good faith by the Continuing Directors who are not Disinterested
Persons.  Each Option granted under the
Plan shall become vested and immediately exercisable upon a Change of Control
Event, whether or not the Option was theretofore exercisable.  For purposes of this Section 7.2:


 


(a) “Change of Control Event” means any one of the following:


 


(i)    Continuing Directors no longer constitute at
least two-thirds of the Directors constituting the Board;


 


(ii)   any person or groups (as  defined in Rule 13d-5_ under the Securities
Exchange Act of 1934, as amended (“Exchange Act”)), together with its
affiliates, becomes the beneficial owner, directly or indirectly, of 20% or
more of Harley-Davidson, Inc.’s then outstanding Common Stock or 20% or more of
the voting power of Harley-Davidson, Inc.’s Directors;


 


(iii)  the approval by Harley-Davidson, Inc.’s
stockholders of the merger or consolidation of Harley-Davidson, Inc. with any
other corporation, the sale of substantially all of Harley-Davidson, Inc.’s
assets or the liquidation or dissolution of Harley-Davidson, inc., unless, in
the case of a merger or consolidation, the Continuing Directors in office immediately
prior to such merger or consolidation constitute at least two-thirds of the
directors constituting the board of directors of the surviving corporation of
such merger or consolidation and any parent


 


8

















 


(as defined in
Rule 12b-2 under the Exchange Act) of such corporation; or


 


(iv)  at least two-thirds of the Continuing
Directors who are Disinterested Persons in office immediately prior to any
other action proposed to be taken by Harley-Davidson, Inc.’s stockholders or by
the Board determine that such proposed action, if taken, would constitute a
change of control of Harley-Davidson, Inc. and such action is taken; and


 


(b) “Continuing
Director” means any individual who is either:


 


(i)             a member of the Board
on the date hereof or


 


(ii)          a
member of the Board whose election or nomination to the Board was approved by a
Vote of at least two-thirds (2/3) of the Continuing Directors (other than a
person whose election was as a result of an actual or threatened proxy or other
control contest).


 


ARTICLE VIII


 


ADJUSTMENTS


 


8.1.  If (a) the Company shall at
any time be involved in a transaction to which Section 424(a) of the Code is
applicable; (b) the Company shall declare a dividend payable in, or shall
subdivide or combine, its Common Stock; or (c) any other event shall occur
which in the judgment of the Committee necessitates an adjustment to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee may, in such manner as it may
deem equitable, adjust any or all of (i) the number and type of securities
subject to the Plan and which thereafter may be the subject of Options; (ii)
the number and type of securities subject to outstanding Options; (iii) the
Option Price with respect to any Option; and (iv) the number of shares of
Common Stock that may be issued pursuant to Options granted to an Optionee in
any calendar year; provided, however, that each such adjustment, in the case of
ISOs, shall be made in such manner as not to constitute a “modification” within
the meaning of Section 424(h)(3) of the Code. The judgment of the Committee
with respect to any matter referred to in this Article shall be conclusive and
binding upon each Optionee.


 


ARTICLE IX


 


AMENDMENT AND TERMINATION OF PLAN


 


9.1. The Board may at any time, or from time to time, suspend or terminate
the Plan in whole or in part or amend it in such respects as the Board may deem
appropriate, provided, however, that no such amendment shall be made, which
would, without approval of the shareholders:


 


9

















 


a.     materially modify the eligibility
requirements for receiving Options;


 


b.              increase
the aggregate number of Shares of Common Stock which may be  issued pursuant to Options granted under the
Plan, except as is provided for in accordance with Article VIII of the Plan;


 


c.               increase
the number of shares of Common Stock which may be issued pursuant to Options  granted to an Optionee in any calendar
year,  except as is provided for in
accordance with Article VIII of the plan;


 


d.              reduce
the minimum Option Price, except as is provided for in accordance with Article
VIII of the Plan;


 


e.               extend
the period of granting Options; or


 


f.                 materially
increase in any other way the benefits accruing to Optionees.


 


9.2. No Amendment, suspension or termination of this Plan shall, without
the Optionee’s consent, alter or impair any of the rights or obligations under
any Option theretofore granted to an Optionee under the Plan.


 


9.3. The Board may amend this Plan, subject to the limitations cited above,
in such manner as it deems necessary to permit the granting of Options meeting
the requirements of future amendments or issued regulations, if any, to the
Code.


 


ARTICLE X


 


GOVERNMENT AND OTHER REGULATIONS


 


10.1. The obligation of the Company to issue or transfer and deliver shares
for Options exercised under the plan shall be subject to all applicable laws,
regulations, rules, orders and approvals which shall then be in effect and
required by governmental entities and the stock exchanges on which Common Stock
is traded.


 


ARTICLE XI


 


MISCELLANEOUS PROVISIONS


 


11.1. PLAN DOES NOT CONFER EMPLOYMENT OR SHAREHOLDER RIGHTS: The right of
the Employer to terminate (whether by dismissal, discharge, retirement or otherwise)
the Optionee’s employment with it at any time at will, or as otherwise provided
by any agreement between the Company and the Optionee, is specifically
reserved. Neither the Optionee nor any person entitled to exercise the Optionee’s
rights in the event of the Optionee’s death shall have any rights of a
shareholder with respect to the shares subject to each Option, except to the
extent that, and until, such shares shall have been issued upon the exercise of
each Option.


 


10

















 


11.2. PLAN EXPENSES:  Any
expenses of administering this Plan shall be borne by the Company.


 


11.3. USE OF EXERCISE PROCEEDS: Payments received from Optionees upon the
exercise of Options shall be used for the general corporate purposes of the
Company, except that any stock received in payment may be retired, or retained
in the Company’s treasury and reissued.


 


11.4. INDEMNIFICATION: In addition to such other rights of indemnification
as they may have as members of the Board, or the Committee, the members of the
Committee and the Board shall be indemnified by the Company against all costs
and expenses reasonably incurred by them in connection with nay action, suit or
proceeding to which they or any of them may be party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except a judgment based upon a finding of bad faith;
provided that upon the institution of any such action, suit or proceeding a
Committee or Board member shall, in writing, give the Company notice thereof
and an Opportunity, at its own expense, to handle and defend the same before
such Committee or Board member undertakes to handle and defend it on such
member’s own behalf.


 


ARTICLE XII


 


SHAREHOLDER APPROVAL AND EFFECTIVE DATES


 


12.1. The Plan shall become effective when it is approved by the shareholders
of Harley-Davidson, Inc. at a shareholders meeting by the requisite vote under
New York Stock Exchange Rules, Internal Revenue Code Section 162(m) and Rule
16b-3 under the Securities Exchange Act of 1934. Options may not be granted
under the Plan after April 26, 2005.


 


11