Document:

a50749126ex10-2.htm

Exhibit 10.2

 

Execution Copy

CASE - 66628

Amendment Four

to the

Convertible Loan Agreement

between

Michigan Economic Development Corporation

and

Advanced Photonix, Inc.

This Amendment Four (the “Amendment”), dated November 6, 2013, is to the Convertible Loan Agreement between the Michigan Economic Development Corporation (the “MEDC”) and Advanced Photonix, Inc. (the “Company”), dated September 15, 2004, as amended (the “Agreement”).

Pursuant to Section 9.10 of the Agreement, the Parties agree to amend the Agreement as follows:

 

	1.	 	Revised Exhibit D is deleted in its entirety and replaced with the attached Second Revised Exhibit D.
	 	 	 
	 	 	 
The following document is incorporated by reference as binding obligations, terms and conditions of the Agreement:

 

Second Revised Exhibit D:  Fourth Amended and Restated Promissory Note

Except as specifically provided above, the Parties agree that all terms and conditions of the Agreement shall remain unchanged and in effect.

The signatories below warrant that they are empowered to enter into this Amendment.

 

	
COMPANY ACCEPTANCE:

	
Advanced Photonix, Inc.

	  	  
	  	  
	  	  
	
Dated:  _____________

	
____________________________

	  	
Jeff Anderson

	  	
Chief Financial Officer

	  	  
	
MEDC ACCEPTANCE:

	
Michigan Economic Development Corporation

	  	  
	  	  
	  	  
	
Dated:  _____________

	
____________________________

	  	
Michael A. Finney

	  	
Chief Executive Officer

 

  

1

  

 

Execution Copy

 

 

SECOND REVISED EXHIBIT D

FORM OF NOTE

FOURTH AMENDED AND RESTATED PROMISSORY NOTE

(Line of Credit)

 

	
Up to $1,024,526

	
Dated:  November 6, 2013

 

THIS FOURTH AMENDED AND RESTATED PROMISSORY NOTE REPLACES AND AMENDS AND RESTATES IN ITS ENTIRETY THAT CERTAIN PROMISSORY NOTE (LINE OF CREDIT) EXECUTED BY BORROWER AND DELIVERED TO LENDER IN THE ORIGINAL PRINCIPAL AMOUNT OF UP TO ONE MILLION TWENTY FOUR THOUSAND FIVE HUNDRED TWENTY SIX AND 00/100 DOLLARS ($1,024,526.00) DATED SEPTEMBER 15, 2004, AS AMENDED AND RESTATED ON MARCH 17, 2005, SEPTEMBER 23, 2008, AND JUNE 16, 2010 (THE “PRIOR NOTES”).  BY ACCEPTANCE OF THIS FOURTH AMENDED AND RESTATED PROMISSORY NOTE, LENDER ACKNOWLEDGES AND AGREES THAT THE PRIOR NOTES SHALL CEASE TO EVIDENCE ANY OBLIGATION OF BORROWER TO LENDER.

 

FOR VALUE RECEIVED, Advanced Photonix, Inc. (the “Borrower”) promises to pay to the order of the Michigan Economic Development Corporation, a Michigan public body corporate (the “Lender”), at 300 North Washington Square, Lansing, Michigan or at such other place as Lender may designate in writing, the principal sum of One Million Twenty Four Thousand Five Hundred Twenty Six Dollars ($1,024,526) or such lesser sum as shall have been advanced by Lender to Borrower under this Note and as contemplated by that certain Convertible Loan Agreement between Borrower and Lender, dated as of September 15, 2004, as amended (the “Loan Agreement”), plus interest as hereinafter provided, all in lawful money of the United States of America, in accordance with the terms hereof.  Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Loan Agreement.

 

All disbursements made under this Fourth Amended and Restated Promissory Note (the “Note”) shall be charged to a loan account in Borrower’s name on Lender’s books, and Lender shall debit to such account the amount of each advance made to, and credit to such account the amount of each repayment made by Borrower.  From time to time and upon Borrower’s request, Lender shall furnish Borrower a statement of Borrower’s loan account, which statement shall be deemed to be correct, accepted by, and binding upon Borrower, unless Lender receives a written statement of exceptions from Borrower within ten (10) calendar days after such statement has been furnished.

 

As of September 30, 2013, the Parties agree that the total outstanding balance due under this Note is Three Hundred Twenty Seven Thousand Eight Hundred Eighty Three Dollars ($327,883) (the “Outstanding Balance”).  Beginning September 1, 2013 the Outstanding Balance of this Note shall bear interest at a per annum rate of five percent (5.0%).  Interest shall be computed on the basis of the actual number of days elapsed.

 

  

D-1

  

 

Execution Copy

 

Commencing on October 1, 2013, and continuing on the first business day of each of the following thirteen (13) calendar months, Borrower shall pay Lender interest only payments. On December 1, 2014 Borrower shall make a final payment to Lender which shall reflect all remaining outstanding indebtedness (the “Final Payment”).  If Borrower fails to make the Final Payment, beginning December 2, 2014 the then outstanding principal balance of this Note shall bear interest at a default per annum rate of fifteen percent (15%) until any unpaid portion of the remaining outstanding indebtedness, including all additional accrued interest, late fees and penalties, as applicable, is paid in full.

 

In the event that any payment under this Note is not received by Lender within ten (10) days of the date when due, a late charge of Five (5%) percent of the amount of such shall be due and payable.  Borrower agrees that the late charge is a reasonable estimate of the administrative costs which Lender will incur in processing the delinquency.  Lender’s acceptance of a late payment and/or of the late payment charge will not waive any default under this Note.

 

The Borrower shall have the right to prepay accrued interest and principal in whole or in part at any time without payment of any prepayment fee or penalty.  Prepayments are to be applied first to accrued interest and then to principal.

 

Upon the occurrence of either a “Trigger Event” (as defined in the Debt Conversion Agreement) or an “Event of Default” (as defined in the Loan Agreement), the entire principal balance of this Note, together with all accrued and unpaid interest, shall become immediately due and payable at the election of Lender without notice, demand or presentment.  All costs and expenses of collection, including, without limitation, reasonable attorney’s fees and expenses, shall be added to and become part of the total indebtedness evidenced by this Note.

 

Upon the occurrence of a Trigger Event (as defined in the Debt Conversion Agreement dated May 12, 2010), Lender may at its sole option and discretion declare the entire indebtedness, plus a premium equal to seven percent (7%) of the then-outstanding principal balance of this Note, immediately due and payable.  Lender shall give Borrower written notice of this declaration of acceleration by sending a statement to Borrower stating the declaration and setting out the amount owed as of the date of the notice.  Interest shall continue to accrue at the rate set out herein until Borrower pays the indebtedness and such premium, in full.

 

Acceptance by Lender of any payment in an amount less than the amount then due shall be deemed an acceptance on account only, and Borrower’s failure to pay the entire amount then due shall be and continue to be a default.  Upon the occurrence of any Trigger Event or Event of Default under the Loan Agreement, neither the failure of Lender promptly to exercise its right to declare the outstanding principal and accrued unpaid interest and any applicable premium under this Note to be immediately due and payable, nor the failure of Lender to demand strict performance of any other obligation of Borrower, shall constitute a waiver of any such rights, nor a waiver of such rights in connection with any future default on the part of the Borrower or any other person who may be liable under this Note.

 

  

D-2

  

 

Execution Copy

 

Notwithstanding anything herein to the contrary, in no event shall Borrower be required to pay a rate of interest in excess of the Maximum Rate.  The term “Maximum Rate” shall mean the maximum non-usurious rate of interest that Lender is allowed to contract for, charge, take, reserve or receive under the applicable laws of any applicable state or of the United States of America (whichever from time to time permits the highest rate for the use, forbearance or detention of money) after taking into account, to the extent required by applicable law, any and all relevant payments or charges hereunder, or under any other document or instrument executed and delivered in connection therewith and the indebtedness evidenced hereby.

 

In the event Lender ever receives, as interest, any amount in excess of the Maximum Rate, such amount as would be excessive interest shall be deemed a partial prepayment of principal, and, if the principal hereof is paid in full, any remaining excess shall be returned to Borrower.  In determining whether or not the interest paid or payable, under any specified contingency, exceeds the Maximum Rate, Borrower and Lender shall, to the maximum extent permitted by law, (a) characterize any non-principal payment as an expense, fee, or premium rather than as interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate and spread the total amount of interest through the entire contemplated term of such indebtedness until payment is made in full of the principal (including the period of any extension or renewal thereof) so that the interest on account of such indebtedness shall not exceed the Maximum Rate.

 

This Note shall be binding upon Borrower and its successors and assigns, and the benefits hereof shall inure to Lender and its successors and assigns.  This Note has been executed in the State of Michigan, and all rights and obligations hereunder shall be governed by the laws of the State of Michigan.

BORROWER:

ADVANCED PHOTONIX, INC.

_________________________

Jeff Anderson

Chief Financial Officer

  

D-3

  

 

Execution Copy

 

FOURTH AMENDED AND RESTATED PROMISSORY NOTE

(Line of Credit)

 

	
Up to $1,024,526

	
Dated:  November 6, 2013

 

THIS FOURTH AMENDED AND RESTATED PROMISSORY NOTE REPLACES AND AMENDS AND RESTATES IN ITS ENTIRETY THAT CERTAIN PROMISSORY NOTE (LINE OF CREDIT) EXECUTED BY BORROWER AND DELIVERED TO LENDER IN THE ORIGINAL PRINCIPAL AMOUNT OF UP TO ONE MILLION TWENTY FOUR THOUSAND FIVE HUNDRED TWENTY SIX AND 00/100 DOLLARS ($1,024,526.00) DATED SEPTEMBER 15, 2004, AS AMENDED AND RESTATED ON MARCH 17, 2005, SEPTEMBER 23, 2008, AND JUNE 16, 2010 (THE “PRIOR NOTES”).  BY ACCEPTANCE OF THIS FOURTH AMENDED AND RESTATED PROMISSORY NOTE, LENDER ACKNOWLEDGES AND AGREES THAT THE PRIOR NOTES SHALL CEASE TO EVIDENCE ANY OBLIGATION OF BORROWER TO LENDER.

 

FOR VALUE RECEIVED, Advanced Photonix, Inc. (the “Borrower”) promises to pay to the order of the Michigan Economic Development Corporation, a Michigan public body corporate (the “Lender”), at 300 North Washington Square, Lansing, Michigan or at such other place as Lender may designate in writing, the principal sum of One Million Twenty Four Thousand Five Hundred Twenty Six Dollars ($1,024,526) or such lesser sum as shall have been advanced by Lender to Borrower under this Note and as contemplated by that certain Convertible Loan Agreement between Borrower and Lender, dated as of September 15, 2004, as amended (the “Loan Agreement”), plus interest as hereinafter provided, all in lawful money of the United States of America, in accordance with the terms hereof.  Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Loan Agreement.

 

All disbursements made under this Fourth Amended and Restated Promissory Note (the “Note”) shall be charged to a loan account in Borrower’s name on Lender’s books, and Lender shall debit to such account the amount of each advance made to, and credit to such account the amount of each repayment made by Borrower.  From time to time and upon Borrower’s request, Lender shall furnish Borrower a statement of Borrower’s loan account, which statement shall be deemed to be correct, accepted by, and binding upon Borrower, unless Lender receives a written statement of exceptions from Borrower within ten (10) calendar days after such statement has been furnished.

 

As of September 30, 2013, the Parties agree that the total outstanding balance due under this Note is Three Hundred Twenty Seven Thousand Eight Hundred Eighty Three Dollars ($327,883) (the “Outstanding Balance”).  Beginning September 1, 2013 the Outstanding Balance of this Note shall bear interest at a per annum rate of five percent (5.0%).  Interest shall be computed on the basis of the actual number of days elapsed.

 

Commencing on October 1, 2013, and continuing on the first business day of each of the following thirteen (13) calendar months, Borrower shall pay Lender interest only payments. On December 1, 2014 Borrower shall make a final payment to Lender which shall reflect all remaining outstanding indebtedness (the “Final Payment”).  If Borrower fails to make the Final Payment, beginning December 2, 2014 the then outstanding principal balance of this Note shall bear interest at a default per annum rate of fifteen percent (15%) until any unpaid portion of the remaining outstanding indebtedness, including all additional accrued interest, late fees and penalties, as applicable, is paid in full.

 

  

D-4

  

 

Execution Copy

 

In the event that any payment under this Note is not received by Lender within ten (10) days of the date when due, a late charge of Five (5%) percent of the amount of such shall be due and payable.  Borrower agrees that the late charge is a reasonable estimate of the administrative costs which Lender will incur in processing the delinquency.  Lender’s acceptance of a late payment and/or of the late payment charge will not waive any default under this Note.

 

The Borrower shall have the right to prepay accrued interest and principal in whole or in part at any time without payment of any prepayment fee or penalty.  Prepayments are to be applied first to accrued interest and then to principal.

 

Upon the occurrence of either a “Trigger Event” (as defined in the Debt Conversion Agreement) or an “Event of Default” (as defined in the Loan Agreement), the entire principal balance of this Note, together with all accrued and unpaid interest, shall become immediately due and payable at the election of Lender without notice, demand or presentment.  All costs and expenses of collection, including, without limitation, reasonable attorney’s fees and expenses, shall be added to and become part of the total indebtedness evidenced by this Note.

 

Upon the occurrence of a Trigger Event (as defined in the Debt Conversion Agreement dated May 12, 2010), Lender may at its sole option and discretion declare the entire indebtedness, plus a premium equal to seven percent (7%) of the then-outstanding principal balance of this Note, immediately due and payable.  Lender shall give Borrower written notice of this declaration of acceleration by sending a statement to Borrower stating the declaration and setting out the amount owed as of the date of the notice.  Interest shall continue to accrue at the rate set out herein until Borrower pays the indebtedness and such premium, in full.

 

Acceptance by Lender of any payment in an amount less than the amount then due shall be deemed an acceptance on account only, and Borrower’s failure to pay the entire amount then due shall be and continue to be a default.  Upon the occurrence of any Trigger Event or Event of Default under the Loan Agreement, neither the failure of Lender promptly to exercise its right to declare the outstanding principal and accrued unpaid interest and any applicable premium under this Note to be immediately due and payable, nor the failure of Lender to demand strict performance of any other obligation of Borrower, shall constitute a waiver of any such rights, nor a waiver of such rights in connection with any future default on the part of the Borrower or any other person who may be liable under this Note.

 

Notwithstanding anything herein to the contrary, in no event shall Borrower be required to pay a rate of interest in excess of the Maximum Rate.  The term “Maximum Rate” shall mean the maximum non-usurious rate of interest that Lender is allowed to contract for, charge, take, reserve or receive under the applicable laws of any applicable state or of the United States of America (whichever from time to time permits the highest rate for the use, forbearance or detention of money) after taking into account, to the extent required by applicable law, any and all relevant payments or charges hereunder, or under any other document or instrument executed and delivered in connection therewith and the indebtedness evidenced hereby.

 

  

D-5

  

 

Execution Copy

 

In the event Lender ever receives, as interest, any amount in excess of the Maximum Rate, such amount as would be excessive interest shall be deemed a partial prepayment of principal, and, if the principal hereof is paid in full, any remaining excess shall be returned to Borrower.  In determining whether or not the interest paid or payable, under any specified contingency, exceeds the Maximum Rate, Borrower and Lender shall, to the maximum extent permitted by law, (a) characterize any non-principal payment as an expense, fee, or premium rather than as interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate and spread the total amount of interest through the entire contemplated term of such indebtedness until payment is made in full of the principal (including the period of any extension or renewal thereof) so that the interest on account of such indebtedness shall not exceed the Maximum Rate.

 

This Note shall be binding upon Borrower and its successors and assigns, and the benefits hereof shall inure to Lender and its successors and assigns.  This Note has been executed in the State of Michigan, and all rights and obligations hereunder shall be governed by the laws of the State of Michigan.

BORROWER:

ADVANCED PHOTONIX, INC.

_________________________

Jeff Anderson

Chief Financial Officer

D-6Exhibit 10.1
    

    
      SHARE REPURCHASE AGREEMENT
    

    
      THIS SHARE REPURCHASE AGREEMENT (this “Agreement”) is made
      and entered into as of this 12th day of November, 2013, by
      and between Fuji Heavy Industries Ltd., a Japanese corporation (the “Seller”),
      and Polaris Industries Inc., a Minnesota corporation (the “Purchaser”).
    

    
      RECITALS
    

    
      WHEREAS, the Seller desires to sell all of shares beneficially owned by
      the Seller of common stock, par value $0.01 per share, of the Purchaser
      (“Common Shares”) to the Purchaser and the Purchaser
      desires to purchase Common Shares from the Seller, on the terms and
      conditions set forth in this Agreement (the “Repurchase
      Transaction”) and the board of directors of the Seller has approved
      the Repurchase Transaction.
    

    
      WHEREAS, after due consideration the board of directors of the Purchaser
      has approved the Repurchase Transaction and the related transactions
      that may be required in connection with the Repurchase Transaction.
    

    
      NOW, THEREFORE, in consideration of the premises and the agreements set
      forth below, and for other good and valuable consideration, the receipt
      and sufficiency of which are hereby acknowledged, the parties agree as
      follows:
    

    
      ARTICLE I
SALE AND PURCHASE OF COMMON SHARES
    

    
      Section 1.1 Purchase. Subject to the terms and conditions of this
      Agreement, on the date hereof, the Seller hereby sells, assigns,
      transfers, conveys and delivers to the Purchaser, and the Purchaser
      hereby purchases, acquires and accepts from the Seller, 3,960,000 Common
      Shares (the “Shares”). The total purchase price for the
      Shares shall be Four Hundred Ninety Seven Million, Four Hundred Seventy
      Three Thousand, Nine Hundred Fifty Five U.S. Dollars (U.S.$497,473,955)
      (the “Purchase Price”).
    

    
      Section 1.2 Closing. The closing of the Repurchase Transaction
      (the “Closing”) shall occur on the date hereof (U.S. Central Standard
      Time) and shall take place at the offices of Kaplan, Strangis and
      Kaplan, P.A. at 5500 Wells Fargo Center, Minneapolis, MN 55402.  At the
      Closing, the Seller shall deliver or cause to be delivered to the
      Purchaser all of the Seller’ right, title and interest in and to the
      Shares and the Purchaser shall pay to the Seller the Purchase Price in
      accordance with the instructions set forth in Schedule A.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
    

    
      The Seller hereby makes the following representations and warranties to
      the Purchaser, each of which is true and correct on the date hereof and
      shall survive the closing of the Repurchase Transaction.
    

    
      Section 2.1 Existence and Power.
    

    
      (a)   Seller has the power, authority and capacity to execute and
      deliver this Agreement, to perform its obligations hereunder, and to
      consummate the Repurchase Transaction.
    

    
      (b)   The execution and delivery of this Agreement by the Seller and the
      consummation by the Seller of the Repurchase Transaction (i) do not
      require the consent, approval, authorization, order, registration or
      qualification of, or (except for filings pursuant to Regulation 13D
      under the U.S. Securities Exchange Act of 1934, as amended (the “U.S.
      Exchange Act”), filings under the Japanese Financial Instruments and
      Exchange Act (the “Japanese FI&E Act”),  and such filings for which the
      failure to make would not have an adverse effect on the ability of the
      Seller to consummate the Repurchase Transaction) filing with, any
      governmental authority or court, or body or arbitrator having
      jurisdiction over the Seller; and (ii) except as would not have an
      adverse effect on the ability of the Seller to consummate the Repurchase
      Transaction, do not and will not constitute or result in a breach,
      violation or default under any note, bond, mortgage, deed, indenture,
      lien, instrument, contract, agreement, lease or license, whether written
      or oral, express or implied, to which the Seller is a party or with the
      Seller’s organizational documents, or any statute, law, ordinance,
      decree, order, injunction, rule, directive, judgment or regulation of
      any court, administrative or regulatory body, governmental authority,
      arbitrator, mediator or similar body on the part of the Seller or cause
      the acceleration or termination of any obligation or right of the Seller
      or any other party thereto.
    

    
      Section 2.2 Valid and Enforceable Agreement; Authorization. This
      Agreement has been duly executed and delivered by the Seller and
      constitutes a legal, valid and binding obligation of the Seller,
      enforceable against the Seller in accordance with its terms, except as
      limited by applicable bankruptcy, insolvency, reorganization,
      moratorium, fraudulent conveyance and other similar laws of general
      application affecting enforcement of creditors’ rights generally and
      general principles of equity.
    

    
      Section 2.3 Title to Shares. The Seller has good and valid title
      to the Shares and beneficially owns the Shares, free and clear of any
      lien, encumbrance, pledge, charge, security interest, mortgage, title
      retention agreement, option, equity or other adverse claim, and has not,
      in whole or in part, (a) assigned, transferred, hypothecated, pledged or
      otherwise disposed of the Shares or its ownership rights in the Shares,
      or (b) given any person or entity any transfer order, power of attorney
      or other authority of any nature whatsoever with respect to such Shares.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      Section 2.4 Acknowledgements of Seller. As a material inducement
      for the Purchaser to enter into this Agreement and consummate the
      Repurchase Transaction, the Seller acknowledges:
    

    
      (a)   The Seller has such knowledge and experience in financial and
      business matters and in making investment decisions of this type that it
      is capable of evaluating the merits and risks of making its investment
      decision regarding the Repurchase Transaction and of making an informed
      investment decision, and is consummating the Repurchase Transaction with
      a full understanding of all of the terms, conditions and risks and
      willingly assumes those terms, conditions and risks.  The Seller is
      authorized to sell the Shares in the Repurchase Transaction and upon
      completion of the Repurchase Transaction the Purchaser will receive good
      and marketable title to the Shares, free and clear of any encumbrance,
      lien, claim, charge, security interest, or other interests.
    

    
      (b)   The Seller has received and carefully reviewed the Annual Report
      of the Purchaser on Form 10-K for the fiscal year ended December 31,
      2012 and all subsequent public filings of the Purchaser with the U.S.
      Securities and Exchange Commission (the “SEC Filings”), other publicly
      available information regarding the Purchaser, and such other
      information that it and its advisers deem necessary to make its decision
      to enter into the Repurchase Transaction.
    

    
      (c)   The Seller has made its own decision to consummate the Repurchase
      Transaction based on its own independent review and consultations with
      such investment, legal, tax, accounting and other advisers as it deemed
      necessary.  The Seller has made its own decision concerning the
      Repurchase Transaction without reliance on any representation or
      warranty of, or advice from, the Purchaser.
    

    
      (d)   The Seller acknowledges and understands that the Purchaser and its
      officers, directors and affiliates may possess material nonpublic
      information not known to the Seller that may impact the value of the
      Shares (the “Information”), and that the Purchaser is unable to disclose
      to Seller.  The Seller understands, based on its experience, the
      disadvantage to which the Seller is subject due to the disparity of
      information between the Purchaser and the Seller. Notwithstanding this,
      Seller has deemed it appropriate to engage in the Repurchase Transaction.
    

    
      (e)   The Seller agrees that the Purchaser and its affiliates, officers,
      directors, stockholders, employees and agents shall have no liability to
      the Seller whatsoever due to or in connection with the Purchaser’s use
      or non-disclosure of the Information in connection with the Repurchase
      Transaction, and the Seller hereby irrevocably waives any claim that it
      might have based on the failure of the Purchaser to disclose the
      Information in connection with the Repurchase Transaction.
    

    
      (f)   The Seller acknowledges and agrees that, except as set forth in
      this Agreement, the Purchaser is not making any express or implied
      warranties in connection with the Repurchase Transaction.  The Seller
      and/or the Seller’s advisor(s) have had a reasonable opportunity to ask
      questions of and receive answers from a person or persons acting on
      behalf of the Purchaser concerning the Shares and the Purchaser and all
      such questions have been answered to the Seller’s full satisfaction.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      (g)   The Seller acknowledges and agrees that the Purchaser is relying
      on the Seller's representations, warranties, acknowledgements and
      agreements herein as a condition to proceeding with the Repurchase
      Transaction. Without such representations, warranties, acknowledgements
      and agreements, the Purchaser would not engage in the Repurchase
      Transaction.
    

    
      ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
      PURCHASER
    

    
      The Purchaser hereby makes the following representations and warranties
      to the Seller, each of which is true and correct on the date hereof and
      shall survive the closing of the Repurchase Transaction.
    

    
      Section 3.1 Existence and Power.
    

    
      (a)   The Purchaser is a corporation duly organized, validly existing
      and in good standing under the laws of the State of Minnesota and has
      the power, authority and capacity to execute and deliver this Agreement,
      to perform the Purchaser’s obligations hereunder, and to consummate the
      Repurchase Transaction.
    

    
      (b)   The execution and delivery of this Agreement by the Purchaser and
      the consummation by the Purchaser of the Repurchase Transaction (i) does
      not require the consent, approval, authorization, order, registration or
      qualification of, or (except for filing of a Current Report on Form 8-K
      in accordance with the U.S. Exchange Act) filing with, any governmental
      authority or court, or body or arbitrator having jurisdiction over the
      Purchaser; and (ii) except as would not have an adverse effect on the
      ability of Purchaser to consummate the Repurchase Transaction, does not
      and will not constitute or result in a breach, violation or default
      under, any note, bond, mortgage, deed, indenture, lien, instrument,
      contract, agreement, lease or license, whether written or oral, express
      or implied, to which Purchaser is a party, with the Purchaser’s articles
      of incorporation or by-laws, or any statute, law, ordinance, decree,
      order, injunction, rule, directive, judgment or regulation of any court,
      administrative or regulatory body, governmental authority, arbitrator,
      mediator or similar body on the part of the Purchaser or cause the
      acceleration or termination of any obligation or right of the Purchaser
      or any other party thereto.
    

    
      Section 3.2 Valid and Enforceable Agreement; Authorization. This
      Agreement has been duly executed and delivered by the Purchaser and
      constitutes a legal, valid and binding obligation of the Purchaser,
      enforceable against the Purchaser in accordance with its terms, except
      as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium, fraudulent conveyance and other similar laws of general
      application affecting enforcement of creditors’ rights generally and
      general principles of equity.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      Section 3.3 Sufficient Funds. The Purchaser has as of the date
      hereof access to legally available funds sufficient to consummate the
      Repurchase Transaction.  Immediately after the Closing and giving effect
      to the Repurchase Transaction, (1) the Purchaser will be able to pay its
      debts as they become due in the ordinary course of business, (2) the
      fair market value or fair saleable value of the Purchaser’s assets will
      exceed the Purchaser’s stated liabilities and identified contingent
      liabilities, and (3) the Purchaser’s capital will not be unreasonably
      low for the business in which it is engaged.
    

    
      Section 3.4 Accuracy of SEC Filings. As of their respective
      dates, the SEC Filings (a) conformed in all material respects to the
      requirements of the U.S. Exchange Act and the rules and regulations of
      the U.S. Securities and Exchange Commission thereunder, and (b) did not
      contain an untrue statement of a material fact or omitted to state a
      material fact required to be stated therein or necessary to make the
      statements therein not misleading.
    

    
      ARTICLE IV
MISCELLANEOUS PROVISIONS
    

    
      Section 4.1 Notice. Any notice provided for in this Agreement
      shall be in writing and shall be either personally delivered, mailed
      first class mail (postage prepaid) with return receipt requested, sent
      by reputable overnight courier service (charges prepaid) or sent by
      facsimile transmission, to the address and to the attention of the
      person set forth in this Agreement. Notices will be deemed to have been
      given hereunder when delivered personally, five business days after
      deposit in the mail postage prepaid with return receipt requested, two
      business days after deposit postage prepaid with a reputable overnight
      courier service for delivery on the next business day or when received
      by facsimile transmission.
    

    
      If delivered to the Purchaser, to:
    

    
      Polaris Industries Inc.
2100 Highway 55
Medina MN 55340
U.S.A.
Attention:
      General Counsel
Facsimile: +1.763.542.0599

with a copy to:

Kaplan,
      Strangis and Kaplan, P.A.
5500 Wells Fargo Center
Minneapolis, MN
      55402
U.S.A.
Attention: James C. Melville
Facsimile:
      +1.612.375.1143
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      If to the Seller, to:

Fuji Heavy Industries Ltd.
1-7-2 Nishi
      Shinjuku
Shinjuku-ku, Tokyo 160-8316
Japan
Attention: General
      Manager of Finance & Accounting Department
Facsimile:
      +81.3.3347.2126

with a copy to:

Latham & Watkins
18th
      Floor, One Exchange Square
8 Connaught Place, Central
Hong Kong
Attention:
      Louis A. Rabinowitz
Facsimile: +852.2912.2600
    

    
      Section 4.2 Entire Agreement. This Agreement and the other
      documents and agreements executed in connection with the Repurchase
      Transaction embody the entire agreement and understanding of the parties
      hereto with respect to the subject matter hereof and supersede all prior
      and contemporaneous oral or written agreements, representations,
      warranties, contracts, correspondence, conversations, memoranda and
      understandings between or among the parties or any of their agents,
      representatives or affiliates relative to such subject matter,
      including, without limitation, any term sheets, emails or draft
      documents.
    

    
      Section 4.3 Assignment; Binding Agreement. No party hereto shall
      transfer any of its rights or obligations hereunder to any other party
      without the prior written consent of the other party hereto; provided,
      however, that this Agreement and the rights and obligations hereunder
      shall inure to the benefit of and be binding upon the parties hereto and
      their successors and assigns.
    

    
      Section 4.4 Counterparts. This Agreement may be executed in
      multiple counterparts, and on separate counterparts, each of which shall
      be deemed an original, but all of which taken together shall constitute
      one and the same instrument. Any counterpart or other signature hereupon
      delivered by facsimile or other electronic transmission shall be deemed
      for all purposes as constituting good and valid execution and delivery
      of this Agreement by such party.
    

    
      Section 4.5 Governing Law and Jurisdiction. This Agreement shall
      in all respects be construed in accordance with and governed by the
      substantive laws of the State of Minnesota, without giving effect to
      principles of conflicts of laws and any and every legal proceeding
      arising out of or in connection with this Agreement shall be brought in
      the appropriate courts in the State of Minnesota, each of the parties
      hereby consenting to the exclusive jurisdiction of said courts for this
      purpose. Each party hereto waives, to the fullest extent permitted by
      applicable law, any right it may have to a trial by jury in respect of
      any action, suit or proceeding arising out of or relating to this
      Agreement or any transaction contemplated hereby.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      Section 4.6 No Third Party Beneficiaries or Other Rights. Nothing
      herein shall grant to or create in any person not a party hereto, or any
      such person’s dependents or heirs, any right to any benefits hereunder,
      and no such party shall be entitled to sue any party to this Agreement
      with respect thereto.
    

    
      Section 4.7 Release. Except in respect of any claim of a breach
      of this Agreement, (i) the Seller does hereby release the Purchaser, its
      shareholders, its affiliates and successors, and all of the Purchaser’s
      directors, officers, employees and agents (collectively, the “Purchaser
      Parties”), and agree to hold them, and each of them, harmless from
      any and all claims or causes of action that the Seller may now have or
      know about, or hereafter may learn about, arising out of or in any way
      connected with the Repurchase Transaction and the Seller agrees that the
      Seller will not file any claim, charge, or lawsuit for the purpose of
      obtaining any monetary awards in connection with the Repurchase
      Transaction, and (ii) the Purchaser does hereby release the Seller, its
      shareholders, its affiliates and successors, and all of the Seller’s
      directors, officers, employees and agents (collectively, the “Seller
      Parties”), and agree to hold them, and each of them, harmless from
      any and all claims or causes of action that the Purchaser may now have
      or know about, or hereafter may learn about, arising out of or in any
      way connected with the Repurchase Transaction and the Purchaser agrees
      that the Purchaser will not file any claim, charge, or lawsuit for the
      purpose of obtaining any monetary awards in connection with the
      Repurchase Transaction. The parties acknowledge that the foregoing
      release includes, but is not limited to, any claim arising under any
      federal, state, or local law, whether statutory or judicial, or
      ordinance, or any administrative regulation.
    

    
      Section 4.8 Waiver; Consent. This Agreement and its terms may not
      be changed, amended, waived, terminated, augmented, rescinded or
      discharged (other than in accordance with its terms), in whole or in
      part, except by a writing executed by the parties hereto.
    

    
      Section 4.9 No Broker. Except as previously disclosed to each
      other party, no party has engaged any third party as broker or finder or
      incurred or become obligated to pay any broker’s commission or finder’s
      fee in connection with the Repurchase Transaction.
    

    
      Section 4.10 Confidentiality. Each party hereto agrees not to
      disclose this Agreement or any information regarding the Repurchase
      Transaction without the prior written consent of the other party (which
      consent shall not be unreasonably withheld), except as required by law
      or any stock exchange on which any of its securities are listed.  If any
      such disclosure is so consented to or required, each party hereto will
      cooperate with the other in the preparation and dissemination of such
      disclosure.  Each party has provided the other party with the press
      release announcing the Repurchase Transaction which the parties intend
      to release after the Closing; the Purchaser has provided the Seller with
      the Current Report on Form 8-K that it intends to file with the U.S.
      Securities and Exchange Commission after the Closing; and the Seller has
      provided the Purchaser with any filing it intends to file under the
      Japanese FI&E Act (such filing, if any, the “FI&E Report”) after the
      Closing.  Each party hereby consents to the disclosures of the other
      party in such press release, Current Report on Form 8-K  and FI&E
      Report, as applicable, and to such further disclosures as are consistent
      with the information contained in such press release, Current Report on
      Form 8-K and FI&E Report.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      Section 4.11 Further Assurances. Each party hereto hereby agrees
      to execute and deliver, or cause to be executed and delivered, such
      other documents, instruments and agreements, and take such other actions
      consistent with the terms of this Agreement as may be reasonably
      necessary in order to accomplish the Repurchase Transaction.
    

    
      Section 4.12 Costs and Expenses. Each party hereto shall each pay
      their own respective costs and expenses, including, without limitation,
      any commission or finder’s fee to any broker or finder, incurred in
      connection with the negotiation, preparation, execution and performance
      of this Agreement.
    

    
      Section 4.13 Severability. If any one or more of the provisions
      contained herein, or the application thereof in any circumstance, is
      held invalid, illegal or unenforceable, the validity, legality and
      enforceability of any such provision in every other respect and of the
      remaining provisions contained herein shall not be affected or impaired
      thereby.
    

    
      (Signatures appear on the next page.)
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
      to be executed as of the date first above written.
    

    	
           
        	
          
            THE PURCHASER:
          

        	

        
	

        	

        	
           
        
	

        	
          
            POLARIS INDUSTRIES INC.
          

        	

        
	

        	

        	
           
        
	

        	
          By:
        	
          /s/ Scott W. Wine
        	

        
	

        	

        	
          Name:
        	
          Scott W. Wine
        	

        
	

        	

        	
          Title:
        	
          
            Chairman and Chief
Executive Officer
          

        	

        
	

        	
           
        
	

        	

        	

        	

        	
           
        
	

        	
          
            THE SELLER:
          

        	

        
	

        	

        	
           
        
	

        	
          
            FUJI HEAVY INDUSTRIES LTD.
          

        	

        
	

        	

        	
           
        
	

        	
          By:
        	
          /s/ Yasuyuki Yoshinaga
        	

        
	

        	

        	
          Name:
        	
          Yasuyuki Yoshinaga
        	

        
	

        	

        	
          Title:
        	
          President and CEO
        	

        

    

    
      

      [Signature Page to Share Repurchase Agreement]

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