Document:

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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

11EXHIBIT
10.20

 

HARLEY-DAVIDSON,
INC.

2004 INCENTIVE STOCK PLAN

 

(as
amended on February 15, 2006)

 

1. Purposes, History and Effective Date.

 

(a) Purpose. The Harley-Davidson, Inc. 2004
Incentive Stock Plan has two complementary purposes: (i) to attract and retain
outstanding individuals to serve as officers and other employees and (ii) to
increase shareholder value. The Plan will provide participants incentives to
increase shareholder value by offering the opportunity to acquire shares of the
Company’s common stock or receive monetary payments based on the value of such
common stock on the potentially favorable terms that this Plan provides.

 

(b) History. Prior to the effective date of
this Plan, the Company had in effect the 1995 Plan, which was originally effective
May 6, 1995. Upon shareholder approval of this Plan, the 1995 Plan will
terminate and no new awards will be granted under the 1995 Plan, although
awards granted under such plan and still outstanding will continue to be
subject to all terms and conditions of such plan.

 

(c) Effective Date. This Plan will become
effective, and Awards may be granted under this Plan, on and after the
Effective Date. This Plan will terminate as provided in Section 14.

 

2. Definitions. Capitalized terms used in this Plan have the following
meanings:

 

(a) “1995 Plan” means the Harley-Davidson, Inc. 1995 Stock Option Plan,
as amended.

 

(b) “Affiliate” has the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act or any successor rule or regulation thereto.

 

(c) “Award” means a grant of Options, Stock Appreciation Rights,
Performance Shares, Performance Units, Restricted Stock, Restricted Stock
Units, STIP Shares or Dividend Equivalent Units.

 

(d) “Award Agreement” means any written agreement, contract, or other
instrument or document evidencing the grant of an Award in such form as the
Committee determines.

 

(e) “Board” means the Board of Directors of the Company.

 

(f) “Change of Control” means the occurrence of any one of the
following events:

 

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

 

(ii) any
person or group (as defined in Rule 13d-5 under the Exchange Act), together
with its affiliates, becomes the beneficial owner, directly or indirectly, of
20% or more of the Company’s then outstanding Stock or 20% or more of the
voting power of the Company’s then outstanding Stock;

 

(iii) the
approval by the Company’s shareholders of the merger or consolidation of the
Company with any other corporation, the sale of substantially all of the
Company’s assets or the liquidation or dissolution of the Company, 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 (as
defined in Rule 12b-2 under the Exchange Act) of such corporation; or

 

(iv) at least
two-thirds of the then Continuing Directors in office immediately prior to any
other action proposed to be taken by the Company’s shareholders or by the Board
determine that such proposed action, if taken, would constitute a change of
control of the Company and such action is taken.

 

(g) “Change of Control Price” means the highest Fair Market Value price
per Share during the sixty (60)-day period preceding the date of a Change of
Control.

 

1

 

(h) “Code” means the Internal Revenue Code of 1986, as amended. Any
reference to a specific provision of the Code includes any successor provision
and the regulations promulgated under such provision.

 

(i) “Committee” means the Human Resources Committee of the Board (or a
successor committee with the same or similar authority).

 

(j) “Company” means Harley-Davidson, Inc., a Wisconsin corporation, or
any successor thereto.

 

(k) “Continuing Director” means any individual who is either (i) a
member of the Board on the Effective Date 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).

 

(l) “Director” means a member of the Board, and “Non-Employee Director”
means a Director who is not also an employee of the Company or its
Subsidiaries.

 

(m) “Disability” has the meaning ascribed to the term in Code Section
22(e)(3), as determined by the Committee.

 

(n) “Disinterested Persons” means the non-employee directors of the
Company within the meaning of Rule 16b-3 as promulgated under the Exchange Act.

 

(o) “Dividend Equivalent Unit” means the right to receive cash equal to
the cash dividends paid with respect to a Share.

 

(p) “Effective Date” means the date the Company’s shareholders approve
this Plan.

 

(q) “Exchange Act” means the Securities Exchange Act of 1934, as
amended. Any reference to a specific provision of the Exchange Act includes any
successor provision and the regulations and rules promulgated under such
provision.

 

(r) “Fair Market Value” means, per Share on the date as of which Fair
Market Value is being determined,, if the Stock is listed for trading on the
New York Stock Exchange, the average of the high and low reported sales prices
on the date in question as reported in The Wall Street Journal, or if no sales
of Stock occur on the date in question, on the last preceding date on which
there was a sale on such exchange. If the Stock is not listed or admitted to
trading on the New York Stock Exchange on the date in question, then “Fair
Market Value” means, per Share on the date as of which Fair Market Value is
being determined, (i) the average of the high and low reported sales prices on
the date in question on the principal national securities exchange on which the
Stock is listed or admitted to trading, or if no sales of Stock occur on the
date in question, on the last preceding date on which there was a sale on such
exchange; or (ii) if the Stock is not listed or admitted to trading on any
national securities exchange, the average of the highest and lowest quoted sale
price on the date in question, or if no sales of Stock occur on the date in
question, on the last preceding date on which there was a sale; or (iii) if not
so quoted, the average of the high bid and low asked prices on the date in
question in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System (“NASDAQ”)
or such other system then in use, or if no sales of Stock occur on the date in
question, on the last preceding date on which there was a sale; or (iv) if on
any such date the Stock is not quoted by any such organization, the average of
the high bid and low asked prices on the date in question as furnished by a
professional market maker making a market in the Stock selected by the Board
for the date in question, or if no sales of Stock occur on the date in
question, on the last preceding date on which there was a sale; or (v) if on
any such date no market maker is making a market in the Stock, the price as
determined in good faith by the Committee; provided that if Fair Market Value
is being determined under clause (v) for purposes of determining the Change of
Control Price, the value will be determined by the Continuing Directors.

 

(s) “Option” means the right to purchase Shares at a specified price
for a specified period of time.

 

(t) “Participant” means an individual selected by the Committee to receive
an Award, and includes any individual who holds an Award after the death of the
original recipient.

 

2

 

(u) “Performance Goals” means any goals the Committee establishes that
relate to one or more of the following for such period as the Committee
specifies (in all cases excluding the effects of (A) extraordinary, unusual,
transition, one-time and/or non-recurring items of gain or loss, (B) gains or
losses on the disposition of a business or arising from the sale of assets
outside the ordinary course of business, or (C) changes in tax or accounting
regulations or laws):

 

(i) Any one or
more of the following as determined for the Company on a consolidated basis,
for any one or more Affiliates or divisions of the Company and/or for any other
business unit or units of the Company, as determined by the Committee at the
time an Award is made:

 

(1) Net sales;

 

(2) Cost of goods sold;

 

(3) Gross profit;

 

(4) Selling, administrative and engineering expenses;

 

(5) Income from operations;

 

(6) Income before interest and the provision for income taxes;

 

(7) Income before provision for income taxes;

 

(8) Net income;

 

(9) Average accounts receivable, calculated by taking the average of
accounts receivable at the end of each fiscal month during the period in
question;

 

(10) Average inventories, calculated by taking the average of
inventories at the end of each fiscal month during the period in question;

 

(11) Return on average equity, with average equity calculated by taking
the average of equity at the end of each fiscal month during the period in
question;

 

(12) Return on year-end equity;

 

(13) Return on average assets, with average assets calculated by taking
the average of assets at the end of each fiscal month during the period in
question;

 

(14) Return on capital;

 

(15) Total shareholder return.

 

(16) Economic value added, or other measure of profitability that
considers the cost of capital employed.

 

(17) Net cash provided by operating activities;

 

(18) Net cash provided by operating activities less net cash used in
investing activities;

 

(19) Net increase (decrease) in cash and cash equivalents;

 

(20) Customer satisfaction;

 

(21) Market share; or

 

(22) Product quality.

 

3

 

(ii) Basic
earnings per Share for the Company on a consolidated basis.

 

(iii) Diluted
earnings per Share for the Company on a consolidated basis.

 

In the case of
Awards that the Committee determines will not be considered “performance-based
compensation” under Code Section 162(m), the Committee may establish other
Performance Goals not listed in this Plan.

 

(v) “Performance Shares” means the right to receive Shares to the
extent Performance Goals are achieved.

 

(w) “Performance Units” means the right to receive a payment valued in
relation to a unit the value of which is equal to the Fair Market Value of one
or more Shares, to the extent Performance Goals are achieved.

 

(x) “Person” has the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 14(d) and 15(d) thereof.

 

(y) “Plan” means this Harley-Davidson, Inc. 2004 Incentive Stock Plan,
as may be amended from time to time.

 

(z) “Restricted Stock” means Shares that are subject to a risk of
forfeiture and/or restrictions on transfer, which may lapse upon the
achievement or partial achievement of Performance Goals and/or upon the
completion of a period of service.

 

(aa) “Restricted Stock Unit” means the right to receive a payment
valued in relation to a unit that has a value equal to the Fair Market Value of
a Share, which right may vest upon the achievement or partial achievement of
Performance Goals and/or upon the completion of a period of service.

 

(bb) “Retirement” means termination of employment from the Company and
its Affiliates on or after age sixty-two (62) or, with the consent of the
Committee, at an earlier age.

 

(cc) “Rule 16b-3” means Rule 16b-3 as promulgated by the United States
Securities and Exchange Commission under the Exchange Act.

 

(dd) “Section 16 Participants” means Participants who are subject to
the provisions of Section 16 of the Exchange Act.

 

(ee) “Share” means a share of Stock.

 

(ff) “STIP Shares” means Shares that the Company delivers in payment or
partial payment of an award under the Harley-Davidson, Inc. Corporate Short
Term Incentive Plan (or any successor thereto) or other incentive plans of the
Company or its affiliates that the Committee designates from time to time.

 

(gg) “Stock” means the common stock of the Company.

 

(hh) “Stock Appreciation Right” or “SAR” means the right of a
Participant to receive a payment equal to the appreciation of the Fair Market
Value of a Share during a specified period of time.

 

(ii) “Subsidiary” means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each such
corporation owns stock possessing fifty percent (50%) or more of the total
combined voting power in one of the other corporations in the chain.

 

3. Administration.

 

(a) Committee Administration. In addition to
the authority specifically granted to the Committee in this Plan, the Committee
has full discretionary authority to administer this Plan, including but not
limited to the authority to (i) interpret the provisions of this Plan, (ii)
prescribe, amend and rescind rules and regulations relating to this Plan, (iii)
correct any defect, supply any omission, or reconcile any inconsistency in any
Award or Award Agreement in the manner and to the extent it deems desirable to
carry this Plan into effect and (iv) make all other determinations necessary or
advisable for the administration of this Plan.

 

(b) Delegation to Other Committees or CEO.
To the extent applicable law permits, the Board or the Committee may delegate
to another committee of the Board, or the Committee may delegate to the Chief
Executive Officer of the Company, any or all of the authority and
responsibility of the Committee. However, no such delegation is permitted with

 

4

 

respect to
Awards made to Section 16 Participants at the time any such delegated authority
or responsibility is exercised. To the extent applicable law permits, the Board
or the Committee also may delegate to another committee of the Board consisting
entirely of Non-Employee Directors any or all of the authority and
responsibility of the Committee with respect to individuals who are Section 16
Participants. If the Board or Committee has made such a delegation, then all
references to the Committee in this Plan include such other committee or the
Chief Executive Officer to the extent of such delegation.

 

(c) 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 any 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 this Plan or any Award, 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.

 

4. Eligibility. The Committee may designate
any of the following as a Participant from time to time: any officer or other
employee of the Company or any of its Affiliates, or an individual that the
Company or an Affiliate has engaged to become an officer or other employee. The
Committee’s designation of a Participant in any year will not require the
Committee to designate such person to receive an Award in any other year.

 

5. Types of Awards. Subject to the terms of
this Plan, the Committee may grant any type of Award to any Participant it
selects, but only employees of the Company or a Subsidiary may receive grants
of incentive stock options. Awards may be granted alone or in addition to, in
tandem with, or in substitution for any other Award (or any other award granted
under another plan of the Company or any Affiliate of the Company). Awards
granted under this Plan shall be evidenced by an Award Agreement except to the
extent the Committee provides otherwise.

 

6. Shares Reserved under this Plan.

 

(a) Plan Reserve. Subject to adjustment as
provided in Section 16, an aggregate of 12,000,000 Shares, plus the number of
Shares described in Section 6(c), are reserved for issuance under this Plan.
The number of Shares reserved for issuance under this Plan shall be reduced
only by the number of Shares delivered in payment or settlement of Awards.
Notwithstanding the foregoing, subject to adjustment as provided in Section 16,
the Company may issue only 12,000,000 Shares upon the exercise of incentive
stock options. In addition, any Shares issued in connection with Restricted
Stock, Restricted Stock Units, Performance Shares and Performance Units shall
count against the limit described in this Section 6(a) as two Shares for every
one Share issued. Shares issued in connection with any other type of Award
shall be counted against this limit as one Share for every one Share issued.

 

(b) Replenishment of Shares Under this Plan.
If an Award lapses, expires, terminates or is cancelled without the issuance of
Shares under the Award, or if Shares are forfeited under an Award, then the
Shares subject to such Award may again be used for new Awards under this Plan
under Section 6(a), including issuance as incentive stock options. If Shares
are issued under any Award and the Company subsequently reacquires them
pursuant to rights reserved upon the issuance of the Shares, or if previously
owned Shares are delivered to the Company in payment of the exercise price of
an Award, then such Shares may again be used for new Awards under this Plan
under Section 6(a), but such Shares may not be issued pursuant to incentive
stock options.

 

(c) Addition of Shares from Predecessor Plan.
In addition to the Shares reserved for issuance under Section 6(a), the number
of Shares which were reserved for issuance under the 1995 Plan but which are
not subject to any outstanding awards under such plan as of the Effective Date
shall be available for issuance under Awards granted under this Plan. Further,
after the Effective Date, if any Shares subject to awards granted under the
1995 Plan would again become available for new grants under the terms of such
plan if such plan were still in effect, then those Shares will be available for
the purpose of granting Awards under this Plan, thereby increasing the number
of Shares available for issuance under this Plan as determined under the first
sentence of Section 6(a). Any such Shares will not be available for future
awards under the terms of the 1995 Plan, which plan is terminated on the
Effective Date.

 

5

 

(d) Participant Limitations. Subject to
adjustment as provided in Section 16, no Participant may be granted Awards that
could result in such Participant:

 

(i) receiving
in any calendar year Options for, and/or Stock Appreciation Rights with respect
to, more than 800,000 Shares (reduced, in the initial calendar year in which
this Plan is effective, by the number of options granted to a Participant under
the 1995 Plan in such year, if any);

 

(ii) receiving
in any calendar year Awards of Restricted Stock and/or Restricted Stock Units
relating to more than 400,000 Shares; or

 

(iii)
receiving in any calendar year Awards of Performance Shares, and/or Awards of
Performance Units, for more than 400,000 Shares.

 

In all cases,
determinations under this Section 6(d) should be made in a manner that is
consistent with the exemption for performance-based compensation that Code
Section 162(m) provides.

 

7. Options. Subject to the terms of this Plan,
the Committee will determine all terms and conditions of each Option, including
but not limited to:

 

(a) Whether the Option is an “incentive stock option” which meets the
requirements of Code Section 422, or a “nonqualified stock option” which does
not meet the requirements of Code Section 422; provided that in the case of an
incentive stock option, if the aggregate Fair Market Value (determined on the
date of grant) of the Shares with respect to which all “incentive stock options”
(within the meaning of Code Section 422) are first exercisable by the
Participant during any calendar year (under this Plan and under all other
incentive stock option plans of the Company or any Affiliate that is required
to be included under Code Section 422) exceeds $100,000, such Option
automatically shall be treated as a nonqualified stock option to the extent
this limit is exceeded.

 

(b) The number of Shares subject to the Option.

 

(c) The exercise price, which may not be less than the Fair Market
Value of the Shares subject to the Option as determined on the date of grant;
provided that (i) no incentive stock option shall be granted to any employee
who, at the time the Option is granted, owns (directly or indirectly, within
the meaning of Code Section 424(d)) more than ten percent of the total combined
voting power of all classes of stock of the Company or of any Subsidiary unless
the exercise price is at least 110 percent of the Fair Market Value of a Share
on the date of grant; and (ii) the exercise price may vary during the term of
the Option if the Committee determines that there should be adjustments to the
exercise price relating to achievement of Performance Goals and/or to changes
in an index or indices that the Committee determines is appropriate (but in no
event may the exercise price be less than the Fair Market Value of the Shares
subject to the Option as determined on the date of grant).

 

(d) The terms and conditions of exercise, which may include a
requirement that exercise of the Option is conditioned upon achievement of one
or more Performance Goals; provided that, unless the Committee provides
otherwise in an Award Agreement:

 

(i) An Option,
or portion thereof, shall be exercised by delivery of a written notice of
exercise to the Company (or its designee) and payment of the full exercise
price of the Shares being purchased pursuant to the Option and any withholding
taxes due thereon.

 

(ii) A
Participant may exercise an Option with respect to less than the full number of
Shares for which the Option may then be exercised, but a Participant must
exercise the Option in full Shares.

 

(iii) The
exercise price may be paid: in United States dollars in cash or by check, bank
draft or money order payable to the order of the Company; through the delivery
of Shares with an aggregate Fair Market Value on the date of exercise equal to
the exercise price; or by any combination of the above methods of payment. The
Committee shall determine acceptable methods for tendering Shares as payment
upon exercise of an Option and may impose such limitations and prohibitions on
the use of Shares to exercise an Option as it deems appropriate, including,
without, limitation, any limitation or prohibition designed to avoid certain
accounting consequences that may result from the use of Shares as payment upon
exercise of an Option.

 

(e) The termination date, except that each Option must terminate no
later than ten (10) years after the date of grant, and each incentive stock
option granted to any employee who, at the time the Option is granted, owns
(directly or

 

6

 

indirectly,
within the meaning of Code Section 424(d)) more than ten percent of the total
combined voting power of all classes of stock of the Company or of any
Subsidiary must terminate no later than five (5) years after the date of grant.

 

(f) The exercise period following a Participant’s termination of
employment, provided that:

 

(i) Unless the
Committee provides otherwise, if a Participant shall cease to be employed by
the Company or any of its Affiliates other than by reason of Retirement,
Disability, or death, (A) the portion of the Option that is not vested shall
terminate on the date of such cessation of employment and (B) the Participant
shall have a period ending on the earlier of the Option’s termination date or
90 days from the date of cessation of employment to exercise the vested portion
of the Option to the extent not previously exercised. At the end of such
period, the Option shall terminate.

 

(ii) Unless
the Committee provides otherwise, if a Participant shall cease to be employed
by the Company or any of its Affiliates by reason of Retirement or Disability,
the Option shall remain exercisable, to the extent it was exercisable at the
time of cessation of employment, until the earliest of: the Option’s
termination date; the death of the Participant, or such later date not more
than one year after the death of the Participant as the Committee, in its
discretion, may provide; the third anniversary of the date of the cessation of
the Participant’s employment, if employment ceased by reason of Retirement; or
the first anniversary of the date of the cessation of the Participant’s
employment by reason of Disability. At the end of such period, the Option shall
terminate.

 

(iii) In the
event of the death of the Participant while employed by the Company or any of
its Affiliates, the Option may be exercised at any time prior to the earlier of
the Option’s termination date or the first anniversary of the date of the
Participant’s death to the extent that the Participant was entitled to exercise
such Option on the Participant’s date of death. In the event of the death of
the Participant while entitled to exercise an Option pursuant to Section
7(f)(ii), the Committee, in its discretion, may permit such Option to be
exercised prior to the Option’s termination date during a period of up to one
year from the death of the Participant, as determined by the Committee to the
extent that the Option was exercisable at the time of cessation of the
Participant’s employment.

 

Any
Participant who disposes of Shares acquired upon the exercise of an incentive
stock option either (a) within two years after the date of the grant of such
Option or (b) within one year after the transfer of such Shares to the
Participant, shall notify the Company of such disposition and of the amount
realized upon such disposition.

 

In all other
respects, the terms of any incentive stock option should comply with the
provisions of Code Section 422 except to the extent the Committee determines
otherwise.

 

8. Stock Appreciation Rights. Subject to the
terms of this Plan, the Committee will determine all terms and conditions of
each SAR, including but not limited to:

 

(a) Whether the SAR is granted independently of an Option or relates to
an Option; provided that if an SAR is granted in relation to an Option, then
unless otherwise determined by the Committee, the SAR shall be exercisable or
shall mature at the same time or times, on the same conditions and to the
extent and in the proportion, that the related Option is exercisable and may be
exercised or mature for all or part of the Shares subject to the related
Option. Upon exercise of any number of SARs, the number of Shares subject to
the related Option shall be reduced accordingly and such Option may not be
exercised with respect to that number of Shares. The exercise of any number of
Options that relate to an SAR shall likewise result in an equivalent reduction
in the number of Shares covered by the related SAR.

 

(b) The number of Shares to which the SAR relates.

 

(c) The grant price, provided that (i) the grant price shall not be
less than the Fair Market Value of the Shares subject to the SAR as determined
on the date of grant and (ii) the grant price may vary during the term of the
SAR if the Committee determines that there should be adjustments to the grant
price relating to achievement of Performance Goals and/or to changes in an
index or indices that the Committee determines is appropriate (but in no event
may the grant price be less than the Fair Market Value of the Shares subject to
the SAR as determined on the date of grant).

 

(d) The terms and conditions of exercise or maturity.

 

(e) The termination date, provided that an SAR must terminate no later
than 10 years after the date of grant.

 

(f) The exercise period following a Participant’s termination of
employment.

 

7

 

(g) Whether the SAR will be settled in cash, Shares or a combination
thereof.

 

9. Performance Awards. Subject to the terms of
this Plan, the Committee will determine all terms and conditions of each Award
of Performance Shares or Performance Units, including but not limited to:

 

(a) The number of Shares and/or units to which such Award relates.

 

(b) One or more Performance Goals that must be achieved during such
period as the Committee specifies in order for the Participant to realize the
benefit of such Award.

 

(c) Whether all or a portion of the Performance Goals subject to an
Award are deemed achieved upon a Participant’s death, Disability or Retirement.

 

(d) With respect to Performance Units, whether to settle such Award in
cash, Shares, or a combination of cash and Shares.

 

10. Restricted Stock and Restricted Stock Unit Awards. Subject
to the terms of this Plan, the Committee will determine all terms and
conditions of each Award of Restricted Stock or Restricted Stock Units,
including but not limited to:

 

(a) The number of Shares and/or units to which such Award relates.

 

(b) The period of time, if any, over which the risk of forfeiture or
restrictions imposed on the Award will lapse, or the Award will vest, and
whether, as a condition for the Participant to realize all or a portion of the
benefit provided under the Award, one or more Performance Goals must be
achieved during such period, if any, as the Committee specifies; provided that,
subject to the provisions of Section 10(c), if an Award requires the
achievement of Performance Goals, then the period to which such Performance
Goals relate must be at least one year in length, and if an Award is not
subject to Performance Goals, then the Award must have a restriction period of
at least one year.

 

(c) Whether all or any portion of the period of forfeiture or
restrictions imposed on the Award will lapse, or the vesting of the Award will
be accelerated, upon a Participant’s death, Disability or Retirement.

 

(d) With respect to Restricted Stock Units, whether to settle such
Awards in cash, Shares, or a combination of cash and Shares.

 

(e) With respect to Restricted Stock, the manner of registration of
certificates for such Shares, and whether to hold such Shares in escrow pending
lapse of the period of forfeiture or restrictions or to issue such Shares with
an appropriate legend referring to such restrictions.

 

(f) Whether dividends paid with respect to an Award of Restricted Stock
will be immediately paid or held in escrow or otherwise deferred and whether
such dividends shall be subject to the same terms and conditions as the Award
to which they relate.

 

11. STIP Shares. Subject to the terms and
conditions of this Plan, the Committee may elect to have the Company deliver
STIP Shares in payment or partial payment of awards under the Harley-Davidson,
Inc. Corporate Short Term Incentive Plan (or any successor thereto) or other
incentive plans of the Company or its affiliates that the Committee designates
from time to time.

 

12. Dividend Equivalent Units. Subject to the
terms and conditions of this Plan, the Committee will determine all terms and
conditions of each Award of Dividend Equivalent Units, including but not
limited to whether such Award will be granted in tandem with another Award, and
the form, timing and conditions of payment.

 

13. Transferability. Awards are not transferable other than by will or the laws
of descent and distribution, unless and to the extent the Committee allows a
Participant to: (a) designate in writing a beneficiary to exercise the Award
after the Participant’s death; or (b) transfer an Award, provided that STIP
Shares and other Shares that a Participant receives upon final payment of an
Award shall be transferable unless the Committee designates otherwise at the
time of the Award.

 

8

 

14. Termination and Amendment of Plan; Amendment, Modification or
Cancellation of Awards.

 

(a) Term of Plan. Unless the Board or the
Committee earlier terminates this Plan pursuant to Section 14(b), this Plan
will terminate on the tenth anniversary of the Effective Date.

 

(b) Termination and Amendment. The Board or
the Committee may amend, alter, suspend, discontinue or terminate this Plan at
any time, subject to the following limitations:

 

(i) the Board must approve any amendment of this Plan to the extent the
Company determines such approval is required by: (A) action of the Board, (B)
applicable corporate law or (C) any other applicable law;

 

(ii) shareholders must approve any amendment of this Plan to the extent
the Company determines such approval is required by: (A) Section 16 of the
Exchange Act, (B) the Code, (C) the listing requirements of any principal
securities exchange or market on which the Shares are then traded or (D) any
other applicable law; and

 

(iii) shareholders must approve any of the following Plan amendments:
(A) an amendment to materially increase any number of Shares specified in
Section 6(a) or 6(d) (except as permitted by Section 16); or (B) an amendment
to the provisions of Section 14(e).

 

(c) Amendment, Modification or Cancellation of Awards.
Except as provided in Section 14(e) and subject to the requirements of this
Plan, the Committee may modify or amend any Award or waive any restrictions or
conditions applicable to any Award or the exercise of the Award, and the terms
and conditions applicable to any Awards may at any time be amended, modified or
canceled by mutual agreement between the Committee and the Participant or any
other person(s) as may then have an interest in the Award, so long as any amendment
or modification does not increase the number of Shares issuable under this Plan
(except as permitted by Section 16), but the Committee need not obtain
Participant (or other interested party) consent for the cancellation of an
Award pursuant to the provisions of Section 16(a) or the modification of an
Award to the extent deemed necessary to comply with any applicable law or the
listing requirements of any principal securities exchange or market on which
the Shares are then traded, or to preserve favorable accounting treatment of
any Award for the Company.

 

(d) Survival of Authority and Awards.
Notwithstanding the foregoing, the authority of the Board and the Committee
under this Section 14 will extend beyond the date of this Plan’s termination.
In addition, termination of this Plan will not affect the rights of
Participants with respect to Awards previously granted to them, and all
unexpired Awards will continue in full force and effect after termination of
this Plan except as they may lapse or be terminated by their own terms and
conditions.

 

(e) Repricing Prohibited. Notwithstanding
anything in this Plan to the contrary, and except for the adjustments provided
in Section 16, neither the Committee nor any other person may decrease the
exercise price for any outstanding Option after the date of grant nor cancel or
allow a Participant to surrender an outstanding Option to the Company as
consideration for the grant of a new Option with a lower exercise price or the
grant of another type of Award the effect of which is to reduce the exercise
price of any outstanding Option.

 

(f) Foreign Participation. To assure the
viability of Awards granted to Participants employed in foreign countries, the
Committee may provide for such special terms as it may consider necessary or
appropriate to accommodate differences in local law, tax policy or custom.
Moreover, the Committee may approve such supplements to, or amendments,
restatements or alternative versions of, this Plan as it determines is
necessary or appropriate for such purposes. Any such amendment, restatement or
alternative versions that the Committee approves for purposes of using this
Plan in a foreign country will not affect the terms of this Plan for any other
country. In addition, all such supplements, amendments, restatements or
alternative versions must comply with the provisions of Section 14(b)(ii).

 

15. Taxes. The Company
is entitled to withhold the amount of any tax attributable to any amount
payable or Shares delivered or deliverable under this Plan after giving the
holder of the Award notice as far in advance as practicable, and the Company
may defer making payment or delivery if any such tax may be pending unless and
until indemnified to its satisfaction. The Committee may permit a Participant
to satisfy all or a portion of the federal, state and local withholding tax
obligations arising in connection with such Award by electing to (a) have the
Company withhold Shares otherwise issuable under the Award, (b) tender back
Shares received in connection with such Award or (c) deliver other previously
owned Shares, in each case having a Fair Market Value equal to the amount to be
withheld. However, the amount to be withheld may not exceed the total minimum
federal, state and local tax withholding obligations associated with the

 

9

 

transaction.
The election must be made on or before the date as of which the amount of tax
to be withheld is determined and otherwise as the Committee requires.

 

16. Adjustment Provisions; Change of Control.

 

(a) Adjustment of Shares. If the Committee
determines that any dividend or other distribution (whether in the form of
cash, Shares, other securities, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other securities of
the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that the Committee determines an adjustment to be
appropriate to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under this Plan, then, subject to
Participants’ rights under Section 16(c), the Committee may, in such manner as
it may deem equitable, adjust any or all of (i) the number and type of Shares
subject to this Plan (including the number and type of Shares described in
Sections 6(a) and 6(d)) and which may after the event be made the subject of
Awards under this Plan, (ii) the number and type of Shares subject to
outstanding Awards, and (iii) the grant, purchase, or exercise price with
respect to any Award. In any such case, the Committee may also (or in lieu of the
foregoing) make provision for a cash payment to the holder of an outstanding
Award in exchange for the cancellation of all or a portion of the Award
(without the consent of the holder of an Award) in an amount determined by the
Committee effective at such time as the Committee specifies (which may be the
time such transaction or event is effective), but if such transaction or event
constitutes a Change of Control, then (A) such payment shall be at least as
favorable to the holder as the greatest amount the holder could have received
in respect of such Award under Section 16(c) and (B) from and after the Change
of Control, the Committee may make such a provision only if the Committee
determines that doing so is necessary to substitute, for each Share then subject
to an Award, the number and kind of shares of stock, other securities, cash or
other property to which holders of Stock are or will be entitled in respect of
each Share pursuant to the transaction or event in accordance with the last
sentence of this subsection (a). However, in each case, with respect to Awards
of incentive stock options, no such adjustment may be authorized to the extent
that such authority would cause this Plan to violate Code Section 422(b).
Further, the number of Shares subject to any Award payable or denominated in
Shares must always be a whole number. Without limitation, subject to
Participants’ rights under Section 16(c), in the event of any reorganization,
merger, consolidation, combination or other similar corporate transaction or
event, whether or not constituting a Change of Control (other than any such
transaction in which the Company is the continuing corporation and in which the
outstanding Stock is not being converted into or exchanged for different
securities, cash or other property, or any combination thereof), the Committee
may substitute, on an equitable basis as the Committee determines, for each
Share then subject to an Award, the number and kind of shares of stock, other
securities, cash or other property to which holders of Stock are or will be
entitled in respect of each Share pursuant to the transaction.

 

(b) Issuance or Assumption. Notwithstanding
any other provision of this Plan, and without affecting the number of Shares
otherwise reserved or available under this Plan, in connection with any merger,
consolidation, acquisition of property or stock, or reorganization, the
Committee may authorize the issuance or assumption of Awards upon such terms
and conditions as it may deem appropriate.

 

(c) Change of
Control. Except to the extent the Committee provides a result more favorable to
holders of Awards (either in an Award Agreement or at the time of a Change of
Control), in the event of a Change of Control and with respect to each Award
the holder of which is employed by the Company or an Affiliate on the date of
the Change of Control:

 

(i) each holder of an Option
or SAR shall have the right at any time thereafter to exercise the Option or
SAR in full whether or
not the Option or SAR was theretofore exercisable;

 

(ii) Restricted Stock and
Restricted Stock Units that are not then vested shall vest, and any period of
forfeiture or restrictions to which Restricted Stock and Restricted Stock Units
are subject shall lapse, upon the date of the Change of Control;

 

(iii) each holder of a
Performance Share and/or Performance Unit for which the performance period has
not expired shall become vested in an amount equal to the product of the value of the Performance
Share and/or Performance Unit and a fraction the numerator of which is the
number of whole months that have elapsed from the beginning of the performance
period to which the Award is subject to the date of the Change of Control and
the denominator of which is the number of whole months in the performance
period;

 

(iv) all Dividend Equivalent Units that were awarded in
connection with another Award shall vest.

 

10

 

For purposes of this Section 16(c), the “value”
of a Performance Share shall be equal to, and the “value” of a Performance Unit
shall be based on, the Change of Control Price.

 

The rules of this Section 16(c) shall not
prevent the Committee, in connection with a Change of Control transaction, from
exercising the authority provided to the Committee under the last sentence of
Section 16(a) to substitute, for each vested (taking into account the vesting
rules of this Section 16(c)) and previously unexercised or undistributed Share
then subject to or underlying an Award, the number and kind of shares of stock,
other securities, cash or other property to which holders of Stock are or will
be entitled in respect to each Share pursuant to the transaction.

 

Unless any agreement between the Participant
and the Company provides for a payment by the Company to the Participant to
cover the excise taxes due by the Participant upon receipt of an excess
parachute payment within the meaning of Code Section 280G, if the receipt of
any payment by a Participant under the circumstances described above would
result in the payment by the Participant of any excise tax provided for in
Section 280G and Section 4999 of the Code, then the amount of such payment
shall be reduced to the extent required to prevent the imposition of such
excise tax.

 

17. Miscellaneous.

 

(a) Other Terms and Conditions. The grant of
any Award may also be subject to other provisions (whether or not applicable to
the Award granted to any other Participant) as the Committee determines
appropriate, including, without limitation, provisions for:

 

(i) one or
more means to enable Participants to defer the delivery of Shares or
recognition of taxable income relating to Awards or cash payments derived from
the Awards on such terms and conditions as the Committee determines, including,
by way of example, the form and manner of the deferral election, the treatment
of dividends paid on the Shares during the deferral period or a means for
providing a return to a Participant on amounts deferred, and the permitted
distribution dates or events (provided that if Shares would have otherwise been
issued under an Award but for the deferral described in this paragraph and
ultimately Shares will be or are issued in respect of the Award, then such
Shares shall be treated as if they were issued for purposes of Section 6(a));

 

(ii) the
payment of the exercise price of Options by delivery of cash or other Shares or
other securities of the Company (including by attestation) having a then Fair
Market Value equal to the exercise price of the Shares being purchased pursuant
to the Option, or by delivery (including by fax) to the Company or its
designated agent of an executed irrevocable option exercise form together with
irrevocable instructions to a broker-dealer to sell or margin a sufficient
portion of the Shares and deliver the sale or margin loan proceeds directly to
the Company to pay for the exercise price;

 

(iii)
conditioning the grant or benefit of an Award on the Participant’s agreement to
comply with covenants not to compete, not to solicit employees and customers
and not to disclose confidential information that may be effective during or
after the Participant’s employment, and/or provisions requiring the Participant
to disgorge any profit, gain or other benefit received in connection with an
Award as a result of the breach of such covenant;

 

(iv)
restrictions on resale or other disposition of Shares, including imposition of
a retention period; and

 

(v) compliance
with federal or state securities laws and stock exchange requirements.

 

(b) Employment. The issuance of an Award
shall not confer upon a Participant any right with respect to continued
employment with the Company or any Affiliate. Unless determined otherwise by
the Committee, for purposes of this Plan and all Awards, the following rules
shall apply:

 

(i) a
Participant who transfers employment between the Corporation and any Affiliate
of the Company, or between the Company’s Affiliates, will not be considered to
have terminated employment;

 

(ii) a
Participant who ceases to be employed by the Company or an Affiliate of the
Company and immediately thereafter becomes a Non-Employee Director, a
non-employee director of any of its Affiliates, or a consultant to the Company
or any of its Affiliates shall not be considered to have terminated employment
until such Participant’s service as a director of, or consultant to, the
Company and its Affiliates has ceased; and

 

11

 

(iii) a
Participant employed by an Affiliate of the Company will be considered to have
terminated employment when such entity ceases to be an Affiliate of the
Company.

 

(c) No Fractional Shares. No fractional
Shares or other securities may be issued or delivered pursuant to this Plan,
and the Committee may determine whether cash, other securities or other
property will be paid or transferred in lieu of any fractional Shares or other
securities, or whether such fractional Shares or other securities or any rights
to fractional Shares or other securities will be canceled, terminated or
otherwise eliminated.

 

(d) Unfunded Plan. This Plan is unfunded and
does not create, and should not be construed to create, a trust or separate
fund with respect to this Plan’s benefits. This Plan does not establish any
fiduciary relationship between the Company and any Participant or other person.
To the extent any person holds any rights by virtue of an Award granted under
this Plan, such rights are no greater than the rights of the Company’s general
unsecured creditors.

 

(e) Requirements of Law and Securities Exchange.
The granting of Awards and the issuance of Shares in connection with an Award
are subject to all applicable laws, rules and regulations and to such approvals
by any governmental agencies or national securities exchanges as may be
required. Notwithstanding any other provision of this Plan or any Award
Agreement, the Company has no liability to deliver any Shares under this Plan
or make any payment unless such delivery or payment would comply with all
applicable laws and the applicable requirements of any securities exchange or
similar entity, and unless and until the Participant has taken all actions
required by the Company in connection therewith. The Company may impose such
restrictions on any Shares issued under this Plan as the Company determines
necessary or desirable to comply with all applicable laws, rules and
regulations or the requirements of any national securities exchanges.

 

(f) Governing Law. This Plan, and all
agreements under this Plan, will be construed in accordance with and governed
by the laws of the State of Wisconsin, without reference to any conflict of law
principles. The parties agree that the exclusive venue for any legal action or
proceeding with respect to this Plan, any Award or any Award Agreement shall be
a court sitting in the County of Milwaukee, or the Federal District Court for
the Eastern District of Wisconsin sitting in the County of Milwaukee, in the
State of Wisconsin, and further agree that any such action may be heard only in
a “bench” trial, and any party to such action or proceeding shall agree to
waive its right to a jury trial.

 

(g) Limitations on Actions. Any legal action
or proceeding with respect to this Plan, any Award or any Award Agreement must
be brought within one year (365 days) after the day the complaining party first
knew or should have known of the events giving rise to the complaint.

 

(h) Construction. Whenever any words are
used herein in the masculine, they shall be construed as though they were used
in the feminine in all cases where they would so apply; and wherever any words
are used in the singular or plural, they shall be construed as though they were
used in the plural or singular, as the case may be, in all cases where they
would so apply. Titles of sections are for general information only, and this
Plan is not to be construed with reference to such titles.

 

(i) Severability. If any provision of this
Plan or any Award Agreement or any Award (i) is or becomes or is deemed to be
invalid, illegal or unenforceable in any jurisdiction, or as to any person or
Award, or (ii) would disqualify this Plan, any Award Agreement or any Award
under any law the Committee deems applicable, then such provision should be
construed or deemed amended to conform to applicable laws, or if it cannot be
so construed or deemed amended without, in the determination of the Committee,
materially altering the intent of this Plan, such Award Agreement or such
Award, then such provision should be stricken as to such jurisdiction, person
or Award, and the remainder of this Plan, such Award Agreement and such Award will
remain in full force and effect.

 

12

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