Document:

exv10wff

 

Exhibit 10.ff

EXECUTION COPY

GOLDMAN
SACHS & CO. | 85  BROAD STREET | NEW YORK, NEW YORK 10004 | TEL: 212-902-1000

Opening Transaction

	 	 	 
	To:

	 	Polaris Industries Inc.
	 

	 	2100 Highway 55
	 

	 	Medina, MN 55340
	 
	 	 
	From:

	 	Goldman, Sachs & Co.
	 
	 	 
	Subject:

	 	Accelerated Share Buyback
	 
	 	 
	Ref. No:

	 	As provided in the Supplemental Confirmation
	 
	 	 
	Date:

	 	December 5, 2006

          This master confirmation (“Master Confirmation”) dated as of December 5, 2006 is intended to
supplement the terms and provisions of certain Transactions (each, a “Transaction”) entered into
from time to time between Goldman, Sachs & Co. (“GS&Co.”) and Polaris Industries Inc., a Minnesota
Corporation (“Counterparty”). This Master Confirmation, taken alone, is neither a commitment by
either party to enter into any Transaction nor evidence of a Transaction. The terms of any
particular Transaction shall be set forth in a Supplemental Confirmation in the form of Annex A
hereto, which references this Master Confirmation (the “Supplemental Confirmation”). This Master
Confirmation and each Supplemental Confirmation together shall constitute a “Confirmation” as
referred to in the Agreement specified below.

          The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc.,
are incorporated into this Master Confirmation. This Master Confirmation and each Supplemental
Confirmation evidence a complete binding agreement between the Counterparty and GS&Co. as to the
subject matter and terms of each Transaction to which this Master Confirmation and the related
Supplemental Confirmation relate and shall supersede all prior or contemporaneous written or oral
communications with respect thereto.

          This Master Confirmation and each Supplemental Confirmation supplement, form a part of, and
are subject to an agreement in the form of the 1992 ISDA Master Agreement (Multicurrency-Cross
Border) (the “Agreement”) as if GS&Co. and Counterparty had executed the Agreement on the date of
this Master Confirmation (but without any Schedule except for (i) the election of Loss and Second
Method for purposes of Section 6(e) of the Agreement, New York law (without regard to the conflicts
of law principles) as the governing law and US Dollars (“USD”) as the Termination Currency, (ii)
the election that subparagraph (ii) of Section 2(c) will not apply to Transactions, (iii) the
replacement of the word “third” in the last line of Section 5(a)(i) with the word “first”, (iv) the
election that the “Cross Default” provisions of Section 5(a)(vi) shall apply to Counterparty, with
a “Threshold Amount” of USD0; provided however, that the words “or becoming capable at such time of
being declared” shall be deleted from clause (i) of such Section 5(a)(vi), and (v) “Specified
Indebtedness” of Counterparty shall mean any obligation (whether present or future, contingent or
otherwise, as principal or surety or otherwise) under the Credit Agreement dated December 4, 2006
by and among Polaris Industries Inc., a Minnesota corporation, as borrower, certain subsidiaries of
the borrower as guarantors, the lenders identified therein, Bank of America, N.A., as
administrative agent and issuing lender, U.S. Bank N.A. and The Royal Bank of Canada as syndication
agents and The Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch as documentation agent, or any
successor or substitute agreement therefor, any other credit agreement entered into by Counterparty
during the term of any Transaction hereunder and any bond, note or debenture sold by Counterparty
during the term of any Transaction hereunder).

          All provisions contained or incorporated by reference in the Agreement shall govern this
Master Confirmation and each Supplemental Confirmation relating to a Transaction except as
expressly modified herein or in the related Supplemental Confirmation.

 

 

          If, in relation to any Transaction to which this Master Confirmation and related Supplemental
Confirmation relate, there is any inconsistency between the Agreement, this Master Confirmation,
any Supplemental Confirmation and the Equity Definitions, the following will prevail for purposes
of such Transaction in the order of precedence indicated: (i) such Supplemental Confirmation; (ii)
this Master Confirmation; (iii) the Agreement; and (iv) the Equity Definitions.

          1. On the Clearance System Business Day following the Trade Date for each Transaction (the
“Initial Settlement Date”), GS&Co. will deliver to Counterparty a number of Shares equal to the
Number of Shares for the relevant Transaction, and Counterparty will pay to GS&Co. cash in
immediately available funds in an amount to be specified in the Supplemental Confirmation (the
“Initial Purchase Price”) equal to the product of the Initial Share Price (as set forth below) and
the Number of Shares; provided that, if GS&Co. is unable to borrow or otherwise acquire a number of
Shares equal to the Number of Shares for delivery to Counterparty on the Initial Settlement Date,
the parties may agree that there will be more than one Initial Settlement Date such that the total
number of Shares delivered to Counterparty and the total amount paid by Counterparty equal the
Number of Shares and the Initial Purchase Price, respectively. If there is more than one Initial
Settlement Date for a Transaction, then on the final Initial Settlement Date for such Transaction,
the parties shall supplement the Supplemental Confirmation for such Transaction to memorialize the
Initial Settlement Dates, the number of Shares delivered on each Initial Settlement Date, the
portion of the Initial Purchase Price paid on each Initial Settlement Date, the Initial Share
Price, the Initial Purchase Price and, if the Number of Shares and the Counterparty Additional
Payment Amount (each as defined below) for such Transaction are reduced pursuant to the provision
to the definitions of such terms set forth in Annex A, the final Number of Shares and Counterparty
Additional Payment Amount.

          The additional terms of each Transaction set forth below are intended to be in substance and
effect an adjustment to the Initial Purchase Price. Solely for the purposes of the Equity
Definitions, each Transaction shall be treated as if it were a Share Forward Transaction. However,
the parties acknowledge that the Transaction is a Share buyback transaction and is not intended to
effect a net issuance of shares or raise equity capital for Counterparty. Set forth below are the
terms and conditions which, together with the terms and conditions set forth in each Supplemental
Confirmation (in respect of each relevant Transaction), shall govern each such Transaction.

	 	 	 	 	 
	General Terms:	 	 
	 
	 	 	 	 
	 

	 	Trade Date:
	 	For each Transaction, as set forth in the Supplemental Confirmation.
	 
	 	 	 	 
	 

	 	Seller:
	 	Counterparty
	 
	 	 	 	 
	 

	 	Buyer:
	 	GS&Co.
	 
	 	 	 	 
	 

	 	Shares:
	 	Common Stock, $0.01 par value, of Counterparty (Ticker: PII)
	 
	 	 	 	 
	 

	 	Number of Shares:
	 	For each Transaction, as set forth in the Supplemental Confirmation.
	 
	 	 	 	 
	 

	 	Initial Share Price:
	 	For each Transaction, as set forth in the Supplemental Confirmation.
	 
	 	 	 	 
	 

	 	Forward Price:
	 	For each Transaction, the Initial Share Price for such Transaction.
	 
	 	 	 	 
	 

	 	Prepayment:
	 	Not Applicable
	 
	 	 	 	 
	 

	 	Variable Obligation:
	 	Not Applicable
	 
	 	 	 	 
	 

	 	Exchange:
	 	New York Stock Exchange
	 
	 	 	 	 
	 

	 	Related Exchange(s):
	 	All Exchanges

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	 	Market Disruption Event:
	 	The definition of “Market Disruption Event” in Section 6.3(a) of
the Equity Definitions is hereby amended by replacing the words “at any time during the
one-hour period that ends at the relevant Valuation Time” in the third line thereof
with the words “at any time on any Scheduled Trading Day during the Valuation Period
or” after the word “material”.
	 
	 	 	 	 
	 

	 	Counterparty Additional
Payment Amount:
	 	For each Transaction, as set forth in the Supplemental Confirmation.
	 
	 	 	 	 
	Valuation:	 	 
	 
	 	 	 	 
	 

	 	Valuation Period:
	 	Each Scheduled Trading Day during the period commencing on and including
the first Scheduled Trading Day following the final Initial Settlement Date, to and
including the Valuation Date (but excluding any day(s) on which the Valuation Period is
suspended in accordance with Section 5 herein).
	 
	 	 	 	 
	 

	 	 	 	Notwithstanding anything to the contrary in the
Equity Definitions, to the extent that any Scheduled
Trading Day in the Valuation Period is a Disrupted
Day, the Calculation Agent may postpone the Valuation
Date. In such event, the Calculation Agent must
determine whether (i) such Disrupted Day is a
Disrupted Day in full, in which case such Disrupted
Day shall not be included for purposes of determining
the Settlement Price, or (ii) such Disrupted Day is a
Disrupted Day only in part, in which case the VWAP
Price for such Disrupted Day shall be determined by
the Calculation Agent based on Rule 10b-18 eligible
transactions in the Shares on such Disrupted Day
effected before the relevant Market Disruption Event
occurred and/or after the relevant Market Disruption
Event ended, and the weighting of the VWAP Prices for
the relevant Scheduled Trading Days during the
Valuation Period shall be adjusted by the Calculation
Agent for purposes of determining the Settlement
Price, with such adjustments based on, among other
factors, the duration of any Market Disruption Event
and the volume, historical trading patterns and price
of the Shares.
	 
	 	 	 	 
	 

	 	 	 	If a Disrupted Day occurs during the Valuation
Period, and each of the nine immediately following
Scheduled Trading Days is a Disrupted Day, then the
Calculation Agent, in its good faith and commercially
reasonable discretion, may either (i) deem such ninth
Scheduled Trading Day to be an Exchange Business Day
and determine the VWAP Price for such ninth Scheduled
Trading Day and adjust the weighting of the VWAP
Prices for the relevant Scheduled Trading Days during
the Valuation Period as it deems appropriate for
purposes of determining the Settlement Price based
on, among other factors, the duration of any Market
Disruption Event and the volume, historical trading
patterns and price of the Shares or (ii) disregard
such day for purposes of determining the Settlement
Price and further postpone the Valuation Date as it
deems appropriate to determine the VWAP Price.

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	 	Valuation Date:
	 	For each Transaction, the Scheduled Valuation Date set forth in the
Supplemental Confirmation (as the same may be postponed in accordance with the
provisions hereof); provided that GS&Co. shall have the right to designate any date
(the “Accelerated Valuation Date”) on or after the First Acceleration Date to be the
Valuation Date by providing notice to Counterparty of any such designation on such
Accelerated Valuation Date; provided further, that if GS&Co. provides notice to
Counterparty of such designation prior to 9:30 a.m. New York City time on any date,
then the Valuation Date shall be the Exchange Business Day immediately preceding such
Accelerated Valuation Date.
	 
	 	 	 	 
	 

	 	First Acceleration Date:
	 	For each Transaction, as set forth in the Supplemental
Confirmation.
	 
	 	 	 	 
	Settlement Terms:	 	 
	 
	 	 	 	 
	 

	 	Settlement Currency:
	 	USD
	 
	 	 	 	 
	 

	 	Settlement Method Election:
	 	Applicable; provided that (a) Section 7.1 of the Equity
Definitions is hereby amended by deleting the word “Physical” in the sixth line thereof
and replacing it with the words “Net Share” and (b) in the event that GS&Co. would be
obligated to deliver to the Counterparty any Shares under Net Share Settlement, Cash
Settlement shall be applicable in lieu of Net Share Settlement.
	 
	 	 	 	 
	 

	 	Electing Party:
	 	Counterparty
	 
	 	 	 	 
	 

	 	Settlement Method Election Date:
	 	The earlier of (i) the fifth Scheduled Trading Day
immediately prior to the originally scheduled Valuation Date and (ii) the Accelerated
Valuation Date, as the case may be.
	 
	 	 	 	 
	 

	 	Default Settlement Method:
	 	Cash Settlement
	 
	 	 	 	 
	 

	 	Forward Cash Settlement Amount:
	 	An amount in the Settlement Currency equal to the sum of (a)
the Number of Shares multiplied by an amount equal to (i) the Settlement Price minus
(ii) the Forward Price plus (b) the Counterparty Additional Payment Amount.
	 
	 	 	 	 
	 

	 	Settlement Price:
	 	The arithmetic mean of the VWAP Prices of the Shares for each Scheduled
Trading Day in the Valuation Period minus the Settlement Price Adjustment Amount.
	 
	 	 	 	 
	 

	 	Settlement Price Adjustment Amount:
	 	For each Transaction, as set forth in the Supplemental
Confirmation.
	 
	 	 	 	 
	 

	 	VWAP Price:
	 	For any Exchange Business Day, as determined by the Calculation Agent
based on the New York Stock Exchange 10b-18 Volume Weighted Average Price per Share for
the regular trading session (including any extensions thereof) on such Exchange
Business Day (without regard to pre-open or after hours trading outside of such regular
trading session for such Exchange Business Day), as published by Bloomberg at 4:15 p.m.
New York time (or 15 minutes following the end of any extension of the regular trading
session) on such

-4-

 

	 	 	 	 	 
	 

	 	 	 	Exchange Business Day, on Bloomberg page “PII.N
<Equity> AQR_SEC” (or any successor thereto).
For purposes of calculating the VWAP Price, the
Calculation Agent will include only those trades that
are reported during the period of time during which
Counterparty could purchase its own shares under Rule
10b-18(b)(2) and pursuant to the conditions of Rule
10b-18(b)(3), each under the Exchange Act (as defined
herein) (such trades, “Rule 10b-18 eligible
transactions”).
	 
	 	 	 	 
	 

	 	Counterparty’s Contact Details
for Purpose of Giving Notice:
	 	To be provided by Counterparty
	 
	 	 	 	 
	 

	 	GS&Co.’s Contact Details for
Purpose of Giving Notice:
	 	Telephone No.: (212) 902-8996
	 

	 	 	 	Facsimile No.: (212) 902-0112
	 

	 	 	 	Attention: Equity Operations: Options and
Derivatives
	 
	 	 	 	 
	 

	 	 	 	With a copy to:
	 

	 	 	 	Tracey McCabe
	 

	 	 	 	Equity Capital Markets
	 

	 	 	 	One New York Plaza
	 

	 	 	 	New York, NY 10004
	 

	 	 	 	Telephone No.: (212) 357-0428
	 

	 	 	 	Facsimile No.: (212) 902-3000
	 
	 	 	 	 
	Net Share Settlement:	 	 
	 
	 	 	 	 
	 

	 	Net Share Settlement Procedures:
	 	Net Share Settlement shall be made in accordance
with the procedures attached hereto as Annex B.
	 
	 	 	 	 
	 

	 	Net Share Settlement Price:
	 	The Relevant Price on the Net Share Valuation Date, as
reduced by the per Share amount of the underwriting discount and/or commissions agreed
to pursuant to the equity underwriting agreement contemplated by the Net Share
Settlement Procedures.
	 
	 	 	 	 
	 

	 	Valuation Time:
	 	As provided in Section 6.1 of the Equity Definitions; provided that Section
6.1 of the Equity Definitions is hereby amended by inserting the words “Net Share
Valuation Date,” before the words “Valuation Date” in the first and third lines
thereof.
	 
	 	 	 	 
	 

	 	Net Share Valuation Date:
	 	The Exchange Business Day immediately following the
Valuation Date.
	 
	 	 	 	 
	 

	 	Net Share Settlement Date:
	 	The third Exchange Business Day immediately following
the Valuation Date.
	 
	 	 	 	 
	 

	 	Reserved Shares:
	 	Initially, 15,000,000 Shares. The Reserved Shares may be increased or
decreased in a Supplemental Confirmation.
	 
	 	 	 	 
	 

	 	Relevant Price:
	 	As provided in Section 1.23(b) of the Equity Definitions; provided that
Section 1.23(b) of the Equity Definitions is hereby amended by replacing each
occurrence therein of “the Valuation Date or Averaging Date, as the case may be,” with
the term “such day.”

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	Share Adjustments:	 	 
	 
	 	 	 	 
	 

	 	Potential Adjustment Event:
	 	Notwithstanding anything to the contrary in Section 11.2(e) of
the Equity Definitions, an Extraordinary Dividend shall not constitute a Potential
Adjustment Event.
	 
	 	 	 	 
	 

	 	Extraordinary Dividend:
	 	For any calendar quarter, any dividend or distribution on the Shares
with an ex-dividend date occurring during such calendar quarter (other than any
dividend or distribution of the type described in Section 11.2(e)(i) or Section
11.2(e)(ii)(A) or (B) of the Equity Definitions) (a “Dividend”) the amount or value of
which (as determined by the Calculation Agent), when aggregated with the amount or
value (as determined by the Calculation Agent) of any and all previous Dividends with
ex-dividend dates occurring in the same calendar quarter, exceeds the Ordinary Dividend
Amount.
	 
	 	 	 	 
	 

	 	Ordinary Dividend Amount:
	 	For each Transaction, as set forth in the Supplemental
Confirmation.
	 
	 	 	 	 
	 

	 	Method of Adjustment:
	 	Calculation Agent Adjustment
	 
	 	 	 	 
	Extraordinary Events:	 	 
	 
	 	 	 	 
	Consequences of Merger Events:	 	 
	 
	 	 	 	 
	 

	 	(a)     Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	(b)     Share-for-Other:
	 	Cancellation and Payment
	 
	 	 	 	 
	 

	 	(c)     Share-for-Combined:
	 	Component Adjustment
	 
	 	 	 	 
	 

	 	Determining Party:
	 	GS&Co.
	 
	 	 	 	 
	Tender Offer:	 	Applicable; provided, however, that the references in the third line of Section
12.1(d) of the Equity Definitions to 10% shall be deleted and replaced with 20%.
	 
	 	 	 	 
	Consequences of Tender Offers:	 	 
	 
	 	 	 	 
	 

	 	(a)     Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	(b)     Share-for-Other:
	 	Cancellation and Payment
	 
	 	 	 	 
	 

	 	(c)     Share-for-Combined:
	 	Component Adjustment
	 
	 	 	 	 
	 

	 	Determining Party:
	 	GS&Co.
	 
	 	 	 	 
	Nationalization, Insolvency or Delisting:	 	Cancellation and Payment; provided that in addition to the provisions of Section
12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the
Exchange is located in the United States and the Shares are not immediately
re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American
Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their
respective successors); and if the Shares are immediately re-listed, re-traded or
re-quoted on any such exchange or

-6-

 

	 	 	 	 	 
	 

	 	 	 	quotation system, such exchange or quotation system
shall be deemed to be the Exchange.

Notwithstanding anything to the contrary in the Equity Definitions, if, as a result of a Merger
Event, a Tender Offer, a Nationalization, an Insolvency or a Delisting, Cancellation and Payment
applies to one or more Transactions hereunder (whether in whole or in part), an Additional
Termination Event shall be deemed to occur (with the Transactions (or portions thereof) to which
Cancellation and Payment applies being the Affected Transactions, Counterparty being the sole
Affected Party and the Early Termination Date being the date on which such Transactions would be
cancelled pursuant to Article 12 of the Equity Definitions), and, in lieu of Sections 12.7 and 12.8
of the Equity Definitions, Section 6 of the Agreement shall apply to such Affected Transactions.

	 	 	 	 	 
	Additional Disruption Events:	 	 
	 
	 	 	 	 
	 

	 	(a)      Change in Law:
	 	Applicable
	 
	 	 	 	 
	 

	 	(b)      Insolvency Filing:
	 	Applicable
	 
	 	 	 	 
	 

	 	(c)      Loss of Stock Borrow:
	 	Applicable; provided that Sections 12.9(a)(vii) and
12.9(b)(iv) of the Equity Definitions are amended by deleting the words “at a rate
equal to or less than the Maximum Stock Loan Rate” and replacing them with “at a rate
of return equal to or greater than minus 100 basis points”.
	 
	 	 	 	 
	 

	 	           Hedging Party:
	 	GS&Co.
	 
	 	 	 	 
	 

	 	           Determining Party:
	 	GS&Co.

Notwithstanding anything to the contrary in the Equity Definitions, if, as a result of an
Additional Disruption Event, any Transaction is cancelled or terminated, an Additional Termination
Event shall be deemed to occur (with such terminated Transaction(s) being the Affected
Transaction(s), Counterparty being the sole Affected Party and the Early Termination Date being the
date on which such Transaction(s) would be cancelled or terminated pursuant to Article 12 of the
Equity Definitions), and, in lieu of Sections 12.7 and 12.8 of the Equity Definitions, Section 6 of
the Agreement shall apply to such Affected Transaction(s).

	 	 	 	 	 
	Non-Reliance:	 	Applicable
	 
	 	 	 	 
	Agreements and Acknowledgements
Regarding Hedging Activities:	 	Applicable
	 
	 	 	 	 
	Additional Acknowledgements:	 	Applicable
	 
	 	 	 	 
	Net Share Settlement Upon
Early Termination:	 	Counterparty shall have the right, in its sole discretion, in lieu of making any payment required to
be made by it (the “Early Termination Amount”) pursuant to Sections 6(d) and 6(e) of the Agreement
following the occurrence of an Early Termination Date in respect of the Transaction (other than any
Early Termination Date occurring as a result of a Share-for-Other or Share-for-Combined Merger Event
or Tender Offer in respect of the portion of the consideration for the Shares consisting of cash),
elect to settle its obligation to pay the Early Termination Amount in Shares in accordance with the
terms, and subject to the conditions, for Net Share Settlement herein by giving written notice to
GS&Co. of such election on the day that the notice fixing an Early Termination Date is

-7-

 

	 	 	 	 	 
	 

	 	 	 	effective. If Counterparty elects Net Share Settlement under such
circumstances: (a) the Net Share Valuation Date shall be the Early Termination
Date, which shall be either the Exchange Business Day that such notice is
effective or the first Exchange Business Day immediately following the Exchange
Business Day that such notice is effective, (b) the Net Share Settlement Date
shall be deemed to be the Exchange Business Day immediately following the Early
Termination Date and (c) all references to Forward Cash Settlement Amount in
Annex B hereto shall be deemed references to the Early Termination Amount.
	 
	 	 	 	 
	Transfer:	 	Notwithstanding anything to the
contrary in the Agreement, GS&Co. may
assign, transfer and set over all
rights, title and interest, powers,
privileges and remedies of GS&Co. under
any Transaction, in whole or in part,
to an affiliate of GS&Co. whose
obligations are guaranteed by The
Goldman Sachs Group, Inc. without the
consent of Counterparty.
	 
	 	 	 	 
	GS&Co. Payment Instructions:	 	Chase Manhattan Bank New York
	 

	 	 	 	For A/C Goldman, Sachs & Co. 

A/C # 930-1-011483

ABA: 021-000-021
	 
	 	 	 	 
	Counterparty Payment Instructions:	 	To be provided by Counterparty

          2. Calculation Agent: GS&Co.

          3. Representations, Warranties and Covenants of GS&Co. and Counterparty.

          (a) Each party represents and warrants that it (i) is an “eligible contract participant”, as
defined in the U.S. Commodity Exchange Act, as amended and (ii) is entering into each Transaction
hereunder as principal (and not as agent or in any other capacity, fiduciary or otherwise) and not
for the benefit of any third party.

          (b) Each party acknowledges that the offer and sale of each Transaction to it is intended to
be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by
virtue of Section 4(2) thereof and the provisions of Regulation D promulgated thereunder
(“Regulation D”). Accordingly, each party represents and warrants to the other that (i) it has the
financial ability to bear the economic risk of its investment in each Transaction and is able to
bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined
under Regulation D, (iii) it will purchase each Transaction not with a view to distribution or
resale thereof in a manner that would violate the Securities Act, and (iv) the disposition of each
Transaction is restricted under this Master Confirmation, the Securities Act and state securities
laws.

          3A. Additional Representations and Warranties of GS&Co. GS&Co. represents, warrants and
covenants to Counterparty that:

          (a) With respect to the purchase of Shares in connection with any Transaction (other than any
purchases made by GS&Co. in connection with dynamic hedge adjustments of GS&Co.’s exposure to such
Transaction as a result of any equity optionality contained in such Transaction) during the
Valuation Period for such Transaction, it will use good faith efforts to (i) effect such purchases
in a manner so that, if such purchases were made by the Counterparty, they would meet the
requirements of paragraphs (b)(2), (3) and (4) of Rule 10b-18 under the Exchange Act and (ii)
effect calculations in respect thereof as if such paragraphs applied to GS&Co. (taking into account
any applicable Securities and Exchange Commission no-action letters as appropriate and subject to
any delays between execution and reporting of a trade of the Shares on the Exchange and other
circumstances beyond GS&Co.’s control) to the extent that it uses the number of Shares so purchased
or the purchase price of any such purchase of Shares to determine terms of such Transaction.

-8-

 

          (b) GS&Co. has implemented reasonable policies and procedures, taking into account the
nature of its business, to ensure that individuals making investment decisions would not violate
laws prohibiting trading on the basis of material nonpublic information. Such individuals shall
not be in possession of material nonpublic information during all relevant times beginning at the
time this Transaction is publicly announced through and including the Valuation Date.

          4. Additional Representations, Warranties and Covenants of Counterparty.

          As of (i) the date hereof and (ii) the period of time from the Trade Date for each Transaction
hereunder until the time that each party has fully performed all of its obligations under such
Transaction, Counterparty represents, warrants and covenants to GS&Co. that:

          (a) the purchase or writing of any Transaction and the transactions contemplated hereby do not
and will not violate Rule 13e-1 or Rule 13e-4 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”);

          (b) it is not entering into any Transaction (i) on the basis of, and is not aware of, any
material non-public information with respect to the Shares (ii) in anticipation of, in connection
with, or to facilitate, a distribution of its securities, a self tender offer or a third-party
tender offer or (iii) to create actual or apparent trading activity in the Shares (or any security
convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for the Shares);

          (c) Counterparty is in compliance with its reporting obligations under the Exchange Act and
its most recent Annual Report on Form 10-K, together with all reports subsequently filed by it
pursuant to the Exchange Act, taken together and as amended and supplemented to the date of this
representation, do not, as of their respective filing dates, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were made, not
misleading;

          (d) (i) each Transaction is being entered into pursuant to a publicly disclosed Share buy-back
program; (ii) its Board of Directors has approved the use of derivatives to effect the Share
buy-back program; and (iii) Counterparty shall immediately retire the Shares purchased under this
Confirmation;

          (e) without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty
acknowledges that GS&Co. is not making any representations or warranties with respect to the
treatment of any Transaction under FASB Statements 128, 133 (as amended), 149 or 150, EITF 00-19,
EITF 03-6 (or any successor issue statements) or under the Financial Accounting Standards Board’s
Liabilities & Equity Project;

          (f) Counterparty is not, and will not be, engaged in a “distribution” of Shares or securities
that are convertible into, or exchangeable or exercisable for Shares for purposes of Regulation M
promulgated under the Exchange Act (“Regulation M”) at any time during the Relevant Period for any
Transaction unless Counterparty has provided written notice to GS&Co. of such distribution (a
“Regulation M Distribution Notice”) not later than the Scheduled Trading Day immediately preceding
the first day of the relevant “restricted period” (as defined in Regulation M); Counterparty
acknowledges that any such notice may cause the Valuation Period to be extended or suspended
pursuant to Section 5 below; accordingly, Counterparty acknowledges that its delivery of such
notice must comply with the standards set forth in Section 6 below; “Relevant Period” means, for
any Transaction, the period commencing on the first day of the Valuation Period and ending on the
20th Exchange Business Day immediately following the end of the Valuation Period, or such earlier
day as elected by GS&Co. and communicated to Counterparty on such day;

          (g) it shall report each Transaction as required under Regulation S-K and/or Regulation S-B
under the Exchange Act, as applicable;

          (h) on the Trade Date for each Transaction and on each day of the Valuation Period for such
Transaction, Counterparty is not and will not be “insolvent” (as such term is defined under Section
101(32) of the

-9-

 

U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) and
Counterparty would be able to purchase a number of Shares equal to the Number of Shares in
compliance with the laws of the jurisdiction of Counterparty’s incorporation;

          (i) it has not and, during the Relevant Period for any Transaction, will not enter into
agreements similar to the Transactions described herein where any initial hedge period (however
defined), the valuation period (however defined) or the relevant period (however defined) in such
other transaction will overlap at any time (including as a result of extensions in such initial
hedge period, valuation period or relevant period as provided in the relevant agreements) with any
Relevant Period under this Master Confirmation. In the event that the initial hedge period,
valuation period or relevant period in any other similar transaction overlaps with any Relevant
Period under this Master Confirmation as a result of an extension of the Valuation Date pursuant to
Section 5 herein, Counterparty shall promptly amend such transaction to avoid any such overlap; and

          (j) Counterparty is not and, after giving effect to any Transaction, will not be, required to
register as an “investment company” as such term is defined in the Investment Company Act of 1940,
as amended.

5. Suspension of Valuation Period.

          (a) If Counterparty concludes that it will be engaged in a distribution of the Shares for
purposes of Regulation M, Counterparty agrees that it will, on a day no later than the Scheduled
Trading Day immediately preceding the start of the relevant restricted period, provide GS&Co. with
a Regulation M Distribution Notice. If on any Scheduled Trading Day Counterparty delivers the
Regulation M Distribution Notice in writing (and confirms by telephone) by 8:30 a.m. New York Time
(the “Notification Time”) then such notice shall be effective as of such Notification Time. In the
event that Counterparty delivers such Regulation M Distribution Notice in writing and/or confirms
by telephone after the Notification Time, then such notice shall be effective as of 8:30 a.m. New
York Time on the following Scheduled Trading Day or as otherwise required by law or agreed between
Counterparty and GS&Co. Upon the effectiveness of such Regulation M Distribution Notice, the
Valuation Period shall be suspended and the Valuation Date shall be postponed for each Scheduled
Trading Day in such restricted period and GS&Co. shall cease effecting purchases of Shares in
connection with any Transaction during such “restricted period” (other than any purchases made by
GS&Co. in connection with dynamic hedge adjustments of GS&Co.’s exposure to any Transaction as a
result of any equity optionality contained in such Transaction).

          (b) In the event that GS&Co. concludes, in good faith based upon the advice of outside legal
counsel, that it is appropriate with respect to any legal, regulatory or self-regulatory
requirements or related policies and procedures (whether or not such requirements, policies or
procedures are imposed by law or have been voluntarily adopted by GS&Co.), for it to refrain from
purchasing Shares on any Scheduled Trading Day during the Valuation Period, GS&Co. may by written
notice to Counterparty elect to suspend the Valuation Period for such number of Scheduled Trading
Days as is specified in the notice. The notice shall not specify, and GS&Co. shall not otherwise
communicate to Counterparty, the reason for GS&Co.’s election to suspend the Valuation Period. The
Valuation Period shall be suspended and the Valuation Date shall be postponed for each Scheduled
Trading Day occurring during any such suspension.

          (c) In the event that the Valuation Period is suspended pursuant to Section 5(a) and (b) above
during the regular trading session on the Exchange, such suspension shall be deemed to be an
additional Market Disruption Event, and the second and third paragraphs under “Valuation Period”
shall apply.

          6. 10b5-1 Plan. Counterparty represents, warrants and covenants to GS&Co. that for
each Transaction:

          (a) Counterparty is entering into this Master Confirmation and each Transaction hereunder in
good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 under the
Exchange Act (“Rule 10b5-1”) or any antifraud or anti-manipulation provisions of the federal or
applicable state securities laws and that it has not entered into or altered and will not enter
into or alter any corresponding or hedging transaction or position with respect to the Shares.
Counterparty acknowledges that it is the intent of the parties that each Transaction entered into
under this Master Confirmation comply with the requirements of Rule 10b5-1(c)(1)(i)(A)

-10-

 

and (B) and each Transaction entered into under this Master Confirmation shall be interpreted
to comply with the requirements of Rule 10b5-1(c).

          (b) Counterparty will not seek to control or influence GS&Co. to make “purchases or sales”
(within the meaning of Rule 10b5-1(c)(1)(i)(B)(3)) under any Transaction entered into under this
Master Confirmation, including, without limitation, GS&Co.’s decision to enter into any hedging
transactions. Counterparty represents and warrants that it has consulted with its own advisors as
to the legal aspects of its adoption and implementation of this Master Confirmation and each
Supplemental Confirmation under Rule 10b5-1.

          (c) Counterparty acknowledges and agrees that any amendment, modification, waiver or
termination of this Master Confirmation or the relevant Supplement Confirmation must be effected in
accordance with the requirements for the amendment or termination of a “plan” as defined in Rule
10b5-1(c). Without limiting the generality of the foregoing, any such amendment, modification,
waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the
prohibitions of Rule 10b-5, and no such amendment, modification, waiver or termination shall be
made at any time at which Counterparty or any officer, director, manager or similar person of
Counterparty is aware of any material non-public information regarding Counterparty or the Shares.

          7. Counterparty Purchases. Counterparty represents, warrants and covenants to GS&Co.
that, for each Transaction, Counterparty (or any “affiliated purchaser” as defined in Rule 10b-18
under the Exchange Act (“Rule 10b-18”)) shall not, without the prior written consent of GS&Co.,
directly or indirectly purchase any Shares (including by means of a derivative instrument), listed
contracts on the Shares or securities that are convertible into, or exchangeable or exercisable for
Shares (including, without limitation, any Rule 10b-18 purchases of blocks (as defined in Rule
10b-18)) during any Relevant Period. During this time, any such purchases by Counterparty shall be
made through GS&Co., or if not through GS&Co., with the prior written consent of GS&Co., and in
compliance with Rule 10b-18 or otherwise in a manner that Counterparty and GS&Co. believe is in
compliance with applicable requirements.

          8. Additional Termination Events. The declaration of any Extraordinary Dividend by
Counterparty during the Valuation Period for any Transaction shall constitute an Additional
Termination Event, with Counterparty as the sole Affected Party and all Transactions hereunder as
the Affected Transactions. For the avoidance of doubt, any amount payable under Section 6(d)(ii)
of the Agreement and any Special Termination Amount (as defined below) in respect of such
Additional Termination Event shall be calculated without regard to such Extraordinary Dividend.

          9. Automatic Termination Provisions. Notwithstanding anything to the contrary in
Section 6 of the Agreement:

          (a) If a Termination Price is specified in one or more Supplemental Confirmations, then an
Additional Termination Event with Counterparty as the sole Affected Party and all Transactions to
which such Supplemental Confirmations relate as Affected Transactions will automatically occur
without any notice or action by GS&Co. or Counterparty if the price of the Shares on the Exchange
at any time falls below such Termination Price. The Exchange Business Day that the price of the
Shares on the Exchange at any time falls below the Termination Price will be the “Early Termination
Date” for purposes of the Agreement.

          (b) Notwithstanding anything to the contrary in Section 6(d) of the Agreement, following the
occurrence of such an Additional Termination Event, GS&Co. will notify Counterparty of the amount
owing under Section 6(e) of the Agreement within a commercially reasonable time period (with such
period based upon the amount of time, determined by GS&Co. (or any of its Affiliates) in its good
faith and commercially reasonable discretion, that it would take to unwind any of its Hedge
Position(s) related to the Transaction in a commercially reasonable manner based on relevant market
indicia). For purposes of the “Net Share Settlement Upon Early Termination” provisions herein, the
date that such notice is effective shall constitute the Net Share Valuation Date and the Early
Termination Date.

          10. Special Provisions for Merger Transactions. Notwithstanding anything to the
contrary herein or in the Equity Definitions, Counterparty shall,

-11-

 

          (a) prior to the opening of trading in the Shares on any day during any Valuation Period on
which Counterparty makes, or expects to be made, any public announcement (as defined in Rule 165(f)
under the Securities Act of 1933, as amended) of any Merger Transaction, notify GS&Co. of such
public announcement;

          (b) promptly notify GS&Co. following any such announcement that such announcement has been
made;

          (c) promptly provide GS&Co. with written notice specifying (i) Counterparty’s average daily
Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately
preceding the Announcement Date that were not effected through GS&Co. or its affiliates and (ii)
the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act
for the three full calendar months preceding the Announcement Date. Such written notice shall be
deemed to be a certification by Counterparty to GS&Co. that such information is true and correct.
In addition, Counterparty shall promptly notify GS&Co. of the earlier to occur of the completion of
such transaction and the completion of the vote by target shareholders. Counterparty acknowledges
that any such notice may cause the terms of any Transaction to be adjusted or such Transaction to
be terminated; accordingly, Counterparty acknowledges that its delivery of such notice must comply
with the standards set forth in Section 6; and

          (d) GS&Co. in its sole discretion may (i) suspend the Valuation Period and postpone the
Valuation Date or (ii) treat the occurrence of such public announcement as an Additional
Termination Event with Counterparty as the sole Affected Party and the Transactions hereunder as
the Affected Transactions.

          “Merger Transaction” means any merger, acquisition or similar transaction involving a
recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.

          11. Special Calculation and Settlement Following Early Termination. Notwithstanding
anything to the contrary in this Master Confirmation or any Supplemental Confirmation hereunder, in
the event that an Early Termination Date occurs or is designated with respect to one or more
Transactions (each an “Elected Transaction” and collectively, the “Elected Transactions”), then
GS&Co. may elect, in its sole discretion, by notice to Counterparty, to have Counterparty deliver
the Number of Early Settlement Shares to GS&Co. on the date that such notice is effective and
either (x) GS&Co. shall pay to Counterparty the Special Termination Amount, if such amount is
positive, or (y) Counterparty shall either (1) pay to GS&Co. the absolute value of the Special
Termination Amount, if such amount is negative, or (2) elect for the provisions set forth opposite
“Net Share Settlement Upon Early Termination” to apply except that all references in such provision
to “the Early Termination Amount” shall be replaced with references to “the Special Termination
Amount”.

          To the extent that Counterparty elects to deliver Early Settlement Shares to GS&Co.
accompanied by an effective Registration Statement (as defined in Annex B and satisfactory to
GS&Co. in its sole discretion) covering such Shares, Counterparty must be in compliance with the
conditions specified in paragraph 3 in Annex B hereto at the time of such delivery. If
Counterparty elects to deliver Unregistered Settlement Shares (as defined in Annex B) to GS&Co.,
Counterparty and GS&Co. will negotiate in good faith on acceptable procedures and documentation
relating to the sale of such Unregistered Settlement Shares. Counterparty and GS&Co. agree that
the payment of the Special Termination Amount and the delivery of the Early Settlement Shares
satisfy in full any obligation of a party to make any payments pursuant to Section 6(e) of the
Agreement or Article 12 of the Equity Definitions, as the case may be, in respect of the Elected
Transactions.

          “Number of Early Settlement Shares” means a number of Shares (“Early Settlement Shares”) as
determined by GS&Co. in a good faith and commercially reasonable manner based on its or any of its
Affiliates’ Hedge Positions with respect to the Elected Transactions under this Master
Confirmation.

          “Special Termination Amount” means the sum of (a) the product of (i) the Number of Early
Settlement Shares multiplied by (ii) a per Share price (the “Early Termination Price”) determined
by GS&Co. in a good faith and commercially reasonable manner based on relevant market indicia,
including GS&Co.’s funding costs associated with Early Settlement Shares and costs incurred or
estimated to be incurred by GS&Co. in connection with the purchase and sale of Shares in order to
close out GS&Co.’s or any of its Affiliates’ Hedge Positions with respect to each Affected
Transaction and, in the event that Counterparty delivers Unregistered Shares

-12-

 

to GS&Co., whether GS&Co. and Counterparty have agreed on acceptable procedures and
documentation relating to such Unregistered Shares as described above and (b) any amount owing
under Section 6(e) of the Agreement, in respect of the Elected Transactions by GS&Co. to
Counterparty (expressed as a positive number) or by Counterparty to GS&Co. (expressed as a negative
number).

          12. Acknowledgments. The parties hereto intend for:

          (a) Each Transaction to be a “securities contract” as defined in Section 741(7) of the
Bankruptcy Code, a “swap agreement” as defined in Section 101(53B) of the Bankruptcy Code and a
“forward contract” as defined in Section 101(25) of the Bankruptcy Code, and the parties hereto to
be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17),
362(b)(27), 362(o), 546(e), 546(g), 555, 556, 560 and 561 of the Bankruptcy Code;

          (b) the Agreement to be a “master netting agreement” as defined in Section 101 (38A) of the
Bankruptcy Code;

          (c) a party’s right to liquidate or terminate any Transaction, net out or offset termination
values of payment amounts, and to exercise any other remedies upon the occurrence of any Event of
Default or Termination Event under the Agreement with respect to the other party to constitute a
“contractual right” (as defined in the Bankruptcy Code);

          (d) any cash, securities or other property transferred as performance assurance, credit
support or collateral with respect to each Transaction to constitute “margin payments” (as defined
in the Bankruptcy Code); and

          (e) all payments for, under or in connection with each Transaction, all payments for the
Shares and the transfer of such Shares to constitute “settlement payments” and “transfers” (as
defined in the Bankruptcy Code).

          13. Calculations on Early Termination and Set-Off.

          (a) Notwithstanding anything to the contrary in the Agreement, the calculation of any
Settlement Amounts or Unpaid Amounts shall be calculated separately for (A) all Terminated
Transactions in the Shares of the Issuer that qualify as equity under applicable accounting rules
(collectively, the “Equity Shares”) as determined by the Calculation Agent and (B) all other
Terminated Transactions under the Agreement including, without limitation, Transactions in Shares
other than those of the Issuer (collectively, the “Other Shares”).

          (b) The parties agree that upon the occurrence of an Event of Default or Termination Event
with respect to a party who is the Defaulting Party or an Affected Party (“X”), the other party
(“Y”) will have the right (but not be obliged) without prior notice to X or any other person to
set-off or apply any obligation of X owed to Y (or any Affiliate of Y) (whether or not matured or
contingent and whether or not arising under the Agreement, and regardless of the currency, place of
payment or booking office of the obligation) against any obligation of Y (or any Affiliate of Y)
owed to X (whether or not matured or contingent and whether or not arising under the Agreement, and
regardless of the currency, place of payment or booking office of the obligation). Y will give
notice to the other party of any set-off effected under this Section 13.

          Amounts (or the relevant portion of such amounts) subject to set-off may be converted by Y
into the Termination Currency at the rate of exchange at which such party would be able, acting in
a reasonable manner and in good faith, to purchase the relevant amount of such currency. If any
obligation is unascertained, Y may in good faith estimate that obligation and set-off in respect of
the estimate, subject to the relevant party accounting to the other when the obligation is
ascertained. Nothing in this Section 13 shall be effective to create a charge or other security
interest. This Section 13 shall be without prejudice and in addition to any right of set-off,
combination of accounts, lien or other right to which any party is at any time otherwise entitled
(whether by operation of law, contract or otherwise).”

-13-

 

          (c) Notwithstanding anything to the contrary in the foregoing, GS&Co. agrees not to set off or
net amounts due from Counterparty with respect to any Transaction against amounts due from GS&Co.
to Counterparty with respect to transactions or instruments that are not Equity Contracts. “Equity
Contract” means any transaction or instrument that does not convey rights to GS&Co. senior to
claims of common stockholders in the event of Counterparty’s bankruptcy.

          14. Payment Date Upon Early Termination. Notwithstanding anything to the contrary in
Section 6(d)(ii) of the Agreement, all amounts calculated as being due in respect of an Early
Termination Date under Section 6(e) of the Agreement will be payable on the day that notice of the
amount payable is effective.

          15. Delivery on Initial Settlement Date. For the avoidance of doubt, GS&Co. may
satisfy its obligation to deliver Shares on any Initial Settlement Date by making separate
deliveries of Shares at more than one time on such Initial Settlement Date, so long as the
aggregate number of Shares so delivered is equal to the Number of Shares.

          16. Credit Support Documents. The parties hereto acknowledge that no Transaction
hereunder is secured by any collateral that would otherwise secure the obligations of Counterparty
herein or pursuant to the Agreement.

          17. Claim in Bankruptcy. GS&Co. agrees that in the event of the bankruptcy of
Counterparty, GS&Co. shall not have rights or assert a claim that is senior in priority to the
rights and claims available to the shareholders of the common stock of Counterparty.

          18. Offices.

          (a) The Office of GS&Co. for each Transaction is: One New York Plaza, New York, New York
10004.

          (b) The Office of Counterparty for each Transaction is: 2100 Highway 55, Medina, Minnesota
55340.

          19. Governing Law. The Agreement, this Master Confirmation and each Supplemental
Confirmation and all matters arising in connection with the Agreement, this Master Confirmation and
each Supplemental Confirmation shall be governed by, and construed and enforced in accordance with,
the laws of the State of New York (without reference to its choice of laws doctrine).

          20. Counterparts. This Master Confirmation may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any party hereto may
execute this Master Confirmation by signing and delivering one or more counterparts.

          21. Arbitration.

          (a) All parties to this Confirmation are giving up the right to sue each other in court,
including the right to a trial by jury, except as provided by the rules of the arbitration forum in
which a claim is filed.

          (b) Arbitration awards are generally final and binding; a party’s ability to have a court
reverse or modify an arbitration award is very limited.

          (c) The ability of the parties to obtain documents, witness statements and other discovery is
generally more limited in arbitration than in court proceedings.

          (d) The arbitrators do not have to explain the reason(s) for their award.

-14-

 

          (e) The panel of arbitrators will typically include a minority of arbitrators who were or are
affiliated with the securities industry, unless Counterparty is a member of the organization
sponsoring the arbitration facility, in which case all arbitrators may be affiliated with the
securities industry.

          (f) The rules of some arbitration forums may impose time limits for bringing a claim in
arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court.

          (g) The rules of the arbitration forum in which the claim is filed, and any amendments
thereto, shall be incorporated into this Confirmation.

          (h) Counterparty agrees that any and all controversies that may arise between Counterparty and
GS & Co., including, but not limited to, those arising out of or relating to the Agreement or any
Transaction hereunder, shall be determined by arbitration conducted before The New York Stock
Exchange, Inc. (“NYSE”) or NASD Dispute Resolution (“NASD-DR”), or, if the NYSE and NASD-DR decline
to hear the matter, before the American Arbitration Association, in accordance with their
arbitration rules then in force. The award of the arbitrator shall be final, and judgment upon the
award rendered may be entered in any court, state or federal, having jurisdiction.

          (i) No person shall bring a putative or certified class action to arbitration, nor seek to
enforce any pre-dispute arbitration agreement against any person who has initiated in court a
putative class action or who is a member of a putative class who has not opted out of the class
with respect to any claims encompassed by the putative class action until: (i) the class
certification is denied; (ii) the class is decertified; or (iii) Counterparty is excluded from the
class by the court.

          (j) Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any
rights under this Confirmation except to the extent stated herein.

-15-

 

     Counterparty hereby agrees (a) to check this Master Confirmation carefully and immediately
upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to
confirm that the foregoing (in the exact form provided by GS&Co.) correctly sets forth the terms of
the agreement between GS&Co. and Counterparty with respect to any Transaction, by manually signing
this Master Confirmation or this page hereof as evidence of agreement to such terms and providing
the other information requested herein and immediately returning an executed copy to Equity
Derivatives Documentation Department, facsimile No. 212-428-1980/83.

	 	 	 	 	 	 	 
	 	 	Yours sincerely,	 	 
	 
	 	 	 	 	 	 
	 	 	GOLDMAN, SACHS & CO.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/Conrad Langenegger
 

Authorized Signatory
	 	 

Agreed and accepted by:

	 	 	 	 	 	 	 
	POLARIS INDUSTRIES INC.	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/Michael W. Malone	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Michael W. Malone	 	 
	 

	 	Title:
	 	Vice President—Finance, Chief	 	 
	 

	 	 	 	Financial Officer and Secretary	 	 

-16-

 

ANNEX A

SUPPLEMENTAL CONFIRMATION

	 	 	 
	To:

	 	Polaris Industries Inc.
	 

	 	2100 Highway 55
	 

	 	Medina, MN 55340
	 
	 	 
	From:

	 	Goldman, Sachs & Co.
	 
	 	 
	Subject:

	 	Accelerated Share Buyback
	 
	 	 
	Ref. No:

	 	[Insert Reference No.]
	 
	 	 
	Date:

	 	[Insert Date]

The purpose of this Supplemental Confirmation is to confirm the terms and conditions of the
Transaction entered into between Goldman, Sachs & Co. (“GS&Co.”) and Polaris Industries Inc., a
Minnesota corporation (“Counterparty” and together with GS&Co., the “Contracting Parties”), on the
Trade Date specified below. This Supplemental Confirmation is a binding contract between GS&Co.
and Counterparty as of the relevant Trade Date for the Transaction referenced below.

1. This Supplemental Confirmation supplements, forms part of, and is subject to the Master
Confirmation dated as of December 5, 2006 (the “Master Confirmation”) between the Contracting
Parties, as amended and supplemented from time to time. All provisions contained in the Master
Confirmation govern this Supplemental Confirmation except as expressly modified below.

2. The terms of the Transaction to which this Supplemental Confirmation relates are as follows:

	 	 	 
	Trade Date:

	 	[            ], 200_
	 
	 	 
	Initial Share Price:

	 	USD[                       ] per Share; provided
that if there is more than one Initial
Settlement Date, the Initial Share
Price shall be the weighted average of
such price (weighted by the number of
Shares delivered on the first Initial
Settlement Date) and the price or
prices agreed between the parties with
respect to the Shares delivered on each
additional Initial Settlement Date
(weighted in each case by the number of
Shares delivered on such additional
Initial Settlement Date).
	 
	 	 
	Scheduled Valuation Date:

	 	[                       ]
	 
	 	 
	First Acceleration Date:

	 	[                       ] (or, if such
date is not a Scheduled Trading Day,
the next following Scheduled Trading
Day).
	 
	 	 
	Number of Shares:

	 	[                       ]; provided that
if GS&Co. is unable to borrow or
otherwise acquire a number of Shares
equal to the Number of Shares for
delivery to Counterparty on all Initial
Settlement Dates, the Number of Shares
shall be reduced to such number of
Shares that GS&Co. is able to so borrow
or otherwise acquire.
	 
	 	 
	Settlement Price Adjustment Amount:

	 	USD[       ] per Share

A-1 

 

	 	 	 
	Initial Purchase Price:

	 	[                       ]; provided
that if the Number of Shares is reduced
pursuant to the proviso to “Number of
Shares” above, then the Initial
Purchase Price will be reduced
accordingly.
	 
	 	 
	Ordinary Dividend Amount:

	 	For any calendar quarter, USD[            ]
	 
	 	 
	[Termination Price:

	 	USD[            ] per Share]
	 
	 	 
	[Increase/Decrease in Reserved Shares:

	 	[            ] Shares]
	 
	 	 
	Counterparty Additional Payment Amount:

	 	USD[            ]; provided that if
the Number of Shares is reduced
pursuant to the proviso to “Number of
Shares” above, then the Counterparty
Additional Payment Amount will be
reduced accordingly.

3. Counterparty represents and warrants to GS&Co. that neither it (nor any “affiliated purchaser”
as defined in Rule 10b-18 under the Exchange Act) have made any purchases of blocks pursuant to the
proviso in Rule 10b-18(b)(4) under the Exchange Act during the four full calendar weeks immediately
preceding the Trade Date.

4. This Supplemental Confirmation may be executed in any number of counterparts, all of which shall
constitute one and the same instrument, and any party hereto may execute this Supplemental
Confirmation by signing and delivering one or more counterparts.

     Counterparty hereby agrees (a) to check this Supplemental Confirmation carefully and
immediately upon receipt so that errors or discrepancies can be promptly identified and rectified
and (b) to confirm that the foregoing (in the exact form provided by GS&Co.) correctly sets forth
the terms of the agreement between GS&Co. and Counterparty with respect to this Transaction, by
manually signing this Supplemental Confirmation or this page hereof as evidence of agreement to
such terms and providing the other information requested herein and immediately returning an
executed copy to Equity Derivatives Documentation Department, facsimile No. 212-428-1980/83.

	 	 	 	 	 	 	 
	 	 	Yours sincerely,	 	 
	 
	 	 	 	 	 	 
	 	 	GOLDMAN, SACHS & CO.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Authorized Signatory
	 	 

	 	 	 	 	 
	Agreed and accepted by:	 	 
	 
	 	 	 	 
	POLARIS INDUSTRIES INC.	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

A-2 

 

ANNEX B

NET SHARE SETTLEMENT PROCEDURES

          1. The following Net Share Settlement Procedures shall apply to the extent that Net Share
Settlement applies under the Master Confirmation:

          2. Net Share Settlement shall be made by delivery on the Net Share Settlement Date of a number
of Shares satisfying the conditions set forth in paragraph 3 below with a value equal to the
Forward Cash Settlement Amount (the “Registered Settlement Shares”), with such Shares’ value based
on the Net Share Settlement Price, or a number of Shares not satisfying such conditions with a
value equal to the Forward Cash Settlement Amount (the “Unregistered Settlement Shares”), with such
Shares’ value based on the value thereof to GS&Co. (which value shall take into account a
commercially reasonable illiquidity discount), in each case as determined by the Calculation Agent.

          3. Counterparty may only deliver Registered Settlement Shares pursuant to paragraph 2 above
if:

          (a) a registration statement covering public resale of the Registered Settlement Shares by the
GS&Co. (the “Registration Statement”) shall have been filed with, and declared effective by, the
Securities and Exchange Commission under the Securities Act on or prior to the date of delivery,
and no stop order shall be in effect with respect to the Registration Statement; a printed
prospectus relating to the Registered Settlement Shares (including any prospectus supplement
thereto, the “Prospectus”) shall have been delivered to GS&Co., in such quantities as GS&Co. shall
reasonably have requested, on or prior to the date of delivery;

          (b) the form and content of the Registration Statement and the Prospectus (including, without
limitation, any sections describing the plan of distribution) shall be satisfactory to GS&Co.;

          (c) as of or prior the date of delivery, GS&Co. and its agents shall have been afforded a
reasonable opportunity to conduct a due diligence investigation with respect to Counterparty
customary in scope for underwritten offerings of equity securities and the results of such
investigation are satisfactory to GS&Co., in its discretion; and

          (d) as of the date of delivery, an agreement (the “Underwriting Agreement”) shall have been
entered into with GS&Co. in connection with the public resale of the Registered Settlement Shares
by GS&Co. substantially similar to underwriting agreements customary for underwritten offerings of
equity securities, in form and substance satisfactory to GS&Co., which Underwriting Agreement shall
include, without limitation, provisions substantially similar to those contained in such
underwriting agreements relating to the indemnification of, and contribution in connection with the
liability of, GS&Co. and its affiliates.

          4. If Counterparty delivers Unregistered Settlement Shares pursuant to paragraph 2 above:

          (a) all Unregistered Settlement Shares shall be delivered to GS&Co. (or any affiliate of
GS&Co. designated by GS&Co.) pursuant to the exemption from the registration requirements of the
Securities Act provided by Section 4(2) thereof;

          (b) as of or prior to the date of delivery, GS&Co. and any potential purchaser of any such
shares from GS&Co. (or any affiliate of GS&Co. designated by GS&Co.) identified by GS&Co. shall be
afforded a commercially reasonable opportunity to conduct a due diligence investigation with
respect to Counterparty customary in scope for private placements of equity securities (including,
without limitation, the right to have made available to them for inspection all reasonably
available financial and other records, pertinent corporate documents and other information
reasonably requested by them); and

B-1 

 

          (c) as of the date of delivery, Counterparty shall enter into an agreement (a “Private
Placement Agreement”) with GS&Co. (or any affiliate of GS&Co. designated by GS&Co.) in connection
with the private placement of such shares by Counterparty to GS&Co. (or any such affiliate) and the
private resale of such shares by GS&Co. (or any such affiliate), substantially similar to private
placement purchase agreements customary for private placements of equity securities, in form and
substance commercially reasonably satisfactory to Counterparty and GS&Co., which Private Placement
Agreement shall include, without limitation, provisions substantially similar to those contained in
such private placement purchase agreements relating to the indemnification of, and contribution in
connection with the liability of, GS&Co. and its affiliates, and shall provide for the payment by
Counterparty of all out of pocket fees and expenses in connection with such resale, including the
reasonable out of pocket fees and expenses of counsel for GS&Co., and shall contain
representations, warranties and agreements of Counterparty reasonably necessary or advisable to
establish and maintain the availability of an exemption from the registration requirements of the
Securities Act for such resales.

          5. GS&Co., itself or through an affiliate (the “Selling Agent”) or any underwriter(s), will
sell all, or such lesser portion as may be required hereunder, of the Registered Settlement Shares
or Unregistered Settlement Shares and any Makewhole Shares (as defined below) (together, the
“Settlement Shares”) delivered by Counterparty to GS&Co. pursuant to paragraph 6 below commencing
on the Net Share Settlement Date and continuing until the date on which the aggregate Net Proceeds
(as such term is defined below) of such sales, as determined by GS&Co., is equal to the Forward
Cash Settlement Amount (such date, the “Final Resale Date”). If the proceeds of any sale(s) made
by GS&Co., the Selling Agent or any underwriter(s), net of any fees and commissions (including,
without limitation, underwriting or placement fees) customary for similar transactions under the
circumstances at the time of the offering, together with out of pocket carrying charges and
expenses incurred in connection with the offer and sale of the Shares (including, but without
limitation to, the covering of any over-allotment or short position (syndicate or otherwise)) (the
“Net Proceeds”) exceed the Forward Cash Settlement Amount, GS&Co. will refund, in U.S. Dollars,
such excess to Counterparty on the date that is three (3) Business Days following the Final Resale
Date, and, if any portion of the Settlement Shares remains unsold, GS&Co. shall return to
Counterparty on that date such unsold Shares.

          6. If the Calculation Agent determines that the Net Proceeds received from the sale of the
Registered Settlement Shares or Unregistered Settlement Shares or any Makewhole Shares, if any,
pursuant to this paragraph 6 are less than the Forward Cash Settlement Amount (the amount in U.S.
Dollars by which the Net Proceeds are less than the Forward Cash Settlement Amount being the
“Shortfall” and the date on which such determination is made, the “Deficiency Determination Date”),
Counterparty shall on the Exchange Business Day next succeeding the Deficiency Determination Date
(the “Makewhole Notice Date”) deliver to GS&Co., through the Agent, a notice of Counterparty’s
election that Counterparty shall either (i) pay an amount in cash equal to the Shortfall on the day
that is one (1) Business Day after the Makewhole Notice Date, or (ii) deliver additional Shares.
If Counterparty elects to deliver to GS&Co. additional Shares, then Counterparty shall deliver
additional Shares in compliance with the terms and conditions of paragraph 3 or paragraph 4 above,
as the case may be (the “Makewhole Shares”), on the first Clearance System Business Day which is
also an Exchange Business Day following the Makewhole Notice Date in such number as the Calculation
Agent reasonably believes would have a market value on that Exchange Business Day equal to the
Shortfall. Such Makewhole Shares shall be sold by GS&Co. in accordance with the provisions above;
provided that if the sum of the Net Proceeds from the sale of the originally delivered Shares and
the Net Proceeds from the sale of any Makewhole Shares is less than the Forward Cash Settlement
Amount then Counterparty shall, at its election, either make such cash payment or deliver to GS&Co.
further Makewhole Shares until such Shortfall has been reduced to zero.

          7. Notwithstanding the foregoing, in no event shall the number of Settlement Shares, be
greater than the Reserved Shares minus the amount of any Shares actually delivered under any other
Transaction(s) under this Master Confirmation (the result of such calculation, the “Capped
Number”). Counterparty represents and warrants (which shall be deemed to be repeated on each day
that a Transaction is outstanding) that the Capped Number is equal to or less than the number of
Shares determined according to the following formula:

B-2 

 

A – B

	 	 	 	 	 
	 

	 	Where
	 	A = the number of authorized but unissued shares of the Issuer
that are not reserved for future issuance on the date of the determination of
the Capped Number; and
	 
	 	 	 	 
	 

	 	 	 	B = the maximum number of Shares required to be delivered to third parties
if Counterparty elected Net Share Settlement of all transactions in the
Shares (other than Transactions in the Shares under this Master
Confirmation) with all third parties that are then currently outstanding and
unexercised.

B-3exv10w42

 

Exhibit 10.42

FAIR ISAAC CORPORATION

Terms and Conditions of Nonstatutory Stock Option Agreement

          These are the terms and conditions applicable to the NONSTATUTORY STOCK OPTION granted by Fair
Isaac Corporation, a Delaware corporation (“Fair Isaac”), to you, the optionee listed on the Notice
of Grant of Stock Option attached hereto as the cover page (the “Cover Page”), effective as of the
date specified on the Cover Page. The Cover Page together with these Terms and Conditions of
Nonstatutory Stock Option Agreement constitute the Nonstatutory Stock Option Agreement (the “Option
Agreement”). This Option is granted pursuant to the terms of Fair Isaac’s 1992 Long-term Incentive
Plan (the “Plan”).

	 	 	 
	Nonstatutory

	 	This Option is not intended to qualify as an incentive
stock option under Section 422 of the Internal Revenue
Code.
	 
	Vesting

	 	Your Option vests and will be exercisable on the vesting
dates, as shown on the Cover Page. In addition, your
entire Option vests and will be exercisable in full in the
event that:
	 
	 

	 	•      your service as an employee or director of Fair
Isaac (or any subsidiary) terminates because of your
Disability or death, or

	 
	 

	 	•      any written employment agreement (other than a
stock option agreement) between you and Fair Isaac
provides for acceleration of this Option upon a change in
control of Fair Isaac or upon any other specified event or
combination of events.

	 
	 	 
	 

	 	No additional shares become exercisable after your
employment or service with Fair Isaac has terminated for
any reason; and all unvested options hereunder are
cancelled as of the last day of your employment or
service. Vested options may be exercised in the manner
and during the period of time set forth in this Option
Agreement.
	 
	 	 
	Exercise Period

	 	The right to purchase shares under this Option Agreement
terminates at 3:00 p.m. Pacific Time on the earliest of
	 
	 

	 	•      the Expiration Date shown on the Cover Page; or

	 
	 

	 	•      the 90th day after the termination date of your
service as an employee or director of Fair Isaac (or any
subsidiary), except if your termination results from
Retirement, Disability or death; or

	 
	 

	 	•      the anniversary date of your Retirement as an
employee or director of Fair Isaac (or any subsidiary); or

	 
	 

	 	•      the anniversary date of the commencement of your
Disability, if you become disabled while an employee or
director of Fair Isaac (or any subsidiary) or

	 
	 

	 	•      the anniversary date of your death, if you die
while an employee or director of Fair Isaac (or any
subsidiary).

 

 

	 	 	 
	Leaves of
Absence

	 	For purposes of this Option, your service does not terminate
when you go on a military leave, a sick leave or another bona
fide leave of absence, if the leave was approved by Fair Isaac
in writing.
	 

	 	Unless you return to active work upon termination of your
approved leave, your service will be treated as terminating on
the later of 90 days after you went on leave or the date that
your right to return to active work is guaranteed by law or by
a contract. Fair Isaac will determine which leaves count for
this purpose.
	 
	Restrictions
on Exercise

	 	You may not exercise this Option if the issuance of shares at
that time would violate any law or regulation, as determined
by Fair Isaac. Moreover, you cannot exercise this Option
unless you have accepted this Option in accordance with
procedures specified by Fair Isaac.
	 
	Notice of
Exercise

	 	If you do not exercise this Option through an automated
electronic exercise system approved by Fair Isaac, then you
must notify Fair Isaac in writing of your intent to exercise
this Option.
	 

	 	The notice must specify how many shares you wish to purchase
and must specify how your shares should be registered (i.e.,
in your name only, in your and your spouse’s names as
community property, or as joint tenants with right of
survivorship).
	 

	 	If someone else wants to exercise this Option after your
death, that person must prove to Fair Isaac’s satisfaction
that he or she is entitled to do so.
	 
	Form of Payment

	 	When you submit your notice, you must include payment of the
exercise price shown on the Cover Page for the shares you are
purchasing. Payment may be made in one (or a combination of
two or more) of the following forms, as approved by Fair Isaac
in its sole discretion:
	 
	 

	 	•      Your personal check, a cashier’s check or a money
order;

	 
	 

	 	•      Irrevocable directions to a securities broker approved
by Fair Isaac to sell shares underlying this Option and to
deliver all or a portion of the sale proceeds to Fair Isaac in
payment of the exercise price and the balance of the sale
proceeds to you; or

	 
	 

	 	•      Certificates for shares of Fair Isaac common stock
that you have owned for at least 12 months, along with any
forms needed to effect a transfer of those shares to Fair
Isaac with the value of the shares, determined as of the
effective date of the exercise of this Option, applied to the
exercise price.

-2-

 

	 	 	 
	Withholding
Taxes

	 	You will not be allowed to exercise this Option unless you
make acceptable arrangements to pay any withholding taxes
that may be due as a result of the exercise of this Option.
These arrangements must be satisfactory to Fair Isaac. Fair
Isaac may agree, in its sole discretion, to withhold shares
with a market value equal to the withholding taxes due from
the shares to be issued to you as a result of your exercise
of this Option.
	 
	 	 
	Restrictions
on Resale

	 	By accepting this Option in the manner prescribed by Fair
Isaac, you agree not to sell any shares at a time when
applicable laws or Fair Isaac policies prohibit a sale.
	 
	Transfer of
Option

	 	Prior to your death, only you or a permitted assignee as
defined herein may exercise this Option (unless this Option
or a portion thereof has been transferred to your former
spouse by a domestic relations order by a court of competent
jurisdiction). You may transfer this Option or a portion of
this Option by gift to members of your immediate family, a
partnership consisting solely of you and/or members of your
immediate family, or to a trust established for the benefit
of you and/or members of your immediate family (including a
charitable remainder trust whose income beneficiaries consist
solely of such persons). For purposes of the foregoing,
“immediate family” means your spouse, children or
grandchildren, including step-children or step-grandchildren.
Any of these persons is a “permitted assignee.” However, such
transfer shall not be effective until you have delivered to
Fair Isaac notice of such transfer. You cannot transfer,
pledge, hypothecate, assign or otherwise dispose of this
Option, including using this Option as security for a loan.
Any attempts to do any of these things contrary to the
provisions of this Option, and the levy of any attachment or
similar process upon this Option, shall be null and void. You
may, however, dispose of this Option in your will or by a
written beneficiary designation. Such a designation must be
filed with Fair Isaac on the proper form.
	 
	Retention
Rights

	 	Neither your Option nor the terms of this Option Agreement
give you the right to continue as an employee or director of
Fair Isaac (or any subsidiaries) in any capacity. Fair Isaac
(and any subsidiaries) reserve the right to terminate your
service at any time, with or without cause, subject to the
terms of any written employment agreement signed by you and
Fair Isaac.

-3-

 

	 	 	 
	Stockholder
Rights

	 	You, or your assignees, estate, beneficiaries or heirs,
have no rights as a stockholder of Fair Isaac until the
options have been exercised, the exercise price has been
received by Fair Isaac, and upon becoming a holder of
record of the purchased shares. No adjustments are made
for dividends or other rights if the applicable record date
occurs before you become a holder of record, except as
described in the Plan.
	 
	Adjustments

	 	In the event of any adjustments to the capital stock of
Fair Isaac as described in Article 10 of the Plan, the
number of shares covered by this Option and the exercise
price per share may be adjusted as Fair Isaac may determine
pursuant to the Plan.
	 
	Applicable Law

	 	This Option Agreement will be interpreted and enforced
under the laws of the State of Delaware (without regard to
its rules on choice of law).
	 
	Other
Agreements

	 	This Option Agreement, the Plan and any written agreement
between you and Fair Isaac (or any subsidiaries) providing
for acceleration of options granted to you by Fair Isaac
upon a change in control of Fair Isaac constitute the
entire understanding between you and Fair Isaac regarding
this Option. Any other prior agreements, commitments or
negotiations concerning this Option are superseded. If
there is any inconsistency between the provisions of this
Option Agreement and the Plan, the provisions of the Plan
shall govern. This Option Agreement may be amended only in
writing.
	 
	Definitions

	 	“Retirement” means the date that you are eligible for
normal retirement or early retirement, as defined as
follows:
	 
	 

	 	•      “Normal Retirement Age” means age 65

	 
	 

	 	•      “Early Retirement” means age 55 and completed 10
Years of Service. One Year of Service is the completion
of at least 1,000 hours of service during the year.

	 

	 	“Disability” means that you are unable to engage in any
substantial gainful activity by reason of a medically
determinable, physical or mental impairment which can be
expected to result in death or which has lasted (or can be
expected to last) for a continuous period of not less than
12 months.

By accepting this Option in the manner prescribed by Fair Isaac, you agree to all of the terms and
conditions described in this Option Agreement and in the Plan.

-4-

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