CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, made and entered into as of __________, 1996 between
POLARIS INDUSTRIES INC., a Minnesota corporation (the "Company"), and ______
(the "Employee").
R E C I T A L S:
WHEREAS, Employee has been and currently is employed by the Company;
WHEREAS, the Board of Directors of the Company (the "Board") believes it is
imperative to diminish the inevitable distraction of Employee by virtue of the
personal uncertainties and risks created by any pending or threatened Change in
Control (as defined below) of the Company; and
WHEREAS, as an inducement to continue employment and to enhance the loyalty
and performance of Employee with the Company, the Company desires to provide the
Employee with certain compensation and benefits in the event a Change in Control
of the Company occurs,
NOW, THEREFORE, in consideration of the mutual premises and agreements set
forth herein, the parties hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, these terms shall have the
following meanings:
(a) CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred if, prior to the Termination Date (as defined below):
(i) Any election has occurred of persons to the Board that causes at
least one-half of the Board to consist of persons other than (x) persons
who were members of the Board on January 1, 1996 and (y) persons who were
nominated for election by the Board as members of the Board at a time when
more than one-half of the members of the Board consisted of persons who
were members of the Board on January 1, 1996; provided, however, that any
person nominated for election by the Board at a time when at least one-half
of the members of the Board were persons described in clauses (x) and/or
(y) or by persons who were themselves nominated by such Board shall, for
this purpose, be deemed to have been nominated by a Board composed of
persons described in clause (x) (persons described or deemed described in
clauses (x) and/or (y) are referred to herein as ("Incumbent Directors"));
or
(ii) The acquisition in one or more transactions, other than from the
Company, by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of a number of Company Voting
Securities equal to or greater than 35% of the Company
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Voting Securities unless such acquisition has been designated by the
Incumbent Directors as an acquisition not constituting a Change of Control
for purposes hereof; or
(iii) A liquidation or dissolution of the Company; or a
reorganization, merger or consolidation of the Company unless, following
such reorganization, merger or consolidation, the Company is the surviving
entity resulting from such reorganization, merger or consolidation or at
least one-half of the Board of Directors of the entity resulting from such
reorganization, merger or consolidation consists of Incumbent Directors;
or a sale or other disposition of all or substantially all of the assets of
the Company unless, following such sale or disposition, at least one-half
of the Board of Directors of the transferee consists of Incumbent
Directors.
As used herein,"Company Voting Securities" means the combined voting power of
all outstanding voting securities of the Company entitled to vote generally in
the election of the Board.
(b) CAUSE. For purposes of this Agreement only, "Cause" means (i) repeated
violations of the Employee's employment obligations (other than as a result of
incapacity due to physical or mental illness), which are demonstrably willful
and deliberate on Employee's part and which are not remedied in a reasonable
period after written notice from the Company specifying such violations; or (ii)
conviction for (or plea of nolo contendere to) a felony involving moral
turpitude, or dishonesty with respect to the Company.
(c) GOOD REASON. "Good Reason" means (i) the assignment to Employee of
any duties inconsistent in any material respect with Employee's position or any
material reduction in the scope of the Employee's authority and responsibility
(other than isolated, insubstantial action not taken in bad faith and which is
remedied by the Company upon notice from Employee, or as temporarily required
due to Employee's illness or injury); (ii) there is a reduction in Employee's
base compensation; (iii) the Company requires the Employee's principal place of
employment to be anywhere other than the Company's principal executive offices,
or there is a relocation of the Company's principal executive offices outside of
the Minneapolis, Minnesota metropolitan area; or (iv) the Company otherwise
fails to perform any of its material obligations to Employee.
(b) TERMINATION DATE. "Termination Date" means the date on which the
Employee's employment with the Company is terminated.
2. TERMINATION UPON CHANGE IN CONTROL. If a Change in Control occurs and
upon or within twenty-four (24) months after such Change in Control, the
Employee terminates his employment for Good Reason or the Employee's employment
is terminated by the Company for any reason other than for Cause (a "Change of
Control Termination"), then the Employee shall be entitled to the following
severance benefits:
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(a) TERMINATION PAYMENT. The Company shall pay the Employee a lump sum
cash payment, no later than thirty (30) days after the Termination Date, in an
amount equal to [ONE] [TWO] times Employee's average annual cash compensation
(including base salary and cash bonuses, but excluding the award or exercise of
stock options or stock grants) for the three fiscal years (or lesser number of
fiscal years if the Employee's employment has been of shorter duration) of the
Company immediately preceding the Change of Control Termination.
(b) ANNUAL BONUS. If the Termination Date occurs before a cash bonus for
any preceding fiscal year has been paid, the Company shall pay to the Employee
the amount of the Employee's cash bonus for such preceding fiscal year as soon
as it is determinable and such amount shall be included in the determination of
the payment to be made pursuant to Paragraph 2(a). Notwithstanding the
foregoing, no cash bonus shall be paid for any part of the fiscal year in which
the Termination Date occurs.
3. BENEFITS IN LIEU OF SEVERANCE PAY. The severance benefits provided
for in paragraph 2 are in lieu of any benefits that would otherwise be provided
to the Employee under the Company's severance pay policy or practice and the
Employee shall not be entitled to any benefits under the Company's severance pay
policy or practice in the event that severance benefits are payable hereunder.
4. RIGHTS IN THE EVENT OF DISPUTE. If there is a claim or dispute
arising out of or relating to this Agreement or any breach thereof,
regardless of the party by whom such claim or dispute is initiated, the
Company shall, in connection with settlement in the Employee's favor of any
such matter or upon payment of any judgment entered in the Employee's favor,
upon presentation of appropriate vouchers, pay all legal expenses, including
reasonable attorneys' fees, court costs, and ordinary and necessary
out-of-pocket cost of attorneys, billed to and payable by the Employee or by
anyone claiming under or through the Employee.
5. OTHER BENEFITS. The benefits provided under this Agreement shall,
except to the extent otherwise specifically provided herein be in addition to,
and not in derogation or diminution of, any benefits that Employee or his
beneficiary may be entitled to receive under any other contract, plan or program
now or hereafter maintained by the Company, or its subsidiaries.
6. EFFECT ON EMPLOYMENT. Neither this Agreement nor anything contained
herein shall be construed as conferring upon Employee the right to continue in
the employment of the Company or any of its affiliates, or as interfering with
or limiting the right of the Company to terminate the Employee's employment
with or without cause at any time.
7. LIMITATION IN ACTION. Prior to the occurrence of a Change in Control,
Employee shall have no rights under this Agreement and the Board shall have the
power and the right, within its sole discretion to rescind, modify or amend this
Agreement without the consent of Employee. In all other cases, and
notwithstanding the authority granted to the Board to exercise any discretion to
rescind, modify or amend this Agreement contained herein, the Board will not,
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following a Change in Control, have the power or right to exercise such
authority or otherwise take any action that is inconsistent with the provisions
of this Agreement.
8. SUCCESSORS. The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Company, to expressly
assume and agree to perform its obligations under this Agreement in the same
manner and to the same extent that the Company would be required to perform them
if no succession had taken place unless, in the opinion of legal counsel
mutually acceptable to the Company and the Employee, such obligations have been
assumed by the successor as a matter of law. The Employee's rights under this
Agreement shall inure to the benefit of, and shall be enforceable by, the
Employee's legal representative or other successors in interest, but shall not
otherwise be assignable or transferable.
9. SEVERABILITY. If any provision of this Agreement or the application
thereof is held invalid or unenforceable, the invalidity or unenforceability
thereof shall not affect any other provisions or applications of this Agreement
which can be given effect without the invalid or unenforceable provision or
application.
10. SURVIVAL. The rights and obligations of the parties pursuant to this
Agreement shall survive the termination of the Employee's employment with the
Company to the extent that any performance is required hereunder after such
termination.
11. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Minnesota, without giving effect to the conflicts
of law provisions thereof.
12. NOTICES. All notices under this Agreement shall be in writing and
shall be deemed effective when delivered in person (in the Company's case, to
its Secretary) or 48 hours after deposit thereof in the U.S. mails, postage
prepaid, addressed, in the case of the Employee, to his last known address as
carried on the personnel records of the Company and, in the case of the
Company, to the corporate headquarters, attention of the Secretary, or to
such other address as the party to be notified may specify by written notice
to the other party.
13. AMENDMENTS AND CONSTRUCTION. Except as set forth in Paragraph 7, this
Agreement may only be amended in a writing signed by the parties hereto.
Paragraph headings are for convenience only and shall not be considered a part
of the terms and provisions of the Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first written above.
POLARIS INDUSTRIES INC.
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By
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EMPLOYEE
Its
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