EXHIBIT 10.3

FORM OF

ARCTIC CAT INC.

RESTRICTED STOCK UNIT AGREEMENT

FOR NON-EMPLOYEE DIRECTORS

This RESTRICTED STOCK UNIT AGREEMENT (“Agreement”) made as of the      day of
            , 20    , between Arctic Cat Inc., a Minnesota corporation (the
“Company”), and                                          , a non-employee member
of the Board of Directors (the “Board”) of the Company (the “Director”). Any
terms not defined herein shall have the meaning set forth in the 2007 Omnibus
Stock and Incentive Plan (the “2007 Stock Plan”) of the Company approved by its
shareholders.

WHEREAS, the Company desires, by granting the Director certain restricted stock
units of the Company, as hereinafter provided, to carry out the purposes of the
2007 Stock Plan.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth
and for other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto have agreed, and do hereby agree, as
follows:

1. Award.

(a) Restricted Stock Units. Pursuant to the 2007 Omnibus Stock and Incentive
Plan (the “2007 Stock Plan”),                      Restricted Stock Units
(RSUs”), each RSU representing the right to receive one share of the Company’s
common stock, par value $.01 per share (“Stock”), shall be issued as hereinafter
provided in the Director’s name subject to certain restrictions thereon.

(b) Issuance of RSUs. The RSUs shall be issued upon acceptance hereof by the
Director and upon satisfaction of the conditions of this Agreement.

(c) 2007 Stock Plan. This award of RSUs is subject to all of the terms and
conditions set forth in the 2007 Stock Plan, including future amendments
thereto, if any. A copy of the 2007 Stock Plan is on file with the Chief
Financial Officer of the Company, and the Director, by acceptance hereof, agrees
to and accepts this award of RSUs subject to the terms of the 2007 Stock Plan.
In the event of any conflict between the terms of the 2007 Stock Plan and this
Agreement, the terms of the 2007 Stock Plan shall prevail.

2. Rights of the Director with Respect to the Restricted Stock Units.

(a) No Shareholder Rights. The RSUs granted pursuant to this Agreement do not
and shall not entitle the Director to any rights of a holder of Stock. The
rights of the Director with respect to the RSUs shall remain forfeitable during
the first year following the date of this Agreement and shall vest in accordance
with Section 3.

 

- 1 -

--------------------------------------------------------------------------------

(b) Dividend Equivalents. The Company shall pay to the Director with respect to
all RSUs outstanding on the record date for the payment of any dividend on the
Stock an amount equal to the dividend the Director would have received on the
payment date therefor if the shares of Stock issuable in accordance with such
RSUs had been issued and outstanding on such record date.

(c) Conversion of Restricted Stock Units; Issuance of Stock. No shares of Stock
shall be issued to the Director prior to the date on which the RSUs vest in
accordance with Section 3. Neither this Section 2(c) nor any action taken
pursuant to or in accordance with this Section 2(c) shall be construed to create
a trust of any kind. After the RSUs vest pursuant to Section 3, the Company
shall cause to be issued no later than 2.5 months after the end of the Company’s
fiscal year (subject to Section 5), in payment for such RSUs that number of
shares of Stock equal to the number of RSUs that have vested.

3. Vesting of RSUs. The Director hereby accepts the RSUs and agrees with respect
thereto as follows:

(a) Transfer Restrictions. The RSUs may not be sold, assigned, pledged,
exchanged, hypothecated or otherwise transferred, encumbered or disposed of and
any attempted sale, assignment, pledge, exchange or other transfer shall be null
and void and without effect.

(b) Vesting. The RSUs may be converted to transferable shares of Stock as to
thirty-three and one-third percent (33 1/3%) of the RSUs on each of the first
three anniversaries of the date of this Agreement. Notwithstanding the
foregoing, all the RSUs may be converted to shares of Stock on the occurrence of
a Change in Control, except as otherwise provided in the 2007 Stock Plan;
provided, however, such conversion shall be allowed only to the extent that the
applicable definition of Change in Control is at least as restrictive as the
definition set forth in Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and the Treasury Regulations relating thereto.

4. Tax Matters.

(a) Election to Defer Distribution. The Director may elect to defer the
distribution of some or all of such Stock. Such deferral election shall be in
accordance with the rules as established by the Committee and in general must be
received in writing by the Company no later than the last day of the fiscal year
preceding the fiscal year in which the RSU is granted, except for grants of RSUs
on April 1, 2011 for which deferral elections must be made on or before
April 30, 2011.

(b) Payment of Tax. To the extent that the receipt or vesting of the RSUs
results in income to the Director for federal or state income tax purposes, the
Director shall deliver to the Company at the time of such receipt or lapse, as
the case may be, such amount of money or shares of Stock as the Company may
require to meet its withholding obligation under applicable tax laws or
regulations, and, if the Director fails to do so, the Company is authorized to
withhold from

 

- 2 -

--------------------------------------------------------------------------------

any cash or Stock remuneration then or thereafter payable to the Director any
tax required to be withheld by reason of such resulting compensation income.

(c) First Year Forfeiture. In the event the Director’s service as a member of
the Board is terminated for any reason prior to the first anniversary of the
date of this Agreement the Director shall, for no consideration, forfeit to the
Company all RSUs granted by this Agreement.

5. Delivery of Stock. The Company shall not be required to deliver any shares of
Stock upon vesting of any RSUs until the requirements of any federal or state
securities laws, rules or regulations or other laws or rules (including the
rules of any securities exchange) as may be determined by the Company to be
applicable are satisfied. The Director agrees that such Stock will not be sold
or otherwise disposed of in any manner which would constitute a violation of any
applicable federal or state securities laws. The Director also agrees (i) that
the certificates representing such Stock may bear such legend or legends as the
Company deems appropriate in order to assure compliance with applicable
securities laws, (ii) that the Company may refuse to register the transfer of
such Stock on the stock transfer records of the Company if such proposed
transfer would be in the opinion of counsel satisfactory to the Company
constitute a violation of any applicable securities law and (iii) that the
Company may give related instructions to its transfer agent, if any, to stop
registration of the transfer of the shares of such Stock.

6. Committee’s Powers. No provision contained in this Agreement shall in any way
terminate, modify or alter, or be construed or interpreted as terminating,
modifying or altering any of the powers, rights or authority vested in the
Committee or, to the extent delegated, in its delegate pursuant to the terms of
the 2007 Stock Plan or resolutions adopted in furtherance of the 2007 Stock
Plan, including, without limitation, the right to make certain determinations
and elections with respect to the RSUs.

7. Company Authority. The existence of the RSUs herein granted shall not affect
in any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the common stock of the Company or
its rights thereof, or dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.

8. Disputes. As a condition of the granting of the RSUs herein granted, the
Director agrees, for the Director and the Director’s personal representatives,
that any dispute or disagreement which may arise under or as a result of or
pursuant to this Agreement shall be determined by the Board of Directors of the
Company, in its sole discretion, and that any interpretation of the Board of the
terms of this Agreement shall be final, binding and conclusive.

9. Binding Effect. This Agreement shall be binding upon and inure to the benefit
of any successors to the Company and all persons lawfully claiming under the
Director.

 

- 3 -

--------------------------------------------------------------------------------

10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Minnesota.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
an officer thereunto duly authorized, and the Director has executed this
Agreement, all as of the date first above written.

 

ARCTIC CAT INC. By:  

 

  Chief Executive Officer

 

Director

Please furnish the following information for shareholder records:

 

 

    

 

(Given name and initial must be used      Social Security Number for stock
registry)      (if applicable)

 

    

 

     Birth Date      Month/Day/Year

 

    

 

     Name of Employer

 

    

 

Address (Zip Code)      Day phone number

United States Citizen: Yes      No     

PROMPTLY NOTIFY THIS OFFICE OF ANY CHANGE IN ADDRESS.

 

- 4 -