EXHIBIT 10.3

FORM OF

ARCTIC CAT INC.

EXECUTIVE OFFICER

INCENTIVE

STOCK OPTION AGREEMENT

THIS OPTION AGREEMENT is made as of the             day of             ,
20            (the “Option Date”), between ARCTIC CAT INC., a Minnesota
corporation (the “Company”), and                     , an employee of the
Company or one or more of its subsidiaries (the “Optionee”).

WHEREAS, the Company desires, by affording the Optionee an opportunity to
purchase shares of its Common Stock, $.01 par value (the “Common Stock”), as
hereinafter provided, to carry out the purpose of the 2013 Omnibus Stock and
Incentive Plan (the “2013 Stock Plan”) of the Company approved by its
shareholders;

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

1. Grant of Option. The Company hereby grants to the Optionee the right and
option (hereinafter called the “Option”) to purchase from the Company all or any
part of an aggregate amount of             shares of the Common Stock of the
Company on the terms and conditions herein set forth. It is intended that the
Option shall constitute an incentive stock option, as defined in Section 422 of
the Internal Revenue Code of 1986, as amended.

2. Purchase Price. The purchase price of the shares of the Common Stock covered
by this Option shall be $             per share.

3. Term of Option. The term of the Option shall be for a period of ten
(10) years from the Option Date, subject to earlier termination as hereinafter
provided. In no event shall the Option be exercisable after the expiration of
the term of the Option.

4. Exercise of Option. During the first year the Option is outstanding it may
not be exercised with respect to any of the shares covered thereby. Subject to
the provisions of paragraphs 6 and 7 hereof, the Option may thereafter be
exercised during the term specified in paragraph 3 as follows:

 

  (a) from and after 12 months from the Option Date, the Option may be exercised
as to             shares;

 

  (b) from and after 24 months from the Option Date, the Option may be exercised
as to and additional             shares;

 

  (c) from and after 36 months from the Option Date, the Option may be exercised
as to an additional             shares.

5. Non-Transferability. The Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and the Option may be exercised,
during the lifetime of the Optionee, only by the Optionee. More particularly
(but without limiting the generality of the foregoing), the Option may not be
assigned, transferred (except as provided above), pledged, or hypothecated in
any way; shall not be assignable by operation of law; and shall not be subject
to execution, attachment, or similar process. Any attempted assignment,
transfer, pledge, hypothecation, or other disposition of the Option contrary to
the provisions hereof, and the levy of any execution, attachment, or similar
process upon the Option, shall be null and void and without effect.

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

6. Termination of Employment. In the event the employment of the Optionee shall
be terminated for any reason whatsoever, the Option may be exercised by the
Optionee at any time (i) until expiration of the term specified in paragraph 3,
if such termination was by reason of Retirement (as defined in the 2013 Stock
Plan) at any time following the first anniversary of the date of this Agreement,
(ii) within one (1) month after such termination if such termination was for any
reason other than Retirement, Cause (as defined in the 2013 Stock Plan) or as
provided in paragraph 7 hereof, and (iii) no later than the date of termination
if such termination was for Cause (as defined in the 2013 Stock Plan), but in no
event may the Option be exercised later than the expiration of the term
specified in paragraph 3. Unless otherwise determined by the Committee (as
defined in the 2013 Stock Plan) in writing after the Option Date, (A) upon
termination by reason of Retirement at any time following the first anniversary
of the date of this Agreement, all outstanding Options then held by the Optionee
that have not vested will continue to vest in accordance with their terms and
(B) upon termination for any reason other than Retirement, all Options held by
the Optionee shall be exercisable only to the extent the Optionee shall have
been entitled to do so at the date of his or her termination of employment. For
purposes of clarity, if Optionee terminates his or her employment prior to the
first anniversary of the date of this Agreement due to Retirement (as such term
is defined in the 2013 Stock Plan), or for any other reason, Employee shall, for
no consideration, forfeit to the Company all Options granted by this Agreement.
So long as the Optionee shall continue to be an employee of the Company or one
or more of its subsidiaries, the Option shall not be affected by any change of
duties or position. Nothing in this Option Agreement shall confer upon the
Optionee any right to continue in the employ of the Company or of any of its
subsidiaries or interfere in any way with the right of the Company or any such
subsidiary to terminate the employment of the Optionee at any time.

7. Death or Permanent Disability of Optionee. If the Optionee shall die while
still employed by the Company or one or more of its subsidiaries, or shall
become permanently and totally disabled (as determined by the Committee) while
still employed by the Company or one or more of its subsidiaries, the Option may
be exercised (to the extent that the Optionee shall have been entitled to do so
at the date of his or her death or termination by reason of permanent and total
disability, unless otherwise determined by the Committee in writing after the
Option Date) by the Optionee, his or her legal representative or the person to
whom the Option is transferred by will or the applicable laws of descent and
distribution, at any time within twelve (12) months after the Optionee’s death
or termination by reason of permanent and total disability, but in no event
later than the expiration of the term specified in paragraph 3 hereof.

8. Method of Exercising Option. Subject to the terms and conditions of this
Option Agreement, the Option may be exercised by written notice to the Chief
Financial Officer of the Company at the principal office of the Company. Such
notice shall state the election to exercise the Option and the number of shares
in respect of which it is being exercised, and shall be signed by the person so
exercising the Option. Such notice shall be accompanied by payment of the full
purchase price of such shares which payment shall be made (i) in cash or by
certified check or bank draft payable to the Company, (ii) by any other form of
legal consideration deemed sufficient by the Company and consistent with the
purpose of the 2013 Stock Plan and applicable law, (iii) in the sole discretion
of the Company, by delivery of shares of Common Stock of the Company having a
Fair Market Value equal to the purchase price, or (iv) by a combination of cash
and shares of Common Stock, whose Fair Market Value shall equal the purchase
price. For purposes of this paragraph, the “Fair Market Value” of the Common
Stock of the Company shall be established in the manner set forth in
Section 2(p) of the 2013 Stock Plan. The certificate or certificates for the
shares as to which the Option shall have been so exercised shall be registered
in the name of the person so exercising the Option, or if the Optionee so
elects, in the name of the Optionee or one other person as joint tenants, and
shall be delivered as soon as practicable after the notice shall have been
received. In the event the Option shall be exercised by any person other than
the Optionee, such notice shall be accompanied by appropriate proof of the right
of such person to exercise the Option. All shares that shall be purchased upon
the exercise of the Option as provided herein shall be fully paid and
nonassessable.

9. Withholding Requirements. Upon exercise of the Option by the Optionee and
prior to the delivery of shares purchased pursuant to such exercise, or in the
event of a “disqualifying disposition” under Code Section 422, the Company shall
have the right to require the Optionee to remit to the Company cash in an amount
sufficient to satisfy any applicable federal and state tax withholding
requirements. The Company shall inform the Optionee as to whether it will
require the Optionee to remit cash for withholding taxes in accordance with the
preceding sentence within two (2) business days after receiving from the
Optionee notice that such Optionee intends to exercise, or has exercised, all or
a portion of the Option. Alternatively, in order to assist Optionee with paying
all or a portion of

 

- 2 -

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

applicable taxes to be withheld or collected upon exercise, the Committee, in
its discretion and subject to such additional terms and conditions as it may
adopt, may permit the Optionee to satisfy such tax obligation by (i) electing to
have the Company withhold a portion of the shares otherwise to be delivered upon
exercise of the Option having a Fair Market Value (determined in the manner set
forth in Section 2(p) of the 2013 Stock Plan) equal to the amount of such taxes,
provided that the maximum amount shall not exceed the amount of the required
withholding, or (ii) delivering to the Company shares of Common Stock other than
shares issuable upon exercise having a Fair Market Value (determined in the
manner set forth in Section 2(p) of the 2013 Stock Plan) equal to the amount of
such taxes. Optionee acknowledges that, if the shares delivered or withheld to
satisfy such withholding tax obligations were acquired through the exercise of
an incentive stock option (including the Option), such delivery or withholding
of shares may result in a “disqualifying disposition” under Code Section 422.

10. Stock Plan and Employment Agreements. This Option is subject to certain
additional terms and conditions set forth in the 2013 Stock Plan pursuant to
which this Option has been issued. A copy of the 2013 Stock Plan is on file with
the Chief Financial Officer of the Company and each Option holder by acceptance
hereof agrees to and accepts this Option subject to the terms of the 2013 Stock
Plan. In the event of any conflict between the terms of the 2013 Stock Plan, any
employment agreement between the Company and Employee and this Agreement, the
terms of this 2013 Stock Plan shall prevail.

11. General. The Company shall at all times during the term of the Option
reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of this Option Agreement, shall pay all
original issue and transfer taxes with respect to the issue and transfer of
shares pursuant hereto and all other fees and expenses necessarily incurred by
the Company in connection therewith, and will from time to time use its best
efforts to comply with all laws and regulations which, in the opinion of counsel
for the Company, shall be applicable thereto.

12. Investment Certificate. Prior to the receipt of the certificates pursuant to
the exercise of the Option granted hereunder, the Optionee shall, if required in
the Company’s discretion, demonstrate an intent to hold the shares acquired by
exercise of the Option for investment and not with a view to resale or
distribution thereof to the public by delivering to the Company an investment
certificate or letter in such form as the Company may require.

13. Subsidiary. As used herein, the term “subsidiary” shall mean any current or
future corporation which would be a “subsidiary corporation” of the Company, as
that term is defined in Section 424 of the Internal Revenue Code of 1986, as
amended.

14. Status. Neither the Optionee nor the Optionee’s executor, administrator,
heirs, or legatees shall be or have any rights or privileges of a shareholder of
the Company in respect of the shares transferable upon exercise of the Option
granted hereunder, unless and until certificates representing such shares shall
be endorsed, transferred, and delivered and the transferee has caused the
Optionee’s name to be entered as the shareholder of record on the books of the
Company.

15. Company Authority. The existence of the Option 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
the 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.

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

 

- 3 -

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

17. Binding Effect. This Option Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.

IN WITNESS WHEREOF, the Company has caused this Option Agreement to be duly
executed by an officer thereunto duly authorized, and the Optionee has hereunto
set his or her hand, all as of the day and year first above written.

 

ARCTIC CAT INC.   By          Its Chief Executive Officer              
, Optionee