EXHIBIT 10.3

SPARTAN MOTORS, INC.

1996 STOCK OPTION AND RESTRICTED STOCK PLAN

FOR OUTSIDE MARKET ADVISORS

(As Amended May 2, 2000 and July 26, 2005)

SECTION 1

Establishment of Plan; Purpose of Plan

          1.1          Establishment of Plan. Spartan Motors, Inc. hereby
establishes the 1996 Stock Option and Restricted Stock Plan for Outside Market
Advisors (the "Plan"). The Plan permits the grant or award of Options and
Restricted Stock.

          1.2          Purpose of Plan. The purpose of the Plan is to provide
those individuals who provide marketing, promotion and product development
advice and counsel to the Company or its subsidiaries with the right to receive
or purchase the Common Stock of the Company so as to join the interests of these
persons with the interests of Spartan Motors, Inc. and its shareholders through
the increased opportunity for stock ownership.

SECTION 2

Definitions

          The following words have the following meanings unless a different
meaning is plainly required by the context:

          2.1          "Act" means the Securities Exchange Act of 1934, as
amended.

          2.2          "Board" means the Board of Directors of the Company.

          2.3          "Code" means the Internal Revenue Code of 1986, as
amended.

          2.4          "Committee" means the Stock Option Plan Committee of the
Board or such other committee as the Board shall designate to administer the
Plan. The Committee shall consist of at least two members of the Board appointed
by the Board all of whom shall be "disinterested persons" as defined in Rule
16b-3 under the Act.

          2.5          "Common Stock" means the common stock, $.01 par value, of
the Company.

          2.6          "Company" means Spartan Motors, Inc., a Michigan
corporation.

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          2.7          "Competition" means participation, directly or
indirectly, in the ownership, management, financing or control of any business
that is the same as or similar to the present or future businesses of the
Company or its parent or any Subsidiary. Such participation could be by way of
employment, consulting services, directorship or officership. Ownership of less
than five percent (5%) of the shares of any corporation whose shares are traded
publicly on any national or regional stock exchange or over the counter shall
not be deemed Competition.

          2.8          "Incentive Award" means the award or grant of an Option
or Restricted Stock to a Participant under the Plan.

          2.9          "Market Value" of any security on any given date means:
(a) if the security is listed for trading on one or more national securities
exchanges (including The NASDAQ National Market System), the mean of the highest
and lowest sales prices on the principal such exchange on the date in question,
or if such security shall not have been traded on such principal exchange on
such date, the last reported sales price on such principal exchange on the first
day prior thereto on which such security was so traded; or (b) if the security
is not listed for trading on a national securities exchange (including The
NASDAQ National Market System) but is traded in the over-the-counter market, the
mean of highest and lowest bid prices for such security on the date in question,
or if there are no such bid prices for such security on such date, the mean of
the highest and lowest bid prices on the first day prior thereto on which such
prices existed; or (c) if neither (a) nor (b) is applicable, the value as
determined by any means deemed fair and reasonable by the Committee, which
determination shall be final and binding on all parties.

          2.10          "Option" means the right to purchase Common Stock at a
stated price for a specified period of time. For purposes of the Plan, an Option
may not be an incentive stock option within the meaning of Section 422(b) of the
Code.

          2.11          "Outside Market Advisor" means an individual who by
reason of his or her position or past or future dealings or knowledge of the
Company or any of its subsidiaries is in a position to provide marketing,
promotion and product development advice and counsel. The Board of Directors
shall determine the persons deemed to be Outside Market Advisors or the standard
or method used to determine the persons to be considered Outside Market
Advisors.

          2.12          "Participant" means an Outside Market Advisor who the
Committee determines is eligible to participate in the Plan and who is
designated to be granted an Incentive Award under the Plan.

          2.13          "Restricted Period" means the period of time during
which Restricted Stock awarded under the Plan is subject to restrictions. The
Restricted Period may differ among Participants and may have different
expiration dates with respect to shares of Common Stock covered by the same
Incentive Award.

          2.14          "Restricted Stock" means Common Stock awarded to a
Participant under Section 6 of the Plan.

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          2.15          "Subsidiary" means any corporation of which a majority
of the outstanding voting stock is directly or indirectly owned or controlled by
the Company, or by one or more Subsidiaries.

SECTION 3

Administration

          3.1          Power and Authority. The Committee shall administer the
Plan, shall have full power and authority to interpret the provisions of the
Plan, and shall have full power and authority to supervise the administration of
the Plan. All determinations, interpretations and selections made by the
Committee regarding the Plan shall be final and conclusive. The Committee shall
hold its meetings at such times and places as it deems advisable. Action may be
taken by a written instrument signed by all of the members of the Committee, and
any action so taken shall be fully as effective as if it had been taken at a
meeting duly called and held. The Committee shall make such rules and
regulations for the conduct of its business as it deems advisable. The members
of the Committee shall receive reasonable fees for their services.

          3.2          Grants or Awards to Participants. In accordance with and
subject to the provisions of the Plan, the Committee shall have the authority
to: determine whether and when Incentive Awards will be granted, the persons or
entities to be granted Incentive Awards, the amount of Incentive Awards to be
granted to each person and the terms of the Incentive Awards to be granted; vary
and amend vesting schedules, if any; and waive any restrictions or conditions
applicable to any Incentive Award. Incentive Awards shall be granted or awarded
by the Committee, and Incentive Awards may be amended by the Committee
consistent with the Plan, provided that no such amendment may become effective
without the consent of the Participant, except to the extent that the amendment
operates solely to the benefit of the Participant.

          3.3          Indemnification of Committee Members. Each person who is
or shall have been a member of the Committee shall be indemnified and held
harmless by the Company from and against any cost, liability or expense imposed
or incurred in connection with such person's or the Committee's taking or
failing to take any action under the Plan. Each such person shall be justified
in relying upon information furnished in connection with the Plan's
administration by any appropriate person or persons.

SECTION 4

Shares Subject to the Plan

          4.1          Number of Shares. Subject to adjustment as provided in
subsection 4.2 of the Plan, a maximum of 200,000 shares of Common Stock shall be
available for Incentive Awards under the Plan, with a maximum of 30,000 shares
available for issuance in any one year. If the Company does not issue a full
30,000 shares in any year, the difference between 30,000 shares and the number
of shares issued in that year shall carry forward and be available for issuance
in any subsequent year during the term of the Plan. Such shares shall be
authorized and unissued shares.

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          4.2          Adjustments. If the number of shares of Common Stock
outstanding changes by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, combination, exchange of shares or any
other change in the corporate structure or shares of the Company, the aggregate
number and class of shares available for grants or awards under the Plan,
together with the Option prices, shall be appropriately adjusted. No fractional
shares shall be issued pursuant to the Plan, and any fractional shares resulting
from adjustments shall be eliminated from the respective Incentive Award, with
an appropriate cash adjustment for the value of any Incentive Awards eliminated.
If an Incentive Award is canceled, surrendered, modified, expired or terminated
during the term of the Plan but prior to the exercise or vesting of the
Incentive Award in full, the shares subject to but not delivered under such
Incentive Award shall be available for other Incentive Awards.

SECTION 5

Options

          5.1          Grant. A Participant may be granted one or more Options
under the Plan. Options shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as shall be determined by the
Committee in its sole discretion. The Committee may vary, among Participants and
among Options granted to the same Participant, any and all of the terms and
conditions of the Options granted under the Plan. The Committee shall have
complete discretion in determining the number of Options granted to each
Participant.

          5.2          Option Agreements. Each Option shall be evidenced by an
Option agreement containing such terms and conditions, consistent with the
provisions of the Plan, as the Committee from time to time determines. Option
Agreements may be amended by the Committee consistent with the Plan, but no such
amendment shall be effective as to a Participant without the Participant's
consent unless the amendment operates solely to the benefit of the Participant.

          5.3          Option Price. The per share Option price shall not be
less than the Market Value on the date of grant. The date of grant of an Option
shall be the date the Option is authorized by the Committee or such future date
specified by the Committee as the date for issuing the Option.

          5.4          Medium and Time of Payment. The exercise price for each
share purchased pursuant to an Option granted under the Plan shall be payable in
cash or, if the Committee consents, in shares of Common Stock (including Common
Stock to be received upon a simultaneous exercise). The time and terms of
payment may be amended with the consent of the Participant before or after
exercise of the Option, but such amendment shall not reduce the Option price.

          5.5          Limits on Exercisability. Options shall be exercisable
for such periods as may be fixed by the Committee, not to exceed ten years from
the grant date. At the time of the exercise of an Option, the holder of the
Option, if requested by the Committee, must represent to the Company that the
shares are being acquired for investment and not with a view to the

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distribution thereof. The Committee may also vary, among Participants and among
Options granted to the same Participant, any and all of the terms and conditions
of Options granted under the Plan.

          5.6          Transferability.

          (a)          General. Unless the Committee otherwise consents or
unless the terms of the Option agreement provide otherwise, no Option granted
under the Plan may be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution if the participant is a natural person. In addition, all Options
granted to a Participant during the Participant's lifetime shall be exercisable
during the Participant's lifetime only by such Participant, his guardian, or
legal representative.

          (b)          Other Restrictions. The Committee may impose such
restrictions on any shares of Common Stock acquired pursuant to the exercise of
an Option under the Plan as it deems advisable, including, without limitation,
restrictions under applicable federal or state securities laws.

          5.7          Restrictions on Exercise.

          (a)          General. The Committee may impose such restrictions as it
deems appropriate on the Participant's right to exercise any options granted.
Such restrictions shall be specified in the Option Agreement entered into with
the participant under Section 5.2.

          (b)          Specific Restrictions. Notwithstanding the Committee's
right to impose additional restrictions under Section 5.7(a), the following
restrictions shall also apply:

          (i)          If the Participant ceases to be an Outside Market Advisor
for any reason other than death or disability, the Option issued to such
Participant shall no longer be exercisable. If a Participant dies or becomes
disabled, the Option shall be exercisable by the Participant or personal
representative for a period of three months after the date the Participant
ceases to be an Outside Market Advisor, but only to the extent that the
Participant was entitled to exercise the option on the date Participant ceases
to be an Outside Market Advisor, unless the Option Agreement provides otherwise
or the Committee otherwise consents;

          (ii)          If the Committee determines that the Participant has
entered into Competition with the Company or any of its subsidiaries, the
Participant's right to exercise any outstanding options shall terminate as of
that date of entry into Competition. The Committee shall have sole discretion in
making such determination.

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SECTION 6

Restricted Stock

          6.1          Grant. A Participant may be granted Restricted Stock
under the Plan. Restricted Stock shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as shall be determined by the
Committee in its sole discretion. Restricted Stock shall be awarded on the
condition that the Participant continues to perform certain services or meets
certain requirements as provided by the Committee in the Restricted Stock
Agreement.

          6.2          Restricted Stock Agreements. Each award of Restricted
Stock shall be evidenced by a Restricted Stock Agreement containing such terms
and conditions, consistent with the provisions of the Plan, as the Committee
from time to time determines. Restricted Stock Agreements may be amended by the
Committee consistent with the Plan, but no such amendment shall be effective as
to a Participant without the Participant's consent unless the amendment operated
solely for the benefit of the Participant.

          6.3          Termination of Outside Market Advisor Status. In addition
to any restrictions that the Committee may impose on the award of Restricted
Stock the following restrictions shall apply:

          (a)          Competition. If the Committee determines that the
Participant has entered into Competition with the Company or any of its
subsidiaries or ceases to be an Outside Market Advisor other than by reason of
death or disability, then any shares of Restricted Stock still subject to
restrictions on the date of such determination shall automatically be forfeited
and returned to the Company.

          (b)          Death or Disability. Unless the terms of the Restricted
Stock agreement or grant provide otherwise, in the event a Participant is no
longer an Outside Market Advisor because of death or disability during the
Restricted Period, the Participant's right to all of the Participant's
Restricted Stock shall vest as of the date of death or disability, and the
Participant's Restricted Stock may be transferred free of any restrictions under
the Plan, except any restrictions as the Company may reasonably specify to
ensure compliance with federal and state securities laws.

          6.4          Restrictions on Transferability.

          (a)          General. Unless the Committee otherwise consents or
unless the terms of the Restricted Stock agreement provide otherwise, shares of
Restricted Stock shall not be sold, exchanged, transferred, pledged or otherwise
disposed of by a Participant during the Restricted Period other than to the
Company pursuant to subsection 6.3 or 6.4(b) or by will or the laws of descent
and distribution.

          (b)          Surrender to the Company. If any sale, exchange,
transfer, pledge or other disposition, voluntary or involuntary, of Restricted
Stock that has not vested shall be

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made or attempted during the Restricted Period, except as provided above in
subsections 6.3 and 6.4(b), the Participant's right to the Restricted Stock
shall immediately cease and terminate, and the Participant shall promptly
surrender to the Company all such Restricted Stock in the Participant's
possession.

          (c)          Other Restrictions. The Committee may impose other
restrictions on any shares of Common Stock acquired pursuant to an award of
Restricted Stock as the Committee deems advisable, including, without
limitation, restrictions under applicable federal or state securities laws.

          6.5          Rights as a Shareholder. During the Restricted Period, a
Participant shall have all rights of a shareholder with respect to his
Restricted Stock, including (a) the right to vote any shares at shareholders'
meetings; (b) the right to receive, without restriction, all cash dividends paid
with respect to such Restricted Stock; and (c) the right to participate with
respect to such Restricted Stock in any stock dividend, stock split,
recapitalization or other adjustment in the Common Stock of the Company or any
merger, consolidation or other reorganization involving an increase or decrease
or adjustment in the Common Stock of the Company. Any new, additional or
different shares or other security received by the Participant pursuant to any
such stock dividend, stock split, recapitalization or reorganization shall be
subject to the same terms, conditions and restrictions as those relating to the
Restricted Stock for which such shares were received.

          6.6          Deposit of Certificates; Legending of Restricted Stock.

          (a)          Deposit of Certificates. Any certificates evidencing
shares of Restricted Stock awarded pursuant to the Plan shall be registered in
the name of the relevant Participant and deposited, together with a stock power
endorsed in blank, with the Company. In the discretion of the Committee, any
such certificates may be deposited in a bank designated by the Committee or
delivered to the Participant. Certificates for shares of Restricted Stock that
have vested shall be delivered to the Participant upon request within a
reasonable period of time. The Participant shall sign all documents necessary or
appropriate to facilitate such delivery.

          (b)          Legend. Any certificates evidencing shares of Restricted
Stock awarded pursuant to the Plan shall bear the following legend:

> The shares represented by this certificate were issued subject to certain
> restrictions under the Spartan Motors, Inc. 1996 Stock Option and Restricted
> Stock Plan for Outside Market Advisors (the "Plan"). A copy of the Plan is on
> file in the office of the Secretary of Spartan Motors, Inc. This certificate
> is held subject to the terms and conditions contained in a restricted stock
> agreement that includes a prohibition against the sale or transfer of the
> stock represented by this certificate except in compliance with that
> agreement, and that provides for forfeiture upon certain events.

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          6.7          Representations and Warranties. A Participant who is
awarded Restricted Stock shall represent and warrant that the Participant is
acquiring the Restricted Stock for the Participant's own account and investment
and without any intention to resell or redistribute the Restricted Stock. The
Participant shall agree not to resell or redistribute such Restricted Stock
after the Restricted Period except upon such conditions as the Company may
reasonably specify to ensure compliance with federal and state securities laws.

SECTION 7

General Provisions

          7.1          No Rights to Awards. No Participant or other person shall
have any claim to be granted any Incentive Award, and there is no obligation of
uniformity of treatment of Participants or holders or beneficiaries of Incentive
Awards. The terms and conditions of the Incentive Awards of the same type and
the determination of the Committee to grant a waiver or modification of any
Incentive Award and the terms and conditions thereof need not be the same with
respect to each Participant.

          7.2          Compliance With Laws; Listing and Registration of Shares.
All Incentive Awards granted under the Plan (and all issuances of Common Stock
or other securities under the Plan) shall be subject to applicable laws, rules
and regulations, and to the requirement that if at any time the Committee
determines, in its sole discretion, that the listing, registration or
qualification of the shares covered thereby upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Incentive Award or the issue or purchase of shares
thereunder, such Incentive Award may not be exercised in whole or in part, or
the restrictions on such Incentive Award shall not lapse, unless and until such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.

          7.3          No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Subsidiary from adopting
or continuing in effect other or additional compensation arrangements, including
the grant of options and other stock-based awards, and such arrangements may be
either generally applicable or applicable only in specific cases.

          7.4          Governing Law. The validity, construction and effect of
the Plan and any rules and regulations relating to the Plan shall be determined
in accordance with the laws of the State of Michigan and applicable federal law.

          7.5          Severability. In the event any provision of the Plan
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included.

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SECTION 8

Effective Date and Duration of the Plan

          This Plan shall take effect February 27, 1996, subject to approval by
the shareholders at the 1996 Annual Meeting of Shareholders, or any adjournment
thereof or at a special meeting of shareholders. Unless earlier terminated by
the Board of Directors, the Plan shall terminate on February 26, 2006. No
Incentive Award shall be granted under this Plan after such date.

SECTION 9

Termination and Amendment

          The Board may terminate the Plan at any time, or may from time to time
amend the Plan as it deems proper and in the best interests of the Company,
provided that without shareholder approval no such amendment may (a) materially
increase either the benefits to Participants under the Plan or the number of
shares that may be issued under the Plan; (b) materially modify the eligibility
requirements; (c) reduce the Option price (except pursuant to adjustments under
subsection 4.2); or (d) impair any outstanding Incentive Award without the
consent of the Participant, except according to the terms of the Incentive
Award. No termination, amendment, or modification of the Plan shall become
effective with respect to any Incentive Award previously granted under the Plan
without the prior written consent of the Participant holding such Incentive
Award unless such amendment or modification operates solely to the benefit of
the Participant.

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