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Exhibit 10.3

MONACO COACH CORPORATION
1993 DIRECTOR OPTION PLAN
As amended and restated effective May 18, 2000

    1.  Purposes of the Plan.  The purposes of this 1993 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.

    All options granted hereunder shall be "non-statutory stock options."

    2.  Definitions.  As used herein, the following definitions shall apply:

    (a)  "Board"  means the Board of Directors of the Company.

    (b)  "Code"  means the Internal Revenue Code of 1986, as amended.

    (c)  "Common Stock"means the Common Stock of the Company.

    (d)  "Company"  means Monaco Coach Corporation, a Delaware corporation.

    (e)  "Continuous Status as a Director"  means the absence of any
interruption or termination of service as a Director.

    (f)  "Director"  means a member of the Board.

    (g)  "Employee"  means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

    (h)  "Exchange Act"  means the Securities Exchange Act of 1934, as amended.

    (i)  "Fair Market Value"  means, as of any date, the value of Common Stock
determined as follows:

     (i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the National Market System
of the National Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") System, the Fair Market Value of a Share of Common Stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the date of grant, as reported in
The Wall Street Journal or such other source as the Board deems reliable;

    (ii) If the Common Stock is quoted on the NASDAQ System (but not on the
National Market System thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Share of
Common Stock shall be the mean between the bid and asked prices for the Common
Stock on the day of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable, or;

    (iii) In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Board.

    (j)  "Option"  means a stock option granted pursuant to the Plan.

    (k)  "Optioned Stock"  means the Common Stock subject to an Option.

    (l)  "Optionee"  means an Outside Director who receives an Option.

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    (m)  "Outside Director"  means a Director who is not an Employee.

    (n)  "Parent"  means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.

    (o)  "Plan"  means this 1993 Director Option Plan.

     (i) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 10 of the Plan.

    (p)  "Subsidiary"  means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.

    3.  Stock Subject to the Plan.  Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is one hundred thirty five thousand (135,000) Shares (the "Pool")
of Common Stock. The Shares may be authorized but unissued, or reacquired Common
Stock.

    If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan.

    4.  Administration of and Grants of Options under the Plan.  

    (a)  Administrator.  Except as otherwise required herein, the Plan shall be
administered by the Board.

    (b)  Procedure for Grants.  The provisions set forth in this Section 4(b)
shall not be amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder. All grants of Options to Outside Directors
under this Plan shall be automatic and non-discretionary and shall be made
strictly in accordance with the following provisions:

     (i) No person shall have any discretion to select which Outside Directors
shall be granted Options or to determine the number of Shares to be covered by
Options granted to Outside Directors.

    (ii) Each Outside Director shall be automatically granted an Initial Option
to purchase eight thousand (8,000) Shares (the "First Option") on the date on
which the later of the following events occurs: (A) the effective date of the
Company's initial underwritten public offering of its Common Stock pursuant to a
registration statement filed under the Securities Act of 1933, as amended, or
(B) the date on which such person first becomes a Director, whether through
election by the stockholders of the Company or appointment by the Board to fill
a vacancy.

    (iii) Commencing on September 30, 1994, each Outside Director shall be
automatically granted a subsequent Option to purchase three thousand five
hundred (3,500) Shares (a "Subsequent Option") on September 30 of each year
after the date of the First Option grant, provided such Outside Director shall
have served on the Board for at least six months prior to the date of the
Subsequent Option grant and remains an Outside Director on such date.

    (iv) Notwithstanding the provisions of subsections (ii) and (iii) hereof,
any exercise of an Option made before the Company has obtained stockholder
approval of the Plan in accordance with Section 16 hereof shall be conditioned
upon obtaining such stockholder approval of the Plan in accordance with
Section 16 hereof.

    (v) The terms of a First Option granted hereunder shall be as follows:

    (A) the term of the First Option shall be ten (10) years.

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    (B) the First Option shall be exercisable only while the Outside Director
remains a Director of the Company, except as set forth in Section 8 hereof.

    (C) the exercise price per Share shall be 100% of the fair market value per
Share on the date of grant of the First Option.

    (D) the First Option shall become exercisable in installments cumulatively
as to twenty percent (20%) of the Shares subject to the First Option one
(1) year from its date of grant and as to twenty percent (20%) each year
thereafter if, on each such date, the Optionee has maintained his Continuous
Status as a Director.

    (vi) The terms of a Subsequent Option granted hereunder shall be as follows:

    (A) the term of the Subsequent Option shall be ten (10) years.

    (B) the Subsequent Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in Section 8
hereof.

    (C) the exercise price per Share shall be 100% of the fair market value per
Share on the date of grant of the Subsequent Option.

    (D) the Subsequent Option shall become exercisable as to one hundred percent
(100%) of the Shares subject to the Subsequent Option five (5) years from its
date of grant if, on such date, the Optionee has maintained his Continuous
Status as a Director.

   (vii) In the event that any Option granted under the Plan would cause the
number of Shares subject to outstanding Options plus the number of Shares
previously purchased under Options to exceed the Pool, then the remaining Shares
available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the stockholders to increase the number of Shares which may be issued
under the Plan or through cancellation or expiration of Options previously
granted hereunder.

    (c)  Powers of the Board.  Subject to the provisions and restrictions of the
Plan, the Board shall have the authority, in its discretion: (i) to determine,
upon review of relevant information and in accordance with Section 2(i) of the
Plan, the Fair Market Value of the Common Stock; (ii) to interpret the Plan;
(iii) to prescribe, amend and rescind rules and regulations relating to the
Plan; (iv) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted
hereunder; and (v) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

    (d)  Effect of Board's Decision.  All decisions, determinations and
interpretations of the Board shall be final.

    5.  Eligibility.  Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof. An Outside Director who has been granted an Option may, if
he is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.

    The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.

    6.  Term of Plan.  The Plan shall become effective upon the earlier to occur
of its adoption by the Board or its approval by the stockholders of the Company
as described in Section 16 of the Plan. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 11 of the Plan.

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    7.  Form of Consideration.  The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall be
determined by the Board and may consist entirely of (i) cash, (ii) check,
(iii) promissory note, (iv) other shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised, (v) delivery of a properly executed
exercise notice together with such other documentation as the Board and the
broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, (vi) any combination of the foregoing methods of payment, or
(vii) such other consideration and method of payment for the issuance of Shares
to the extent permitted under applicable law.

    8.  Exercise of Option.  

    (a)  Procedure for Exercise; Rights as a Stockholder.  Any Option granted
hereunder shall be exercisable at such times as are set forth in Section 4(b)
hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.

    An Option may not be exercised for a fraction of a Share.

    An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 10 of the
Plan.

    Exercise of an Option in any manner shall result in a decrease in the number
of Shares which thereafter may be available, both for purposes of the Plan and
for sale under the Option, by the number of Shares as to which the Option is
exercised.

    (b)  Rule 16b-3.  Options granted to Outside Directors must comply with the
applicable provisions of Rule 16b-3 promulgated under the Exchange Act or any
successor thereto and shall contain such additional conditions or restrictions
as may be required thereunder to qualify for the maximum exemption from
Section 16 of the Exchange Act with respect to Plan transactions.

    (c)  Termination of Continuous Status as a Director.  In the event an
Optionee's Continuous Status as a Director terminates (other than upon the
Optionee's death or total and permanent disability (as defined in
Section 22(e)(3) of the Code)), the Optionee may exercise his or her Option, but
only within three (3) months from the date of such termination, and only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option at
the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.

    (d)  Disability of Optionee.  In the event Optionee's Continuous Status as a
Director terminates as a result of total and permanent disability (as defined in
Section 22(e)(3) of the Code), the Option granted hereunder to such Optionee
shall become vested and exercisable for the full number of Shares covered by the
Option. The Optionee may exercise his or her Option, at any time within twelve
(12) months from the date of such termination (but in no

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event later than the expiration of the term of such Option as set forth in the
Notice of Grant). If, after termination, the Optionee does not exercise his or
her Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

    (e)  Death of Optionee.  In the event of the death of an Optionee, the
Option shall become vested and exercisable for the full number of Shares covered
by the Option. The Option held by the Optionee at the time of death may be
exercised at any time within twelve (12) months following the date of death by
the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance. In no event shall an Option be exercised later
than the expiration of the term of the Option, as set forth in the Option
agreement. If, after death, the Optionee's estate or a person who acquired the
right to exercise the Option by bequest or inheritance does not exercise the
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

    9.  Non-Transferability of Options.  The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

    10.  Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
Sale or Change of Control.  

    (a)  Changes in Capitalization.  Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding
Option and the number of Shares which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to an Option. In addition, a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company shall not result in an
adjustment to the number of shares granted to Outside Directors pursuant to
Section 4(b)(ii) and Section 4(b)(iii) of the Plan subsequent to such stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company.

    (b)  Dissolution or Liquidation.  In the event of the proposed dissolution
or liquidation of the Company, to the extent that an Option has not been
previously exercised, it will terminate immediately prior to the consummation of
such proposed action. The Board may, in the exercise of its sole discretion in
such instances, declare that any Option shall terminate as of a date fixed by
the Board and give each Optionee the right to exercise his or her Option as to
all or any part of the Optioned Stock, including Shares as to which the Option
would not otherwise be exercisable.

    (c)  Merger or Asset Sale.  In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding

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Option shall be assumed or an equivalent option shall be substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation does not agree to assume the Option or
to substitute an equivalent option, the Board shall, in lieu of such assumption
or substitution, provide for the Optionee to have the right to exercise the
Option as to all of the Optioned Stock, including Shares as to which it would
not otherwise be exercisable. If the Board makes an Option fully exercisable in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Board shall notify the Optionee that the Option shall be fully exercisable
for a period of thirty (30) days from the date of such notice, and the Option
will terminate upon the expiration of such period. For the purposes of this
paragraph, the Option shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase, for each
Share of Optioned Stock subject to the Option immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets was not solely
common stock of the successor corporation or its Parent, the Board may, with the
consent of the successor corporation and the participant, provide for the
consideration to be received upon the exercise of the Option, for each Share of
Optioned Stock subject to the Option, to be solely common stock of the successor
corporation or its Parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

    11.  Amendment and Termination of the Plan.  

    (a)  Amendment and Termination.  Except as set forth in Section 4, the Board
may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent. In addition, to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required.

    (b)  Effect of Amendment or Termination.  Any such amendment or termination
of the Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated.

    12.  Time of Granting Options.  The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.

    13.  Conditions Upon Issuance of Shares.  Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

    As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

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    Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.

    14.  Reservation of Shares.  The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

    15.  Option Agreement.  Options shall be evidenced by written option
agreements in such form as the Board shall approve.

    16.  Stockholder Approval.  Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law.

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Exhibit 10.3