<PAGE>   1
                                                                    Exhibit 99.3

                              OUTDOOR SYSTEMS, INC.
                  1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN


      The purpose of the Outdoor Systems, Inc. 1996 Non-Employee Director Stock
Option Plan (the "Plan") is to authorize the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board") to provide
non-employee directors of Outdoor Systems, Inc. (the "Company") with certain
rights to acquire common stock of the Company through the grant of nonqualified
stock options. Historically, the Company has not compensated its non-employee
directors, and the Company believes that implementing this Plan to award stock
options to current and future non-employee directors will materially enhance the
Company's ability to attract highly-qualified individuals to serve as
non-employee directors on the Board and further align the interests of the
non-employee directors with those of the Company's stockholders, thereby
benefiting the Company and its stockholders.


      1.    Administration

            The Plan shall be administered and interpreted by the Committee,
which shall consist of not less than two (2) persons appointed by the Board from
among its members who are not employees of the Company. A person may serve on
the Committee only if he is a "disinterested person" within the meaning of 17
C.F.R. Section 240.16b-3(c)(2)(i). The Committee shall have full power and
authority to administer and interpret the Plan and to adopt or amend such rules,
regulations, agreements and instruments for implementing the Plan and for
conducting its business as it deems necessary or advisable, in its sole
discretion. The Committee's interpretations of the Plan and all determinations
made by the Committee pursuant to the powers vested in it hereunder shall be
conclusive and binding on all persons having any interests in the Plan or in any
awards granted hereunder. The Committee may delegate to officers or managers of
the Company the authority, subject to such terms as the Committee shall
determine, to perform administrative functions under the Plan.


      2.    Options

            Incentives under the Plan shall consist of nonqualified stock
options ("Options"). All Options shall be subject to the terms and conditions
set forth herein.
<PAGE>   2
      3.    Shares Subject to the Plan


            (a) Subject to the adjustment specified below, the aggregate number
of shares of common stock of the Company ("Company Stock") that may be issued or
transferred under the Plan is 50,000 shares. The shares may be authorized but
unissued shares or treasury shares. If and to the extent any Options granted
under the Plan terminate, expire or are canceled without having been exercised,
the shares subject to any such Options shall again be available for purposes of
the Plan.

            (b) If there is any change in the number or kind of shares of
Company Stock through a recapitalization, the declaration of stock dividends,
stock splits, or combinations or exchanges of such shares, or merger,
reorganization or consolidation of the Company, reclassification or change in
par value or by reason of any other extraordinary or unusual events, the number
of shares of Company Stock available for Options and the number of such shares
covered by outstanding Options, and the price per share or the applicable market
value of such Options, shall be proportionately or otherwise appropriately
adjusted by the Committee; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated.

            (c) If the Company is reorganized, or merged or consolidated, or is
a party to a plan of exchange with another entity pursuant to which
reorganization, merger, consolidation or plan of exchange the stockholders of
the Company receive cash or other securities, or if the Company is dissolved or
liquidated, the Committee may cancel all outstanding Options as of the effective
date of the reorganization, merger, consolidation, plan of exchange or any
dissolution or liquidation of the Company, by giving notice to each holder
thereof or his personal representative of its intention to do so and by
permitting the purchase for a period of approximately thirty days during the
sixty days next preceding such effective date of all of the shares of Company
Stock subject to such outstanding Options.


      4.    Eligibility for Participation


                  All persons who are serving as non-employee directors of the
Company on or after April 24, 1996 shall receive Options (the "Director
Optionees").


                                       2
<PAGE>   3
      5.    Granting of Options


            (a) NUMBER OF SHARES. On April 24, 1996, each Director Optionee
shall automatically be granted a one-time Option to purchase the number of
shares of Company Stock equal to the product of 7,273 multiplied by (1 plus
(.125 multiplied by the number of years of continuous service to that point,
including any portion of any year of service as a full year)), rounded to the
nearest whole share; provided, however, that no such Option shall allow a
Director Optionee to purchase more than 10,000 shares of Company Stock.
Thereafter, each additional non-employee director of the Company shall, upon his
election to the Board, automatically be granted a one-time Option to purchase
the number of shares determined by the application of the foregoing formula to
such director. The date on which a non-employee director is granted an Option
shall, with respect to such non-employee director, be referred to as the
"Initial Grant Date".

            (b) EXERCISE PRICE. The exercise price of Company Stock subject to
an Option shall be the fair market value of Company Stock on the date the Option
is granted. The "fair market value" of Company Stock on a particular date shall
be deemed to be (A) if the Company Stock is being sold pursuant to an
underwritten public offering, the price at which each share of Company Stock is
being offered to the public by members of the underwriting group or (B) if the
Company Stock is not being sold pursuant to an underwritten public offering but
is quoted on the NASDAQ National Market System, the sales price per share of
Company Stock on the NASDAQ National Market System published in the Wall Street
Journal for that date, or, if there shall have been no such sale so reported for
that date, on the last preceding date on which such a sale was so reported.

            (c) EXERCISE PERIOD. The option exercise period of each Option shall
be ten (10) years. Notwithstanding anything herein to the contrary, all
outstanding Options shall become immediately exercisable upon a Change of
Control of the Company (as defined in Section 7).

            (d) VESTING OF OPTIONS. The vesting period for Options shall
commence on the Initial Grant Date applicable thereto, with twenty percent (20%)
of the shares originally subject to each Option becoming exercisable on each
successive year following the Initial Grant Date. Notwithstanding anything
herein to the contrary, all outstanding Options shall become immediately
exercisable upon a Change of Control of the Company (as defined in Section 7).

            (e) MANNER OF EXERCISE. A Director Optionee may exercise an Option
by delivering a notice of exercise to the Committee with accompanying payment of
the option price. Such notice may instruct the Company to deliver shares of
Company Stock due upon the exercise of the Option to any registered broker or
dealer designated by the Company ("Designated Broker") in lieu of delivery to
the Director Optionee. Such instructions must designate the account into which
the shares are to be deposited. The Director Optionee may tender this notice of
exercise, which has been properly executed by the Director Optionee, and the
aforementioned delivery instructions to any Designated Broker.


                                       3
<PAGE>   4
            (f) TERMINATION OF SERVICE, DISABILITY OR DEATH.


                  (i) In the event a Director Optionee ceases to serve as a
director for any reason other than death, any Option which is otherwise
exercisable by such Director Optionee shall terminate unless exercised within
three (3) months of the date on which he ceases to be a director, but in any
event, no later than the date of expiration of the exercise period pertaining to
such Option; provided, however, that in the case of a Director Optionee who is
disabled within the meaning of Section 22(e)(3) of the Internal Revenue Code, as
amended (the "Code"), such period shall be one (1) year rather than three (3)
months (except as the Committee may otherwise provide in the Option Letter).
Upon the termination of service by a director, the unvested portion of his
Option shall be canceled.

                  (ii) In the event of the death of a Director Optionee while he
is a director of the Company or within not more than three (3) months of the
date on which he ceases to be a director, any Option which was otherwise
exercisable by the Director Optionee at the date of death may be exercised by
his personal representative at any time prior to the expiration of one (1) year
from the date of death, but in any event no later than the date of expiration of
the exercise period pertaining to such Option.


            (g) SATISFACTION OF OPTION PRICE. A Director Optionee shall pay the
option price in cash, with Company Stock, or by a combination of the foregoing.
If a Director Optionee elects to pay the option price for a Option in whole or
in part with Company Stock, such Company Stock must have been previously held by
the director for at least six (6) months prior to exercise. The Director
Optionee shall pay the option price and the amount of withholding tax due, if
any, at the time of exercise. Shares of Company Stock shall not be issued or
transferred upon exercise of an Option until the option price and the
withholding obligation is fully paid.


      6.    Transferability of Options

            Only a Director Optionee or his authorized legal representative 
may exercise rights under an Option. Such persons may not transfer those rights
except by will or by the laws of descent and distribution. When a director
Optionee dies, the personal representative or other person entitled to succeed
to the rights of the director Optionee ("Successor Optionee") may exercise such
rights. A Successor Optionee must furnish proof satisfactory to the Company of
his or her right to exercise the Option under the Director Optionee's will or
under the applicable laws of descent and distribution. Except for transfers
pursuant to a domestic relations order approved by a federal or state court, no
Option shall be subject in whole or in part, to attachment, execution or levy of
any kind.


      7.    Change of Control of the Company

            Change of Control" means the occurrence of one or more of the
following events: (a) the Permitted Holders (as defined below), individually or
in the aggregated, shall cease to beneficially own (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), directly or indirectly, voting Stock (as defined


                                       4
<PAGE>   5
below) representing at least 40% of the total voting power of all Voting Stock;
(b) any person, entity or group (as such term is used in Section 13(d)(3) of the
Exchange Act), other than the Permitted Holders, individually or in the
aggregate, shall beneficially own (within the meaning of Rule 13d-3 under the
Securities Exchange Act), directly or indirectly, Voting Stock representing more
than 30% of the total voting power of all Voting Stock; (c) the sale, lease, or
transfer of all or substantially all of the Company's assets to any person,
entity or group (as such term is used in Section 13(d)(3) of the Exchange Act);
(d) the stockholders of the Company shall approve any plan or proposal for the
liquidation or dissolution of the Company; or (e) William S. Levine and Arte R.
Moreno (together with any new or replacement directors whose election was
approved by a vote of at least two-thirds of the directors then still in office)
shall cease for any reason to constitute a majority of the Board.

      For purposes hereof (i) the term "Permitted Holders" means William S.
Levine, Arte R. Moreno, any trust solely for the benefit of Messrs. Levine and
Moreno or their respective immediate family members, or any partnership in which
the ownership interests thereof are beneficially owned by any of the foregoing,
provided that with respect to any such trust or partnership either Mr. Levine or
Mr. Moreno shall at all times have the exclusive power to direct the voting of
the shares of Voting Stock of the Company held by such trust or partnership; and
(ii) the term "Voting Stock" means one or more classes of the capital stock of
the Company entitled to vote under ordinary circumstances in the election of
directors of the Company.




      8.      Amendment and Termination of the Plan

                 (a) AMENDMENT. This plan may not be amended more than once ever
six (6) months, except to comport with changes in the Code or the rules
thereunder.

                 (b) TERMINATION OF PLAN. The Plan shall terminate on April 24,
2006, unless terminated earlier by the board or unless extended by the Board.

                 (c) TERMINATION AND AMENDMENT OF OUTSTANDING OPTIONS. A
termination or amendment of the Plan that occurs after an Option is made shall
not result in the termination or amendment of the Option unless the director
Optionee consents or unless the Committee acts in accordance with Section 3(c)
or Section 15(a) of the Plan. The termination of the Plan shall not impair the
power and authority of the Committee with respect to an outstanding Option.
Whether or not the Plan has terminated, an outstanding Option may be terminated
or amended in accordance with Section 3(c) or Section 15(a) of the Plan or may
be amended by agreement of the Company and the Director Optionee consistent with
the Plan.


      9.      Funding of the Plan

                  This Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Options under this Plan. In no event shall
interest be paid or accrued on any option, including unexercised installments.


                                       5
<PAGE>   6
      10. Rights of Director Optionees

            Nothing in this Plan shall entitle any Director Optionee or other
person to any claim or right to be granted an award under this Plan. Neither
this Plan nor any action taken hereunder shall be construed as giving any
Director Optionee any right to be retained as a director or to be employed by
the Company.


      11. Withholding of Taxes

            The Company may make such provisions as it may deem appropriate for
the withholding of any taxes which it determines is required in connection with
any Options granted under the Plan.


      12. General Restrictions Applicable to Options

            (a) REQUIREMENTS FOR ISSUANCE OF SHARES. No Company Stock shall be
issued or transferred upon payment of any Option hereunder unless and until all
legal requirements applicable to the issuance or transfer of such Company Stock
have been complied with to the satisfaction of the Committee. The Committee
shall have the right to condition any Option made to any Director Optionee
hereunder on such participant's undertaking in writing to comply with such
restrictions on his subsequent disposition of such shares of Company Stock as
the Committee shall deem necessary or advisable as a result of any applicable
law, regulation or official interpretation thereof, and certificates
representing such shares may be legended to reflect any such restrictions.

            (b) COMPLIANCE WITH RULE 16b-3(c)(2)(II). It is the intent of the
Company that this Plan comply in all respects with the requirements of Rule
16b-3(c)(2)(ii) of the Exchange Act. Accordingly, if any provision of this Plan
or any Option does not comply with the requirements of Rule 16b-3(c)(2)(ii) as
then applicable to any such person, such provision shall be construed or deemed
amended to the extent necessary to conform to such requirements with respect to
such person.

      13. Headings

            Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.


      14. Effective Date

            This Plan shall be implemented upon approval of the Board of
Directors, and effective as of April 24, 1996.

      15. Miscellaneous


                                       6