Exhibit 10.1

 

MONACO COACH CORPORATION

1993 STOCK PLAN

PERFORMANCE SHARE

AGREEMENT

 

THIS PERFORMANCE SHARE AGREEMENT (the “Agreement”) is effective as of (Date)
(the “Date of Grant”), between MONACO COACH CORPORATION (hereinafter called the
“Company”) and (NAME) (hereinafter called the “Participant”). Unless otherwise
defined herein, the terms defined in the amended and restated 1993 Stock Plan
(the “Plan”) will have the same defined meanings in this Agreement.

 

1.             AWARD GRANT. THE COMPANY HEREBY AWARDS TO PARTICIPANT A TARGET
NUMBER OF PERFORMANCE SHARES EQUAL TO (   #  ) UNDER THE PLAN. THIS AWARD
RELATES TO THE PERFORMANCE PERIOD FOR FISCAL YEARS 2007-2009. THE NUMBER OF
PERFORMANCE SHARES THAT A PARTICIPANT MAY EARN WILL DEPEND UPON ACHIEVEMENT OF
TARGETS OF TOTAL SHAREHOLDER RETURN AND RETURN ON NET ASSETS FOR THE PERFORMANCE
PERIOD AND WILL BE DETERMINED IN ACCORDANCE WITH THE PERFORMANCE SHARE AWARD
PROGRAM, A COPY OF WHICH IS ATTACHED HERETO AS APPENDIX A. IN ACCORDANCE WITH
THE PERFORMANCE SHARE AWARD PROGRAM, THE NUMBER OF THE PERFORMANCE SHARES THAT
PARTICIPANT MAY EARN WILL RANGE FROM ZERO PERCENT (0%) OF THE TARGET NUMBER OF
PERFORMANCE SHARES TO TWO HUNDRED PERCENT (200%) OF THE TARGET NUMBER OF
PERFORMANCE SHARES. THE NUMBER OF SUCH SHARES SHALL BE DETERMINED FOLLOWING THE
END OF THE PERFORMANCE PERIOD, IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET
FORTH IN THE PERFORMANCE SHARE AWARD PROGRAM.

 

2.             OBLIGATION TO PAY. EACH PERFORMANCE SHARE REPRESENTS THE RIGHT TO
RECEIVE ONE SHARE TO THE EXTENT IT IS EARNED. UNLESS AND UNTIL THE PERFORMANCE
SHARES ARE EARNED IN THE MANNER SET FORTH IN SECTION 1 AND THE PERFORMANCE SHARE
AWARD PROGRAM, PARTICIPANT WILL HAVE NO RIGHT TO PAYMENT OF SUCH PERFORMANCE
SHARES. PRIOR TO ACTUAL PAYMENT OF ANY EARNED PERFORMANCE SHARES, SUCH
PERFORMANCE SHARES WILL REPRESENT AN UNSECURED OBLIGATION. PAYMENT OF ANY EARNED
PERFORMANCE SHARES SHALL BE MADE IN WHOLE SHARES ONLY. NOTWITHSTANDING THE
FOREGOING PROVISIONS OF THIS SECTION 2, IN THE EVENT THE COMPANY (OR THE
SUBSIDIARY EMPLOYING PARTICIPANT) TERMINATES PARTICIPANT AS AN EMPLOYEE WITHOUT
CAUSE OR PARTICIPANT CEASES TO BE AN EMPLOYEE AS THE RESULT OF PARTICIPANT’S
DEATH OR DISABILITY, PARTICIPANT WILL BE ENTITLED TO RECEIVE A PRO-RATED AMOUNT
OF THE PERFORMANCE SHARES THAT WOULD HAVE ACTUALLY BEEN EARNED DURING THE
PERFORMANCE PERIOD HAD PARTICIPANT REMAINED AN EMPLOYEE THROUGH THE END OF THE
PERFORMANCE PERIOD BASED ON THE AMOUNT OF TIME PARTICIPANT WAS AN EMPLOYEE
DURING THE PERFORMANCE PERIOD, WHICH WILL BE SETTLED AT THE TIME THEY WOULD HAVE
OTHERWISE BEEN PAID PURSUANT TO THE PERFORMANCE SHARE AWARD PROGRAM. IN
ADDITION, IN THE EVENT PARTICIPANT CEASES TO BE AN EMPLOYEE AS THE RESULT OF HIS
OR HER RETIREMENT, PARTICIPANT WILL BE ENTITLED TO RECEIVE 100% OF THE
PERFORMANCE SHARES THAT WOULD HAVE OTHERWISE BEEN EARNED UNDER THE PERFORMANCE
SHARE AWARD PROGRAM HAD PARTICIPANT REMAINED AN EMPLOYEE THROUGH THE END OF THE
PERFORMANCE PERIOD, WHICH WILL BE SETTLED AT THE TIME THEY WOULD HAVE OTHERWISE
BEEN PAID PURSUANT TO THE PERFORMANCE SHARE AWARD PROGRAM. IN ADDITION, IN THE
EVENT OF A CHANGE IN CONTROL THAT OCCURS DURING THE PERFORMANCE PERIOD WHILE
PARTICIPANT IS AN EMPLOYEE, A NUMBER OF PERFORMANCE SHARES WILL BE EARNED AND
PAID OUT AS IF ALL PERFORMANCE OBJECTIVES UNDER THE PERFORMANCE SHARE AWARD
PROGRAM HAD BEEN EARNED AT TARGET, WHICH WILL BE SETTLED UPON CONSUMMATION OF
THE CHANGE IN CONTROL. SUBJECT TO THE FOREGOING ACCELERATION PROVISIONS AND ANY
SUCH PROVISIONS SET FORTH IN THE PLAN, IN THE EVENT PARTICIPANT CEASES TO BE AN
EMPLOYEE FOR ANY OR NO REASON BEFORE PARTICIPANT EARNS THE PERFORMANCE SHARES
PURSUANT TO THIS AWARD, THE PERFORMANCE SHARE AWARD AND PARTICIPANT’S RIGHT TO
ACQUIRE ANY SHARES HEREUNDER WILL IMMEDIATELY TERMINATE.

 

For purposes of this Section 2, “Cause” is defined as (i) an act of dishonesty
made by Participant in connection with Participant’s responsibilities as an
Employee, (ii) Participant’s conviction of, or plea of nolo contendere to, a
felony, (iii) Participant’s gross misconduct, or (iv) Participant’s continued
substantial

 

1

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violations of his employment duties after Participant has received a demand for
performance from the Company.

 

3.             PAYMENT AFTER EARNING. ANY PERFORMANCE SHARES THAT ARE EARNED OR
ARE DEEMED EARNED IN ACCORDANCE WITH SECTION 2 WILL BE PAID TO PARTICIPANT (OR
IN THE EVENT OF PARTICIPANT’S DEATH, TO HIS OR HER ESTATE) IN WHOLE SHARES,
SUBJECT TO PARTICIPANT SATISFYING ANY APPLICABLE TAX WITHHOLDING OBLIGATIONS AS
SET FORTH IN SECTION 7. NOTWITHSTANDING THE FOREGOING SENTENCE, TO THE EXTENT
NECESSARY TO AVOID THE IMPOSITION OF ANY ADDITIONAL TAX OR INCOME RECOGNITION
UNDER SECTION 409A OF THE CODE PRIOR TO OR UPON THE ACTUAL PAYMENT OF SHARES
PURSUANT TO THIS AWARD OF PERFORMANCE SHARES THAT ARE EARNED IN ACCORDANCE WITH
SECTION 2 WILL BE PAID TO PARTICIPANT (OR IN THE EVENT OF PARTICIPANT’S DEATH,
TO HIS OR HER ESTATE) NO EARLIER THAN SIX (6) MONTHS AND ONE (1) DAY FOLLOWING
THE DATE OF PARTICIPANT’S TERMINATION OF EMPLOYMENT WITH THE COMPANY (OR ANY
AFFILIATE), SUBJECT TO SECTION 7. PARTICIPANT WILL NOT BE REQUIRED TO MAKE ANY
ADDITIONAL MONETARY PAYMENT (OTHER THAN APPLICABLE TAX WITHHOLDING, IF ANY) UPON
SETTLEMENT OF THE AWARD.

 

4.             PAYMENTS AFTER DEATH. ANY DISTRIBUTION OR DELIVERY TO BE MADE TO
PARTICIPANT UNDER THIS AGREEMENT WILL, IF PARTICIPANT IS THEN DECEASED, BE MADE
TO PARTICIPANT’S DESIGNATED BENEFICIARY, OR IF NO BENEFICIARY SURVIVES
PARTICIPANT, THE ADMINISTRATOR OR EXECUTOR OF PARTICIPANT’S ESTATE. ANY SUCH
TRANSFEREE MUST FURNISH THE COMPANY WITH (A) WRITTEN NOTICE OF HIS OR HER STATUS
AS TRANSFEREE, AND (B) EVIDENCE SATISFACTORY TO THE COMPANY TO ESTABLISH THE
VALIDITY OF THE TRANSFER AND COMPLIANCE WITH ANY LAWS OR REGULATIONS PERTAINING
TO SAID TRANSFER.

 

5.             RIGHTS AS STOCKHOLDER. EXCEPT AS SET FORTH IN SECTION 4, NEITHER
PARTICIPANT NOR ANY PERSON CLAIMING UNDER OR THROUGH PARTICIPANT WILL HAVE ANY
OF THE RIGHTS OR PRIVILEGES OF A STOCKHOLDER OF THE COMPANY IN RESPECT OF ANY
SHARES DELIVERABLE HEREUNDER, UNLESS AND UNTIL CERTIFICATES REPRESENTING SUCH
SHARES WILL HAVE BEEN ISSUED, RECORDED ON THE RECORDS OF THE COMPANY OR ITS
TRANSFER AGENTS OR REGISTRARS, AND DELIVERED TO PARTICIPANT.

 

6.             EFFECT ON EMPLOYMENT. PARTICIPANT ACKNOWLEDGES AND AGREES THAT
THE VESTING OF PERFORMANCE SHARES PURSUANT TO SECTION 2 HEREOF IS EARNED ONLY BY
PARTICIPANT CONTINUING TO BE AN EMPLOYEE THROUGH THE APPLICABLE VESTING DATES
(AND NOT THROUGH THE ACT OF BEING HIRED OR ACQUIRING SHARES HEREUNDER).
PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING PROVISIONS SET FORTH HEREIN
DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF PARTICIPANT CONTINUING TO BE
AN EMPLOYEE FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT
INTERFERE WITH THE PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE
AFFILIATE EMPLOYING PARTICIPANT) TO TERMINATE PARTICIPANT AS AN EMPLOYEE AT ANY
TIME, WITH OR WITHOUT CAUSE.

 

7.             TAX WITHHOLDING. NOTWITHSTANDING ANY CONTRARY PROVISION OF THIS
AGREEMENT, NO CERTIFICATE REPRESENTING SHARES WILL BE ISSUED TO PARTICIPANT,
UNLESS AND UNTIL SATISFACTORY ARRANGEMENTS (AS DETERMINED BY THE ADMINISTRATOR)
WILL HAVE BEEN MADE BY PARTICIPANT WITH RESPECT TO THE PAYMENT OF INCOME,
EMPLOYMENT AND OTHER TAXES WHICH THE COMPANY DETERMINES MUST BE WITHHELD WITH
RESPECT TO SUCH SHARES SO ISSUABLE. ALL INCOME, EMPLOYMENT AND OTHER TAXES
RELATED TO THE PERFORMANCE SHARE AWARD AND ANY SHARES DELIVERED IN PAYMENT
THEREOF ARE THE SOLE RESPONSIBILITY OF PARTICIPANT. THE ADMINISTRATOR, IN ITS
SOLE DISCRETION AND PURSUANT TO SUCH PROCEDURES AS IT MAY SPECIFY FROM TIME TO
TIME, MAY PERMIT PARTICIPANT TO SATISFY SUCH TAX WITHHOLDING OBLIGATION, IN
WHOLE OR IN PART BY ONE OR MORE OF THE FOLLOWING (WITHOUT LIMITATION):
(A) PAYING CASH OR (B)  SELLING A SUFFICIENT NUMBER OF SUCH SHARES OTHERWISE
DELIVERABLE TO PARTICIPANT THROUGH SUCH MEANS AS THE COMPANY MAY DETERMINE IN
ITS SOLE DISCRETION (WHETHER THROUGH A BROKER OR OTHERWISE) EQUAL TO THE AMOUNT
REQUIRED TO BE WITHHELD. IF PARTICIPANT FAILS TO MAKE SATISFACTORY ARRANGEMENTS
FOR THE PAYMENT OF ANY REQUIRED TAX WITHHOLDING OBLIGATIONS HEREUNDER AT THE
TIME THIS AWARD IS OTHERWISE SCHEDULED TO VEST PURSUANT TO SECTION 2,
PARTICIPANT AGREES AND ACKNOWLEDGES THAT THE COMPANY,

 

2

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IN ITS DISCRETION, SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) TO SATISFY ANY
TAX WITHHOLDING OBLIGATIONS BY EITHER (I) REDUCING THE NUMBER OF SHARES
OTHERWISE DELIVERABLE TO PARTICIPANT HAVING A FAIR MARKET VALUE EQUAL TO THE
MINIMUM AMOUNT REQUIRED TO BE WITHHELD, OR (II) SELLING A SUFFICIENT NUMBER OF
SHARES OTHERWISE DELIVERABLE TO PARTICIPANT ON PARTICIPANT’S BEHALF THROUGH SUCH
MEANS AS THE COMPANY MAY DETERMINE IN ITS SOLE DISCRETION (WHETHER THROUGH A
BROKER OR OTHERWISE) EQUAL TO THE AMOUNT REQUIRED TO BE WITHHELD.

 

8.             ADDITIONAL CONDITIONS TO ISSUANCE OF STOCK. IF AT ANY TIME THE
COMPANY WILL DETERMINE, IN ITS DISCRETION, THAT THE LISTING, REGISTRATION OR
QUALIFICATION OF THE SHARES UPON ANY SECURITIES EXCHANGE OR UNDER ANY STATE OR
FEDERAL LAW, OR THE CONSENT OR APPROVAL OF ANY GOVERNMENTAL REGULATORY AUTHORITY
IS NECESSARY OR DESIRABLE AS A CONDITION TO THE ISSUANCE OF SHARES TO
PARTICIPANT (OR HIS ESTATE), SUCH ISSUANCE WILL NOT OCCUR UNLESS AND UNTIL SUCH
LISTING, REGISTRATION, QUALIFICATION, CONSENT OR APPROVAL WILL HAVE BEEN
EFFECTED OR OBTAINED FREE OF ANY CONDITIONS NOT ACCEPTABLE TO THE COMPANY. WHERE
THE COMPANY DETERMINES THAT THE DELIVERY OF THE PAYMENT OF ANY SHARES WILL
VIOLATE FEDERAL SECURITIES LAWS OR OTHER APPLICABLE LAWS, THE COMPANY WILL DEFER
DELIVERY UNTIL THE EARLIEST DATE AT WHICH THE COMPANY REASONABLY ANTICIPATES
THAT THE DELIVERY OF SHARES WILL NO LONGER CAUSE SUCH VIOLATION. THE COMPANY
WILL MAKE ALL REASONABLE EFFORTS TO MEET THE REQUIREMENTS OF ANY SUCH STATE OR
FEDERAL LAW OR SECURITIES EXCHANGE AND TO OBTAIN ANY SUCH CONSENT OR APPROVAL OF
ANY SUCH GOVERNMENTAL AUTHORITY.

 

9.             RESTRICTIONS ON SALE OF SECURITIES. SUBJECT TO SECTION 8, THE
SHARES ISSUED AS PAYMENT FOR VESTED PERFORMANCE SHARES AWARDED UNDER THIS
AGREEMENT WILL BE REGISTERED UNDER THE FEDERAL SECURITIES LAWS AND WILL BE
FREELY TRADABLE UPON RECEIPT. HOWEVER, PARTICIPANT’S SUBSEQUENT SALE OF THE
SHARES WILL BE SUBJECT TO ANY MARKET BLACKOUT-PERIOD THAT MAY BE IMPOSED BY THE
COMPANY AND MUST COMPLY WITH THE COMPANY’S INSIDER TRADING POLICIES, AND ANY
OTHER APPLICABLE SECURITIES LAWS.

 

10.           SUCCESSORS. SUBJECT TO THE LIMITATION ON THE TRANSFERABILITY OF
THIS GRANT CONTAINED HEREIN, THIS AGREEMENT WILL BE BINDING UPON AND INURE TO
THE BENEFIT OF THE HEIRS, LEGATEES, LEGAL REPRESENTATIVES, SUCCESSORS AND
ASSIGNS OF THE PARTIES HERETO.

 

11.           ADDRESS FOR NOTICES. ANY NOTICE TO BE GIVEN TO THE COMPANY UNDER
THE TERMS OF THIS AGREEMENT WILL BE ADDRESSED TO THE COMPANY, IN CARE OF IT
SECRETARY AT MONACO COACH CORPORATION, 91320 COBURG INDUSTRIAL WAY, COBURG,
OREGON 97408, OR AT SUCH OTHER ADDRESS AS THE COMPANY MAY HEREAFTER DESIGNATE IN
WRITING.

 

12.           TRANSFERABILITY. EXCEPT TO THE LIMITED EXTENT PROVIDED IN
SECTION 4, THIS GRANT AND THE RIGHTS AND PRIVILEGES CONFERRED HEREBY WILL NOT BE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN ANY WAY (WHETHER BY OPERATION
OF LAW OR OTHERWISE) AND WILL NOT BE SUBJECT TO SALE UNDER EXECUTION, ATTACHMENT
OR SIMILAR PROCESS. UPON ANY ATTEMPT TO TRANSFER, ASSIGN, PLEDGE, HYPOTHECATE OR
OTHERWISE DISPOSE OF THIS GRANT, OR ANY RIGHT OR PRIVILEGE CONFERRED HEREBY, OR
UPON ANY ATTEMPTED SALE UNDER ANY EXECUTION, ATTACHMENT OR SIMILAR PROCESS, THIS
GRANT AND THE RIGHTS AND PRIVILEGES CONFERRED HEREBY IMMEDIATELY WILL BECOME
NULL AND VOID.

 

13.           PLAN GOVERNS. THIS AGREEMENT IS SUBJECT TO ALL TERMS AND
PROVISIONS OF THE PLAN. IN THE EVENT OF A CONFLICT BETWEEN ONE OR MORE
PROVISIONS OF THIS AGREEMENT AND ONE OR MORE PROVISIONS OF THE PLAN, THE
PROVISIONS OF THE PLAN WILL GOVERN.

 

14.           ADMINISTRATOR AUTHORITY. THE ADMINISTRATOR WILL HAVE THE POWER TO
INTERPRET THE PLAN AND THIS AGREEMENT AND TO ADOPT SUCH RULES FOR THE
ADMINISTRATION, INTERPRETATION AND APPLICATION OF THE PLAN AS ARE CONSISTENT
THEREWITH AND TO INTERPRET OR REVOKE ANY SUCH RULES (INCLUDING, BUT NOT LIMITED
TO, THE DETERMINATION OF WHETHER OR NOT ANY PERFORMANCE SHARES HAVE VESTED). ALL
ACTIONS TAKEN AND ALL

 

3

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INTERPRETATIONS AND DETERMINATIONS MADE BY THE ADMINISTRATOR IN GOOD FAITH WILL
BE FINAL AND BINDING UPON PARTICIPANT, THE COMPANY AND ALL OTHER INTERESTED
PERSONS. NO MEMBER OF THE ADMINISTRATOR WILL BE PERSONALLY LIABLE FOR ANY
ACTION, DETERMINATION OR INTERPRETATION MADE IN GOOD FAITH WITH RESPECT TO THE
PLAN OR THIS AGREEMENT.

 

15.           ELECTRONIC DELIVERY. THE COMPANY MAY, IN ITS SOLE DISCRETION,
DECIDE TO DELIVER ANY DOCUMENTS RELATED TO PERFORMANCE SHARES AWARDED UNDER THE
PLAN OR FUTURE PERFORMANCE SHARES THAT MAY BE AWARDED UNDER THE PLAN BY
ELECTRONIC MEANS OR REQUEST PARTICIPANT’S CONSENT TO PARTICIPATE IN THE PLAN BY
ELECTRONIC MEANS. PARTICIPANT HEREBY CONSENTS TO RECEIVE SUCH DOCUMENTS BY
ELECTRONIC DELIVERY AND AGREES TO PARTICIPATE IN THE PLAN THROUGH AN ON-LINE OR
ELECTRONIC SYSTEM ESTABLISHED AND MAINTAINED BY THE COMPANY OR ANOTHER THIRD
PARTY DESIGNATED BY THE COMPANY.

 

16.           CAPTIONS. CAPTIONS PROVIDED HEREIN ARE FOR CONVENIENCE ONLY AND
ARE NOT TO SERVE AS A BASIS FOR INTERPRETATION OR CONSTRUCTION OF THIS
AGREEMENT.

 

17.           AGREEMENT SEVERABLE. IN THE EVENT THAT ANY PROVISION IN THIS
AGREEMENT WILL BE HELD INVALID OR UNENFORCEABLE, SUCH PROVISION WILL BE
SEVERABLE FROM, AND SUCH INVALIDITY OR UNENFORCEABILITY WILL NOT BE CONSTRUED TO
HAVE ANY EFFECT ON, THE REMAINING PROVISIONS OF THIS AGREEMENT.

 

18.           ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE
UNDERSTANDING OF THE PARTIES ON THE SUBJECTS COVERED. THE PARTICIPANT EXPRESSLY
WARRANTS THAT HE OR SHE IS NOT EXECUTING THIS AGREEMENT IN RELIANCE ON ANY
PROMISES, REPRESENTATIONS, OR INDUCEMENTS OTHER THAN THOSE CONTAINED HEREIN.

 

19.           MODIFICATIONS TO THE AGREEMENT. THIS AGREEMENT CONSTITUTES THE
ENTIRE UNDERSTANDING OF THE PARTIES ON THE SUBJECTS COVERED. THE PARTICIPANT
EXPRESSLY WARRANTS THAT HE OR SHE IS NOT ACCEPTING THIS AGREEMENT IN RELIANCE ON
ANY PROMISES, REPRESENTATIONS, OR INDUCEMENTS OTHER THAN THOSE CONTAINED HEREIN.
MODIFICATIONS TO THIS AGREEMENT OR THE PLAN CAN BE MADE ONLY IN AN EXPRESS
WRITTEN CONTRACT EXECUTED BY A DULY AUTHORIZED OFFICER OF THE COMPANY.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE PLAN OR THIS AGREEMENT, THE
COMPANY RESERVES THE RIGHT TO REVISE THIS AGREEMENT AS IT DEEMS NECESSARY OR
ADVISABLE, IN ITS SOLE DISCRETION AND WITHOUT THE CONSENT OF PARTICIPANT, TO
COMPLY WITH SECTION 409A OF THE CODE OR TO OTHERWISE AVOID IMPOSITION OF ANY
ADDITIONAL TAX OR INCOME RECOGNITION UNDER SECTION 409A OF THE CODE PRIOR TO THE
ACTUAL PAYMENT OF SHARES PURSUANT TO THIS AWARD OF PERFORMANCE SHARES.

 

20.           AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN. BY ACCEPTING
THIS AWARD, THE PARTICIPANT EXPRESSLY WARRANTS THAT HE OR SHE HAS RECEIVED A
RIGHT TO ACQUIRE SHARES UNDER THE PLAN, AND HAS RECEIVED, READ AND UNDERSTOOD A
DESCRIPTION OF THE PLAN. THE PARTICIPANT UNDERSTANDS THAT THE PLAN IS
DISCRETIONARY IN NATURE AND MAY BE MODIFIED, SUSPENDED OR TERMINATED BY THE
COMPANY AT ANY TIME.

 

21.           GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF OREGON, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. FOR PURPOSES OF LITIGATING ANY DISPUTE THAT ARISES UNDER THIS AWARD OF
PERFORMANCE SHARES OR THIS AGREEMENT, THE PARTIES HEREBY SUBMIT TO AND CONSENT
TO THE JURISDICTION OF THE STATE OF OREGON, AND AGREE THAT SUCH LITIGATION SHALL
BE CONDUCTED IN THE COURTS OF LANE COUNTY, OREGON, OR THE FEDERAL COURTS FOR THE
UNITED STATES LOCATED IN OR AROUND LANE COUNTY, OREGON, AND NO OTHER COURTS,
WHERE THIS AWARD OF PERFORMANCE SHARES IS MADE AND/OR TO BE PERFORMED.

 

4

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IN WITNESS WHEREOF, the parties have signed this Agreement effective as of the
date and year indicated above.

 

 

MONACO COACH CORPORATION

 

 

 

 

 

By:

 

 

 

 

  Kay L. Toolson, Chairman and

 

 

  Chief Executive Officer

 

 

 

 

ACCEPTED

 

 

 

  Participant

 

 

 

 

 

PRINT NAME:

 

 

 

 

 

 

DATE:

 

 

 

5

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Appendix A

 

PERFORMANCE SHARE AWARD PROGRAM

 

6

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Monaco Coach Corporation

 

Performance Share Award Program

 

Introductory Note

 

The following Performance Share Award Program (the “PSA Program”) was approved
by the Board of Directors (the “Board”) of Monaco Coach Corporation (the
“Company”) on March 20, 2006. Awards under the PSA Program will be granted under
the Company’s 1993 Stock Plan (the “Plan”). Capitalized terms not otherwise
defined herein will have the meanings given to them under the Plan.

 

The description provided herein sets forth the specific terms and conditions of
the PSA Program covering eligibility, performance measures, Performance Period
and other key factors not described in the Plan. Each year when a new three-year
Performance Period commences, the exhibits detailing the specific performance
goals for a Performance Period under the PSA Program will be updated. Each
participant in the PSA Program will receive an agreement that defines the
individual terms for participation in a Performance Period.

 

Purpose

 

The purpose of the PSA Program is to provide a means for rewarding executives
for their success in driving long-term performance results, which increase
shareholder value.

 

Eligibility

 

All Company executives are eligible to participate in the PSA Program, unless
otherwise specifically excluded by the Compensation Committee of the Board (the
“Committee”). Each executive participating in the PSA Program is referred to as
a “Participant.”  To be eligible to receive an Award, an executive must be
actively employed by the Company or a Subsidiary of the Company on the date a
Performance Period commences. Participation for less than the full Performance
Period under certain circumstances set forth herein or the occurrence of a
Change in Control will allow a Participant to receive all or portion of his or
her Award for a particular Performance Period. An employee who becomes an
executive after the commencement of a Performance Period and within the first
ninety (90) days of such Performance Period may receive a pro-rated Award for
such Performance Period, as determined by the Committee (which employee’s target
Award opportunity must be established no later than the latest possible date
that will not jeopardize such employee’s Award qualification as performance
based compensation under Section 162(m) of the Internal Revenue Code of 1986 as
amended).

 

Termination of Employment and Change in Control

 

In the event the Company (or the Subsidiary employing a Participant) terminates
a Participant as an Employee without Cause or Participant ceases to be an
Employee as the result of Participant’s death or Disability, Participant will be
entitled to receive a pro-rated amount of the Award that would have actually
been earned during the Performance Period had Participant remained an Employee
through the end of the

 

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

 

Performance Period based on the amount of time Participant was an Employee
during the Performance Period, which will be settled at the time it would have
otherwise been paid had Participant remained employed through the end of the
Performance Period. In addition, in the event a Participant ceases to be an
Employee as the result of his or her Retirement, Participant will be entitled to
receive 100% of the Award that would have otherwise been earned had Participant
remained employed through the end of the Performance Period, which will be
settled at the time it would have otherwise been paid had Participant remained
employed through the end of the Performance Period. In addition, in the event of
a Change in Control that occurs during the Performance Period while a
Participant is an Employee, an Award will be deemed earned and paid out as if
all performance objectives under the Performance Share Award Program had been
earned at target, which will be settled upon consummation of the Change in
Control. Subject to the foregoing acceleration provisions and any such
provisions set forth in the Plan, in the event Participant ceases to be an
Employee for any or no reason before Participant earns any portion of an Award,
the Award and Participant’s right to acquire any Shares thereunder will
immediately terminate.

 

Performance Period

 

A Performance Period will coincide with each fiscal year and will continue for a
3 year period, unless otherwise specified. Each year a new three-year
Performance Period will commence.

 

Award

 

Each Participant in the PSA Program has a target Award opportunity for the
Performance Period, which must be established no later than the latest possible
date that will not jeopardize an Award’s qualification as performance based
compensation under Section 162(m) of the Internal Revenue Code of 1986 as
amended. This target is determined by the Committee. The Award opportunity is
established for each executive pay grade level considering competitive
performance share award opportunities for comparable positions.

 

Performance Goals

 

Participants will have their actual Award payment determined based upon the
Company’s performance. The performance goals established for a Performance
Period and the formula for determining the “Performance Share Award Factor,” as
defined below, will be displayed in Exhibit A.

 

PSA Program Award Formula

 

Participants are limited to a maximum Award equal to 200% of the target Award
established for each Participant by the Committee. Final Awards will be
distributed in shares of the Company’s Common Stock. The Performance Share Award
Factor is the combined performance level achieved by the Company against the two
target measures of Total Shareholder Return (“TSR”) and Return on Net Assets
(“RONA”).

 

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The Award formula is provided below:

 

PSA Factors

(TSR & RONA)

 

X

 

Participant’s Target Award
(Base Pay x Target percent
 ÷ by Stock Price on Award
Date)

 

=

 

Final
Performance
Share Award

 

Tax Withholding

 

The full value of the shares of Common Stock paid pursuant to an Award is
considered wages and is therefore subject to tax withholding at the time of
settlement. To satisfy such tax withholding obligations, a Participant may
request that a sufficient number of Shares be sold to satisfy such tax
withholding obligation, or he or she may provide cash payment to cover such tax
withholding obligation As a condition to receiving an Award, Participants must
acknowledge and agree that if they fail to make satisfactory arrangements for
the payment of any required tax withholding obligations at the time the Award is
otherwise scheduled to vest that the Company, in its discretion, will have the
right (but not the obligation) to satisfy any tax withholding obligations by
either (i) reducing the number of shares of Common Stock otherwise deliverable
having a fair market value equal to the minimum amount required to be withheld,
or (ii) selling a sufficient number of shares of Common Stock otherwise
deliverable on a Participant’s behalf through a broker or such other means as
the Company may determine equal to the amount required to be withheld.

 

Audit and Approval of Awards

 

The Corporate Controller will review the financial calculations necessary to
determine the performance against TSR and RONA measures as shown in Exhibit A,
as well as other steps in determining the actual Award for each Participant,
before Awards are settled. The Committee will approve all Awards prior to
payout. Notwithstanding any contrary provision of this PSA Program, the
Committee, in its sole discretion, may eliminate or reduce an actual Award
payable to any Participant below that which otherwise would be payable under the
Award formula.

 

Payment

 

Awards will be paid as soon as practicable following the completion of the
Performance Period and after the Committee has certified in writing that the
performance goals and other material terms are satisfied.

 

DEFINITIONS

 

“Performance Share Award Factor” means the measure used to calculate the
participants payout determined by Company performance using Total Shareholder
Return (TSR) and Return on Net Assets (RONA) performance measures – see Exhibit
A attached.

 

“RETIREMENT” MEANS AN EMPLOYEE WHO RETIRES ON OR AFTER AGE SIXTY-TWO (62) AND
SUCH INDIVIDUAL HAS BEEN AN EMPLOYEE AT LEAST FIVE (5) YEARS AT THE DATE OF
RETIREMENT.

 

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EXHIBIT A

 

200X Performance Criteria

Two and Three Year 200X Performance Periods

 

Formula for Calculating the Performance Share Award Factor

 

The following formula will be used to determine the PSA Factor at the end of the
Performance Periods

 

[g255831mqi001.jpg]

 

TSR Component Factor

 

The following table represents the amount of the TSR Component Factor earned,
based on Total Shareholder Return versus the peer group.

 

TSR Percentile

 

 

 

Ranking vs. Peers (1) (2)

 

TSR Payout %

 

 

 

 

 

90th

 

200

%

80th

 

150

%

70th

 

125

%

60th

 

100

%

50th

 

75

%

40th

 

50

%

30th

 

25

%

<30

 

0

%

 

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(1)          The TSR Ranking for each company in the peer group and the Company
will be determined as follows:

 

•                  TSR for the term will be calculated by taking the company’s
stock price at the end of the Performance Period and adding the value of
dividends paid during the Performance Period (assuming reinvestment). This sum
is then divided by the company’s stock price at the beginning of the Performance
Period. Beginning and ending stock prices will be calculated by taking a 30 day
average of the quoted prices immediately preceding the first and last days of
the Performance Period, respectively

•                  Peer companies will be ranked from lowest to highest using
the above calculation.

 

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•                  The Company’s TSR performance will be compared to the ranked
companies to determine the TSR Component Factor. For example, if the Company
ranked equivalent to a company that ranked in the 50th percentile, the TSR
Component Factor would be 75% of the target Award.

•                  If the Company’s TSR falls between the levels shown, the TSR
Factor will be interpolated.

 

(2)          The following companies comprise the peer group:

 

 

Peer Group

 

 

Coachmen Industries Inc.

 

Fleetwood Enterprises

 

National RV Holdings Inc.

 

Thor Industries Inc.

 

Winnebago Industries

 

Dover Corporation

 

Greenbrier Companies

 

Oshkosh Truck Corp

 

Paccar Inc.

 

Trinity Industries

 

Artic Cat Inc.

 

Champion Enterprises Inc.

 

Baldor Electric

 

Cummins Inc.

 

Harley Davidson

 

Parker Hannifin Corp.

 

Polaris

 

Regal-Beloit Corp

 

Spartan Motors

 

Return on Net Assets Factor

 

The Company must achieve an annual average rate of Return on Net Assets (“RONA”)
of at least 1% for the Performance Period before any Award from the RONA
Component Factor is payable.

 

RONA Percentile

 

 

 

Ranking vs. Peers (1)

 

RONA Payout %

 

 

 

 

 

>90th

 

200

%

80th – 89th

 

150

%

70th – 79th

 

125

%

60th-69th

 

100

%

50th-59th

 

75

%

40th-49th

 

50

%

30th-39th

 

25

%

<30th

 

0

%

 

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(1)          The RONA Ranking for each company in the peer group and the Company
will be determined as follows:

 

•                  RONA for the term will be an average of the RONA calculated
for each year during the Performance Period. RONA for each year is calculated by
taking a company’s net income for the year and dividing it by the company’s
year-end Net Assets. Net Assets are defined as the company’s total assets minus
non-interest bearing current liabilities.

•                  Peer companies will be ranked from lowest to highest using
the above calculation.

•                  The Company’s RONA performance will be compared to the ranked
companies to determine the RONA Component Factor. For example, if the Company
ranked equivalent to a company that ranked in the 60th percentile, the RONA
Component Factor would be 100% of the target Award.

 

(2)          The following companies comprise the peer group:

 

 

Peer Group

 

 

Coachmen Industries Inc.

 

Fleetwood Enterprises

 

National RV Holdings Inc.

 

Thor Industries Inc.

 

Winnebago Industries

 

Dover Corporation

 

Greenbrier Companies

 

Oshkosh Truck Corp

 

Paccar Inc.

 

Trinity Industries

 

Artic Cat Inc.

 

Champion Enterprises Inc.

 

Baldor Electric

 

Cummins Inc.

 

Harley Davidson

 

Parker Hannifin Corp.

 

Polaris

 

Regal-Beloit Corp

 

Spartan Motors

 

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