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PROMISSORY NOTE
(Revolving Note—Renewal)

$40,000,000 Eugene, Oregon November 30, 2000

PARTIES:

    MONACO COACH CORPORATION, a Delaware corporation (Borrower)

    U.S. BANK NATIONAL ASSOCIATION (Bank)

RECITAL:

    On August 25, 2000, Borrower executed and delivered to Bank a Promissory
Note (the Original Note) in the principal amount of Forty Million United States
Dollars ($40,000,000). The entire balance of the Original Note, principal and
interest, is due and payable no later than September 30, 2000. The parties
previously extended that due date to October 31, 2000 pursuant to a first
renewal note and then to November 30, 2000 pursuant to a second renewal note
(the Prior Renewal Notes). The parties desire to further extend that due date to
December 31, 2000, and this note is being executed for that purpose. This note
renews the Original Note and the Prior Renewal Notes, and shall not be deemed
payment or satisfaction of the indebtedness evidenced by those notes.

AGREEMENTS:

    1.  PROMISE TO PAY.  Upon demand, for value received, Borrower promises to
pay to Bank, or its order, the principal amount of Forty Million United States
Dollars ($40,000,000), or so much as may be outstanding, together with interest
on the unpaid principal balance of each Advance at the rate specified in this
note. Interest shall be calculated from the date of each Advance until repayment
of each Advance.

    2.  PAYMENT OF PRINCIPAL.  Borrower shall pay the Principal Balance of this
note on demand, or if no demand, on December 31, 2000.

    3.  INTEREST RATE AND PAYMENT OF INTEREST.  

    3.1.  DEFINITIONS.  As used in this note, the following terms have the
following meanings:

    a.  "Advance" means any one or more of the loans made by Bank to Borrower
pursuant to this note.

    b.  "Business Day" means any day other than a Saturday, Sunday or other day
that commercial banks in Portland, Oregon, Minneapolis, Minnesota, or New York,
New York, are authorized or required by law to close; provided, however, that
when determining a LIBOR Rate or the first day of a LIBOR Interest Period, or
when obtaining LIBOR Borrowing Rate quotes, such term shall also exclude any day
on which dealings in U.S. dollar deposits are not carried on in the London
interbank market.

    c.  "Dow Jones Page 3750" means the display designated as such on the Dow
Jones Markets Service (formerly known as Telerate) (or such other page as may
replace page 3750 on that service for the purpose of displaying London interbank
offered rates of major banks for United States Dollar deposits).

    d.  "Event of Default" means an event described in Paragraph 6.

    e.  "LIBOR Borrowing Rate" means the LIBOR Rate plus one percent (1.0%) per
annum. The LIBOR Borrowing Rate for each LIBOR Borrowing Rate Amount shall be
determined pursuant to Paragraph 3.3., as of the beginning of the applicable
LIBOR Interest Period, based on the then current LIBOR Rate, and, except as
provided in Paragraphs 3.3.c., 3.3.d. and 3.4., shall remain fixed during that
LIBOR Interest Period.

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    f.   "LIBOR Borrowing Rate Amount(s)" means those portions of the Principal
Balance that, at any time, are accruing interest at a LIBOR Borrowing Rate.

    g.  "LIBOR Interest Period" means, as to any LIBOR Borrowing Rate Amount, a
period of two weeks or one month commencing on the date the LIBOR Borrowing Rate
becomes applicable thereto; provided, however, that (1) the first day of each
LIBOR Interest Period must be a Business Day; (2) no LIBOR Interest Period shall
be selected which would extend beyond December 31, 2000; (3) any LIBOR Interest
Period which would otherwise expire on a day which is not a Business Day, shall
be extended to the next succeeding Business Day, unless the result of such
extension would be to extend such LIBOR Interest Period into another calendar
month, in which event the LIBOR Interest Period shall end on the immediately
preceding Business Day; and (4) any LIBOR Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such LIBOR
Interest Period) shall end on the last Business Day of a calendar month.

    h.  "LIBOR Rate" means, for any LIBOR Interest Period, the average offered
rate for deposits in United States Dollars (rounded upwards, if necessary, to
the nearest 1/16 of 1%) for delivery of such deposits on the first day of such
LIBOR Interest Period, for the period thereof, which appears on Dow Jones Page
3750 as of 11:00 a.m., London time (or such other time as of which such rate
appears) on the day that is two Business Days preceding the first day of such
LIBOR Interest Period; or the rate for such deposits determined by Bank at such
time based on such other published service of general application as shall be
selected by Bank for such purpose; provided, that in lieu of determining the
rate in the foregoing manner, Bank may determine the rate based on the rates
offered to Bank for deposits in United States Dollars (rounded upwards, if
necessary, to the nearest 1/16 of 1%) in the interbank eurodollar market at such
time for delivery on the first day of such LIBOR Interest Period for the period
thereof; provided, further, that because a two week LIBOR Rate is generally not
quoted in the marketplace, if Borrower requests a two week LIBOR Interest
Period, Bank may determine and use the one month LIBOR Rate for that LIBOR
Interest Period; and provided, further, that in any case the LIBOR Rate shall be
adjusted to take into account the maximum reserves required to be maintained for
Eurocurrency liabilities by banks during each such LIBOR Interest Period as
specified in Regulation D of the Board of Governors of the Federal Reserve
System or any successor regulation.

    i.   "Maturity" means the time when the entire unpaid Principal Balance of
this note becomes due and payable, whether by agreement, acceleration, demand or
otherwise.

    j.   "Prime Borrowing Rate" means a variable interest rate equal to the
Prime Rate minus three-quarters of one percent (0.75%) per annum. The Prime
Borrowing Rate shall be adjusted without notice effective on each day the Prime
Rate changes.

    k.  "Prime Rate" means the rate identified and publicly announced by Bank
from time to time as its prime rate and does not necessarily mean, for example,
the lowest rate of interest which Bank collects for any borrower or group of
borrowers.

    l.   "Prime Borrowing Rate Amount" means that portion of the Principal
Balance that, at any time, is accruing interest at the Prime Borrowing Rate.

    m.  "Principal Balance" means, at any time, the unpaid principal balance of
this note.

    n.  "Related Documents" means, without limitation, all loan agreements,
mortgages, deeds of trust, security agreements, guaranties and all other
instruments, agreements and documents, whether now or hereafter existing,
relating to the indebtedness evidenced by this note.

    3.2.  PRIME BORROWING RATE.  Except for portions of the Principal Balance
that are accruing interest at a LIBOR Borrowing Rate, Borrower shall pay
interest on the Principal

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Balance at the Prime Borrowing Rate. The Prime Borrowing Rate shall be adjusted
without notice effective on each day the Prime Rate changes.

    3.3.  LIBOR BORROWING RATE.  

    a.  Borrower may obtain LIBOR Borrowing Rate quotes from Bank between
8:00 a.m. and 10:00 a.m. (Portland, Oregon, time) on any Business Day. Borrower
may request a new Advance as a LIBOR Borrowing Rate Amount, conversion of a
portion of the Prime Borrowing Rate Amount to a LIBOR Borrowing Rate Amount, or
a new LIBOR Interest Period for a LIBOR Borrowing Rate Amount whose LIBOR
Interest Period is expiring, only by giving Bank notice in accordance with
Paragraph 3.3.b. not later than 10:00 a.m. on such date.

    b.  Whenever Borrower desires to use the LIBOR Borrowing Rate option,
Borrower shall give Bank irrevocable notice (either in writing or orally)
between 8:00 a.m. and 10:00 a.m. (Portland, Oregon, time) two (2) Business Days
in advance of the desired effective date of such rate. Any oral notice shall be
given by, and any written notice or confirmation of an oral notice shall be
signed by, any officer of Borrower or any other authorized person, and shall
specify the requested effective date of the rate, the LIBOR Interest Period and
LIBOR Borrowing Rate Amount, and whether Borrower is requesting a new Advance as
a LIBOR Borrowing Rate Amount, conversion of a portion of the Prime Borrowing
Rate Amount to a LIBOR Borrowing Rate Amount, or a new LIBOR Interest Period for
a LIBOR Borrowing Rate Amount whose LIBOR Interest Period is expiring. Bank may,
but need not, require that all oral notices be confirmed in writing.
Notwithstanding any other term of this note, Borrower may elect a LIBOR
Borrowing Rate Amount only in the minimum principal amount of Five Hundred
Thousand Dollars ($500,000) and in larger integral multiples of One Hundred
Thousand Dollars ($100,000). Except as provided in Paragraphs 3.3.c., 3.3.d. and
3.4., the LIBOR Borrowing Rate for each LIBOR Borrowing Rate Amount shall remain
fixed for the applicable LIBOR Interest Period.

    c.  If at any time Bank's LIBOR Rate is unascertainable or unavailable to
Bank or if LIBOR Rate loans become unlawful, the option to select the LIBOR
Borrowing Rate shall terminate immediately. If any LIBOR Borrowing Rates are
then in effect (i) each shall terminate automatically with respect to the
applicable LIBOR Borrowing Rate Amount (a) on the last day of the applicable
LIBOR Interest Period, if Bank may lawfully continue to maintain such loans, or
(b) immediately if Bank may not lawfully continue to maintain such loans through
such day, and (ii) the Prime Borrowing Rate automatically shall become effective
as to such amounts upon termination.

    d.  If at any time after the date of this note (i) any revision in or
adoption of any applicable law, rule or regulation or in the interpretation or
administration thereof (a) shall subject Bank or its Eurodollar lending office
to any tax, duty or other charge, or change the basis of taxation of payments to
Bank with respect to any loans bearing interest based on Bank's LIBOR Rate or
(b) shall impose or modify any reserve, insurance, special deposit or similar
requirements against assets of, deposits with or for the account of, or credit
extended by Bank or its Eurodollar lending office, or impose on Bank or its
Eurodollar lending office any other condition affecting any such loans, and
(ii) the result of the foregoing is (x) to increase the cost to Bank of making
or maintaining any such loans or (y) to reduce the amount of any sum receivable
under this note by Bank or its Eurodollar lending office, Borrower shall pay
Bank within fifteen (15) days after demand by Bank such additional amount as
will compensate Bank for such increased cost or reduction. The determination
hereunder by Bank of such additional amounts shall be conclusive in the absence
of manifest error. If Bank demands compensation under this paragraph, Borrower
may, upon three (3) Business Days' notice to Bank, pay the accrued interest on
all LIBOR Borrowing Rate Amounts as may be affected, together with any
additional amounts payable under Paragraph 3.3.e. Upon Borrower's paying such
accrued interest and additional costs, the Prime

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Borrowing Rate immediately shall be effective with respect to the unpaid
principal balance of such LIBOR Borrowing Rate Amounts.

    e.  Borrower will indemnify Bank upon demand against any loss or expense
which Bank may sustain or incur (including, without limitation, any loss or
expense sustained or incurred in obtaining, liquidating or employing deposits or
other funds acquired to effect, fund or maintain any portion of the loan or any
Advance) as a consequence of:

    (1) Any failure of Borrower to make any payment when due;

    (2) Any failure of Borrower to borrow, continue or prepay any LIBOR
Borrowing Rate Amount or to convert any portion of the Prime Borrowing Rate
Amount to a LIBOR Borrowing Rate Amount on a date specified in notice thereof;
or

    (3) Any payment or prepayment of a LIBOR Borrowing Rate Amount, termination
of the LIBOR Borrowing Rate or conversion of a LIBOR Borrowing Rate Amount to
the Prime Borrowing Rate on a day other than the last day of the applicable
LIBOR Interest Period (including as a result of acceleration or demand or
pursuant to Paragraph 3.3.c. or 3.3.d.).

Determinations by Bank of the amount required to indemnify Bank shall be
conclusive in the absence of manifest error.

    f.   Notwithstanding any provision of this note to the contrary, Bank shall
be entitled to fund and maintain its funding of all or any part of the loan
evidenced by this note in any manner it elects; it being understood, however,
that with respect to any LIBOR Borrowing Rate Amount, all determinations
hereunder shall be made as if Bank had actually funded and maintained each LIBOR
Borrowing Rate Amount during the LIBOR Interest Period applicable to it through
the purchase of deposits having a term corresponding to such LIBOR Interest
Period and bearing an interest rate equal to the LIBOR Rate for such LIBOR
Interest Period (whether or not Bank shall have granted any participations in
such LIBOR Amounts).

    g.  Notwithstanding any other term of this note, Borrower may not select the
LIBOR Borrowing Rate if an event has occurred that constitutes an Event of
Default or which, with notice or lapse of time, or both, would be an Event of
Default.

    h.  Nothing contained in this note, including without limitation the
determination of any LIBOR Interest Period or Bank's quotation of any LIBOR
Borrowing Rate, shall be construed to prejudice Bank's right, if any, to decline
to make any requested Advance or to require payment on demand.

    3.4.  DEFAULT INTEREST RATE.  Notwithstanding anything in this note to the
contrary, upon the occurrence of an Event of Default, the Prime Borrowing Rate
Amount shall thereafter accrue interest at a Prime Borrowing Rate equal to the
Prime Rate plus five percent (5%), and each outstanding LIBOR Borrowing Rate
Amount shall accrue interest at a LIBOR Borrowing Rate equal to the LIBOR Rate
previously determined by Bank for that LIBOR Borrowing Rate Amount plus six
percent (6%).

    3.5.  PAYMENT OF INTEREST.  Except for interest on LIBOR Borrowing Rate
Amounts, Borrower shall pay accrued interest on December 1, 2000, and at
Maturity. With respect to all LIBOR Borrowing Rate Amounts, accrued interest
shall be paid on the last day of the applicable LIBOR Interest Period, and at
Maturity.

    3.6.  COMPUTATION OF INTEREST.  All interest will be computed at the
applicable rate based on a three hundred sixty (360) day year and applied to the
actual number of days elapsed.

    3.7.  USURY.  Notwithstanding anything in this note to the contrary, at no
time shall the Prime Borrowing Rate or any LIBOR Borrowing Rate exceed the
maximum rate permitted by applicable law.

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    4.  LINE OF CREDIT.  This note evidences a revolving line of credit.
Advances under this note may be requested orally by Borrower, any officer of
Borrower or any other authorized person. Bank may, but need not, require that
all oral requests be confirmed in writing. All communications, instructions or
directions by telephone or otherwise to Bank are to be directed to the Eugene
office of Bank's Commercial Banking Division. Borrower agrees to be liable for
all sums either (a) advanced in accordance with the instructions of an
authorized person or (b) credited to any of Borrower's accounts with Bank,
regardless of the fact that persons other than those authorized to borrow have
authority to draw against the accounts. The Principal Balance may be evidenced
by endorsements on this note or by Bank's internal records, including daily
computer printouts. Borrower agrees that Bank is under no obligation and has not
committed to make any Advances hereunder. Each Advance hereunder shall be made
at the sole option of Bank.

    5.  LATE CHARGE.  If a payment is nineteen (19) or more days past due,
Borrower will pay a late charge of five percent (5%) of the delinquent payment,
but not more than the maximum amount authorized by law.

    6.  DEFAULT.  Each of the following shall constitute an Event of Default
under this note:

    6.1. Borrower fails to make any payment within five (5) days after it is
due.

    6.2. Any default under any Related Document or under any other agreement
between Bank and Borrower.

    7.  FEE.  Contemporaneously with the execution of this note, Borrower shall
pay to Bank a loan fee in the amount of Four Thousand One Hundred Sixty-Seven
Dollars ($4,167).

    8.  NOTICES.  Any notices required or permitted to be given under the terms
of this note shall be in writing and may be given by personal delivery;
first-class mail; certified mail, return receipt requested; or nationally
recognized overnight courier; directed to the parties at the following
addresses, or such other address as any party may designate in writing prior to
the time of the giving of such notice, or in any other manner authorized by law:

Borrower:
 
91320 Industrial Way
Coburg, Oregon 97408
Attn: John Nepute, President
Bank:
 
Oregon Commercial Banking
800 Willamette Street, Third Floor
P.O. Box 10553
Eugene, Oregon 97440
Attn: Ken Carson

Any notice given shall be effective when actually received; or if given by
certified mail, then forty-eight (48) hours after deposit of such notice in the
United States mail with postage prepaid; or if given by overnight courier, then
twenty-four (24) hours after the deposit of such notice with the overnight
courier with delivery charges prepaid.

    9.  ARBITRATION.  

    9.1. Either Bank or Borrower may require that all disputes, claims,
counterclaims and defenses, including those based on or arising from any alleged
tort ("Claims") relating in any way to this note or any transaction of which
this note is a part (the "Loan"), be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association and Title 9 of the U.S. Code. All Claims will be subject to the
statutes of limitation applicable if they were litigated. This provision is void
if the effect of the arbitration procedure (as opposed to any Claims of
Borrower) would be to materially impair Bank's ability to realize on any
collateral securing the Loan.

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    9.2. If arbitration occurs and each party's Claim is less than $100,000, one
neutral arbitrator will decide all issues; if any party's Claim is $100,000 or
more, three neutral arbitrators will decide all issues. All arbitrators will be
active Oregon State Bar members in good standing. All arbitration hearings will
be held in Eugene, Oregon. In addition to all other powers, the arbitrator(s)
shall have the exclusive right to determine all issues of arbitrability.
Judgment on any arbitration award may be entered in any court with jurisdiction.

    9.3. If either party institutes any judicial proceeding relating to the
Loan, such action shall not be a waiver of the right to submit any Claim to
arbitration. In addition, each has the right before, during and after any
arbitration to exercise any number of the following remedies, in any order or
concurrently: (i) setoff; (ii) self-help repossession; (iii) judicial or
non-judicial foreclosure against real or personal property collateral; and
(iv) provisional remedies, including injunction, appointment of receiver,
attachment, claim and delivery and replevin.

    10.  COLLECTION COSTS AND ATTORNEY FEES.  Borrower agrees to pay upon demand
all of Bank's reasonable costs and expenses, including attorneys' fees and
Bank's legal expenses, incurred in connection with the enforcement of this note.
Costs and expenses include Bank's attorneys' fees and legal expenses whether or
not there is a lawsuit, including attorneys' fees and legal expenses for
bankruptcy proceedings (and including efforts to modify or vacate any automatic
stay or injunction), appeals and any anticipated post-judgment collection
services. Borrower also shall pay all court costs and such additional fees as
may be directed by the court.

    11.  REQUESTS FOR ADVANCES AND RATES.  Borrower agrees that Lender shall
have no obligation to verify the identity of any person making any request
pursuant to this note, and Borrower assumes all risks of the validity and
authorization of such requests. Borrower promises to pay Bank, in accordance
with the provisions of this note, the Principal Balance together with interest
thereon and other sums due hereunder, although any requests may have been
submitted by a person or persons not authorized to do so.

    12.  WAIVERS.  Each maker, co-maker, endorser or guarantor of this note
waives diligence, demand, presentment for payment, notice of non-payment,
protest and notice of protest and consents to all extensions of time and
renewals hereof, whether or not the extensions or renewals are longer than the
original period of the note, to any exchange or release of any security for the
indebtedness evidenced by this note, and to any release of any party liable on
this note.

    13.  GENERAL PROVISIONS.  Time is of the essence of this note. All
obligations of any maker, co-maker, endorser or guarantor of this note are joint
and several. This note shall be governed by and construed and enforced in
accordance with the laws of the State of Oregon without regard to conflicts of
law principles. Bank's rights and remedies under this note are cumulative.

    14.  EXECUTION BY FACSIMILE; COUNTERPARTS.  This note may be executed in
several counterparts, each of which will be deemed to be an original and all of
which together constitute one and the same instrument. Delivery of an executed
copy of this note by telecopy, telex or other means of electronic communication
producing a printed copy will be deemed to be an execution and delivery of this
note on the date of such communication by the parties so delivering such a copy.
The party so delivering such a copy via electronic communication shall deliver
an executed original of this note to the other party within one week of the date
of delivery of the copy sent via electronic communication.

    15.  WARRANTY OF AUTHORITY.  The person executing this note on behalf of
Borrower personally represent and warrant that he is duly authorized to do so,
and that this note is enforceable against Borrower in accordance with its terms.

    16.  UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY
BANK AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH
ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR

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SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS
CONSIDERATION AND BE SIGNED BY BANK TO BE ENFORCEABLE.  

    MONACO COACH CORPORATION
 
 
By
 
/s/ KAY TOOLSON   

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Name: Kay Toolson
Title: Chairman and CEO

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ALLONGE TO PROMISSORY NOTE

    MONACO COACH CORPORATION, a Delaware corporation ("Borrower"), hereby amends
its November 30, 2000 Promissory Note (Revolving Note—Renewal) ("Note") in the
original principal amount of $40,000,000 payable to the order of U.S. Bank
National Association by deleting "December 31, 2000" from Section 2 and
replacing the deleted date with "January 12, 2001." In all other respects,
Borrower ratifies and confirms the Note and acknowledges that the Note remains
in full force and effect.

    Borrower hereby requests that this Allonge to Promissory Note be fastened to
the Note.

    Signed as of December 29, 2000.

        MONACO COACH CORPORATION
 
 
By:
 
/s/ KAY TOOLSON   

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Kay L. Toolson, Chief Executive Officer and Chairman of the Board

    This Allonge to Promissory Note is hereby accepted by U.S. Bank National
Association as of December 29, 2000.

 

 

U.S. Bank National Association
By: 

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Title: 

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