** **

**Exhibit 10.3.1**

** **

**MONACO COACH CORPORATION**

**1993 STOCK PLAN**

**PERFORMANCE SHARE**

**AGREEMENT**

** **

THISPERFORMANCE SHARE AGREEMENT (the “Agreement”) is effective as of (Date) (the “Dateof Grant”), between MONACO COACH CORPORATION (hereinafter called the “Company”)and (NAME)****(hereinafter called the “Participant”).  Unless otherwise definedherein, 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 atarget number of Performance Shares equal to (  #  ) under the Plan.  This Award relates to the Performance Periodfor fiscal years [2008-2010].  The number of Performance Shares that a Participant may earn will dependupon achievement of targets of Total Shareholder Return and Return on NetAssets for the Performance Period and will be determined in accordance with thePerformance Share Award Program, a copy of which is attached hereto as AppendixA.  In accordance with the Performance ShareAward Program, the number of the Performance Shares that Participant may earnwill range from zero percent (0%) of the target number of Performance Shares totwo hundred percent (200%) of the target number of Performance Shares.  The number of such Shares shall be determinedfollowing the end of the Performance Period, in accordance with the terms andconditions 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 PerformanceShare Award Program, Participant will have no right to payment of such Performance Shares.  Prior to actual payment of anyearned Performance Shares, such Performance Shares will represent an unsecured obligation. Payment of any earned Performance Shares shall be made in whole Sharesonly.

 

# Notwithstanding the foregoing provisions of this Section 2,in the event the Company (or the Subsidiary employing Participant) terminatesParticipant as an Employee without Cause or Participant ceases to be anEmployee as the result of Participant’s death or Disability, Participant willbe entitled to receive a pro-rated amount of the Performance Shares that wouldhave actually been earned during the Performance Period had Participantremained an Employee through the end of the Performance Period based on theamount of time Participant was an Employee during the Performance Period, whichwill be settled at the time they would have otherwise been paid pursuant to thePerformance Share Award Program.  Inaddition, in the event Participant ceases to be an Employee as the result ofhis or her Retirement, Participant will be entitled to receive 100% of thePerformance Shares that would have otherwise been earned under the PerformanceShare Award Program had Participant remained an Employee through the end of thePerformance Period, which will be settled at the time they would have otherwisebeen paid pursuant to the Performance Share Award Program.  In addition, in the event of a Change inControl that occurs during the Performance Period while Participant is anEmployee, a number of Performance Shares will be earned and paid out as if allperformance objectives under the Performance Share Award Program had beenearned at target, which will be settled upon consummation of the Change inControl.  Subject to the foregoingacceleration provisions and any such provisions set forth in the Plan, in the eventParticipant ceases to be an Employee for any or no reason before Participantearns the Performance Shares pursuant to this Award, the Performance ShareAward and Participant’s right to acquire any Shares hereunder will immediatelyterminate.

 

 

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Forpurposes of this Section 2, “Cause” is defined as (i) an act ofdishonesty made by Participant in connection with Participant’sresponsibilities as an Employee, (ii) Participant’s conviction of, or pleaof nolo contendere to, a felony, (iii) Participant’s grossmisconduct, or (iv) Participant’s continued substantial violations of hisemployment duties after Participant has received a demand for performance fromthe Company.

 

Forpurposes of this Section 2, “Change in Control” is defined as:

 

(i)        Any “person” (as suchterm is used in Sections 13(d) and 14(d) of the Securities ExchangeAct of 1934, as amended (the “Exchange Act”)) becomes the “beneficial owner”(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, ofsecurities of the Company representing more than fifty percent (50%) of thetotal voting power represented by the Company’s then outstanding voting; or

 

(ii)       A change in theownership of a substantial portion of the Company’s assets which occurs on thedate that any one person, or more than one person acting as a group acquires(or has acquired during the twelve (12) month period ending on the date of themost recent acquisition by such person or persons) assets from the Company thathave a total gross fair market value equal to or more than fifty percent (50%)of the total gross fair market value of all of the assets of the Companyimmediately prior to such acquisition; or

 

(iii)      A change in thecomposition of the Company’s Board of Directors (the “Board”) occurring withina twelve (12) month period, as a result of which fewer than a majority of thedirectors are Incumbent Directors.  “IncumbentDirectors” means directors who either (A) are Directors as of theeffective date of the Plan, or (B) are elected, or nominated for election,to the Board with the affirmative votes of at least a majority of the IncumbentDirectors at the time of such election or nomination (but will not include anindividual whose election or nomination is in connection with an actual orthreatened proxy contest relating to the election of directors to the Company);or

 

(iv)      Theconsummation of a merger or consolidation of the Company with any othercorporation, other than a merger or consolidation which would result in thevoting securities of the Company outstanding immediately prior theretocontinuing to represent (either by remaining outstanding or by being convertedinto voting securities of the surviving entity or its parent) fifty percent(50%) or more of the total voting power represented by the voting securities ofthe Company or such surviving entity or its parent outstanding immediatelyafter such merger or consolidation.

 

# 3.             **Payment after Earning**.  Any Performance Shares that are earned ordeemed earned in accordance with Section 2 will be paid to Participantduring the calendar year following the calendar year the Performance Periodexpires; provided, however, that Performance Shares shall be paid earlier upona Change in Control as provided in Section 2 of this Agreement.  Any Performance Shares that are earned or aredeemed earned in accordance with Section 2 will be paid to Participant (orin the event of Participant’s death, to his or her estate) in whole Shares,subject to Participant satisfying any applicable tax withholding obligations asset forth in Section 7.  Participant will notbe required to make any additional monetary payment (other than applicable taxwithholding, if any) upon settlement of the Award.

 

Notwithstandinganything in the Plan or this Agreement to the contrary, if the vestingof the balance, or some lesser portion of the balance, of the PerformanceShares is accelerated in connection with Participant’stermination as an Employee (provided that such termination is a “separation fromservice” within the meaning of Section 409A, as determined by theCompany), other than due to death**,**and if

 

 

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(i) Participant is a “specified employee” within themeaning of Section 409A at the time of such termination as an Employee,and (ii) the payment of such accelerated Performance Shares will result inthe imposition of additional tax under Section 409A if paid to Participanton or within the six (6) month period following Participant’s terminationas an Employee, then the payment of such accelerated Performance Shares willnot be made until the date six (6) months and one (1) day followingthe date of Participant’s termination as an Employee, unless the Participantdies following his or her termination as an Employee, in which case, thePerformance Shares will be paid in Shares to the Participant’s estate as soonas practicable following his or her death. It is the intent of this Agreement to comply with the requirements of Section 409Aso that none of the Performance Shares provided under this Agreement or Sharesissuable thereunder will be subject to the additional tax imposed under Section 409A,and any ambiguities herein will be interpreted to so comply.  For purposes of this Agreement, “Section 409A”means Section 409A of the Code, and any proposed, temporary or finalTreasury Regulations and Internal Revenue Service guidance thereunder, as eachmay be amended from time to time.

 

# 4.             **Paymentsafter Death**.  Any distributionor delivery to be made to Participant under this Agreement will, if Participantis then deceased, be made to Participant’s designated beneficiary, or if nobeneficiary survives Participant, the administrator or executor of Participant’sestate.  Any such transferee must furnishthe Company with (i) written notice of his or her status as transferee,and (ii) evidence satisfactory to the Company to establish the validity ofthe transfer and compliance with any laws or regulations pertaining to saidtransfer.

 

# 5.             **Rights as Stockholder**.  Except as set forth in Section 4,neither Participant nor any person claiming under or through Participant willhave any of the rights or privileges of a stockholder of the Company in respectof any Shares deliverable hereunder, unless and until certificates representingsuch Shares will have been issued, recorded on the records of the Company orits transfer agents or registrars, and delivered to Participant.

 

# 6.             **Effect on Employment**.  Participant acknowledges and agrees that thevesting of Performance Shares pursuant to Section 2 hereof is earned onlyby Participant continuing to be an Employee through the applicable vestingdates (and not through the act of being hired or acquiring Shareshereunder).  Participant furtheracknowledges and agrees that this Agreement, the transactions contemplatedhereunder and the vesting provisions set forth herein do not constitute anexpress or implied promise of Participant continuing to be an Employee for thevesting period, for any period, or at all, and will not interfere with theParticipant’s right or the right of the Company (or the Affiliate employingParticipant) to terminate Participant as an Employee at any time, with orwithout cause.

 

# 7.             **Tax Withholding**.  The Company will withhold otherwisedeliverable Shares having a Fair Market Value equal to the minimum amountrequired to be withheld with respect to any income, employment and other taxeswhich the Company determines must be withheld with respect to such Sharesissuable with respect to this Award.  Onlywhole Shares will be withheld to satisfy any tax withholding obligationspursuant to this Section 7.  At thediscretion of the Company, the Company will either (i) round down thenumber of Shares so withheld and Participant will pay to the Company an amountin cash sufficient to satisfy the remaining tax withholding due and payable asa result of the Company not retaining fractional Shares, or (ii) thenumber of Shares withheld will be rounded up to the nearest whole Share, with acash refund to Participant for any value of the Shares withheld in excess ofthe tax obligation (pursuant to such procedures as the Company may specify fromtime to time).  Should the Company rounddown the number of Shares withheld and is unable to procure the additional cashamounts from Participant, Participant agrees and acknowledges that Participantis giving the Company permission to withhold from Participant’spaycheck(s) or other compensation or remuneration an amount equal to theremaining tax withholding due

 

 

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# andpayable as a result of the Company not retaining fractional Shares.  Byaccepting this Award, Participant expressly consents to the withholding ofShares and to any additional cash withholding as provided for in this Section 7.

 

# 8.             **Additional Conditions to Issuance of Stock**.  If at any time the Company will determine, inits discretion, that the listing, registration or qualification of the Sharesupon any securities exchange or under any state or federal law, or the consentor approval of any governmental regulatory authority is necessary or desirableas a condition to the issuance of Shares to Participant (or his estate), suchissuance will not occur unless and until such listing, registration,qualification, consent or approval will have been effected or obtained free ofany conditions not acceptable to the Company. Where the Company determines that the delivery of the payment of anyShares will violate federal securities laws or other applicable laws, the Companywill defer delivery until the earliest date at which the Company reasonablyanticipates that the delivery of Shares will no longer cause suchviolation.  The Company will make allreasonable efforts to meet the requirements of any such state or federal law orsecurities exchange and to obtain any such consent or approval of any suchgovernmental authority.

 

# 9.             **Restrictions on Sale of Securities**.  Subject to Section 8, the Shares issuedas payment for vested Performance Shares awarded under this Agreement will beregistered under the federal securities laws and will be freely tradable uponreceipt.  However, Participant’ssubsequent sale of the Shares will be subject to any market blackout-periodthat may be imposed by the Company and must comply with the Company’s insidertrading policies, and any other applicable securities laws.

 

# 10.           **Successors**.  Subject to the limitation on thetransferability of this grant contained herein, this Agreement will be bindingupon 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 underthe terms of this Agreement will be addressed to the Company, in care of itSecretary at Monaco Coach Corporation, 91320 Coburg Industrial Way, Coburg,Oregon 97408, or at such other address as the Company may hereafter designatein writing.

 

# 12.           **Transferability**.  Except to the limited extent provided in Section 4,this grant and the rights and privileges conferred hereby will not betransferred, assigned, pledged or hypothecated in any way (whether by operationof law or otherwise) and will not be subject to sale under execution,attachment or similar process.  Upon anyattempt to transfer, assign, pledge, hypothecate or otherwise dispose of thisgrant, or any right or privilege conferred hereby, or upon any attempted saleunder any execution, attachment or similar process, this grant and the rightsand privileges conferred hereby immediately will become null and void.

 

# 13.           **Plan Governs**.  This Agreement is subject to all terms andprovisions of the Plan.  In the event ofa conflict between one or more provisions of this Agreement and one or moreprovisions of the Plan, the provisions of the Plan will govern.

 

# 14.           **Administrator Authority**.  The Administrator will have the power tointerpret the Plan and this Agreement and to adopt such rules for theadministration, interpretation and application of the Plan as are consistenttherewith and to interpret or revoke any such rules (including, but notlimited to, the determination of whether or not any Performance Shares havevested).  All actions taken and allinterpretations and determinations made by the Administrator in good faith willbe final and binding upon Participant, the Company and all other interestedpersons.  No member of the Administratorwill be

 

 

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# personally liable for any action, determination orinterpretation 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 thePlan or future Performance Shares that may be awarded under the Plan byelectronic means or request Participant’s consent to participate in the Plan byelectronic means.  Participant herebyconsents to receive such documents by electronic delivery and agrees toparticipate in the Plan through an on-line or electronic system established andmaintained by the Company or another third party designated by the Company.

 

# 16.           **Captions**.  Captions provided herein are for convenienceonly and are not to serve as a basis for interpretation or construction of thisAgreement.

 

# 17.           **Agreement Severable**.  In the event that any provision in thisAgreement will be held invalid or unenforceable, such provision will beseverable from, and such invalidity or unenforceability will not be construedto have any effect on, the remaining provisions of this Agreement.

 

# 18.           **Entire Agreement**.  This Agreement constitutes the entireunderstanding of the parties on the subjects covered.  The Participant expressly warrants that he orshe 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 entireunderstanding of the parties on the subjects covered.  The Participant expressly warrants that he orshe is not accepting this Agreement in reliance on any promises,representations, or inducements other than those contained herein.  Modifications to this Agreement or the Plancan be made only in an express written contract executed by a duly authorizedofficer of the Company.  Notwithstandinganything to the contrary in the Plan or this Agreement, the Company reservesthe right to revise this Agreement as it deems necessary or advisable, in itssole discretion and without the consent of Participant, to comply with Section 409Aof the Code or to otherwise avoid imposition of any additionaltax or income recognition under Section 409A of the Code prior to theactual payment of Shares pursuant to this Award of Performance Shares.

 

# 20.           **Amendment, Suspension or Termination of the Plan**.  By accepting this Award, the Participantexpressly warrants that he or she has received a right to acquire Shares underthe Plan, and has received, read and understood a description of the Plan.  The Participant understands that the Plan isdiscretionary in nature and may be modified, suspended or terminated by theCompany at any time.

 

# 21.           **Governing Law**.  This Agreement shall be governed by the lawsof the State of Oregon, without giving effect to the conflict of law principlesthereof.  For purposes of litigating anydispute that arises under this Award of Performance Shares or this Agreement,the parties hereby submit to and consent to the jurisdiction of the State ofOregon, and agree that such litigation shall be conducted in the courts of LaneCounty, Oregon, or the federal courts for the United States located in oraround Lane County, Oregon, and no other courts, where this Award ofPerformance Shares is made and/or to be performed.

 

 

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IN WITNESS WHEREOF, the parties have signed thisAgreement effective as of the date and yearindicated above.

 
|        | MONACO COACH CORPORATION |
|-------------|--------------------------|
|        |                     |
|        | By:                      |   |
|        |                     | Kay L. Toolson, Chairman and |
|        |                     | Chief Executive Officer |
|        |                     |
|        |                     |
|        |                     |
| ACCEPTED    |                     |   |
|        | Participant              |   |
|        |                     |
| PRINT NAME: |                     |   |
|        |                     |
| DATE:       |                     |   |

 

 

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**Appendix A**

 

**Monaco Coach Corporation**

 

**Performance Share Award Program**

 

***Introductory Note***

 

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

 

*The description provided herein sets forth the specificterms and conditions of the PSA Program covering eligibility, performancemeasures, Performance Period and other key factors not described in thePlan.  Each year when a new three-yearPerformance Period commences, the exhibits detailing the specific performancegoals for a Performance Period under the PSA Program will be updated.  Each participant in the PSA Program willreceive an agreement that defines the individual terms for participation in aPerformance Period.*

 

**Purpose**

 

Thepurpose of the PSA Program is to provide a means for rewarding executives fortheir success in driving long-term performance results, which increaseshareholder value.

 

**Eligibility**

 

AllCompany executives are eligible to participate in the PSA Program, unlessotherwise specifically excluded by the Compensation Committee of the Board (the“Committee”).  Each executiveparticipating in the PSA Program is referred to as a “Participant.”  To be eligible to receive an Award, anexecutive must be actively employed by the Company or a Subsidiary of theCompany on the date a Performance Period commences.  Participation for less than the fullPerformance Period under certain circumstances set forth herein or theoccurrence of a Change in Control will allow a Participant to receive all orportion of his or her Award for a particular Performance Period.  An employee who becomes an executive afterthe commencement of a Performance Period and within the first ninety (90) daysof such Performance Period may receive a pro-rated Award for such PerformancePeriod, as determined by the Committee (which employee’s target Awardopportunity must be established no later than the latest possible date thatwill not jeopardize such employee’s Award qualification as performance basedcompensation under Section 162(m) of the Internal Revenue Code of1986 as amended).

 

**Termination of Employment and Change in Control**

 

Inthe event the Company (or the Subsidiary employing a Participant) terminates aParticipant as an Employee without Cause or Participant ceases to be anEmployee as the result of Participant’s death or Disability, Participant willbe entitled to receive a pro-

 

 

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ratedamount of the Award that would have actually been earned during the PerformancePeriod had Participant remained an Employee through the end of the PerformancePeriod based on the amount of time Participant was an Employee during thePerformance Period, which will be settled at the time it would have otherwisebeen paid had Participant remained employed through the end of the PerformancePeriod.  In addition, in the event aParticipant 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 haveotherwise been earned had Participant remained employed through the end of thePerformance Period, which will be settled at the time it would have otherwisebeen paid had Participant remained employed through the end of the PerformancePeriod.  In addition, in the event of aChange in Control that occurs during the Performance Period while a Participantis an Employee, an Award will be deemed earned and paid out as if allperformance objectives under the Performance Share Award Program had beenearned at target, which will be settled upon consummation of the Change inControl.  Subject to the foregoingacceleration provisions and any such provisions set forth in the Plan, in theevent Participant ceases to be an Employee for any or no reason beforeParticipant earns any portion of an Award, the Award and Participant’s right toacquire any Shares thereunder will immediately terminate.

 

Notwithstandinganything in this PSA Program or the Plan to the contrary, if the vesting of thebalance, or some lesser portion of the balance, of an Award is accelerated inconnection with Participant’s termination as an Employee (provided that suchtermination is a “ separation from service” within the meaning of Section 409A,as determined by the Company), other than due to death**,** and if (i) Participant is a “specifiedemployee” within the meaning of Section 409A at the time of suchtermination as an Employee, and (ii) the payment of such accelerated Awardwill result in the imposition of additional tax under Section 409A if paidto Participant on or within the six (6) month period following Participant’stermination as an Employee, then the payment of such accelerated Award will notbe made until the date six (6) months and one (1) day following thedate of Participant’s termination as an Employee, unless the Participant diesfollowing his or her termination as an Employee, in which case, the Award willbe paid in Shares to the Participant’s estate as soon as practicable followinghis or her death.  It is the intent ofthis PSA Program to comply with the requirements of Section 409A so thatnone of the Awards provided under this PSA Program or Shares issuable pursuantto Awards made thereunder will be subject to the additional tax imposed under Section 409A,and any ambiguities herein will be interpreted to so comply.  For purposes of this Agreement, “Section 409A”means Section 409A of the Code, and any proposed, temporary or finalTreasury Regulations and Internal Revenue Service guidance thereunder, as eachmay be amended from time to time.

 

**Performance Period**

 

APerformance Period will coincide with each fiscal year and will continue for a3 year period, unless otherwise specified. Each year a new three-yearPerformance Period will commence.

 

 

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**Award**

 

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

 

**Performance Goals**

 

Participantswill have their actual Award payment determined based upon the Company’sperformance.  The performance goalsestablished for a Performance Period and the formula for determining the “PerformanceShare Award Factor,” as defined below, will be displayed in Exhibit A.

 

**PSA Program Award Formula**

 

Participantsare limited to a maximum Award equal to 200% of the target Award establishedfor each Participant by the Committee. Final Awards will be distributed in shares of the Company’s CommonStock.  The Performance Share AwardFactor is the combined performance level achieved by the Company against the two target measuresof Total Shareholder Return (“TSR”) and Return on Net Assets (“RONA”).

 

| PSA Factors (TSR &  RONA) | X |  Participant’s  Target Award   (Base Pay x Target percent    ÷ by Stock Price on Award Date) | = |  Final    Performance    Share Award |
|------------------------------------|---|-----------------------------------------------------------------------------------------------------------------------|---|-----------------------------------------------------|

 

The Award formula isprovided below:

 

**Tax Withholding**

 

Thefull value of the shares of Common Stock paid pursuant to an Award isconsidered wages and is therefore subject to tax withholding at the time ofsettlement.  To satisfy such taxwithholding obligations, the Company, in its sole discretion and pursuant tosuch procedures as it may specify from time to time, may permit a Participantto satisfy such tax withholding obligation, in whole or in part by one or moreof the following (without limitation): (i) paying cash, (ii) electingto have the Company withhold otherwise deliverable Shares having a Fair MarketValue equal to the minimum amount required to be withheld, (iii) deliveringto the Company already vested and owned Shares having a Fair Market Value equalto the amount  required to be withheld,or (iv) selling a sufficient number of such Shares otherwise deliverableto Participant through such means as the Company may determine in its solediscretion (whether through a broker or otherwise) equal to the amount requiredto be withheld.  If a Participant failsto make satisfactory arrangements for the payment of any required tax withholdingobligations at the time the Award is otherwise scheduled to vest, the Companywill, in its discretion, have the right (but not the obligation) to satisfy anytax withholding obligations by either

 

 

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(i) reducingthe number of Shares otherwisde deliverable having a Fair Market Value equal tothe minimum amount required to be withheld, or (ii) selling a sufficientnumber of Shares otherwise deliverable on a Participant’s behalf through abroker or such other means as the Company may determine equal to the amountrequired to be withheld.

 

**Audit and Approval of Awards**

 

TheChief Financial Officer will review the financial calculations necessary todetermine 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 topayout.  Notwithstanding any contraryprovision of this PSA Program, the Committee, in its sole discretion, mayeliminate or reduce an actual Award payable to any Participant below that whichotherwise would be payable under the Award formula.

 

**Payment**

 

Awardswill be paid as soon as practicable following the completion of the PerformancePeriod and after the Committee has certified in writing that the performancegoals and other material terms are satisfied. Payment will be made in whole Shares with any fractional Shares to berounded up to the nearest whole Share.

 

## **Definitions**

 

“PerformanceShare Award Factor” means the measure used to calculate theparticipants payout determined by Company performance using Total ShareholderReturn (TSR) and Return on Net Assets (RONA) performance measures — see Exhibit Aattached.

 

## “Retirement” meansan Employee who retires on or after age sixty-two (62) and such individual hasbeen 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**

 

Thefollowing formula will be used to determine the PSA Factor at the end of thePerformance Periods

 

 

**TSRComponent Factor**

** **

The following table represents the amount of the TSR Component Factorearned, 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 Rankingfor each company in the peer group and the Company will be determined asfollows:

 

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

 

·                  The Company’sTSR performance will be ranked with a peer group of companies to determine theTSR Component Factor.  For example, ifthe Company ranked in the 50th percentile, the TSR Component Factorwould be 75% of the target Award.

 

 

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·                  If the Company’sTSR falls between the levels shown, the TSR Factor will be interpolated.

 

(2)          The followingcompanies 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                        |
|       | Arctic  Cat Inc.                           |
|       | Champion  Enterprises Inc.                 |
|       | Baldor  Electric                           |
|       | Cummins  Inc.                              |
|       | Harley  Davidson                           |
|       | Parker  Hannifin Corp.                     |
|       | Polaris                                    |
|       | Regal-Beloit  Corp                         |
|       | Spartan  Motors                            |

 

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* Company will be removed from peer group forpurposes of calculating Awards for Performance Periods beginning after 2007.

 

**Return on Net Assets Factor**

** **

TheCompany must achieve an annual average rate of Return on Net Assets (“RONA”) ofat least 1**%** for the PerformancePeriod 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 groupand the Company will be determined as follows:

 

 

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·                  RONA for theterm will be an average of the RONA calculated for each year during thePerformance Period.  RONA for each yearis calculated by taking a company’s net income for the year and dividing it bythe company’s year-end Net Assets.  NetAssets are defined as the company’s total assets minus non-interest bearingcurrent liabilities.

 

·                  The Company’sRONA performance will be ranked with a peer group of companies to determine theRONA Component Factor.  For example, ifthe Company ranked in the 60th percentile, the RONA Component Factorwould be 100% of the target Award.

 

(2)          The following companiescomprise 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                        |
|       | Arctic  Cat Inc.                           |
|       | Champion  Enterprises Inc.                 |
|       | Baldor  Electric                           |
|       | Cummins  Inc.                              |
|       | Harley  Davidson                           |
|       | Parker  Hannifin Corp.                     |
|       | Polaris                                    |
|       | Regal-Beloit  Corp                         |
|       | Spartan  Motors                            |

 

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* Company will be removed from peer group for purposes of calculatingAwards for Performance Periods beginning after 2007.

 

8

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