**EXHIBIT 10.8**

 

**MONACO COACH CORPORATION**

 

**DIRECTOR OPTION AGREEMENT**

 

**INITIAL GRANT**

 

MonacoCoach Corporation, a Delaware corporation (the “Company”), has granted to                               (the “Optionee”), an option to purchase a total of eight thousand (8,000)shares of the Company’s Common Stock (the “Optioned Stock”), at the pricedetermined as provided herein, and in all respects subject to the terms,definitions and provisions of the Company’s Director Stock Plan (as amended May13, 2003) (the “Plan”) adopted by the Company which is incorporated herein byreference. The terms defined in the Plan shall have the same defined meaningsherein.

 

# 1.             Nature of the Option. This Option is a nonstatutory optionand is not intended to qualify for any special tax benefits to the Optionee.

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2.             ExercisePrice. The exercise price is                 for each share of Common Stock.

 

3.             Exerciseof Option. This Option shall be exercisable during its term in accordancewith the provisions of Section 11 of the Plan as follows:

 

(i)            Rightto Exercise.

 

### (a)           This Option shall become exercisable ininstallments cumulatively with respect to twenty percent (20%) of the OptionedStock one year after May 18, 2005 (the “Vesting Commencement Date”) if Optioneemaintains his Continuous Status as a Director, so that one hundred percent(100%) of the Optioned Stock shall be exercisable five years after the VestingCommencement Date if Optionee maintains his Continuous Status as a Director.

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(b)       ThisOption may not be exercised for a fraction of a share.

 

### (c)           In the event of Optionee’s death,disability, retirement or other termination of Continuous Status as a Director,the exercisability of the Option is governed by Section 11 of thisAgreement.

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(ii)           Methodof Exercise. This Option shall be exercisable by written notice which shallstate the election to exercise the Option and the number of Shares in respectof which the Option is being exercised. Such written notice, in the formattached hereto as Exhibit A, shall be signed by the Optionee and shall bedelivered in person or by certified mail to the Secretary of the Company. Thewritten notice shall be accompanied by payment of the exercise price.

 

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# 4.             Method of Payment. Payment of the exercise price shall beby any of the following, or a combination thereof, at the election of theOptionee:

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(i)            cash;

 

(ii)           check,or

 

(iii)          surrenderof other shares which (x) in the case of Shares acquired upon exercise ofan Option, have been owned by the Optionee for more than six (6) months on thedate of surrender, and (y) have a Fair Market Value on the date ofsurrender equal to the aggregate exercise price of the Shares as to which saidOption shall be exercised; or

 

(iv)          deliveryof a properly executed exercise notice together with such other documentationas the Company and the broker, if applicable, shall require to effect anexercise of the Option and delivery to the Company of the sale or loan proceedsrequired to pay the exercise price.

 

# 5.             Restrictions on Exercise. This Option may not be exercised if theissuance of such Shares upon such exercise or the method of payment ofconsideration for such shares would constitute a violation of any applicablefederal or state securities or other law or regulations, or if such issuancewould not comply with the requirements of any stock exchange upon which theShares may then be listed. As a condition to the exercise of this Option, theCompany may require Optionee to make any representation and warranty to theCompany as may be required by any applicable law or regulation.

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# 6.             Termination of Continuous Status as aDirector. In theevent Optionee’s Continuous Status as a Director terminates (other than uponthe Optionee’s death or permanent and total disability (as defined in Section22(e)(3) of the Code)), the Optionee may exercise his or her Option, but onlywithin three (3) months from the date of such termination, and only to theextent that the Optionee was entitled to exercise it at the date of suchtermination (but in no event later than the expiration of its ten (10) yearterm). To the extent that the Optionee was not entitled to exercise this Optionat the date of such termination, and to the extent that Optionee does notexercise this Option (to the extent otherwise so entitled) within the timespecified herein, the Option shall terminate.

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# 7.             Disability of Optionee. In the event Optionee’s ContinuousStatus as a Director terminates as a result of total and permanent disability(as defined in Section 22(e)(3) of the Code), the Option granted hereunder tosuch Optionee shall become vested and exercisable for the full number of Sharescovered by the Option. The Optionee may exercise his or her Option, at any timewithin twelve (12) months from the date of such termination (but in no eventlater than the expiration of the term of such Option as set forth in the Noticeof Grant). If, after termination, the Optionee does not exercise his or herOption within the time specified herein, the Option shall terminate, and theShares covered by such Option shall revert to the Plan.

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# 8.             Death of Optionee. In the event of the death of anOptionee, the Option shall become vested and exercisable for the full number ofShares covered by the Option. The Option held by the Optionee

 

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# at thetime of death may be exercised at any time within twelve (12) months followingthe date of death by the Optionee’s estate or by a person who acquired theright to exercise the Option by bequest or inheritance. In no event shall anOption be exercised later than the expiration of the term of the Option, as setforth in the Option agreement. If, after death, the Optionee’s estate or aperson who acquired the right to exercise the Option by bequest or inheritancedoes not exercise the Option within the time specified herein, the Option shallterminate, and the Shares covered by such Option shall revert to the Plan.

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# 9.             Retirement of Optionee. In the event of an Optionee’sRetirement while a Director, the Option shall become vested and exercisable forthe full number of Shares covered by the Option. The Option held by theOptionee at the time of Retirement may be exercised at any time withintwelve (12) months following the date of Retirement (but in no event laterthan the date of expiration of its ten (10) year term). If the Option isnot exercised within the time specified herein, the Option shall terminate.

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# 10.           Non-Transferability of Option. This Option may not be transferred inany manner otherwise than by will or by the laws of descent or distribution andmay be exercised during the lifetime of Optionee only by the Optionee. Theterms of this Option shall be binding upon the executors, administrators,heirs, successors and assigns of the Optionee.

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# 11.           Term of Option. This Option may not be exercised morethan ten (10) years from the Vesting Commencement Date of this Option, andmay be exercised during such period only in accordance with the Plan and theterms of this Option.

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# 12.           Taxation Upon Exercise of Option. Optionee understands that, uponexercise of this Option, he will recognize income for tax purposes in an amountequal to the excess of the then Fair Market Value of the Shares purchased overthe exercise price paid for such Shares. Since the Optionee is subject to Section 16(b)of the Securities Exchange Act of 1934, as amended, under certain limitedcircumstances the measurement and timing of such income (and the commencementof any capital gain holding period) may be deferred, and the Optionee isadvised to contact a tax advisor concerning the application of Section 83in general and the availability an 83(b) election in particular in connectionwith the exercise of the Option. Upon a resale of such Shares by the Optionee,any difference between the sale price and the Fair Market Value of the Shareson the date of exercise of the Option, to the extent not included in income asdescribed above, will be treated as capital gain or loss.

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| Dated: |   |                   |   | MONACO COACH CORPORATION, |
|--------|--------|------------------------|--------|---------------------------|
|   |   | a Delaware corporation |
|   |   |                   |
|   |   |                   |
|   |   | By:                    |   |

 

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Optionee acknowledgesreceipt of a copy of the Plan, a copy of which is annexed hereto, andrepresents that he is familiar with the terms and provisions thereof, andhereby accepts this Option subject to all of the terms and provisions thereof. Optioneehereby agrees to accept as binding, conclusive and final all decisions orinterpretations of the Board upon any questions arising under the Plan.

 
| Dated: |   |   |   |
|--------|--------|--------|--------|

 

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**EXHIBIT A**

** **

**MONACO COACH CORPORATION**

** **

**DIRECTOR STOCK OPTION EXERCISE NOTICE**

** **

# Attention:              Monaco Coach CorporationCorporate Secretary

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1.             Exercise of Option. The undersigned (“Optionee”)hereby elects to exercise Optionee’s option to purchase                 shares of the Common Stock (the “Shares”) of Monaco Coach Corporation (the “Company”)under and pursuant to the Company’s Director Stock Plan (as amended May 13,2003) (the “Plan”) and the Director Option Agreement dated                              (the “Agreement”).

 

2.             Representations of Optionee. Optionee acknowledges that Optionee hasreceived, read and understood the Agreement.

 

3.             Federal Restrictions on Transfer. Optionee understands that the Sharesmust be held indefinitely unless they are registered under the Securities Actof 1933, as amended (the “1933 Act”) or unless an exemption from suchregistration is available and that the certificate(s) representing the Sharesmay bear a legend to that effect. Optionee understands that the Company isunder no obligation to register the Shares and that an exemption may not beavailable or may not permit Optionee to transfer Shares in the amounts or atthe times proposed by Optionee.

 

4.             Tax Consequences. Optionee understands that Optionee maysuffer adverse tax consequences as a result of Optionee’s purchase ordisposition of the Shares. Optionee represents that Optionee has consulted withany tax consultant(s) Optionee deems advisable in connection with the purchaseor disposition of the Shares and that Optionee is not relying on the Companyfor any tax advice.

 

5.             Delivery of Payment. Optionee herewith delivers to theCompany the aggregate purchase price for the Shares that Optionee has electedto purchase and has made provision for the payment of any federal or statewithholding taxes required to be paid or withheld by the Company.

 

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6.             Entire Agreement. The Agreement and the Plan areincorporated herein by reference. This agreement, the Plan and the Agreementconstitute the entire agreement of the parties and supersede in their entiretyall prior undertakings and agreements of the Company and Optionee with respectto the subject matter hereof. This agreement, the Plan and the Agreement aregoverned by Delaware law except for that body of law pertaining to conflict oflaws.

 

 
| Submitted by: |   |   | Accepted by:             |
|---------------|--------|--------|--------------------------|
|          |   |   |                     |
| OPTIONEE:     |   |   | MONACO COACH CORPORATION |
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|          |   | By:    |                     |
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|          |   | Its:   |                     |
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| Address:      |   |   |                     |   |
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| Dated:        |   |   | Dated:                   |   |
|               |        |        |                          |  |  |  |

 

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