**Exhibit 10.3.1**

**MONACO COACH CORPORATION**

**1993 STOCK PLAN**

**PERFORMANCE SHARE**

**AGREEMENT**

THIS PERFORMANCESHARE 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”).  Unlessotherwise defined herein, the terms defined in the amended and restated 1993Stock Plan (the “Plan”) will have the same defined meanings in this Agreement.

# 1.             **Award Grant**.  TheCompany hereby awards to Participant a target number of Performance Sharesequal to (   #  ) under the Plan.  This Award relates to the Performance Periodfor fiscal years 2007-2009.  The number of Performance Shares that aParticipant may earn will depend upon achievement of targets of TotalShareholder Return and Return on Net Assets for the Performance Period and willbe determined in accordance with the Performance Share Award Program, a copy ofwhich is attached hereto as Appendix A. In accordance with the Performance Share Award Program, the number ofthe 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 thePerformance Period, in accordance with the terms and conditions set forth inthe Performance Share Award Program.

# 2.             **Obligation to Pay**.  Each Performance Share represents the right to receive one Share tothe extent it is earned.  Unless anduntil the Performance Shares areearned in the manner set forth in Section 1 and the Performance ShareAward Program, Participant will have no right to payment of such PerformanceShares. Prior to actual payment of any earned Performance Shares, such Performance Shares will represent an unsecuredobligation.  Payment of any earnedPerformance Shares shall be made in whole Shares only.  Notwithstanding the foregoing provisions ofthis Section 2, in the event the Company (or the Subsidiary employingParticipant) terminates Participant as an Employee without Cause or Participantceases 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 PerformanceShares that would have actually been earned during the Performance Period hadParticipant remained an Employee through the end of the Performance Periodbased on the amount of time Participant was an Employee during the PerformancePeriod, which will be settled at the time they would have otherwise been paidpursuant to the Performance Share Award Program.  In addition, in the event Participant ceasesto be an Employee as the result of his or her Retirement, Participant will beentitled to receive 100% of the Performance Shares that would have otherwisebeen earned under the Performance Share Award Program had Participant remainedan Employee through the end of the Performance Period, which will be settled atthe time they would have otherwise been paid pursuant to the Performance ShareAward Program.  In addition, in the eventof a Change in Control that occurs during the Performance Period whileParticipant is an Employee, a number of Performance Shares will be earned andpaid out as if all performance objectives under the Performance Share AwardProgram had been earned at target, which will be settled upon consummation ofthe Change in Control.  Subject to theforegoing acceleration provisions and any such provisions set forth in thePlan, in the event Participant ceases to be an Employee for any or no reasonbefore Participant earns the Performance Shares pursuant to this Award, thePerformance Share Award and Participant’s right to acquire any Shares hereunderwill immediately terminate.

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Forpurposes of this Section 2, “Cause” is defined as (i) an act of dishonestymade by Participant in connection with Participant’s responsibilities as anEmployee, (ii) Participant’s conviction of, or plea of nolo contendereto, a felony, (iii) Participant’s gross misconduct, or(iv) Participant’s continued substantial violations of his employmentduties after Participant has received a demand for performance from theCompany.

# 3.             **Payment after Earning**.  AnyPerformance Shares that are earned or are deemed earned in accordance withSection 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 anyapplicable tax withholding obligations as set forth in Section 7.  Notwithstanding the foregoing sentence, tothe extent necessary to avoid the imposition of any additional tax or incomerecognition under Section 409A of the Code prior to or upon the actual paymentof Shares pursuant to this Award of PerformanceShares 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 thansix (6) months and one (1) day following the date of Participant’s terminationof employment with the Company (or any Affiliate), subject to Section 7.  Participant will not be required tomake any additional monetary payment (other than applicable tax withholding, ifany) upon settlement of the Award.  

# 4.             **Payments after Death**.  Any distribution or delivery to be made toParticipant under this Agreement will, if Participant is then deceased, be madeto Participant’s designated beneficiary, or if no beneficiary survivesParticipant, 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 thetransfer 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 personclaiming under or through Participant will have any of the rights or privilegesof 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 PerformanceShares pursuant to Section 2 hereof is earned only by Participant continuing tobe an Employee through the applicable vesting dates (and not through the act ofbeing hired or acquiring Shares hereunder). Participant further acknowledges and agrees that this Agreement, thetransactions contemplated hereunder and the vesting provisions set forth hereindo not constitute an express or implied promise of Participant continuing to bean Employee for the vesting period, for any period, or at all, and will notinterfere with the Participant’s right or the right of the Company (or theAffiliate employing Participant) to terminate Participant as an Employee at anytime, with or without cause.

# 7.             **Tax Withholding**.  Notwithstandingany contrary provision of this Agreement, no certificate representing Shareswill be issued to Participant, unless and until satisfactory arrangements (asdetermined by the Administrator) will have been made by Participant withrespect to the payment of income, employment and other taxes which the Companydetermines must be withheld with respect to such Shares so issuable.  All income, employment and other taxesrelated to the Performance Share Award and any Shares delivered in paymentthereof are the sole responsibility of Participant.  The Administrator, in its sole discretion andpursuant to such procedures as it may specify from time to time, may permitParticipant to satisfy such tax withholding obligation, in whole or in part byone or more of the following (without limitation): (a) paying cash,(b) electing to have the Company withhold otherwise deliverable Shareshaving a Fair Market Value equal to the amount required to be withheld,(c) delivering to the Company already 

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# vested and owned Shareshaving a Fair Market Value equal to the amount required to be withheld, or(d) selling a sufficient number of such Shares otherwise deliverable toParticipant 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 Participant fails tomake satisfactory arrangements for the payment of any required tax withholdingobligations hereunder at the time this Award is otherwise scheduled to vestpursuant to Section 2, Participant will permanently forfeit the portion of theAward that so vests and the right to receive any Shares with respect theretoand the Award will be returned to the Company at no cost to the Company.

# 8.                     **Additional Conditions to Issuanceof 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, theCompany will defer delivery until the earliest date at which the Companyreasonably anticipates 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 ofSecurities**.  Subject to Section 8, the Shares issued aspayment 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 the transferability of this grant containedherein, this Agreement will be binding upon and inure to the benefit of theheirs, legatees, legal representatives, successors and assigns of the partieshereto.

# 11.                  **Address for Notices**.  Anynotice to be given to the Company under the terms of this Agreement will beaddressed to the Company, in care of it Secretary at Monaco Coach Corporation,91320 Coburg Industrial Way, Coburg, Oregon 97408, or at such other address asthe Company may hereafter designate in writing.

# 12.                  **Transferability**. Except to the limited extent provided in Section 4, this grant andthe 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 similarprocess.  Upon any attempt to transfer,assign, pledge, hypothecate or otherwise dispose of this grant, or any right orprivilege conferred hereby, or upon any attempted sale under any execution,attachment or similar process, this grant and the rights and privilegesconferred hereby immediately will become null and void.

# 13.                  **Plan Governs**.  ThisAgreement is subject to all terms and provisions of the Plan.  In the event of a conflict between one ormore provisions of this Agreement and one or more provisions of the Plan, theprovisions of the Plan will govern.

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# 14.                  **Administrator Authority**.  TheAdministrator will have the power to interpret the Plan and this Agreement andto adopt such rules for the administration, interpretation and application ofthe Plan as are consistent therewith and to interpret or revoke any such rules(including, but not limited to, the determination of whether or not anyPerformance Shares have vested).  All actionstaken and all interpretations and determinations made by the Administrator ingood faith will be final and binding upon Participant, the Company and allother interested persons.  No member ofthe Administrator will be personally liable for any action, determination orinterpretation made in good faith with respect to the Plan or this Agreement.

# 15.                  **Electronic Delivery**.  TheCompany may, in its sole discretion, decide to deliver any documents related toPerformance Shares awarded under the Plan or future Performance Shares that maybe awarded under the Plan by electronic means or request Participant’s consentto participate in the Plan by electronic means. Participant hereby consents to receive such documents by electronicdelivery and agrees to participate in the Plan through an on-line or electronicsystem established and maintained by the Company or another third partydesignated by the Company.

# 16.                  **Captions**. Captions provided herein are for convenience only and are not to serveas a basis for interpretation or construction of this Agreement.

# 17.                  **Agreement Severable**.  Inthe event that any provision in this Agreement will be held invalid orunenforceable, such provision will be severable from, and such invalidity orunenforceability will not be construed to have any effect on, the remainingprovisions of this Agreement.

# 18.           **Entire Agreement**.  ThisAgreement constitutes the entire understanding of the parties on the subjectscovered.  The Participant expresslywarrants that he or she is not executing this Agreement in reliance on anypromises, representations, or inducements other than those contained herein.

# 19.           **Modifications to the Agreement**.  ThisAgreement constitutes the entire understanding of the parties on the subjectscovered.  The Participant expresslywarrants that he or she is not accepting this Agreement in reliance on anypromises, representations, or inducements other than those containedherein.  Modifications to this Agreementor the Plan can be made only in an express written contract executed by a dulyauthorized 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 necessaryor advisable, in its sole discretion and without the consent of Participant, tocomply with Section 409A of the Code or to otherwise avoid imposition of any additional tax or incomerecognition under Section 409A of the Code prior to the actual payment ofShares pursuant to this Award of Performance Shares.

# 20.                  **Amendment, Suspension orTermination 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**.  ThisAgreement shall be governed by the laws of the State of Oregon, without givingeffect to the conflict of law principles thereof.  For purposes of litigating any dispute thatarises under this Award of Performance Shares or this Agreement, the partieshereby submit to and consent to the jurisdiction of the State of Oregon**,** and agree that such litigation shall be conducted in thecourts of Lane County, Oregon, or the federal courts for the United Stateslocated in or around Lane County, Oregon, and no other courts, where this Awardof Performance 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:                       |   |   |
|        |                      |   Chairman  and Chief Executive Officer |
|        |                      |
| ACCEPTED    |                      |   |
|        |   Participant   |   |
|        |                      |   |
|        |                      |
| PRINT NAME: |                      |   |
|        |                      |   |
|        |                      |
|        |                      |
| DATE:       |                      |   |
|             |                           |  |  |  |  |  |

 

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**AppendixA**

PERFORMANCE SHAREAWARD PROGRAM

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**Monaco Coach Corporation**

**Performance Share Award Program**

***IntroductoryNote***

*The following Performance ShareAward 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 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 hereinsets forth the specific terms and conditions of the PSA Program coveringeligibility, performance measures, Performance Period and other key factors notdescribed in the Plan.  Each year when anew three-year Performance Period commences, the exhibits detailing thespecific performance goals for a Performance Period under the PSA Program willbe updated.  Each participant in the PSAProgram will receive an agreement that defines the individual terms forparticipation in a Performance Period.*

**Purpose**

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

**Eligibility**

All Company executivesare eligible to participate in the PSA Program, unless otherwise specificallyexcluded by the Compensation Committee of the Board (the “Committee”).  Each executive participating in the PSAProgram is referred to as a “Participant.” To be eligible to receive an Award, an executive must be activelyemployed by the Company or a Subsidiary of the Company on the date aPerformance Period commences. Participation for less than the full Performance Period under certaincircumstances set forth herein or the occurrence of a Change in Control willallow a Participant to receive all or portion of his or her Award for aparticular Performance Period.  Anemployee who becomes an executive after the commencement of a PerformancePeriod and within the first ninety (90) days of such Performance Period mayreceive a pro-rated Award for such Performance Period, as determined by theCommittee (which employee’s target Award opportunity must be established nolater than the latest possible date that will not jeopardize such employee’sAward qualification as performance based compensation under Section 162(m) ofthe Internal Revenue Code of 1986 as amended).

**Termination of Employment andChange in Control**

In the event the Company(or the Subsidiary employing a Participant) terminates a Participant as anEmployee without Cause or Participant ceases to be an Employee as the result ofParticipant’s death or Disability, Participant will be entitled to receive apro-rated amount of the Award that would have actually been earned during thePerformance Period had Participant remained an Employee through the end of thePerformance Period based on the amount of time Participant was an Employeeduring the Performance Period, which will be settled at the time it would haveotherwise been paid had Participant remained employed through the end of thePerformance Period.  In addition, in theevent a Participant ceases to be an Employee as the result of his or herRetirement, Participant will be entitled to receive 100% of the Award that 

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would have otherwise beenearned had Participant remained employed through the end of the PerformancePeriod, which will be settled at the time it would have otherwise been paid hadParticipant remained employed through the end of the Performance Period.  In addition, in the event of a Change inControl that occurs during the Performance Period while a Participant is anEmployee, an Award will be deemed earned and paid out as if all performanceobjectives 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 accelerationprovisions and any such provisions set forth in the Plan, in the eventParticipant ceases to be an Employee for any or no reason before Participantearns any portion of an Award, the Award and Participant’s right to acquire anyShares thereunder will immediately terminate.

**Performance Period**

A Performance Period willcoincide with each fiscal year and will continue for a 3 year period, unlessotherwise specified. Each year a new three-year Performance Period willcommence.

**Award**

Each Participant in thePSA Program has a target Award opportunity for the Performance Period, whichmust be established no later than the latest possible date that will notjeopardize an Award’s qualification as performance based compensation underSection 162(m) of the Internal Revenue Code of 1986 as amended.  This target is determined by theCommittee.  The Award opportunity isestablished for each executive pay grade level considering competitiveperformance share award opportunities for comparable positions.

**Performance Goals**

Participants will havetheir 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**

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

The Award formula isprovided 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 |
|-------------------------------------|--------|---|--------|----------------------------------------------------------------------------------------------------|--------|---|--------|---------------------------------|

 

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**Tax Withholding**

The full value of theshares of Common Stock paid pursuant to an Award is considered wages and istherefore 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 satisfysuch tax withholding obligation, or he or she may provide cash payment to coversuch tax withholding obligation.

**Audit and Approval of Awards**

The CorporateController will review the financial calculations necessary to determine theperformance against TSR and RONA measures as shown in Exhibit A, as well asother steps in determining the actual Award for each Participant, before Awardsare settled. The Committee will approve all Awards prior to payout.  Notwithstanding any contrary provision ofthis PSA Program, the Committee, in its sole discretion, may eliminate orreduce an actual Award payable to any Participant below that which otherwisewould be payable under the Award formula.

**Payment**

Awards will be paid assoon as practicable following the completion of the Performance Period andafter the Committee has certified in writing that the performance goals andother material terms are satisfied.

## **Definitions**

“Performance Share AwardFactor” means the measure used to calculate the participantspayout 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 suchindividual has been an Employee at least five (5) years at the date ofretirement.

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EXHIBIT A

2006 Performance CriteriaTwo and Three Year 2006 Performance Periods

**Formulafor Calculating the Performance Share Award Factor**

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

|   |   | Total  shareholder    |   |   |   |   | Return on Net  Asset |   |       |   |
|--------|--------|-----------------------|--------|--------|--------|--------|----------------------|--------|------------|--------|
| [ 50%  | x      | Return Component  ]   | +      |   | [ 50%  | x      | Component Factor  ]  | =      | PSA Factor |   |
|   |   | Factor  0 – 200% |   |   |   |   | 0 - 200%             |   |       |   |

 

**TSR Component Factor**

The followingtable represents the amount of the TSR Component Factor earned, based on TotalShareholder 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 eachcompany in the peer group and the Company will be determined as follows:

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

·      Peer companies will be ranked from lowest tohighest using the above calculation.

·      The Company’s TSR performance will be compared tothe ranked companies to determine the TSR Component Factor.  For example, if the Company ranked equivalentto a company that ranked in the 50th percentile, the TSR Component Factor would be75% of the target Award.

·      Ifthe Company’s TSR falls between the levels shown, the TSR Factor will beinterpolated.

(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

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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**Returnon Net Assets Factor**

The Company must achievean annual average rate of Return on Net Assets (“RONA”) of at least 1**%** for the Performance Period before any Award from the RONAComponent 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 eachcompany in the peer group and the Company will be determined as follows:

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

·      Peer companies will be ranked from lowest tohighest using the above calculation.

·      TheCompany’s RONA performance will be compared to the ranked companies todetermine the RONA Component Factor.  Forexample, if the Company ranked equivalent to a company that ranked in the 60th percentile, the RONA Component Factor would be100% 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

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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