Document:

Exhibit 10.4

EMPLOYMENT AGREEMENT

 

AGREEMENT,
dated as of          , 2007,
between GENERAL PHYSICS CORPORATION, a Delaware corporation with principal
executive offices at 6095 Marshalee Drive, Suite 300, Elkridge, Maryland
21075 (the “Company”), and [EMPLOYEE], residing at [                              ]
(“Employee”).

 

W I T N E S S
E T H

 

WHEREAS, the
Company desires to employ Employee to perform services for the Company,
and any successor or assign of the Company, and Employee desires to perform such
services, subject to the terms and conditions set forth in this Agreement.

 

NOW,
THEREFORE, in consideration of the premises, the mutual promises, covenants,
and conditions herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto intending to be legally bound hereby agree as follows:

 

1.                                       Term.
The Company agrees
to employ Employee, and Employee agrees to serve, on the terms and conditions
of this Agreement, for a period commencing on the date of this Agreement and
ending on February 28, 2009, or such shorter period as may be
provided for herein (the “Employment
Period”); however,
unless the Company or Employee has notified the other at least twelve (12)
months prior to February 28, 2009 that it or he/she does not wish to extend
the Employment Period, this Agreement and the Employment Period shall automatically
be extended and end on the earlier of (a) the date determined in
accordance with Section 9 below, (b) the date which is not less than twelve
(12) months after Company or Employee has given written notice to the other of
its decision to end the Employment Period, or (c) the date mutually agreed
in writing by Company and Employee.

 

2.                                       Duties
and Services. During the Employment Period,
Employee shall be employed in the business of the Company as Senior Vice
President together with such other capacity or capacities as shall be assigned
to Employee by the President, Chief Executive Officer or Board of Directors of
the Company (the “Board”) that are consistent with being an executive of the
Company. In performance of his/her duties, Employee shall be subject to the
direction of the President, Chief
Executive Officer or another senior executive of the Company as designated by
the President, Chief Executive Officer or Board. Employee agrees to his/her
employment as described in this Section 2 and, subject to any qualifications and limitations set forth herein, the
Employee agrees to devote all of his/her business time and efforts to
the performance of his/her duties under this Agreement and to promote and
advance the business interests of the Company. Employee shall comply with the
policies and procedures of the Company adopted from time to time. Employee
shall be based in the [            ]
metropolitan area, but otherwise available to travel as the needs of the
business reasonably require.

 

3.                                       Compensation. As full compensation for his/her services
hereunder, the Company shall provide Employee during the Employment Period the
following:

 

(a)                                  Base Salary. During the Employment Period, the Company shall
pay to Employee a base annual salary at the rate paid by the Company to
Employee immediately prior to the Employment Period, payable at such intervals
(at least monthly) as salaries are paid 

 

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generally to
other employees of the Company. The base salary shall be reviewed annually on
or about March 1 and subject to such increase as shall be determined by
the Board. During any period in which Employee is eligible to receive salary
replacement payments under the provisions of any benefits plan(s) sponsored or
maintained by the Company, the Company’s obligation to pay salary shall be
reduced by an amount equal to the amount of benefits paid or payable under such
plan(s).

 

(b)                                 Employee Benefit Plans. Employee shall be entitled to
participate in all employee benefit plans maintained by the Company for its
executives or employees, including without limitation the Company’s medical,
dental, disability, life, stock option and 401(k) Plans and Bonus Plan, if
he/she meets the eligibility requirements. The cost of such benefits to
Employee shall not exceed the cost of such benefits to the Company’s vice
presidents generally.

 

(c)                                  Paid Time Off. Employee shall be entitled to
reasonable vacations and other paid time off (PTO) in accordance with the then
regular procedures of the Company governing executives. For PTO accrual
purposes, Employee shall be credited with all service time accumulated during his/her employment by the Company and GP.

 

(d)                                 Automobile. The Company shall provide Employee with an
automobile of his/her choice (appropriate
for business use) on the same terms as currently provided to officers of the
Company. Alternatively, Employee may elect to receive a monthly allowance equal
to such amount as the Company shall then pay its vice presidents who elect to use
their own automobile, and assume personal responsibility for the cost of
operating and maintaining such vehicle, rather than to use a Company-provided
automobile.

 

(e)                                  Cellular Telephone. The Company shall, at its expense, provide
the Employee with a cellular telephone, and pay all charges associated
therewith, for his/her use in connection with the performance of his/her duties hereunder. Reasonable personal use of the telephone will be
permitted.

 

(f)                                    Change in Control or Sale of the Company. Upon the
occurrence of a “Change in Control” or a “Sale of the Company” during the
Employment Period, all stock options to purchase GP Strategies Corporation (“GPSC”)
common stock granted to Employee shall immediately become fully vested and exercisable
and all Units granted to Employee under the GPSC 2003 Incentive Stock Plan (“Units”)
shall immediately be paid in unrestricted shares of Common Stock. For purposes
of this Agreement, a “Change in Control” is deemed to have occurred if any
person who was not on the date of this Agreement a “beneficial owner” (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of securities of GPSC representing 15% of
more of the combined voting power of GPSC’s outstanding securities becomes the
beneficial owner, directly or indirectly, of securities of GPSC representing
25% or more of the combined voting power of GPSC’s outstanding securities and a
“Sale of the Company” is deemed to have occurred if (i) GPSC engages in a
transaction or series of transactions (including, without limitation, a
merger or consolidation) with another corporation, partnership, limited liability
company, joint venture, trust or other entity, and the stockholders of GPSC
immediately prior to such transaction(s) do not, after such transaction(s),
hold at least 50% of the voting power of GPSC or its successor, (ii) GPSC
and its affiliates cease to own more than 80% of the voting stock of the
Company, (iii) all or substantially all of the assets of GPSC, the Company,
or the business unit of the Company with regard to which Employee is assigned
are sold, or (iv) the Common Stock is neither listed on a 

 

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national
securities exchange nor authorized to be quoted in an inter-dealer quotation
system of a registered national securities association.

 

4.                                       Expenses. Employee shall be entitled to reimbursement for
reasonable travel and other out-of-pocket expenses necessarily incurred in the
performance of his/her duties hereunder, upon submission and approval of
written statements, receipts and bills in accordance with the then regular
procedures of the Company.

 

5.                                       Representations
and Warranties of Employee. Employee represents
and warrants to the Company that (a) Employee is under no contractual or
other restriction or obligation which is inconsistent with the execution of
this Agreement, the performance of his/her duties hereunder, or the other
rights of the Company hereunder and (b) Employee is under no physical or
mental disability that would preclude his/her performance, with or without
reasonable accommodation, of the essential duties of his/her position.

 

6.                                       Non-Competition,
Non-Solicitation. In view of the unique and
valuable services that it is expected Employee will render to the Company, the
knowledge of the customers, trade secrets, and other proprietary information
relating to the business of the Company and its customers and suppliers that it
is expected Employee will obtain, and in consideration of the compensation to
be received hereunder, Employee agrees

 

(a)                                  that he/she will not during the period
he/she is employed by the Company under this Agreement (i) compete with
the Company with respect to any product or service directly or indirectly sold,
offered for sale, contemplated for future sale or otherwise provided by the
Company, (ii) Participate In (hereinafter defined in this Section 6)
any other business or organization (other than (A) not-for profit
professional, civic, or similar organizations that do not compete with the
Company or (B) as agreed to in writing by the Company), whether or not
such business or organization now is or shall then be competing with or of a
nature similar to the business of the Company; (iii) directly or
indirectly reveal the name of any of the Company’s suppliers, customers or
employees, except as reasonably required to promote and advance the business
interests of the Company, (iv) directly or indirectly solicit or interfere
with, encourage to leave the Company, or endeavor to entice away from the
Company any of its suppliers, customers, or employees; or (v) directly or
indirectly employ any person who, at any time within the prior ninety (90)
days, was an employee of the Company; and

 

(b)                                 for a period of six months after he/she
ceases to be employed by the Company under this Agreement, he/she will not (i) compete
with, or Participate In any other business or organization which during such six-month period competes with, the Company, with respect
to any product or service sold within the twelve (12) month period preceding
such cessation; (ii) directly or indirectly reveal the name of, solicit or
interfere with, encourage to leave the Company, or endeavor to entice away from
the Company any of its suppliers, customers, or employees; or (iii) directly
or indirectly employ any person who, at any time within ninety (90) days prior
to such cessation, was an employee of the Company.

 

The term “Participate In” shall mean: 
“directly or indirectly, for his/her own benefit or for, with, or
through any other person, firm, or corporation, own (other than the ownership
of not more than 1% of the outstanding common stock of a corporation, if,
at the time of its acquisition, such stock is listed on a national securities
exchange, is reported on NASDAQ, or is regularly traded in the over-the-counter
market by a member of a national securities exchange), manage, operate, control, loan money to, or
participate in the ownership, management, operation, or control of, or be
connected as a director, officer, employee, partner, consultant, agent,
independent contractor, 

 

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or otherwise with, or acquiesce in the use of his/her name in.”  Since a breach of the provisions of this Section 6
or Section 8 could not adequately be compensated by money damages, the
Company shall be entitled, in addition to any other right and remedy available
to it, to seek an injunction restraining such breach or a threatened breach,
and in either case no bond or other security shall be required in connection
therewith. Employee agrees that the provisions of this Section 6 and Section 8
are necessary and reasonable to protect the Company in the conduct of its
business. If any restriction contained in this Section 6 or Section 8
shall be deemed to be invalid, illegal, or unenforceable by reason of its
extent, duration, geographical scope, or otherwise, then (a) it is hereby
declared to be the intention of the parties hereto that such provision be
reformed to reflect the maximum extent, duration, geographical scope, or other
limitation that is permitted by law and (b) the court making such
determination shall have the authority to reduce such restriction to the
maximum extent, duration, geographical scope, or other limitation that is
permitted by law, and in its reduced form such restriction shall then be
enforceable in the manner contemplated hereby.

 

7.                                       Patents,
Etc. Any interest in patents, patent
applications, inventions, copyrights, developments, and processes (“Such
Inventions”) which Employee acquires during the period he/she is employed by
the Company relating to the fields in which the Employee shall be engaged
on behalf of the Company shall belong to the Company; and forthwith upon
request of the Company Employee shall execute all such assignments and other
documents and take all such other action as the Company may reasonably
request in order to vest in the Company all his/her right, title, and interest
in and to Such Inventions free and clear of all liens, charges, and
encumbrances caused by acts of Employee.

 

8.                                       Confidential
Information. All confidential information which
Employee may now possess, may obtain during or after the Employment
Period, or may create prior to the end of the period he/she is employed by
the Company under this Agreement or otherwise relating to the business of the
Company or any of its affiliates or of any customer or supplier of the Company
or any of its affiliates shall not be published, disclosed, or made accessible
by him/her to any other person, firm, or corporation either during or after the
termination of his/her employment or used by him/her except during the
Employment Period in the business and for the benefit of the Company, in each
case without prior written permission of the Company. Employee shall return all
tangible evidence of such confidential information to the Company prior to or
at the termination of his/her employment.

 

9.                                       Termination. Notwithstanding anything herein contained, if on or
after the date hereof and prior to the end of the Employment Period,

 

(a)                                  either
(i) as a result of a serious health condition (as defined in the Family
and Medical Leave Act of 1993), and after giving effect to any reasonable
accommodation required by law, Employee shall be physically or mentally
incapacitated or disabled or otherwise unable fully to discharge his/her duties
hereunder for a period of ninety (90) consecutive days,  (ii) Employee shall be convicted, plead
guilty, or enter a plea of nolo  contendere to a felony or a crime involving moral turpitude,
(iii) Employee shall commit any act or omit to take any action in bad
faith and to the detriment of the Company, or (iv) Employee shall (A) willfully
and continually fail to perform his/her duties or obligations under any
provision of this Agreement other than Section 6 or 8 in any material
respect, and shall not correct such failure within thirty (30) days after
receipt of written notice thereof, or (B) fail to perform his/her
duties or obligations under Section 6 or 8 in any material respect, then,
and in 

 

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each such
case, the Company shall have the right to give notice of termination of
Employee’s services hereunder as of a then present or future date to be
specified in such notice, Employee’s employment shall terminate on the date so
specified, the Company shall pay Employee his/her base annual salary through
the date of termination only, and, except as provided by law or the terms of
the applicable benefit plan, Employee shall continue to receive the other
benefits set forth in Section 3 through the date of termination only, and

 

(b)                                 if
(i) (A) Employee resigns for “Just Cause,” as defined below, or (B) the
Company terminates Employee’s employment for reasons other than those specified
in Section 9(a) and (ii) Employee is in full compliance with his
obligations under Sections 6 and 8, then, for a period of twelve (12) months
after termination, (1) the Company shall pay Employee his/her base annual
salary at the rate in effect on the date of such employment termination,
payable at such intervals (at least monthly) as salaries are paid generally to
executive officers of the Company and (2) Employee shall continue to be
eligible to receive such benefits as Employee would have been entitled to under
Section 3 had his/her employment not terminated; provided that the obligations of the Company pursuant to Section 9(b) shall
terminate if Employee does not remain in full compliance with Sections 6 and 8.
For the purposes hereof, the Employee shall be deemed to have resigned for “Just
Cause” in the event that the Employee resigns within sixty (60) days following
either (A) the Company, without the express written consent of the
Employee, (i) imposes any significant change in the Employee’s function,
duties, or responsibilities that is not consistent with the Employee being an
executive of the Company and fails to rescind or modify such change within ten (10) business
days after receipt of written notice from the Employee, or (ii) fails to
make any material payment, or provide any material benefit to the Employee,
contemplated hereunder, and fails to correct any such deficiency within ten (10) business
days after receipt of written notice from the Employee, or (B) the Company
shall breach any other term of this Agreement and shall not correct such
failure or breach within thirty (30) days after written notice from Employee. The
payments to be made to the Employee hereunder shall be made without regard to
any compensation or remuneration earned by the Employee from any source after
the date of the termination of his/her employment.

 

(c)                                  If
(i) (A) Employee resigns for “Just Cause,” as defined above, or (B) the
Company terminates Employee’s employment for reasons other than those specified
in Section 9(a) and (ii) Employee is not in full compliance with
his/her obligations under Sections 6 and 8, the Company shall pay Employee his/her
base annual salary only through the date of termination of employment and,
except as provided by law or the terms of the applicable benefit plan, Employee
shall continue to receive the other benefits set forth in Section 3
through the date of termination only. Employee shall repay to the Company any
amounts previously paid to which Employee was not entitled.

 

(d)                                 If
Employee shall die, then this Agreement shall terminate on the date of Employee’s
death, whereupon Employee or his/her estate, as the case may be, (i) shall
be entitled to receive only his/her salary at the rate provided in Section 3
to the end of the calendar month within which the date of termination shall
take effect, plus his/her salary at the rate provided in Section 3 for the
next two calendar months, and (ii) for purposes of the Units only,
Employee shall be deemed to be employed by the Company for the period that
would have been remaining in the Employment Period if Employee had not so died.

 

Nothing
contained in this Section 9 shall be deemed to limit any other right the
Company may have to terminate Employee’s employment hereunder upon any
ground permitted by law.

 

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10.                                 Merger,
Etc. In the event of a future disposition of
(or including) the properties and business of the Company, substantially as an
entirety, by merger, consolidation, sale of assets, or otherwise, then the
Company shall assign this Agreement and all of its rights and obligations
hereunder to the acquiring or surviving corporation or other entity, and such
corporation or other entity shall assume in writing all of the obligations of
the Company hereunder.

 

11.                                 Survival. The covenants, agreements, representations, and warranties
contained in or made pursuant to this Agreement shall survive Employee’s
termination of employment, irrespective of any investigation made by or on
behalf of any party.

 

12.                                 Modification. This Agreement sets forth the entire understanding
of the parties with respect to the subject matter hereof, supersedes all
existing agreements between them concerning such subject matter, and may be
modified only by a written instrument duly executed by each party.

 

13.                                 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, given by Federal Express, Express
Mail, or similar overnight delivery or courier service, or delivered against
receipt to the party to whom it is to be given at the address of such party set
forth in the preamble to this Agreement (or to such other address as the party
shall have furnished in writing in accordance with the provisions of this Section 13).
Notice to the estate of Employee shall be sufficient if addressed to Employee
as provided in this Section 13. Any notice or other communication given
shall be deemed given at the time of receipt thereof.

 

14.                                 Waiver. Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision
of this Agreement. The failure of a party to insist upon strict adherence to
any term of this Agreement on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must be
in writing.

 

15.                                 Binding
Effect. Employee’s rights and obligations under
this Agreement shall not be transferable by Employee by assignment or
otherwise, such rights shall not be subject to commutation, encumbrance, or the
claims of Employee’s creditors, and any attempt to do any of the foregoing
shall be void. The provisions of this Agreement shall be binding upon and inure
to the benefit of Employee and his/her heirs and personal representatives, and
shall be binding upon and inure to the benefit of the Company and its
successors and those who are its assigns under Section 10.

 

16.                                 Separability. If any provision of this Agreement is invalid,
illegal, or unenforceable, the balance of this Agreement shall remain in
effect, and if any provision is inapplicable to any person or circumstance, it
shall nevertheless remain applicable to all other persons and circumstances.

 

17.                                 No
Third Party Beneficiaries. This Agreement does
not create, and shall not be construed as creating, any rights enforceable by
any person not a party to this Agreement (except as provided in Section 15).

 

18.                                 Headings. The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.

 

19.                                 Counterparts;
Governing Law. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute 

 

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one and the same instrument. It shall be governed by and construed in
accordance with the laws of the State of Maryland, without giving effect to
conflict of laws principles.

 

20.                                 Indemnification. The Company shall indemnify the Employee,
to the maximum extent permitted by applicable law and in accordance with the
Company’s By-Laws, from any and all claims relating to or arising out of the
performance by the Employee of his/her duties hereunder, or his/her acts or
omissions as an officer, director or employee of the Company, and the Company
shall hold harmless the Employee from any and all costs or expenses actually
and reasonably suffered or incurred by him/her in connection with the defense
against any such claim, reimbursing such costs and expenses as the same are
incurred by the Employee. However, the Company shall not be required to
indemnify the Employee with respect to any proceeding initiated by the Employee
against the Company, or any counterclaim, cross-claim, affirmative defense or
similar claim of the Company in connection with any such proceeding.

 

21.                                 Legal Expenses. In the event of any litigation arising out
of, or relating to, this Agreement or the Employee’s employment with the
Company, the prevailing party shall be entitled to recover from the other party
his/her/its legal fees, expert witness fees, court costs, and other reasonable
expenses incurred in connection with any such litigation.

 

IN WITNESS
WHEREOF, the parties have duly executed this Agreement as of the date first
above written.

 

                                                

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GENERAL
  PHYSICS CORPORATION

  	
   

  	
  EMPLOYEE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  

 

The
undersigned hereby agrees to the provisions of Sections 3(f), 9(b), and 9(d) of
this Agreement to the extent such provisions relate to options to purchase GPSC
common stock or to Units.

 

	
   

  	
  GP
  STRATEGIES CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

7Exhibit 10.1

 

MONACO COACH CORPORATION

1993 STOCK PLAN

PERFORMANCE SHARE

AGREEMENT

 

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

 

1.             Award Grant. The Company hereby awards to Participant a
target number of Performance Shares equal to (  
#  ) under the Plan. This Award relates to the Performance Period for
fiscal years 2007-2009. The number of Performance Shares that a Participant may
earn will depend upon achievement of targets of Total Shareholder Return and
Return on Net Assets for the Performance Period and will be determined in
accordance with the Performance Share Award Program, a copy of which is
attached hereto as Appendix A. In accordance with the Performance Share Award
Program, the number of the Performance Shares that Participant may earn will
range from zero percent (0%) of the target number of Performance Shares to two
hundred percent (200%) of the target number of Performance Shares. The number
of such Shares shall be determined following the end of the Performance Period,
in accordance with the terms and conditions set forth in the Performance Share
Award Program.

 

2.             Obligation to Pay. Each Performance Share represents the right to receive one Share to the
extent it is earned. Unless and until the Performance Shares are earned in the manner set forth in Section 1 and
the Performance Share Award Program, Participant will have no right to payment
of such Performance Shares. Prior to actual
payment of any earned Performance
Shares,
such Performance Shares will represent an
unsecured obligation. Payment of any earned Performance Shares shall be made in
whole Shares only. Notwithstanding the foregoing provisions of this Section 2,
in the event the Company (or the Subsidiary employing Participant) terminates
Participant as an Employee without Cause or Participant ceases to be an
Employee as the result of Participant’s death or Disability, Participant will
be entitled to receive a pro-rated amount of the Performance Shares that would
have actually been earned during the Performance Period had Participant
remained an Employee through the end of the Performance Period based on the
amount of time Participant was an Employee during the Performance Period, which
will be settled at the time they would have otherwise been paid pursuant to the
Performance Share Award Program. In addition, in the event Participant ceases
to be an Employee as the result of his or her Retirement, Participant will be
entitled to receive 100% of the Performance Shares that would have otherwise
been earned under the Performance Share Award Program had Participant remained
an Employee through the end of the Performance Period, which will be settled at
the time they would have otherwise been paid pursuant to the Performance Share
Award Program. In addition, in the event of a Change in Control that occurs
during the Performance Period while Participant is an Employee, a number of
Performance Shares will be earned and paid out as if all performance objectives
under the Performance Share Award Program had been earned at target, which will
be settled upon consummation of the Change in Control. Subject to the foregoing
acceleration provisions and any such provisions set forth in the Plan, in the
event Participant ceases to be an Employee for any or no reason before
Participant earns the Performance Shares pursuant to this Award, the
Performance Share Award and Participant’s right to acquire any Shares hereunder
will immediately terminate.

 

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

 

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

 

3.             Payment after Earning. Any Performance Shares
that are earned or are deemed earned in accordance with Section 2 will be paid
to Participant (or in the event of Participant’s death, to his or her estate)
in whole Shares, subject to Participant satisfying any applicable tax
withholding obligations as set forth in Section 7. Notwithstanding the
foregoing sentence, to the extent
necessary to avoid the imposition of any additional tax or income recognition
under Section 409A of the Code prior to or upon the actual payment of Shares
pursuant to this Award of Performance Shares that are earned in accordance with
Section 2 will be paid to Participant (or in the event of Participant’s death,
to his or her estate) no earlier than six (6) months and one (1) day following
the date of Participant’s termination of employment with the Company (or any
Affiliate), subject to Section 7. Participant
will not be required to make any additional monetary payment (other than
applicable tax withholding, if any) upon settlement of the Award.

 

4.             Payments
after Death. Any distribution
or delivery to be made to Participant under this Agreement will, if Participant
is then deceased, be made to Participant’s designated beneficiary, or if no
beneficiary survives Participant, the administrator or executor of Participant’s
estate. Any such transferee must furnish the Company with (a) written
notice of his or her status as transferee, and (b) evidence satisfactory
to the Company to establish the validity of the transfer and compliance with
any laws or regulations pertaining to said transfer.

 

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

 

6.             Effect on Employment. Participant
acknowledges and agrees that the vesting of Performance Shares pursuant to
Section 2 hereof is earned only by Participant continuing to be an Employee
through the applicable vesting dates (and not through the act of being hired or
acquiring Shares hereunder). Participant further acknowledges and agrees that
this Agreement, the transactions contemplated hereunder and the vesting
provisions set forth herein do not constitute an express or implied promise of
Participant continuing to be an Employee for the vesting period, for any
period, or at all, and will not interfere with the Participant’s right or the
right of the Company (or the Affiliate employing Participant) to terminate
Participant as an Employee at any time, with or without cause.

 

7.             Tax Withholding. Notwithstanding any contrary provision of this
Agreement, no certificate representing Shares will be issued to Participant,
unless and until satisfactory arrangements (as determined by the Administrator)
will have been made by Participant with respect to the payment of income,
employment and other taxes which the Company determines must be withheld with
respect to such Shares so issuable. All income, employment and other taxes
related to the Performance Share Award and any Shares delivered in payment
thereof are the sole responsibility of Participant. The Administrator, in its
sole discretion and pursuant to such procedures as it may specify from time to
time, may permit Participant to satisfy such tax withholding obligation, in
whole or in part by one or more of the following (without limitation):
(a) paying cash or (b)  selling a sufficient number of such Shares
otherwise deliverable to Participant through such means as the Company may
determine in its sole discretion (whether through a broker or otherwise) equal
to the amount required to be withheld. If Participant fails to make
satisfactory arrangements for the payment of any required tax withholding
obligations hereunder at the time this Award is otherwise scheduled to vest
pursuant to Section 2, Participant agrees and acknowledges that the Company,

 

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in
its discretion, shall have the right (but not the obligation) to satisfy any
tax withholding obligations by either (i) reducing the number of Shares
otherwise deliverable to Participant having
a Fair Market Value equal to the minimum amount required to be withheld,
or (ii) selling a sufficient number of Shares otherwise deliverable to
Participant on Participant’s behalf through such means as the Company may
determine in its sole discretion (whether through a broker or otherwise) equal
to the amount required to be withheld.

 

8.             Additional Conditions to Issuance of Stock. If at any time the
Company will determine, in its discretion, that the listing, registration or
qualification of the Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory
authority is necessary or desirable as a condition to the issuance of Shares to
Participant (or his estate), such issuance will not occur unless and until such
listing, registration, qualification, consent or approval will have been
effected or obtained free of any conditions not acceptable to the Company. Where
the Company determines that the delivery of the payment of any Shares will
violate federal securities laws or other applicable laws, the Company will
defer delivery until the earliest date at which the Company reasonably
anticipates that the delivery of Shares will no longer cause such violation. The
Company will make all reasonable efforts to meet the requirements of any such
state or federal law or securities exchange and to obtain any such consent or
approval of any such governmental authority.

 

9.             Restrictions on Sale of Securities. Subject to Section 8,
the Shares issued as payment for vested Performance Shares awarded under this
Agreement will be registered under the federal securities laws and will be
freely tradable upon receipt. However, Participant’s subsequent sale of the
Shares will be subject to any market blackout-period that may be imposed by the
Company and must comply with the Company’s insider trading policies, and any
other applicable securities laws.

 

10.           Successors. Subject to the limitation on the transferability
of this grant contained herein, this Agreement will be binding upon and inure
to the benefit of the heirs, legatees, legal representatives, successors and
assigns of the parties hereto.

 

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

 

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

 

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

 

14.           Administrator Authority. The Administrator will
have the power to interpret the Plan and this Agreement and to adopt such rules
for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret or revoke any such rules (including, but
not limited to, the determination of whether or not any Performance Shares have
vested). All actions taken and all

 

3

 

interpretations and determinations made by the
Administrator in good faith will be final and binding upon Participant, the
Company and all other interested persons. No member of the Administrator will
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or this Agreement.

 

15.           Electronic Delivery. The Company may, in
its sole discretion, decide to deliver any documents related to Performance
Shares awarded under the Plan or future Performance Shares that may be awarded
under the Plan by electronic means or request Participant’s consent to
participate in the Plan by electronic means. Participant hereby consents to
receive such documents by electronic delivery and agrees to participate in the
Plan through an on-line or electronic system established and maintained by the
Company or another third party designated by the Company.

 

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

 

17.           Agreement Severable. In the event that any
provision in this Agreement will be held invalid or unenforceable, such
provision will be severable from, and such invalidity or unenforceability will
not be construed to have any effect on, the remaining provisions of this
Agreement.

 

18.           Entire Agreement. This Agreement
constitutes the entire understanding of the parties on the subjects covered. The
Participant expressly warrants that he or she is not executing this Agreement
in reliance on any promises, representations, or inducements other than those
contained herein.

 

19.           Modifications to the Agreement. This Agreement
constitutes the entire understanding of the parties on the subjects covered. The
Participant expressly warrants that he or she is not accepting this Agreement
in reliance on any promises, representations, or inducements other than those
contained herein. Modifications to this Agreement or the Plan can be made only
in an express written contract executed by a duly authorized officer of the
Company. Notwithstanding anything to the contrary in the Plan or this
Agreement, the Company reserves the right to revise this Agreement as it deems
necessary or advisable, in its sole discretion and without the consent of
Participant, to comply with Section 409A of the Code or
to otherwise avoid imposition of any additional tax or income recognition under
Section 409A of the Code prior to the actual payment of Shares pursuant to this
Award of Performance Shares.

 

20.           Amendment, Suspension or Termination of the Plan. By accepting this
Award, the Participant expressly warrants that he or she has received a right
to acquire Shares under the Plan, and has received, read and understood a
description of the Plan. The Participant understands that the Plan is
discretionary in nature and may be modified, suspended or terminated by the
Company at any time.

 

21.           Governing Law. This Agreement shall
be governed by the laws of the State of Oregon, without giving effect to the
conflict of law principles thereof. For purposes of litigating any dispute that
arises under this Award of Performance Shares or this Agreement, the parties
hereby submit to and consent to the jurisdiction of the State of Oregon, and
agree that such litigation shall be conducted in the courts of Lane County,
Oregon, or the federal courts for the United States located in or around Lane
County, Oregon, and no other courts, where this Award of Performance Shares is
made and/or to be performed.

 

4

 

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

 

	
   

  	
  MONACO COACH CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
    Kay L. Toolson, Chairman and

  
	
   

  	
   

  	
    Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED

  	
   

  	
   

  
	
   

  	
    Participant

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  PRINT NAME:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  DATE:

  	
   

  	
   

  
							

 

5

 

Appendix A

 

PERFORMANCE SHARE AWARD PROGRAM

 

6

 

Monaco Coach Corporation

 

Performance Share Award Program

 

Introductory Note

 

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

 

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

 

Purpose

 

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

 

Eligibility

 

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

 

Termination of Employment and Change in
Control

 

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

 

 

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

 

Performance Period

 

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

 

Award

 

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

 

Performance Goals

 

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

 

PSA Program Award Formula

 

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

 

 

The Award formula is provided
below:

 

	
  

  PSA Factors

  

  (TSR & RONA)

  	
   

  	
  

  X

  	
   

  	
  Participant’s Target Award

  (Base Pay x Target percent
  ÷ by Stock Price on Award

  Date)

  	
   

  	
  

  

  =

  	
   

  	
  Final

  Performance

  Share Award

  

 

Tax Withholding

 

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

 

Audit and Approval of Awards

 

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

 

Payment

 

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

 

Definitions

 

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

 

“Retirement” means an Employee who retires on or after age
sixty-two (62) and such individual has been an Employee at least five (5) years
at the date of retirement.

 

 

EXHIBIT A

 

200X Performance Criteria

Two and Three Year 200X Performance Periods

 

Formula for Calculating the Performance Share Award Factor

 

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

 

 

TSR Component Factor

 

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

 

	
  TSR Percentile

  	
   

  	
   

  	
   

  
	
  Ranking vs. Peers (1) (2)

  	
   

  	
  TSR Payout %

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  90th

  	
   

  	
  200

  	
  %

  
	
  80th

  	
   

  	
  150

  	
  %

  
	
  70th

  	
   

  	
  125

  	
  %

  
	
  60th

  	
   

  	
  100

  	
  %

  
	
  50th

  	
   

  	
  75

  	
  %

  
	
  40th

  	
   

  	
  50

  	
  %

  
	
  30th

  	
   

  	
  25

  	
  %

  
	
  <30

  	
   

  	
  0

  	
  %

  

 

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

 

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

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

 

 

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

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

 

(2)          The following companies comprise the peer
group:

 

	
   

  	
  Peer Group

  
	
   

  
	
   

  	
  Coachmen Industries Inc.

  
	
   

  	
  Fleetwood Enterprises

  
	
   

  	
  National RV Holdings Inc.

  
	
   

  	
  Thor Industries Inc.

  
	
   

  	
  Winnebago Industries

  
	
   

  	
  Dover Corporation

  
	
   

  	
  Greenbrier Companies

  
	
   

  	
  Oshkosh Truck Corp

  
	
   

  	
  Paccar Inc.

  
	
   

  	
  Trinity Industries

  
	
   

  	
  Artic Cat Inc.

  
	
   

  	
  Champion Enterprises Inc.

  
	
   

  	
  Baldor Electric

  
	
   

  	
  Cummins Inc.

  
	
   

  	
  Harley Davidson

  
	
   

  	
  Parker Hannifin Corp.

  
	
   

  	
  Polaris

  
	
   

  	
  Regal-Beloit Corp

  
	
   

  	
  Spartan Motors

  
			

 

Return on Net Assets Factor

 

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

 

	
  RONA Percentile

  	
   

  	
   

  	
   

  
	
  Ranking vs. Peers (1)

  	
   

  	
  RONA Payout %

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  >90th

  	
   

  	
  200

  	
  %

  
	
  80th – 89th

  	
   

  	
  150

  	
  %

  
	
  70th – 79th

  	
   

  	
  125

  	
  %

  
	
  60th-69th

  	
   

  	
  100

  	
  %

  
	
  50th-59th

  	
   

  	
  75

  	
  %

  
	
  40th-49th

  	
   

  	
  50

  	
  %

  
	
  30th-39th

  	
   

  	
  25

  	
  %

  
	
  <30th

  	
   

  	
  0

  	
  %

  

 

 

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

 

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

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

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

 

(2)          The following companies comprise the peer
group:

 

	
   

  	
  Peer Group

  
	
   

  
	
   

  	
  Coachmen Industries Inc.

  
	
   

  	
  Fleetwood Enterprises

  
	
   

  	
  National RV Holdings Inc.

  
	
   

  	
  Thor Industries Inc.

  
	
   

  	
  Winnebago Industries

  
	
   

  	
  Dover Corporation

  
	
   

  	
  Greenbrier Companies

  
	
   

  	
  Oshkosh Truck Corp

  
	
   

  	
  Paccar Inc.

  
	
   

  	
  Trinity Industries

  
	
   

  	
  Artic Cat Inc.

  
	
   

  	
  Champion Enterprises Inc.

  
	
   

  	
  Baldor Electric

  
	
   

  	
  Cummins Inc.

  
	
   

  	
  Harley Davidson

  
	
   

  	
  Parker Hannifin Corp.

  
	
   

  	
  Polaris

  
	
   

  	
  Regal-Beloit Corp

  
	
   

  	
  Spartan Motors

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