Document:

Exhibit

10.2

 

1993

Director Option Plan as Amended Through May 13, 2003.

 

MONACO COACH CORPORATION

 

DIRECTOR STOCK PLAN

 

1.                                       Purposes of

the Plan.  The purposes of

this Director Stock Plan are to attract and retain the best available personnel

for service as Outside Directors (as defined herein) of the Company, to provide

additional incentive to the Outside Directors of the Company to serve as

Directors, and to encourage their continued service on the Board.  To achieve these objectives, the Plan (i)

provides for the automatic grant to Outside Directors of options to purchase

the Company’s Common Stock upon their becoming Directors and annually

thereafter and (ii) provides a means for Outside Directors to elect to receive

a portion of their fees for service on the Board in the form of Common Stock or

options to purchase Common Stock.

 

All options granted

hereunder shall be “non-statutory stock options.”

 

2.                                       Applicability of May 2002 Amendments.  Options granted on or prior to May 16,

2002 shall not be subject to Section 11(f) of the Plan.  Options granted subsequent to May 16,

2002 shall be subject to Section 11(f) of the Plan.

 

3.                                       Definitions.  As used herein, the following definitions

shall apply:

 

(a)                                  “Annual

Retainer” shall mean the amount which an Outside Director will be entitled to

receive for serving as a Director during a fiscal year, but shall not include

reimbursement for expenses or fees with respect to any other services provided

to the Company.

 

(b)                                 “Board”

means the Board of Directors of the Company.

 

(c)                                  “Code”

means the Internal Revenue Code of 1986, as amended.

 

(d)                                 “Common

Stock”

means the Common Stock of the Company.

 

(e)                                  “Company”

means Monaco Coach Corporation, a Delaware corporation.

 

(f)                                    “Continuous

Status as

a Director” means the absence of any interruption or termination of

service as a Director.

 

(g)                                 “Director”

means a member of the Board.

 

(h)                                 “Employee”

means any person, including officers and Directors, employed by the Company or

any Parent or Subsidiary of the Company. 

The payment of a Director’s fee by the Company shall not be sufficient

in and of itself to constitute “employment” by the Company.

 

(i)                                     “Exchange Act”

means the Securities Exchange Act of 1934, as amended.

 

(j)                                     “Fair Market

Value” means, as of any date, the value of Common Stock determined

as follows:

 

 

(i)                                     If

the Common Stock is listed on any established stock exchange or a national

market system, including without limitation the National Market System of the

National Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”)

System, the Fair Market Value of a Share of Common Stock shall be the closing

sales price for such stock (or the closing bid, if no sales were reported) as

quoted on such system or exchange (or the exchange with the greatest volume of

trading in Common Stock) on the date of grant, as reported in The Wall Street

Journal or such other source as the Board deems reliable;

 

(ii)                                  If

the Common Stock is quoted on the NASDAQ System (but not on the National Market

System thereof) or regularly quoted by a recognized securities dealer but

selling prices are not reported, the Fair Market Value of a Share of Common

Stock shall be the mean between the bid and asked prices for the Common Stock

on the day of determination, as reported in The Wall Street Journal or such

other source as the Board deems reliable, or;

 

(iii)                               In

the absence of an established market for the Common Stock, the Fair Market

Value thereof shall be determined in good faith by the Board.

 

(k)                                  “Fixed Option” means a stock option granted

pursuant to Section 6 of the Plan.

 

(l)                                     “Option”

means a Fixed Option or a Retainer Option.

 

(m)                               “Optioned

Stock” means the Common Stock subject to an Option.

 

(n)                                 “Optionee”

means an Outside Director who receives an Option.

 

(o)                                 “Outside

Director” means a Director who is not an Employee.

 

(p)                                 “Parent”

means a “parent corporation”, whether now or hereafter existing, as defined in

Section 424(e) of the Code.

 

(q)                                 “Per Share Option Value” shall mean the

value of one Share of the Optioned Stock subject to a Retainer Option. For so

long as the Company accounts for stock-based compensation using the intrinsic

value method prescribed in Accounting Principles Board Opinion No. 25, the Per

Share Option Value shall be calculated using the valuation method prescribed by

Statement of Financial Accounting Standards No. 123, “Accounting for

Stock-Based Compensation,” and used in the footnotes to the Company’s audited

financial statements that it files with the Securities and Exchange Commission.  However, if the Company at any time begins

to treat stock options as an expense on its books and records, the Per Share

Option Value shall be calculated in accordance with the valuation method used

by the Company when valuing stock options to determine the compensation expense

that it records in the financial statements that it files with the Securities

and Exchange Commission.

 

(r)                                    “Plan”

means this Director Stock Plan, as amended.

 

(s)                                  “Retainer Option” means an option to

purchase Common Stock granted pursuant to Section 7 of the Plan.

 

(t)                                    “Share”

means a share of the Common Stock, as adjusted in accordance with Section 13 of

the Plan.

 

(u)                                 “Retirement” means a Director who

voluntarily resigns from the Board on or after age sixty-two (62) and such

Director has at least five (5) years of service on the Company’s Board of 

 

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Directors

at the date of retirement; provided, that, the Administrator, notwithstanding

the foregoing, has the discretion to determine when a Director retires so long

as such determination is not less favorable than provided for in the foregoing

definition.

 

(v)                                 “Subsidiary”

means a “subsidiary corporation”, whether now or hereafter existing, as defined

in Section 424(f) of the Internal Revenue Code of 1986.

 

4.                                       Stock

Subject to the Plan.  Subject

to the provisions of Section 13 of the Plan, the maximum aggregate number of

Shares which may be optioned and/or sold under the Plan is 352,500 Shares (the

“Pool”) of Common Stock.  The Shares may

be authorized but unissued, or reacquired Common Stock.

 

If an Option should

expire or become unexercisable for any reason without having been exercised in

full, the unpurchased Shares which were subject thereto shall, unless the Plan

shall have been terminated, become available for future grant under the Plan.

 

5.                                       Administration

of the Plan.

 

(a)                                  Administrator.  Except as otherwise required herein, the

Plan shall be administered by the Board.

 

(b)                                 Powers of

the Board.  Subject to the

provisions and restrictions of the Plan, the Board shall have the authority, in

its discretion: (i) to determine, upon review of relevant information and in

accordance with Section 3(j) of the Plan, the Fair Market Value of the Common

Stock; (ii) to interpret the Plan; (iii) to prescribe, amend and rescind rules

and regulations relating to the Plan; (iv) to authorize any person to execute

on behalf of the Company any instrument required to effectuate the grant of an

Option previously granted hereunder; and (v) to make all other determinations deemed

necessary or advisable for the administration of the Plan.

 

(c)                                  Effect of

Board’s Decision.  All

decisions, determinations and interpretations of the Board shall be final.

 

6.                                       Procedure

for Fixed Option Grants.  All

grants of Fixed Options to Outside Directors under this Plan shall be automatic

and non-discretionary and shall be made strictly in accordance with the

following provisions:

 

(a)                                  No

person shall have any discretion to select which Outside Directors shall be

granted Fixed Options or to determine the number of Shares to be covered by

Fixed Options granted to Outside Directors.

 

(b)                                 Each

Outside Director shall be automatically granted an initial Fixed Option to

purchase eight thousand (8,000) Shares (the “First Option”) on the date which

such person first becomes a Director, whether through election by the

stockholders of the Company or appointment by the Board to fill a vacancy.

 

(c)                                  Each

Outside Director shall be automatically granted a subsequent Fixed Option to

purchase four thousand (4,000) Shares (a “Subsequent Option”) on

September 30 of each year after the date of the First Option grant,

provided such Outside Director shall have served on the Board for at least six

months prior to the date of the Subsequent Option grant and remains an Outside

Director on such date.

 

(d)                                 The

terms of a First Option granted hereunder shall be as follows:

 

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(i)                                     the

term of the First Option shall be ten (10) years.

 

(ii)                                  the

First Option shall be exercisable only while the Outside Director remains a

Director of the Company, except as set forth in Section 11 hereof.

 

(iii)                               the

exercise price per Share shall be 100% of the Fair Market Value per Share on

the date of grant of the First Option.

 

(iv)                              the

First Option shall become exercisable in installments cumulatively as to twenty

percent (20%) of the Shares subject to the First Option one (1) year from its

date of grant and as to twenty percent (20%) each year thereafter if, on each

such date, the Optionee has maintained his Continuous Status as a Director.

 

(e)                                  The

terms of a Subsequent Option granted hereunder shall be as follows:

 

(i)                                     the

term of the Subsequent Option shall be ten (10) years.

 

(ii)                                  the

Subsequent Option shall be exercisable only while the Outside Director remains

a Director of the Company, except as set forth in Section 11 hereof.

 

(iii)                               the

exercise price per Share shall be 100% of the Fair Market Value per Share on

the date of grant of the Subsequent Option.

 

(iv)                              the

Subsequent Option shall become exercisable as to one hundred percent (100%) of

the Shares subject to the Subsequent Option five (5) years from its date of

grant if, on such date, the Optionee has maintained his Continuous Status as a

Director.

 

7.                                       Procedure

for Election to receive Securities in Lieu of Cash Retainer.

 

(a)                               Compensation

Alternatives.

 

(i)                                     Each

Outside Director who, in any fiscal year of the Company, delivers to the

Company written notice of an irrevocable election concerning the Annual

Retainer to be earned in the next fiscal year of the Company, will be entitled

to select one of the following alternative means of payment for the value of

his Annual Retainer in the next fiscal year of the Company:

 

(1)                                  an

amount between ten percent (10%) and fifty percent (50%) of the value of his or

her Annual Retainer (in increments of 10% of the Annual Retainer) in the form

of Common Stock (a “Common Stock Payment”) and the balance in cash (a “Cash

Payment”); or

 

(2)                                  an

amount between ten percent (10%) and fifty percent (50%) of the value of his or

her Annual Retainer (in increments of 10% of the Annual Retainer) in the form

of an option to purchase shares of Common Stock (a “Retainer Option”) and the

balance in a Cash Payment.

 

(ii)                                  If

any Outside Director fails to notify the Secretary of the Company in writing

prior to the beginning of the next fiscal year of the Company of his desired

means to receive payment of the Annual Retainer for the next fiscal year, then

he shall be deemed to have elected the entire value of the Annual Retainer in

cash.

 

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(b)                                 Common Stock Payment.

 

(i)                                     Date of Payment.  The Shares constituting any Common Stock Payment shall be issued

automatically on the first business day following the last day of each fiscal

quarter for the applicable year (a “Stock Grant Date”).  Each award of a Common Stock Payment shall

be evidenced by an agreement which shall reflect the terms and conditions of

the Common Stock Payment and such additional terms and conditions as may be

determined by the Board of a committee thereof.

 

(ii)                                  Number of Shares Subject to Common Stock Payment.  The total number of Shares included in each

Common Stock Payment shall be determined by dividing (A) the amount of the

quarterly installment of the Annual Retainer that is to be paid in stock by (B)

the Fair Market Value of one Share on the applicable Stock Grant Date.

 

Any payment for a

fractional share automatically shall be paid in cash based upon the Fair Market

Value on the Grant Date of such fractional share.

 

(c)                                  Option Payment.

 

(i)                                     Date of Payment.  The Retainer Option shall be granted automatically on the first

business day of the applicable fiscal year in which an Outside Director has

elected to receive a Retainer Option (the “Option Grant Date”).

 

(ii)                                  Number of Shares Subject to Option.  The number of Shares to be subject to any

Retainer Option granted shall be equal to that portion of the Annual Retainer

that the Outside Director elected to receive in the form of an Option divided

by the Per Share Option Value on the Option Grant Date.

 

(iii)                               Exercise Price.  The per Share exercise price of a Retainer Option granted

pursuant to this Section 7 shall equal the Fair Market Value of one Share on

the Option Grant Date.

 

(iv)                              Vesting. 

A Retainer Option shall become exercisable for one fourth (1/4th)

of the Optioned Stock on the last day of each quarter during the applicable

year (a “Vesting Date”) so long as the Outside Director is serving as a member

of the Board on the Vesting Date.

 

(v)                                 Term. 

The term of a Retainer Option shall be ten (10) years.

 

(vi)                              Exercisability.  A Retainer Option shall be exercisable only while the Outside

Director remains a Director of the Company, except as set forth in

Section 11 hereof.

 

(d)                                 Interim Period.  Notwithstanding any other provision of the Plan, an Outside

Director may elect to receive between ten percent (10%) and fifty percent (50%)

of the value of his or her last two quarterly installments of the Annual

Retainer for 2003 (in increments of 10% of the Annual Retainer) in the form of

a Common Stock Payment or a Retainer Option if the Outside Director delivers to

the Company written notice of an irrevocable election concerning such portion

of the 2003 Annual Retainer prior to July 1, 2003.

 

(i)                                     Interim Period Common Stock Payment.  If an Outside Director elects to receive a

Common Stock Payment pursuant to this Section 7(d), a Common Stock Payment

shall be made on the first business day following the last day of the third and

fourth quarters of 2003.  The number of

shares subject to such a Common Stock Payment shall be determined in accordance

with Section 7(b) hereof.

 

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(ii)                                  Interim Period Retainer Option.  If an Outside Director elects to receive a

Retainer Option pursuant to this Section 7(d), the Retainer Option shall be

granted on July 1, 2003.  The

number of shares of Common Stock subject to such Retainer Option and the per

Share exercise price and other terms of such Retainer Option shall be

determined in accordance with Section 7(c), however, with respect to such

Retainer Option, the “Option Grant Date” shall be July 1, 2003.  In addition, a Retainer Option granted

pursuant to this Section 7(d) shall become exercisable for one half (1/2) of

the Optioned Stock on the last day of each of the last two quarters of 2003 so

long as the Outside Director is serving as a member of the Board on such dates.

 

8.                                       Eligibility.  Options and Common Stock Payments may be

granted only to Outside Directors.  All

Fixed Options shall be automatically granted in accordance with the terms set

forth in Section 6 hereof.

 

The Plan shall not confer

upon any Outside Director any right with respect to continuation of service as

a Director or nomination to serve as a Director, nor shall it interfere in any

way with any rights which the Director or the Company may have to terminate his

or her directorship at any time.

 

9.                                       Term of Plan.  The Plan shall become effective upon the

earlier to occur of its adoption by the Board or its approval by the

stockholders of the Company as described in Section 19 of the Plan.  It shall continue in effect until

March 1, 2012 unless sooner terminated under Section 14 of the Plan.

 

10.                                 Form of

Consideration.  The

consideration to be paid for the Shares to be issued upon exercise of an

Option, including the method of payment, shall be determined by the Board and

may consist entirely of (i) cash, (ii) check, (iii) promissory note, (iv) other

shares which (x) in the case of Shares acquired upon exercise of an Option,

have been owned by the Optionee for more than six (6) months on the date of

surrender, and (y) have a Fair Market Value on the date of surrender equal to

the aggregate exercise price of the Shares as to which said Option shall be

exercised, (v) delivery of a properly executed exercise notice together with

such other documentation as the Board and the broker, if applicable, shall

require to effect an exercise of the Option and delivery to the Company of the

sale or loan proceeds required to pay the exercise price, (vi) any combination

of the foregoing methods of payment, or (vii) such other consideration and

method of payment for the issuance of Shares to the extent permitted under

applicable law.

 

11.                                 Exercise of

Option.

 

(a)                                  Procedure

for Exercise; Rights as a Stockholder.  Any Option granted hereunder shall be exercisable at such times

as are set forth in Sections 6 and 7 hereof.

 

An Option may not be

exercised for a fraction of a Share.

 

An Option shall be deemed

to be exercised when written notice of such exercise has been given to the

Company in accordance with the terms of the Option by the person entitled to

exercise the Option and full payment for the Shares with respect to which the

Option is exercised has been received by the Company.  Full payment may consist of any consideration and method of

payment allowable under Section 10 of the Plan.  Until the issuance (as evidenced by the appropriate entry on the

books of the Company or of a duly authorized transfer agent of the Company) of

the stock certificate evidencing such Shares, no right to vote or receive

dividends or any other rights as a stockholder shall exist with respect to the

Optioned Stock, notwithstanding the exercise of the Option.  A share certificate or electronic

notification of share ownership for the number of Shares so acquired shall be

issued or provided to the Optionee as soon as practicable after exercise of the

Option.  No adjustment will be made for

a dividend or other right for which the record date is prior to the date the

stock certificate is issued, except as provided in Section 13 of the Plan.

 

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Exercise of an Option in

any manner shall result in a decrease in the number of Shares which thereafter

may be available, both for purposes of the Plan and for sale under the Option,

by the number of Shares as to which the Option is exercised.

 

(b)                                 Rule 16b-3.  Options granted to Outside Directors must

comply with the applicable provisions of Rule 16b-3 promulgated under the Exchange

Act or any successor thereto and shall contain such additional conditions or

restrictions as may be required thereunder to qualify for the maximum exemption

from Section 16 of the Exchange Act with respect to Plan transactions.

 

(c)                                  Termination

of Continuous Status as a Director. 

In the event an Optionee’s Continuous Status as a Director terminates

(other than upon the Optionee’s death, total and permanent disability (as

defined in Section 22(e)(3) of the Code) or Retirement), the Optionee may

exercise his or her Option, but only within three (3) months from the date of

such termination, and only to the extent that the Optionee was entitled to

exercise it at the date of such termination (but in no event later than the

expiration of its ten (10) year term). 

To the extent that the Optionee was not entitled to exercise an Option

at the date of such termination, and to the extent that the Optionee does not

exercise such Option (to the extent otherwise so entitled) within the time

specified herein, the Option shall terminate.

 

(d)                                 Disability

of Optionee.  In the event

Optionee’s Continuous Status as a Director terminates as a result of total and

permanent disability (as defined in Section 22(e)(3) of the Code), any Fixed

Options granted to such Optionee shall become vested and exercisable for the

full number of Shares covered by the Fixed Option and any Retainer Option shall

be exercisable to the extent that the Optionee was entitled to exercise the

Retainer Option at the date of disability. 

The Optionee may exercise his or her Option, at any time within twelve

(12) months from the date of such termination (but in no event later than the

expiration of the term of such Option as set forth in the Notice of

Grant).  If, after termination, the

Optionee does not exercise his or her Option within the time specified herein,

the Option shall terminate, and the Shares covered by such Option shall revert

to the Plan.

 

(e)                                  Death of

Optionee.  In the event of

the death of an Optionee, any Fixed Option shall become vested and exercisable

for the full number of Shares covered by the Fixed Option and any Retainer

Option shall be exercisable to the extent that the Optionee was entitled to

exercise the Retainer Option at the time of death.  The Option held by the Optionee at the time of death may be

exercised at any time within twelve (12) months following the date of death by

the Optionee’s estate or by a person who acquired the right to exercise the

Option by bequest or inheritance.  In no

event shall an Option be exercised later than the expiration of the term of the

Option, as set forth in the Option agreement. 

If, after death, the Optionee’s estate or a person who acquired the

right to exercise the Option by bequest or inheritance does not exercise the

Option within the time specified herein, the Option shall terminate, and the

Shares covered by such Option shall revert to the Plan.

 

(f)                                    Retirement of Optionee.  In the event of an Optionee’s Retirement

while a Director, any Fixed Option shall become vested and exercisable for the

full number of Shares covered by the Fixed Option and any Retainer Option shall

be exercisable to the extent that the Optionee was entitled to exercise the

Retainer Option at the time of Retirement. 

Any Option held by the Optionee at the time of Retirement may be

exercised at any time within twelve (12) months following the date of

Retirement.  In no event shall an Option

be exercised later than the expiration of the term of the Option, as set forth

in the Option Agreement; provided, however, that (i) this subsection (f) shall

not apply to grants made on or before May 16, 2002, and (ii) this

subsection (f) shall apply to grants made on or after May 17, 2002.  If the Option is not so exercised within the

time specified herein, the Option shall terminate, and the Shares covered by

such Option shall revert to the Plan.

 

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12.                                 Non-Transferability

of Options.  The Option may

not be sold, pledged, assigned, hypothecated, transferred, or disposed of in

any manner other than by will or by the laws of descent or distribution and may

be exercised, during the lifetime of the Optionee, only by the Optionee.

 

13.                                 Adjustments

Upon Changes in Capitalization, Dissolution, Merger, Asset Sale or Change of

Control.

 

(a)                                  Changes in

Capitalization.  Subject to

any required action by the stockholders of the Company, the number of Shares

covered by each outstanding Option and the number of Shares which have been

authorized for issuance under the Plan but as to which no Options have yet been

granted or which have been returned to the Plan upon cancellation or expiration

of an Option, as well as the price per Share covered by each such outstanding

Option, shall be proportionately adjusted for any increase or decrease in the

number of issued Shares resulting from a stock split, reverse stock split,

stock dividend, combination or reclassification of the Common Stock, or any

other increase or decrease in the number of issued Shares effected without

receipt of consideration by the Company; provided, however, that conversion of

any convertible securities of the Company shall not be deemed to have been

“effected without receipt of consideration.” Such adjustment shall be made by

the Board, whose determination in that respect shall be final, binding and

conclusive.  Except as expressly

provided herein, no issuance by the Company of shares of stock of any class, or

securities convertible into shares of stock of any class, shall affect, and no

adjustment by reason thereof shall be made with respect to, the number or price

of Shares subject to an Option.  In

addition, a stock split, reverse stock split, stock dividend, combination or

reclassification of the Common Stock, or any other increase or decrease in the

number of issued Shares effected without receipt of consideration by the

Company shall not result in an adjustment to the number of shares granted to

Outside Directors pursuant to Section 5(b)(ii) and Section 5(b)(iii) of the

Plan subsequent to such stock split, reverse stock split, stock dividend,

combination or reclassification of the Common Stock, or other increase or

decrease in the number of issued Shares effected without receipt of

consideration by the Company.

 

(b)                                 Dissolution

or Liquidation.  In the event

of the proposed dissolution or liquidation of the Company, to the extent that

an Option has not been previously exercised, it will terminate immediately

prior to the consummation of such proposed action.  The Board may, in the exercise of its sole discretion in such

instances, declare that any Option shall terminate as of a date fixed by the

Board and give each Optionee the right to exercise his or her Option as to all

or any part of the Optioned Stock, including Shares as to which the Option

would not otherwise be exercisable.

 

(c)                                  Merger or

Asset Sale.  In the event of

a merger of the Company with or into another corporation, or the sale of

substantially all of the assets of the Company, each outstanding Option shall

be assumed or an equivalent option shall be substituted by the successor

corporation or a Parent or Subsidiary of the successor corporation.  In the event that the successor corporation

does not agree to assume the Option or to substitute an equivalent option, the

Board shall, in lieu of such assumption or substitution, provide for the

Optionee to have the right to exercise the Option as to all of the Optioned

Stock, including Shares as to which it would not otherwise be exercisable.  If the Board makes an Option fully

exercisable in lieu of assumption or substitution in the event of a merger or

sale of assets, the Board shall notify the Optionee that the Option shall be

fully exercisable for a period of thirty (30) days from the date of such

notice, and the Option will terminate upon the expiration of such period.  For the purposes of this paragraph, the

Option shall be considered assumed if, following the merger or sale of assets,

the option or right confers the right to purchase, for each Share of Optioned

Stock subject to the Option immediately prior to the merger or sale of assets,

the consideration (whether stock, cash, or other securities or property)

received in the merger or sale of assets by holders of Common Stock for each

Share held on the effective date of the transaction (and if holders were

offered a choice of consideration, the type of consideration chosen by the

holders of a majority of the outstanding Shares); provided, however, that if

such consideration received in the merger or sale of assets was

 

8

 

not solely

common stock of the successor corporation or its Parent, the Board may, with

the consent of the successor corporation and the participant, provide for the

consideration to be received upon the exercise of the Option, for each Share of

Optioned Stock subject to the Option, to be solely common stock of the

successor corporation or its Parent equal in Fair Market Value to the per share

consideration received by holders of Common Stock in the merger or sale of

assets.

 

14.                                 Amendment

and Termination of the Plan.

 

(a)                                  Amendment

and Termination.  Except as

set forth in Section 5, the Board may at any time amend, alter, suspend, or

discontinue the Plan, but no amendment, alteration, suspension, or

discontinuation shall be made which would impair the rights of any Optionee

under any grant theretofore made, without his or her consent.  In addition, to the extent necessary and

desirable to comply with Rule 16b-3 under the Exchange Act (or any other

applicable law or regulation), the Company shall obtain stockholder approval of

any Plan amendment in such a manner and to such a degree as required.

 

(b)                                 Effect of

Amendment or Termination. 

Any such amendment or termination of the Plan shall not affect Options

already granted and such Options shall remain in full force and effect as if

this Plan had not been amended or terminated.

 

15.                                 Time of

Granting Options.  The date

of grant of an Option shall, for all purposes, be the date determined in

accordance with Sections 6 and 7 hereof. 

Notice of the determination shall be given to each Outside Director to

whom an Option is so granted within a reasonable time after the date of such

grant.

 

16.                                 Conditions

Upon Issuance of Shares. 

Shares shall not be issued pursuant to the exercise of an Option unless

the exercise of such Option and the issuance and delivery of such Shares

pursuant thereto shall comply with all relevant provisions of law, including,

without limitation, the Securities Act of 1933, as amended, the Exchange Act,

the rules and regulations promulgated thereunder, state securities laws, and

the requirements of any stock exchange upon which the Shares may then be

listed, and shall be further subject to the approval of counsel for the Company

with respect to such compliance.

 

As a condition to the

exercise of an Option, the Company may require the person exercising such

Option to represent and warrant at the time of any such exercise that the

Shares are being purchased only for investment and without any present

intention to sell or distribute such Shares, if, in the opinion of counsel for

the Company, such a representation is required by any of the aforementioned

relevant provisions of law.

 

Inability of the Company

to obtain authority from any regulatory body having jurisdiction, which

authority is deemed by the Company’s counsel to be necessary to the lawful

issuance and sale of any Shares hereunder, shall relieve the Company of any

liability in respect of the failure to issue or sell such Shares as to which

such requisite authority shall not have been obtained.

 

17.                                 Reservation

of Shares.  The Company,

during the term of this Plan, will at all times reserve and keep available such

number of Shares as shall be sufficient to satisfy the requirements of the

Plan.

 

18.                                 Option

Agreements.  Options shall be

evidenced by written option agreements in such form as the Board shall approve.

 

19.                                 Stockholder

Approval.  Continuance of the

Plan shall be subject to approval by the stockholders of the Company at or

prior to the first annual meeting of stockholders held subsequent to the 

 

9

 

granting

of an Option hereunder.  Such

stockholder approval shall be obtained in the degree and manner required under

applicable state and federal law.

 

10Exhibit 10.12

 

Third Amendment to the Amended and
Restated Credit Agreement dated May 29, 2003 with U.S. Bank National
Association.

 

THIRD AMENDMENT TO
AMENDED AND RESTATED

CREDIT AGREEMENT

 

THIS THIRD AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of May 29, 2003,
by and among MONACO COACH CORPORATION, a Delaware corporation; ROYALE COACH BY
MONACO, INC., an Indiana corporation; MCC ACQUISITION CORPORATION, a Delaware
corporation; OUTDOOR RESORTS OF NAPLES, INC., a Florida corporation; OUTDOOR
RESORTS OF LAS VEGAS, INC., a Nevada corporation; OUTDOOR RESORTS MOTORCOACH
COUNTRY CLUB, INC., a California corporation; Lenders; GE COMMERCIAL
DISTRIBUTION FINANCE CORPORATION, WELLS FARGO BANK, NATIONAL ASSOCIATION and
BANK OF AMERICA, N.A., as Co-Documentation Agents; and U.S. BANK NATIONAL
ASSOCIATION as Administrative Lender.

 

RECITALS

 

Borrowers,
Administrative Lender and Lenders are parties to that certain Amended and
Restated Credit Agreement dated September 28, 2001 (as previously amended,
the “Agreement”).  In order to increase
the amount and extend the maturity date of the Revolving Loan Commitments,
modify the financial covenants contained in the Agreement and change certain
other provisions thereof, Borrowers, Administrative Lender and Lenders desire
to amend the Agreement in the manner set forth below.

 

NOW,
THEREFORE, in consideration of the mutual covenants and promises of the parties
contained herein, Administrative Lender, Lenders and Borrowers hereby agree as
follows:

 

1.                                      Definitions.  All capitalized terms used, and not
otherwise defined, herein shall have the respective meanings attributed to them
in the Agreement.

 

2.                                      Amendment
to Section 1.1.

 

The
following defined term is amended in its entirety to read as follows:

 

“Debt”
of any Person means, without duplication, (a) all obligations of such Person
for borrowed money and all obligations of such Person evidenced by bonds,
debentures, notes, bills or other similar instruments; (b) all obligations,
contingent or otherwise, relative to the face amount of all letters of credit,
whether or not drawn, and banker’s acceptances issued for such Person’s
account; (c) all Capitalized Lease Obligations and Other Lease obligations of
such Person; (d) whether or not so

 

 

included as liabilities in accordance with GAAP, all
obligations of such Person to pay the deferred purchase price of property or
services, and indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse; (e) all Contingent Obligations of such Person
in respect of any of the foregoing, other than Contingent Obligations in
connection with an Approved Dealer Financing Agreement; and, with respect to
Parent and its Subsidiaries collectively, (f) the amount by which any
outstanding book overdrafts exceed $10,000,000.  For purposes of determining the amount of Debt in a circumstance
when the creditor has recourse only to specified assets, the amount shall be
the lesser of (i) the amount of such obligation or (ii) the fair market value
of such assets.

 

“Revolver
Maturity Date” means the earlier of June 30, 2005 or the due
date pursuant to Section 11.2.

 

3.                                      Section
3.3(b)(i).  Section 3.3(b)(i)
is amended in its entirety to read as follows:

 

(i)                                     Borrowers
shall, on the first Business Day of each fiscal quarter, repay the outstanding
principal balance of the Term Loans by making a payment in the aggregate amount
of $2,500,000;

 

4.                                      Section
3.3A(b)(i).  Section 3.3A(b)(i)
is amended in its entirety to read as follows:

 

(i)                                     Borrowers
shall, on the first Business Day of each fiscal quarter, repay the outstanding
principal balance of the Term Loans II by making a payment in the aggregate
amount of $1,833,333, provided that if on or before such day a principal
payment has been made pursuant to any of items (iii), (iv) or (v) below,
then the required principal payment due on such day shall be the amount
resulting from dividing the then outstanding principal balance of Term
Loans II by the number equal to one plus the number of full fiscal
quarters remaining after such day (excluding the fiscal quarter of which such
day is the first Business Day) through the Maturity Date;

 

5.                                      Amendment
of Section 10.1.  Section 10.1
is amended in its entirety to read as follows:

 

As of the end of
each of the second, third and fourth fiscal quarters of its 2003 fiscal year
and as of the end of each fiscal quarter of its 2004 fiscal year, Parent shall
maintain a Leverage Ratio not greater than 2.25:1.  As of the end of each fiscal quarter of its 2005 fiscal year and
thereafter, Parent shall maintain a Leverage Ratio not greater than 1.75:1.

 

2

 

6.                                      Amendment
of Section 10.3.  Section 10.3
is amended in its entirety to read as follows:

 

As of the end of
each fiscal quarter of its 2003 fiscal year, Parent shall maintain a Fixed
Charge Coverage Ratio not less than 1.25:1. 
As of the end of each fiscal quarter of its 2004 fiscal year and
thereafter, Parent shall maintain a Fixed Charge Coverage Ratio not less than
1.50:1.

 

7.                                      Addition
of Section 10.5.  Section 10.5
is added to the Agreement to read as follows:

 

10.5                        INVENTORY
LEVELS

 

Parent will not
permit the total consolidated inventory of Borrowers (excluding inventory
acquired pursuant to the ORA Acquisition), valued at the lower of cost
(determined on a “first in, first out” basis) and market value, as of the end
of any fiscal quarter to exceed (i) $224,831,000 for the second fiscal quarter
of its 2003 fiscal year, (ii) $205,025,000 for the third fiscal quarter of its
2003 fiscal year, and (iii) $185,000,000 for the fourth fiscal quarter of its
2003 fiscal year.

 

8.                                      Addition
of Section 12.7.  Section 12.7
is added to the Agreement to read as follows:

 

12.7                        DOCUMENTATION
AGENTS

 

No Lender
identified as a “Co-Documentation Agent” or “Documentation Agent” herein shall
have any right, power, obligation, liability, responsibility or duty under this
Agreement in such capacity.  Each Lender
acknowledges that it has not relied on and will not rely on any Lender
identified as a “Documentation Agent” in deciding to enter into this Agreement
or in taking or not taking any action hereunder.

 

9.                                      Schedule I.  Schedule I is amended in its
entirety to read as Schedule I attached hereto.

 

10.                               Schedule II.  Schedule II is amended in its
entirety to read as Schedule II attached hereto.

 

11.                               Amendment
Fee.  Contemporaneously with the
execution of this Third Amendment, Borrowers shall pay to Administrative
Lender, for the ratable benefit of Lenders, a fee in the amount of $235,416.67
in consideration of Lenders’ execution and delivery of this Third Amendment and
the increased Total Commitments.

 

12.                               Administrative
Lender’s Fee.  Contemporaneously
with the execution of this Third Amendment, Borrowers shall pay to
Administrative Lender, for Administrative Lender’s own account, the fees set
forth in that certain fee letter from U.S. Bank to Borrowers’ Agent of even
date herewith.

 

3

 

13.                               Effective
Date.  This Third Amendment
shall be effective as of May 29, 2003, upon the payment of the fees
described in Paragraphs 11 and 12 and execution and delivery hereof.

 

14.                               Ratification.  Except as otherwise provided in this Third
Amendment, all of the provisions of the Agreement are hereby ratified and
confirmed and shall remain in full force and effect.

 

15.                               One
Agreement.  The Agreement, as
modified by the provisions of this Third Amendment, shall be construed as one
agreement.

 

16.                               Counterparts.  This Third Amendment may be executed in any
number of counterparts, each of which when executed and delivered shall be
deemed to be an original, and all of which when taken together shall constitute
one and the same agreement.  Delivery of
an executed signature page of this Third Amendment by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof.

 

17.                               Statutory
Notice.

 

UNDER OREGON LAW, MOST AGREEMENTS,
PROMISES AND COMMITMENTS MADE BY LENDER AFTER OCTOBER 3, 1989 CONCERNING
LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR
HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY THE LENDER TO BE ENFORCEABLE.

 

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

4

 

IN WITNESS WHEREOF,
this Third Amendment to Amended and Restated Credit Agreement has been duly
executed as of the date first written above.

 

	
  MONACO COACH CORPORATION

  	
  ROYALE COACH BY MONACO, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John W. Nepute

  	
   

  	
  By:

  	
  /s/ John W. Nepute

  	
   

  
	
  Title: 
  President

  	
  Title:  Vice
  President

  
	
   

  	
   

  
	
  MCC
  ACQUISITION CORPORATION

  	
  OUTDOOR
  RESORTS OF NAPLES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John W. Nepute

  	
   

  	
  By:

  	
  /s/ John W. Nepute

  	
   

  
	
  Title:  Vice President

  	
  Title:  President

  
	
   

  	
   

  
	
  OUTDOOR
  RESORTS OF LAS VEGAS, INC.

  	
  OUTDOOR
  RESORTS MOTORCOACH 

  COUNTRY CLUB, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John W. Nepute

  	
   

  	
  By:

  	
  /s/ John W. Nepute

  	
   

  
	
  Title:  President

  	
  Title:  President

  
	
   

  	
   

  
	
  GE
  COMMERCIAL DISTRIBUTION 

  FINANCE CORPORATION

  	
  WELLS
  FARGO BANK, NATIONAL 

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/
  Timothy Wass

  	
   

  	
  By:

  	
  /s/
  Kathy Inman Lucier

  	
   

  
	
  Title:  Director of Underwriting

  	
  Title:  Vice President

  
	
   

  	
   

  
	
  UNION
  BANK OF CALIFORNIA, N.A.

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/
  Thmos Marks

  	
   

  	
  By:

  	
  /s/
  Brad DeSpain

  	
   

  
	
  Title:  Vice President

  	
  Title:  Senior Vice President

  
	
   

  	
   

  
	
  WASHINGTON
  MUTUAL BANK

  	
  U.S.
  BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/
  Elizabeth Records

  	
   

  	
  By:

  	
  /s/
  Caron Carlyon

  	
   

  
	
  Title:  A.V.P., Credit Manager

  	
  Title:  Managing Director

  
	
   

  	
   

  
	
  NATIONAL
  CITY BANK OF INDIANA

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Mike Callas

  	
   

  	
   

  	
   

  
	
  Title:  Vice President

  	
   

  
															

 

5

 

SCHEDULE I

 

1.                                      Revolving
Loan Commitments:

 

U.S. Bank National
Association  -  $19,308,146.44   
(22.715466396%)

 

Wells Fargo Bank,
National Association  -  $14,250,295.16    (16.765053131%)

 

Bank of America,
N.A.  - 
$11,666,174.72    (13.724911440%)

 

GE Commercial
Distribution Finance Corporation  -  $11,666,174.72    (13.724911440%)

 

Washington Mutual
Bank  - 
$11,600,944.53    (13.648170030%)

 

Union Bank of
California, N.A.  -  $10,547,225.50    (12.408500585%)

 

National City Bank
of Indiana  -  $5,961,038.93   
(7.012986977%)

 

2.                                      Term
Loan I Commitments:

 

U.S. Bank National
Association  -  $5,678,866.60   
(22.715466396%)

 

Wells Fargo Bank,
National Association  -   $4,191,263.28    (16.765053131%)

 

Bank of America,
N.A.  - 
3,431,227.86    (13.724911440%)

 

GE Commercial
Distribution Finance Corporation  -  $3,431,227.86    (13.724911440%)

 

Washington Mutual
Bank  - 
$3,412,042.51    (13.648170030%)

 

Union Bank of
California, N.A.  -  $3,102,125.15    (12.408500585%)

 

National City Bank
of Indiana  -  $1,753,246.74   
(7.012986977%)

 

3.                                      Term
Loan II Commitments:

 

U.S. Bank National
Association  -  $4,164,502.32   
(22.715466396%)

 

Wells Fargo Bank,
National Association  -  $3,073,593.19   (16.765053131%)

 

Bank of America,
N.A.  - 
$2,516,233.86    (13.724911440%)

 

GE Commercial
Distribution Finance Corporation  -  $2,516,233.86    (13.724911440%)

 

Washington Mutual
Bank  - 
$2,502,164.60    (13.648170030%)

 

6

 

Union Bank of
California, N.A.  -  $2,274,891.86    (12.408500585%)

 

National City Bank
of Indiana  -  $1,285,714.33   
(7.012986977%)

 

4.                                      Swing
Loan Commitment:

 

U.S. Bank National
Association  -  $10,000,000     (100%)

 

5.                                      Applicable
Lending Office and Address for Notices for each Lender:

 

U.S. Bank
National Association

Oregon Commercial Banking

800 Willamette Street, 3rd Floor

PO Box 10553

Eugene, Oregon  97440

Attn:  Brett German

Telephone:  (541) 465-4104

Fax:  (541) 342-6712

Email:  brett.german@usbank.com

 

GE
Commercial Distribution Finance Corporation

2625 S. Plaza Drive, Suite 201

Tempe, AZ  85282

Attn: Timothy Wass, Director of Underwriting

Telephone:  (480) 449-7124

Fax:  (480) 829-3963

Email:  timothy.wass@ge.com

 

Wells
Fargo Bank, National Association

99 E. Broadway, 2nd Floor

Eugene, OR  97440

Attn: Kathy Lucier, Vice President

Telephone:  (541) 465-5965

Fax:  (541) 465-5764

Email:  lucierki@wellsfargo.com

 

Washington
Mutual Bank

1201 Third Avenue, WMT 1445

Seattle, WA  98101

Attn: Bruce Kendrex, Vice President

Telephone:  (206) 377-3888

Fax:  (206) 377-3812

Email:  bruce.kendrex@wamu.net

 

7

 

Union
Bank of California, N.A.

407 SW Broadway

Portland, OR  97205

Attn:  Tom Marks, Vice President

Telephone:  (503) 225-3693

Fax:  (503) 225-2846

Email:  thomas.marks@uboc.com

 

Bank
of America, N.A.

121 SW Morrison, #1700

Portland, OR  97204

Attn: Brad DeSpain, Senior Vice President

Telephone:  (503) 275-1573

Fax:  (503) 275-1377

Email:  brad.w.despain@bankofamerica.com

 

National
City Bank of Indiana

1
National City Center, Suite 200 E

Indianapolis,
Indiana  46255

Attn:
Mike Callas

Telephone:  (317) 267-7443

Fax:  (317) 267-7441

Email:  mike.callas@nationalcity.com

 

8

 

SCHEDULE
II

 

Pricing Schedule

 

 

	
   

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  	
  Level IV

  	
   

  	
  Level V

  	
   

  
	
  LIBOR
  Margin – Revolving Loans

  	
   

  	
  125

  	
   

  	
  150

  	
   

  	
  175

  	
   

  	
  200

  	
   

  	
  225

  	
   

  
	
  Prime
  Margin – Revolving Loans

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  25

  	
   

  	
  50

  	
   

  
	
  LIBOR
  Margin – Term Loans and Term Loans II

  	
   

  	
  150

  	
   

  	
  175

  	
   

  	
  200

  	
   

  	
  225

  	
   

  	
  250

  	
   

  
	
  Prime
  Margin – Term Loans and Term Loans II

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  25

  	
   

  	
  50

  	
   

  
	
  Fee
  Percentage

  	
   

  	
  25

  	
   

  	
  25

  	
   

  	
  37.5

  	
   

  	
  50

  	
   

  	
  50

  	
   

  

 

For
purposes of this Pricing Schedule, the following terms have the following
meanings:

 

“Level I”
applies on any day if, on such day, the applicable Leverage Ratio is less than
1.00:1.

 

“Level II”
applies on any day if, on such day, the applicable Leverage Ratio is equal to
or greater than 1.00:1 and less than 1.25:1.

 

“Level III”
applies on any day if, on such day, the applicable Leverage Ratio is equal to
or greater than 1.25:1 and less than 1.50:1.

 

“Level IV”
applies on any day if, on such day, the applicable Leverage Ratio is equal to
or greater than 1.50:1 and less than 2.00:1.

 

“Level V”
applies on any day if, on such day, the applicable Leverage Ratio is 2.00:1 or
greater.

 

For
purposes of this Pricing Schedule, the Leverage Ratio shall be calculated once
every quarter based on the financial information most recently reported by
Borrowers’ Agent pursuant to Section 8.3 of the Agreement; provided,
however, that the Leverage Ratio shall not be computed on the financial
information most recently reported by Borrowers’ Agent until the later of the
first day of the month after receipt of such information or five Business Days
after the receipt thereof, and if the most recent report required pursuant to
Section 8.3 has not been delivered, or if Administrative Lender reasonably
objects to the accuracy of such report within five Business Days after the
receipt thereof, the next higher Level from the Level then in effect shall
apply until such time as the delinquent report is delivered or Administrative
Lender’s objections are resolved to Administrative Lender’s reasonable
satisfaction.

 

9

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