Table of Contents

					Page
ARTICLE I Definitions and Rules of Construction					2
	1.1			Certain Defined Terms	2
	1.2			Rules of Construction	2
	1.3			Joint and Several Liability	2
ARTICLE II Establishment of the Company					2
	2.1			Establishment of the Company	2
	2.2			Name	2
	2.3			Term	2
	2.4			Representations and Warranties	2
	2.5			Covenants Pending Closing	3
	2.6			Closing Conditions and Termination	3
	2.7			Place and Time of Closing	3
	2.8			Closing Deliveries	3
	2.9			Initial Member Interests	4
	2.10			Company Obligations & Rights	5
ARTICLE III Capital Contributions					5
	3.1			Initial Capital Contributions	5
	3.2			Additional Capital Contributions and Member Loans	5
	3.3			Failure of a Member to Make Additional Capital Contribution or Member Loan	6
	3.4			No Withdrawal of or Payment of Interest on Capital	7
ARTICLE IV Allocation of Profits and Losses; Distributions					7
	4.1			Shares of Profits and Losses	7
	4.2			Distributions	7
	4.3			No Priority	7
	4.4			Other Distribution Rules	7
	4.5			Liquidating Distribution Provisions	7
	4.6			Limitation upon Distributions	9
ARTICLE V Management and Employees					9
	5.1			Board of Directors	9
	5.2			Board of Directors Meetings	10
	5.3			Voting of Directors; Quorum	11
	5.4			Actions Requiring Approval of the Board of Directors	11
	5.5			General Manufacturing Manager.	13
	5.6			Employees	14
	5.7			Business Plan	14
	5.8			Dispute Resolution Procedures	15
	5.9			Standard of Conduct	16
	5.10			Directors and Officers—Exculpation	17

 

 

 

	5.11		Directors and Officers—Indemnification	17
	5.12		Average Cost Savings.	19
ARTICLE VI Transfer Restrictions on Member Interests				20
	6.1		Restrictions on Transfer of Member Interests	20
	6.2		Effect of Non-compliance	21
ARTICLE VII Termination				21
	7.1		Termination Generally	21
	7.2		Termination for Default	22
	7.3		Remedies—Upon Default by One Member	24
	7.4		Remedies if Both Members are Defaulting Members	24
	7.5		Post-Termination Supply Arrangements	25
ARTICLE VIII Dissolution				25
	8.1		Generally	25
	8.2		Liquidation Procedures	25
	8.3		Certified Liquidation Statement	25
ARTICLE IX Reporting and Accounting Provisions				26
	9.1		Books and Records	26
	9.2		Other Accounting and Tax Provisions	26
	9.3		Distribution of Financial Statements and Other Reports	26
	9.4		Right of Inspection and Examination	27
	9.5		Auditors	27
ARTICLE X Dispute Resolution				27
	10.1		Generally	27
	10.2		Dispute Resolution Procedures	27
ARTICLE XI Indemnification				29
	11.1		Survival; Effect of Knowledge; Other	29
	11.2		Indemnification—By International	29
	11.3		Indemnification—By Monaco	29
	11.4		Limitations on Indemnification Amount	30
	11.5		Time Limitations	30
	11.6		Procedure for Indemnification—Third Party Claims	30
	11.7		Procedure for Indemnification—Other Claims	31
	11.8		Satisfaction of Indemnification Obligations	31
	11.9		Exclusiveness of Remedies	31
ARTICLE XII Competition				32
	12.1		Competition	32
	12.2		Independent Agreements	33
	12.3		Scope of Restrictions	33
ARTICLE XIII Confidentiality				33

 

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	13.1		Confidentiality—Confidential Information	33
	13.2		Confidentiality—Company Information	34
	13.3		Definitions—Company Information and Other	34
	13.4		Certain Exceptions	35
	13.5		Permitted Disclosure to Representatives	36
	13.6		Disclosure to Non-Representatives	36
	13.7		Continuing Protection of Trade Secrets	36
	13.8		Remedies	36
	13.9		Attorney-Client Privilege	36
	13.10		Continuing Obligations	37
	13.11		No Limitation on Other Agreements	37
ARTICLE XIV Miscellaneous				37
	14.1		Further Assurances	37
	14.2		Notices	37
	14.3		Jurisdiction; Service of Process	39
	14.4		Waiver	39
	14.5		Entire Agreement and Modification	39
	14.6		Assignments, Successors	39
	14.7		No Third Party Rights	39
	14.8		Severability	39
	14.9		Time is of the Essence; Computation of Time	40
	14.10		Expenses	40
	14.11		Governing Law	40
	14.12		Counterparts	40

 

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Joint Venture Agreement

This Joint Venture Agreement (together with all Attachments and Exhibits and amendments to it, this “ Agreement ”), is executed as of January 24, 2007, by and among International Truck and Engine Corporation, a Delaware corporation (“ ITEC ”), International Truck and Engine Investments Corporation, a Delaware corporation and wholly-owned subsidiary of ITEC (“ Investments ” and, together with ITEC, “ International ”), and Monaco Coach Corporation, a Delaware corporation (“ Monaco ”).

RECITALS

WHEREAS , ITEC’s wholly owned indirect subsidiary, Workhorse Custom Chassis, LLC, an Illinois limited liability company (“ Workhorse ”), is a manufacturer of stripped chassis products (i.e., a rolling chassis including power-train but excluding cab) for recreational vehicles, buses and step vans;

WHEREAS , Monaco is a manufacturer of premium recreational vehicles, including Class A, B and C motor coaches, as well as rear engine diesel stripped chassis products; and

WHEREAS , International and Monaco desire to form a joint venture as a Delaware limited liability company (the “ Company ”) to be the exclusive manufacturer and supplier of (i) all of Workhorse’s production requirements for its current and future portfolio of rear engine diesel recreational vehicle and low-floor bus stripped chassis products (excluding the “Whirlaway” platform) and (ii) all of Monaco’s production requirements for all of its current and future rear engine diesel stripped chassis (such supply and manufacturing operations, the “ Business ”).

NOW, THEREFORE , in consideration of the premises and mutual promises contained in this Agreement (the mutuality, adequacy and sufficiency of which are hereby acknowledged), the parties hereto agree as follows:

 

ARTICLE I
Definitions and Rules of Construction

1.1 Certain Defined Terms .  Capitalized terms used in this Agreement have the meanings indicated in Attachment 1.1 .

1.2 Rules of Construction .  Attachment 1.2 contains rules of construction relating to this Agreement.

1.3 Joint and Several Liability .  All obligations of ITEC and Investments under this Agreement shall be joint and several, whether or not such obligation is stated as an obligation of a Member or the holder of Member Interests.

ARTICLE II
Establishment of the Company

2.1 Establishment of the Company.

(a) Generally .  At the Closing (as defined in Section 2.7 ), the Members will establish the Company pursuant to the Delaware Limited Liability Company Act, Del. Code Ann. tit. 6, § 18—101 et seq. (1992) (the “ DLLCA ”).

(b ) Applicability of the DLLCA .  To the extent that a Member’s rights and obligations with respect to, and procedures with respect to the administration, dissolution, liquidation and termination of, the Company are not set forth in this Agreement, which constitutes the Company’s limited liability company agreement, they will be governed by the DLLCA.  To the extent that this Agreement contains a provision contrary to a DLLCA provision that permits its being overridden by a limited liability company agreement, that DLLCA provision is overridden by such contrary provision in this Agreement whether or not specific reference is made to the overridden provision of the DLLCA.

2.2 Name .  The name of the Company is “Custom Chassis Products, LLC.”

2.3 Term .  The Company will continue for a fixed term of 10 years commencing on the Closing Date; provided that, at the end of the initial term (and any renewal term), the Company will be continued for an additional four year renewal term unless either Member shall have given written notice to the other at least one year prior to the end of such term stating that the term of the Company will not be so renewed.

2.4 Representations and Warranties .  International makes the representations and warranties set forth in Attachment 2.4-A , and Monaco makes the representations and warranties set forth in Attachment 2.4-B .   MONACO ACKNOWLEDGES AND AGREES THAT THE ONLY REPRESENTATIONS AND WARRANTIES MADE BY INTERNATIONAL ARE THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ATTACHMENT 2.4-A, AND MONACO HAS NOT RELIED UPON ANY OTHER REPRESENTATIONS, WARRANTIES OR OTHER INFORMATION MADE OR SUPPLIED BY OR ON BEHALF

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OF INTERNATIONAL OR BY ANY AFFILIATE OR REPRESENTATIVE OF INTERNATIONAL.   INTERNATIONAL ACKNOWLEDGES AND AGREES THAT THE ONLY REPRESENTATIONS AND WARRANTIES MADE BY MONACO ARE THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ATTACHMENT 2.4-B, AND INTERNATIONAL HAS NOT RELIED UPON ANY OTHER REPRESENTATIONS, WARRANTIES OR OTHER INFORMATION MADE OR SUPPLIED BY OR ON BEHALF OF MONACO OR BY ANY AFFILIATE OR REPRESENTATIVE OF MONACO.

2.5 Covenants Pending Closing .  Until the Closing, International and Monaco will comply with the covenants set forth in Attachment 2.5 .

2.6 Closing Conditions and Termination .  The conditions to International’s obligation to close and, if not satisfied, the right to terminate are set forth in Attachment 2.6-A .  The conditions to Monaco’s obligation to close and, if not satisfied, the right to terminate are set forth in Attachment 2.6-B .

2.7 Place and Time of Closing .  The completion of the Formation Transactions (the “ Closing ”) will occur at the offices of Kirkland & Ellis LLP, Chicago, Illinois, commencing at 10:00 a.m. (local time) on (a) February 9, 2007 or, if later, the second Business Day following the satisfaction of the conditions to the Closing set forth in Attachment 2.6-A and Attachment 2.6-B and effective as of the opening of business on such day, or (b) at such other date, time and place as the parties may agree (the date of the Closing, the “ Closing Date ”).

2.8 Closing Deliveries .  At the Closing:

(a) Deliveries By Internationa l.  International will deliver:

(i)            to Monaco and the Company, each Related Agreement to which International or any of its Affiliates is a party;

(ii)           to Monaco and the Company, a certificate executed by an authorized representative of International to the effect that, except as otherwise stated in such certificate, each of International’s representations and warranties pursuant to Section 2.4 is accurate in all material respects as of the date of this Agreement and as of the date of the Closing as if made on the date of the Closing, except for those representations and warranties given as of a specified date, which shall be accurate in all material respects as of such specified date (in each case, without giving effect to any exceptions made in such certificate);

(iii)          to Monaco, such other documents as Monaco may reasonably request for the purpose of (A) evidencing the accuracy of any of International’s representations and warranties, (B) evidencing the performance by International of, or the compliance by International with, any covenant or obligation required to be performed or complied with by International, (C) evidencing the satisfaction of any condition referred to in Attachment 2.6-B , or (D) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement; and

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(iv)          to the Company its capital contribution, consisting of (A) cash in an amount to be agreed upon by the parties to this Agreement and (B) the assets to be agreed upon by the parties to this Agreement that International will transfer by the transfer documents in form and substance reasonably agreed by the parties, together with any permits and/or licenses required in connection with such assets.

(b) Deliveries By Monaco .  Monaco will deliver:

(i)            to International and the Company, each Related Agreement to which Monaco or any of its Affiliates is a party;

(ii)           to International and the Company, a certificate executed by an authorized representative of Monaco to the effect that, except as otherwise stated in such certificate, each of Monaco’s representations and warranties pursuant to Section 2.4 is accurate in all material respects as of the date of this Agreement and as of the date of the Closing as if made on the date of the Closing, except for those representations and warranties given as of a specified date, which shall be accurate in all material respects as of such specified date (in each case, without giving effect to any exceptions made in such certificate);

(iii)          to International, such other documents as International may reasonably request for the purpose of (A) evidencing the accuracy of any of Monaco’s representations and warranties, (B) evidencing the performance by Monaco of, or the compliance by Monaco with, any covenant or obligation required to be performed or complied with by Monaco, (C) evidencing the satisfaction of any condition referred to in Attachment 2.6-A , or (D) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement; and

(iv)          to the Company its capital contribution, consisting of (A) cash in an amount to be agreed upon by the parties to this Agreement and (B) the assets to be agreed upon by the parties to this Agreement that Monaco will transfer by the transfer documents transfer documents in form and substance reasonably agreed by the parties, together with any permits and/or licenses required in connection with such assets.

2.9 Initial Member Interests.

(a) Generally .  The respective initial interests of the Members in the capital, net profits, net losses and distributions of the Company as represented by their Member Interests are as follows:

 

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Such percentages will change only (i) by amendment to this Agreement, (ii) by an assignment of a Member Interest permitted by this Agreement, (iii) by the issuance of additional Units in accordance with the terms of this Agreement, or (iv) to reflect additional capital contributions pursuant to Section 3.2 .  Such changes will be effective upon the effective date of the amendment, assignment, issuance or additional capital contribution, and the Company’s books will be closed as of such effective date so that allocations and distributions in accordance with Article IV can be made to reflect such change in Member Interests.  The percentages set forth above, as so changed, apply in all circumstances where relevant to determining the extent of each Member’s interest in the Company, including its rights to profits and losses, right to vote on, consent to or otherwise participate in any decision or action to be taken by the Members under this Agreement or the DLLCA.

(b) Units .  Each Member’s Member Interest may be stated in terms of “Units.” For such purposes, initially each Member has Units equal to its initial Member Interest percentage (so that, for example, Investments has 51 Units at the date of this Agreement).

2.10 Company Obligations & Rights.

(a) Generally .  The Members will cause the Company to fulfill its obligations pursuant to this Agreement.  The Company may, as a third party beneficiary or otherwise, independently enforce its rights under this Agreement, including those under Article XI and Article XII.

ARTICLE III
Capital Contributions

3.1 Initial Capital Contributions.   Immediately after the completion of the Closing, the Book Capital Account of each Member shall be as agreed upon by the parties hereto.

3.2  Additional Capital Contributions and Member Loans.

(a) Mandatory Only If Included in Business Plan .  Each Member will make additional capital contributions (“ Additional Capital Contributions ”) or loans (“ Member Loans ”) to the Company, but only in the amounts and at the times set forth in the Business Plan as it may be amended from time to time.  Neither Member is otherwise required to make Additional Capital Contributions or make Member Loans to the Company.

(b) Procedure .

(i)            Generally .  All requirements or requests for Additional Capital Contributions or Member Loans will (A) be in a notice delivered to each Member by the Company stating explicitly whether such requirement or request relates to an Additional Capital Contribution or a Member Loan, and stating that such Additional Capital Contribution or Member Loan, as applicable, has been approved by the Board of Directors in accordance with Section 5.4 or pursuant to the Business Plan; (B) state the aggregate amount of Additional Capital Contributions or Member Loans, as applicable,

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and the amount of each Member’s share of such Additional Capital Contribution or Member Loan (which shall in all cases be allocated on a pro rata basis between the Members); and (C) specify the date that the Additional Capital Contribution or Member Loan, as applicable, is to be made, which will not be sooner than twenty (20) Business Days following each Member’s receipt of the notice.  Except as set forth in the last sentence of Section 3.3 , any amounts paid to the Company pursuant to a notice delivered in accordance with this Section 3.2(b) shall be characterized as an Additional Capital Contribution or Member Loan based on how the related requirement or request is characterized in such notice.

(ii)           Accompanying Certificate .  Each Member will deliver certificates to the Company and to each other, dated as of the date the Additional Capital Contribution or Member Loan, as applicable, is to be made, that contain customary representations and warranties relating to authorization, title and such other matters with respect to capital contributions in the form of property (other than cash) as the Members shall reasonably agree.  In addition, if Additional Capital Contributions are to consist of property other than cash, such certificate will contain customary representations and warranties as to the ownership and condition of any such property.

(c) Member Loans .  Each Member Loan will be evidenced by a promissory note bearing interest at a fluctuating rate equal to six percentage points over the Prime Rate, but not in excess of any legally permitted rate of interest (the “ Specified Interest Rate ”).  “Prime Rate” means the prime rate as published in the “Money Rates” table of The Wall Street Journal on the first publication day of the calendar quarter in which the loan was made and as adjusted as of the first publication day of each subsequent calendar quarter until paid.  Each Member Loan will (i) be for such term and subject to such security, if any, as determined by the Board of Directors, (ii) if necessary to secure financing for the Company, be subordinated to any other indebtedness of the Company or a portion of it, (iii) become due and payable in the event the Company is dissolved, (iv) rank pari passu with any and all other Member Loans and (v) be non-recourse as to the other Member.

3.3 Failure of a Member to Make Additional Capital Contribution or Member Loan.   If a Member (the “ Non-Contributing Member ”) fails to make all or a portion of a required Additional Capital Contribution or Member Loan within thirty (30) days of when such Additional Capital Contribution or Member Loan is due, the other Member (the “ Other Member ”) may lend an amount equal to such shortfall to the Non-Contributing Member (a “ Shortfall Loan ”), which amount shall constitute an Additional Capital Contribution or Member Loan by the Non-Contributing Member and shall be secured by the Non-Contributing Member’s Member Interest.  Until all accrued interest and principal on the Shortfall Loan is repaid in full (i) the Non-Contributing Member will be liable to the Other Member for the amount of such Shortfall Loan, plus all expenses incurred by the Other Member and the Company in connection with such Shortfall Loan, to be repaid in 20 equal quarterly installments (minus any applicable Shortfall Distributions (as defined below)) plus interest at the Specified Interest Rate; and (ii) any distributions from the Company otherwise due to the Non-Contributing Member will be paid directly to the Other Member and be applied to the interest and principal of the Shortfall Loan (“ Shortfall Distributions ”).  In addition to the foregoing, any Member providing a Shortfall Loan

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to another Member shall be entitled, in its sole discretion, to recharacterize the Additional Capital Contributions as Member Loans.

3.4 No Withdrawal of or Payment of Interest on Capital .  No Member will have any right to withdraw or make a demand for withdrawal of all or any portion of its Book Capital Account.  No interest or additional share of profits will be paid or credited to the Members on their Book Capital Accounts.

ARTICLE IV
Allocation of Profits and Losses; Distributions

4.1 Shares of Profits and Losses .  Except as otherwise provided in Sections 4.3 and 4.4 of Attachment 9 , each Member will share in the Company’s book profits and book losses in accordance with its Member Interest.  A Member’s share of the taxable income or loss or other tax items of the Company will be determined in accordance with Sections 4.1 and 4.2 of Attachment 9 .

4.2 Distributions .  Distributions shall be made as follows:

(a) Distribution of Tax Amount .  No later than sixty-five (65) days after the end of the Company’s Fiscal Year, the Company will distribute to each Member its share (based on expected allocations of taxable income for the Fiscal Year to which such distribution relates) of the Tax Amount estimated by the Company to have accrued through the end of the Fiscal Year.  To the extent that each Member’s actual allocation of taxable income for the Fiscal Year is later determined to be different than was estimated for purposes of these distributions, such differences will be adjusted against the amounts computed and distributed to each Member for the next Fiscal Year.

(b)   Other Distributions .  All other distributions shall be made at such times and in such amounts as shall be determined by the Board of Directors in accordance with Section 5.4(a) .

4.3 No Priority .  Except as otherwise provided in this Agreement, no Member will have priority over any other Member as to the return of capital, allocation of income or losses, or any distribution.

4.4 Other Distribution Rules .  Except as provided in Section 4.5 below, (a) no Member will have the right to demand and receive property other than cash in payment for its share of any distribution and (b) distribution of non-cash property may be made with the consent of both Members.  The preceding sentence expressly overrides the contrary provisions of DLLCA § 18—605 as to non-cash distributions.

4.5 Liquidating Distribution Provisions .  Distributions made upon liquidation of any Member Interest will be made in accordance with the positive Book Capital Account balance of the Member.  These balances will be determined after taking into account all Book Capital Account adjustments for the Company’s Fiscal Year during which the liquidation occurs.  In the

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event of a liquidation of the Company, distributions of the positive Book Capital Account Balance of each Member, if any, will be made as follows:

(a)   Except as otherwise agreed in writing by the parties, each non-cash operating asset of the Company contributed to the Company at Closing (as well each non-cash operating asset subsequently purchased by the Company to replace a contributed asset) (each, a “ Contributed Operating Asset ”) shall be distributed to the Member that contributed such asset, or the asset it replaced as applicable, to the Company. Each non-cash operating asset of the Company that is not a Contributed Operating Asset (each, an “ Other Operating Asset ” and, together with the Contributed Operating Assets, the “ Operating Assets ”) shall be distributed to the Member that, as of the date of such distribution, purchases at least 60% of the products manufactured using such Other Operating Asset or, in the case of inventory, uses such Other Operating Asset (such Member, the “ Principal Customer ” of such Other Operating Asset), in all cases irrespective of whether or not the aggregate fair market value of the Operating Assets distributed to such Member exceeds such Member’s Book Capital Account Balance; provided , however , that in the event that there is no Principal Customer with respect to an Other Operating Asset, such Other Operating Asset shall be distributed pursuant to the determination of the Board of Directors;

(b)   To the extent the fair market value of the Operating Assets allocated to a Member pursuant to Section 4.5(a) hereof exceeds such Member’s Book Capital Account Balance (such excess, if any, the “ Excess Distribution Amount ”), such Member will, except as otherwise agreed by the Members, (i) contribute an amount of cash to the Company equal to the Excess Distribution Amount, (ii) assume additional accrued liabilities of the Company in an amount equal to the Excess Distribution Amount or (iii) contribute cash and assume accrued liabilities such that the total amount of the cash contribution and accrued liabilities assumed equals the Excess Distribution Amount.

The Members shall cooperate reasonably in order to determine the fair market value of the Operating Assets required to be distributed pursuant to this Section 4.5 .  In the event that the Members cannot agree on the fair market value for one or more Operating Assets, each Member shall, within thirty (30) days of any election or event resulting in dissolution, select a valuation expert (each, an “ Initial Valuation Expert ”) and cause such expert to deliver a valuation report that sets forth such expert’s determination of the fair market value, together with an analysis of how it determined that fair market value (any such report, a “ Valuation Report ”).  In the event that the Members cannot agree on a fair market value within ten days of the receipt of the Initial Valuation Reports, the two Initial Valuation Experts shall subsequently select a third valuation expert (the “ Final Valuation Expert ”).  Within sixty (60) days after the appointment of the Final Valuation Expert, the Members will cause the Final Valuation Expert to deliver to each Member a final valuation report that sets out such valuation expert’s determination of the fair market value, together with an analysis of how it determined that fair market value (the “ Final Valuation Report ”); provided, however, that the fair market value determined by the Final Valuation Expert may in no event (i) be less than the lowest value or (ii) be more than the highest value attributed by the Initial Valuation Experts.  Each Member will pay the fees and expenses of the Initial Valuation Expert it appoints. The fees and expenses of the Final Valuation Expert shall be borne by the Members in direct proportion to the ratio of (A) the difference between (x) the fair

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market value set out in the Initial Valuation Report prepared by the Initial Valuation Expert appointed by such Member and (y) the fair market value set out in the Final Valuation Report over (B) the difference between the fair market values set out in the two Initial Valuation Reports.

If the Company is prohibited by Applicable Law from effecting a liquidating distribution in accordance with the provisions of this Section 4.5 , then the Members agree that they will cooperate reasonably to effect the sale by the Company of the Operating Assets to each Member in a manner consistent with the allocation set forth in this Section 4.5 (including, without limitation, by providing guarantees from their respective parent companies to creditors of the Company).

4.6 Limitation upon Distributions .  No distribution will be made to Members if prohibited by DLLCA § 18—607 or other Applicable Law.

ARTICLE V
Management and Employees

5.1 Board of Directors.

(a) Board of Directors .  The business and affairs of the Company will be managed exclusively by or under the direction of a Board of Directors (the “ Board of Directors ”) consisting of five individuals (each, a “ Director ”).  The Board of Directors shall be the Manager (the “ Manager ”) of the Company.  The foregoing expressly override the contrary provisions of DLLCA § 18—407.

(b) Initial Appointment; Replacement .  International will appoint three Directors (each, an “ International Director ”) and Monaco will appoint two Directors (each, a “ Monaco Director ”).  The initial appointments by each Member are as follows:

 

By written notice to the other Member and Directors, a Member may, in its sole discretion, remove and replace with or without cause any of its appointed Directors with other individuals.  A Director may be an officer or employee of a Member or of an Affiliate of a Member.  Each Director will serve on the Board of Directors until his successor is appointed or until his earlier death, resignation or removal.

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(c) Compensation and Expenses of Directors .  Each Member will pay the compensation and expenses of the Directors it appoints.

(d) Right to Rely on Certificate of Manufacturing Manager .  Any Person dealing with the Company may rely (without duty of further inquiry) upon a certificate signed by the Manufacturing Manager as to (i) the identity of any Officer, Member or employee of the Company, (ii) the existence or nonexistence of any fact or facts that constitute a condition precedent to acts by the Board of Directors or that are in any other manner germane to the affairs of the Company or (iii) the Persons who are authorized to execute and deliver any instrument or document of the Company.

(c) Signing on Behalf of the Company .  Except as otherwise provided in Section 5.5(c) or as required by law, the signature of any individual to whom the Board of Directors has delegated appropriate authority is sufficient to constitute execution of a document on behalf of the Company.  A copy or extract of this Agreement may be shown to the relevant parties in order to confirm such authority.

(f) No Authority of Members to Act on Behalf of the Company .  Except as otherwise specifically provided in this Agreement, no Member will act for, deal on behalf of or bind the Company in any way other than through its representatives on the Board of Directors (acting as members of a board of directors).  Neither party shall take any action as a Member other than in accordance with this Agreement.

5.2 Board of Directors Meetings.

(a) Meetings .  The Board of Directors will hold regular meetings (at least quarterly) at such time and place as it determines.  Any Director or the Chair may call a special meeting of the Board of Directors by giving the notice specified in Section 5.2(g) .

(b) Chair   The chairperson of the Board of Directors (“ Chair ”) will be one of the three International Directors.  The initial Chair shall be the President of Workhorse.  The Chair will preside at all meetings of the Board of Directors but will have no other special rights.  Notwithstanding the foregoing, the Chair shall be responsible for preparing and circulating the agenda for each meeting of the Board of Directors, although other directors shall be entitled to supplement the agenda with additional items.

(c) Participation .  Directors may participate in a meeting of the Board of Directors in person or by conference video or telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other.

(d) Written Consent .  Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting upon the unanimous written consent of the Directors.  Each Director will be given a copy of the written consent promptly after the last required signature is obtained.  A copy of the consent will be filed with the minutes of Board of Directors meetings.

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(e)   Minutes .  The Board of Directors will keep written minutes of all of its meetings.  Copies of the minutes will be provided to each Director.

(f)    Delegation .  Each Director has the right to appoint, by written notice to the other Directors, any individual as his delegate.  That delegate may attend meetings of the Board of Directors on his behalf and exercise all of such Director’s authority for all purposes until the appointment is revoked.

(g)   Notice .  Written notice of each meeting of the Board of Directors will be given to each Director at least five Business Days before the meeting and will identify the items of business to be conducted at the meeting.  No business other than those items listed in the notice may be conducted at any meeting, unless otherwise expressly agreed by all of the Directors.  The notice provisions of this Section may be waived in writing and will be waived by a Director’s attendance at the meeting, unless the Director at the beginning of the meeting or promptly upon his arrival objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

5.3  Voting of Directors; Quorum.

(a)   Generally .  Each Director will have one vote.  Except as otherwise provided in Section 5.4 , all actions by the Board of Directors will require the approval of a majority of the Directors present at a meeting at which a quorum exists.

(b)   Quorum .  Two Directors will constitute a quorum for the transaction of business, provided that at least one International Director and at least one Monaco Director is in attendance.

5.4  Actions Requiring Approval of the Board of Directors.

(a)   Supermajority Approval Required .  The following actions require the approval of at least one International Director and one Monaco Director:

(i)            approval of any new Business Plan or material modification of an existing Business Plan (for this purpose, any change by $50,000 or more during any Fiscal Year of any line item in the budget that is included in the Business Plan shall constitute a material modification of the Business Plan);

(ii)           to the extent not provided for in any Business Plan, the approval of:

                a.     any capital and other expenditures in excess of $50,000;

                b.     any acquisition or lease of real property in excess of $50,000, including the exercise of extension options under the Lease;

                c.     the incurrence of debt, borrowings, guarantees or indemnities in excess of $50,000;

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d.     any pledge or encumbrance of assets in excess of $50,000;

e.     the extension of credit in excess of $50,000, other than trade receivables in the ordinary course of business;

f.      the sale of assets of the Company in excess of $50,000, or otherwise outside the ordinary course of business;

g.     engaging in any single transaction outside of the ordinary course of business involving aggregate consideration in excess of $50,000; or

(iii)          any material change in product designs, programs or offerings;

(iv)          any increase in (or material change in the terms of) the funding obligations of any Member (whether in the form of capital contributions, loans, guarantees or otherwise);

(v)           any change in the distribution strategy of the Company or the distribution rights of the Members set forth in this Agreement, including any determination pursuant to Section 4.5(a) ;

(vi)          the entry by the Company into new markets or businesses;

(vii)         any issuance of additional Units;

(viii)        (A) the establishment of a subsidiary, (B) the acquisition of assets or shares of any other Person in excess of $100,000 in any single transaction or series of related transactions, other than inventory purchased in the ordinary course of business, (C) entering into any joint venture, collaboration or similar arrangement, (D) the acquisition of an interest in any entity or (E) the making of loans to any Person.

(ix)           appointment and removal of key officers, other than the Manufacturing Manager;

(x)            any change in the compensation of officers or employees of the Company, other than increases in the compensation of employees in the ordinary course of business as contemplated by the Business Plan;

(xi)           entry into or material change in the terms of any transaction or agreement between the Company and any Member or Affiliate of a Member, or any director or Affiliate of a director, including, without limitation, any agreement with Monaco and International for the provision of services or the supply of product to the Company;

(xii)          any distributions of cash or property other than those pursuant to Sections 4.3(a) and 4.5 hereof;

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(xiii)         any action affecting the Members in a manner disproportionate to their pro rata ownership of Units of the Company;

(xiv)        approval of the calculation of the Average Cost Savings pursuant to Section 5.12 hereof;

(xv)         any liquidation of the Company, winding-up of the Company’s business or the filing of an Insolvency Proceeding by the Company;

(xvi)        any merger, consolidation, conversion, transfer or other reorganization of the Company;

(xvii)       any issuance or redemption of securities by the Company;

(xviii)      any proposed sale of products manufactured by the Company to any entity other than Monaco or Workhorse; or

(xix)         any adjustment to the Average Cost Savings Target pursuant to Section 5.12(e) hereto.

(b)   Majority Approval Required .  Except as otherwise provided in Section 5.4(a) , and except for actions within the authority of the Manufacturing Manager, all actions by the Company shall require the approval of a simple majority of the Directors present at a meeting at which a quorum exists.

5.5  General Manufacturing Manager.

(a)   Appointment .  The initial general manufacturing manager (“ Manufacturing Manager ”) and subsequent Manufacturing Managers will be appointed by Monaco, subject to the prior written consent of International, not to be unreasonably withheld or delayed; provided , however , that prior to any such appointment, International shall have had reasonable opportunity to (i) interview the candidate and (ii) consult with Monaco for a reasonable period both before and after such interview regarding the candidate and the appointment process.  The Manufacturing Manager may be an officer or employee of a Member or its Affiliate.

(b)   Term .  The Manufacturing Manager will hold office until his resignation, removal or death.  The Board of Directors may remove the Manufacturing Manager at any time with or without cause.

(c)   Authority .  Subject to (1) the power and authority of the Board of Directors to revoke or modify the following or to direct the actions of the Manufacturing Manager and (2) the then-current Business Plan, the Manufacturing Manager has responsibility and authority for:

(i)            operating and managing the day-to-day business and affairs of the Company in a manner consistent with the Business Plan and then-current budgets;

(ii)           hiring and removal of Company employees;

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(iii)          purchase of services from the Members up to an annual aggregate of $50,000 in excess of the then-current Business Plan;

(iv)          proposing revisions to the Business Plan or budget for submission to the Board of Directors for consideration;

(v)           implementing the Business Plan and budget as approved by the Board of Directors;

(vi)          appointing and removal of the Company’s appointee to the Purchasing Committee;

(vii)         making any non-material changes to or taking actions that would constitute a non-material deviation from the Business Plan or budget; and

(viii)        executing contracts or other instruments on behalf of the Company (subject to the receipt of any necessary approvals of the Board of Directors) .

The Manufacturing Manager shall keep the Board of Directors reasonably informed of his actions.

5.6  Employees .  All employees will be leased to the Company by Monaco pursuant to the Services Agreement.  Subject to the Business Plan, leased employees shall include, but not be limited to, materials administrators, purchasing/scheduling administrator(s), finance manager(s), IE(s), design engineer(s) and administrative and support personnel.  Appointment and removal of the chief accounting officer and his or her staff shall be subject to the prior approval of the Board of Directors.  Other than as set forth in the Business Plan, material changes to staffing levels shall require approval by the Board of Directors.

5.7  Business Plan.

(a)   Initial Business Plan .  The initial business plan (“ Business Plan ”) to be agreed upon by the parties hereto shall cover the first five years of the Company’s proposed operations.  The Business Plan will include a budget prepared in accordance with Section 5.7(b) .  The Members intend that the Business Plan be reviewed or modified, as applicable, at least annually.  At least 120 days before the beginning of each Fiscal Year, the Manufacturing Manager will deliver to the Board of Directors any proposed modifications in the Business Plan.

(b)   Budget Contents .  The budget will include:

(i)            a projected income statement, balance sheet and operational and capital expenditure budgets for the forthcoming Fiscal Year;

(ii)           a projected cash flow statement showing in reasonable detail: (A) the projected receipts, disbursements and distributions; (B) the amounts of any corresponding projected cash deficiencies or surpluses; and (C) the amounts and due

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dates of all projected calls for Additional Capital Contributions for the forthcoming Fiscal Year;

(iii)          market strategies, product cycle plan, manufacturing and distribution strategies, and a proposed organization chart; and

(iv)          such other items requested by the Board of Directors.

(c)   Consideration of Proposed Plans .  Each proposal to continue or modify a Business Plan will be considered for approval by the Board of Directors at least forty-five (45) days before the beginning of the Fiscal Year to which it pertains.  The Board of Directors may revise the proposed Business Plan or direct the Manufacturing Manager to submit revisions to the Board of Directors for consideration.

(d)   Continuation of Existing Business Plan .  Until a revised Business Plan is approved, the Company will be managed in a manner consistent with the last Business Plan approved by the Board of Directors, adjusted as necessary to reflect the Company’s contractual obligations and other changes that result from the passage of time or the occurrence of events beyond the control of the Company.

(e)   Strategic Plan .  In addition to the foregoing, the Members shall use reasonable best efforts to complete, within six (6) months of the date hereof, a long-term strategic plan for the Company, which plan shall be updated on an annual basis.

5.8  Dispute Resolution Procedures.

(a)   Failure to Approve Certain Actions .  If (i) the Board of Directors has disagreed regarding (A) material modifications to the then-current Business Plan and the disagreement has not been resolved at least ten Business Days before the beginning of the next Fiscal Year or (B) any other action listed in Section 5.4(a) when properly submitted to it for a vote, (ii) the Board of Directors approves any resolution or votes to take any action as to which one or both Monaco Directors casts a “no” vote or (iii) (A) a duly called meeting is adjourned because none of the Directors appointed by a Member attends that meeting, (B) none of the Directors appointed by that Member attends a meeting duly called as to the same items of business of the adjourned meeting within thirty (30) days after the adjournment of that first meeting and (C) notice of both meetings complied with Section 5.2(g) (any of which, a “ Business Dispute ”), then the Directors will consult and negotiate with each other in good faith to find a mutually agreeable solution.  Notwithstanding the foregoing, in no event shall any decision of the Board of Directors to adjust or refrain from adjusting an Average Cost Savings Target pursuant to Section 5.12(e) hereof, whether or not in connection with discussions of the Board of Directors relating to the Business Plan, be the basis for a Business Dispute.  If the Directors do not reach a solution within ten Business Days from the date the Directors receive notice of such Business Dispute and the failure to reach a solution, in a Member’s judgment, adversely affects the Company or such Member’s interest in the Company (other than immaterial effects), then either Member may initiate the escalation procedures under this Section.  No action of the Board of Directors which is the subject of a Business Dispute shall be effective until resolved pursuant to this Section 5.8 .

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(b)   Consideration by Management Representatives .  Upon the initiative of either Member, in accordance with Section 5.8(a), the Business Dispute will be referred by the Directors to the Vice President and General Manager, Medium Truck Vehicle Center of International and the President of Monaco (the “ Designated Representatives ”).  The Designated Representatives will meet, consult and negotiate with each other in good faith.  If they are unable to agree within twenty Business Days of the date of such referral, then they will adjourn such attempts for a further period of five Business Days during which no meeting will be held.  On the first Business Day following such period, the Designated Representatives will meet again in an effort to resolve the Business Dispute.  If the Designated Representatives are unable to resolve the Business Dispute within 48 hours after the time at which their last meeting occurred, then Section 5.8(c) will apply.

(c)   Mediation.   If the Designated Members are unable to resolve the Business Dispute within the 48 hour period set forth in Section 5.8(b) , either Member may provide the other Member with a notice for mediation.  After delivery of that notice, the Members will attempt in good faith to settle the matter by mediation administered by the CPR Institute for Dispute Resolution under its CPR Mediation Procedure. If within 60 days after receipt of the notice for mediation, the mediation does not result in resolution of the Business Dispute, then Section 7.1(a) will apply.

5.9  Standard of Conduct.

(a)   Generally .

(i)            A Director and each Officer, in managing the business or affairs of the Company, will discharge his duties:

a.     in a manner he believes in good faith to be in the best interests of the Company;

b.     in a manner he believes in good faith to represent the care an ordinarily prudent person in a like position would exercise under similar circumstances;

c.     in good faith reliance on the provisions of this Agreement;

d.     without intentional misconduct or a knowing violation of law; and

e.     without engaging in any transaction for which he receives a personal benefit (or benefit for the Member that appointed him) in violation or breach of any provision of this Agreement.

(ii)           Except as otherwise set forth herein and for the implied contractual covenant of good faith and fair dealing under applicable Delaware law, no Director or Officer has any other duty to the Company, any Member or any other Person.

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(b)   Limitations .  Notwithstanding the foregoing Subsection (a), a Director or Officer (i) does not violate a duty or obligation under this Agreement or under Applicable Law because the Director’s or Officer’s conduct furthers the interest of a Member (including in the case of a Director, the Member that designated the Director, the Members each acknowledging that each Member has appointed a Director with the expectation that such Director will represent and serve the interest of the Member appointing him) and (ii) without limiting the foregoing clause (i), has no duty or obligation to consider any interest of or affecting the Company, any Member or any other Person.

(c)   No Duty of Members .  No Member has any duty to the Company or any Member solely by reason of acting in its capacity as a Member, except to refrain from (i) any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing and (ii) any transaction in which the Member receives a personal benefit in violation or breach of any provision of this Agreement.  Without limiting the foregoing, a Member (A) does not violate any duty or obligation under this Agreement or under Applicable Law because the Member’s conduct furthers its interest and (B) has no duty or obligation to consider any interest of or effect on the Company or any other Person.

(d)   Override .  The provisions of this Agreement (including this Section 5.9 and Sections 5.10 and 5.11 ) replace, eliminate and otherwise supplant those duties (including fiduciary duties) that a Member, Manager, Director or Officer might otherwise have under Applicable Law.

5.10                        Directors and Officers—Exculpation .  No Director or Officer will be personally liable to the Company, any Member or any other Person for monetary damages for any act or omission, including breach of contract or breach of duties (including fiduciary duties) of a Director or Officer to the Company, any Member or any other Person, except (a) for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing or (b) for any transaction for which the Director or Officer received a personal benefit in violation or breach of any provision of this Agreement.

5.11                        Directors and Officers—Indemnification.

(a)   Generally .  The Company will indemnify, defend and hold harmless each Director and Officer (each, a “ Company Indemnified Person ”) in connection with the management of the Company or any entity in which the Company has an interest to the fullest extent permitted under the DLLCA and Applicable Law; provided, however, that the foregoing obligations will not apply (i) unless the Company Indemnified Person (A) acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interest of the Company and (B) with respect to a criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful or (ii) to the extent that the act or omission of the Company Indemnified Person involved either (x) any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing or (y) any transaction for which the Company Indemnified Person received a personal benefit (or benefit for the Member that appointed him) in violation or breach of any provision of this Agreement.  The sole source of indemnity under this Section 5.11(a) shall be the assets of the Company, and no Member shall be required to make any additional capital contribution, loan or guarantee (or

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provide any other form of financing or credit support) to the Company in order to fund any indemnity obligation pursuant hereto.

(b)   Procedure .  If a Company Indemnified Person requests indemnification pursuant to this Agreement, the Board of Directors will cause a determination to be made as to whether indemnification of the Company Indemnified Person is proper in the circumstances.  Upon any such determination that indemnification is proper, the Company will make indemnification payments of liability, cost, payment or expense asserted against, or paid or incurred by, the Company Indemnified Person to the maximum extent permitted by the DLLCA and Applicable Law.

(c)   Defense Counsel .

(i)            The Company shall be entitled to assume and control the defense of a claim against a Company Indemnified Person. If the Company elects to assume and control the defense, Company Indemnified Person shall have the right to employ counsel separate from counsel employed by the Company in any such action and to participate in the defense thereof, but the fees and expenses of such counsel employed by the Company Indemnified Person shall be at the expense of the Company Indemnified Person unless (A) the employment thereof has been specifically authorized by the Company in writing, or (B) the Company has been advised by counsel that a reasonable likelihood exists of a conflict of interest between the Company and the Company Indemnified Party.

(ii)           If the Company shall control the defense of any such claim, the Company shall obtain the prior written consent of the Company Indemnified Party (which shall not be unreasonably withheld or delayed) before entering into any settlement of a claim or ceasing to defend such claim if, pursuant to or as a result of such settlement or cessation, injunction or other equitable relief will be imposed against any Company Indemnified Person or if such settlement does not expressly unconditionally release each Company Indemnified Person from all liabilities with respect to such claim and all other claims arising out of the same or similar facts and circumstances, with prejudice.

(d)   Non-Exclusive .  The rights accruing to each Company Indemnified Person under this Section will not exclude any other right to which he may be lawfully entitled.

(e)   Subsequent Amendment .  No amendment, termination or other elimination of this Section or of any relevant provisions of the DLLCA or of any other Applicable Law will affect or diminish in any way the rights to indemnification under this Section with respect to any action, suit or proceeding arising out of, or relating to, any event or act or omission occurring or fact or circumstance existing before the amendment, termination or other elimination.

(f)    Continuation of Right to Indemnification .  All rights to indemnification under this Section will continue as to a person who has ceased to be a Director or Officer, will inure to the benefit of the heirs, executors, administrators and the estate of that person, and will be deemed to be a contract between the Company and each such person.  This Section shall be binding upon any successor to the Company, whether by way of merger, consolidation, liquidation, dissolution or otherwise.

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(g)   Savings Clause .  If this Section or any portion of it is invalidated on any ground by any court of competent jurisdiction, then the Company will nevertheless indemnify persons specified in this Section to the full extent permitted by any applicable portion of this Section that has not been invalidated.

5.12                        Average Cost Savings.

(a)   Purchasing Committee .  The Company will establish a steering committee (the “ Purchasing Committee ”) designed to (i) manage purchasing decisions on behalf of the Company and (ii) report to the Board of Directors on the Company’s progress in realizing on cost savings objectives set forth in this Section 5.12 and the Business Plan.  Each of the Company, International and Monaco shall appoint one member of the Purchasing Committee.  The initial appointments by each Member shall be director-level appointees of such Member.

(b)   Efforts by the Members .  The Members shall use their commercially reasonable efforts to achieve the Average Cost Savings sufficient to meet the periodic targets set forth in Section 5.12(e) below.

(c)   Purchasing Efforts by International .  International shall use its commercially reasonable efforts to permit the Company to be entitled to make purchases on the same prices and terms as International and its Affiliates under supply agreements entered into by International (or its Affiliates) relating to the supply of component parts used by the Business.   International shall also use its commercially reasonable efforts to specifically address the purchasing needs of the Company in its future negotiations with suppliers of component parts.

(d)   Measurement of Average Cost Savings .  As soon as reasonably practicable, but in no event more than 10 Business Days, after each Measurement Date, the Purchasing Committee shall submit to the Board of Directors (i) its determination of the Actual Per Unit Cost for each chassis and (ii) its calculation of the Average Cost Savings as of such Measurement Date.  For avoidance of doubt, any calculation of the Average Cost Savings shall be made according to the procedures and methodologies which shall be agreed by the parties in writing.  The Board of Directors shall use its commercially reasonable efforts to approve a final measurement of the Average Cost Savings as soon as practicable after its receipt of the calculation of the Purchasing Committee.  If the Board of Directors approves the measurement of the Average Cost Savings pursuant to Section 5.4(a) , the calculation of the Average Cost Savings with respect to such Measurement Date shall be final for all purposes related to this Agreement.

(e)   Average Cost Savings Targets .  In the event that Monaco notifies International that it believes in good faith that the Average Cost Savings was less than as mutually agreed upon by the parties for (i) the first Measurement Date or (ii) for any subsequent Measurement Date ((i) or (ii), as applicable, as adjusted from time to time after the twenty-four-month anniversary of the Closing by the Board of Directors in accordance with Section 5.4(a) hereof, the “ Goal ”) as of any Measurement Date, the Members shall consult with each other as to commercially reasonable actions which they or the Company should consider to address the situation.  Without limiting the foregoing, International shall consider, depending upon the results achieved from earlier actions and such other factors that International considers relevant, whether it will take one or more of the following actions:

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(i)            convene meetings with suppliers in order to seek further price concessions related to components used by the Company;

(ii)           deliver written communications to suppliers, where applicable, regarding consolidation efforts / expectations of support and/or denote suppliers’ lack of support, where applicable, on supplier score cards;

(iii)          initiate and prioritize (at International’s expense) a VAVE effort with respect to the production processes of the Company; and/or

(iv)          discuss the possibility of changing the prices at which International would agree to sell engines to the Company.

In the event that the Company achieves Average Cost Savings of less than Goal as of (A) each Measurement Date during the nine (9) months following the date on which Monaco provided notice pursuant to Section 5.12(e) (such period, the “ Cure Period ”) and (B) the date on which the Cure Period ends, Monaco shall have the right to dissolve the Company pursuant to Section 7.1(b) .  The calculation of the Average Cost Savings at the end of the Cure Period shall be subject to the dispute resolution procedures set forth in Section 5.8 .

(f)    Limitation .  Dissolution of the Company in accordance with Articles V and VII shall be the sole remedy of the Parties in the event that any particular levels of Average Cost Savings are not realized.  The Parties understand and acknowledge that (1) International is not giving any guarantee or assurance as to its ability to extend its pricing and terms for component parts to the Company, (2) International shall not be required to agree to higher pricing or less advantageous supply terms for its truck, engine, chassis or other business units in order to include the Company in its purchasing arrangements, or to sell engines to the Company at any particular pricing level, (3) neither International nor Monaco shall be required to agree to any change in the design or manufacturing of its chassis (including any “make versus buy” decision) if it concludes in good faith that strategic, safety or other business considerations dictate otherwise, and (4) neither International nor Monaco is providing any indemnity, and neither International nor Monaco shall be subject to any damages, in the event that the Company does not achieve any particular level of Average Cost Savings.

ARTICLE VI
Transfer Restrictions on Member Interests

6.1  Restrictions on Transfer of Member Interests.  Except to the extent specifically permitted or required by this Agreement, neither Member may transfer its Member Interest or any interest in it without the prior written consent of the other Member, which consent may be granted or withheld by such party in its sole discretion; provided, however, that if such transfer shall be to an entity that is wholly owned by such party, directly or indirectly (or, in the case of International, wholly owned directly or indirectly by Navistar International Corporation), then such consent may not be unreasonably withheld; provided, further, however, that the transferring Member (and in the case of International, ITEC) shall continue to be the primary obligor of the obligations under this Agreement.  For purposes of this Article, “Transfer” and its derivatives include all forms of direct or indirect transfer or disposition, voluntary or involuntary, by

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operation of law, by direct or indirect sale of stock or equity interests, or other direct or indirect change of control of the Member or otherwise, as well as the creation of any Encumbrance on all or any part of a Member Interest; provided, however, that the change of control of Monaco or Navistar International Corporation shall not be deemed a “Transfer” for purposes of this Agreement, unless such change of control constitutes a Change of Control under Section 7.2(a)(vi) .  The provisions of this Article VI replace, eliminate and otherwise supplant any contrary provisions in the DLLCA (including DLLCA § 18—702) that permit the assignment of a limited liability company interest.

6.2  Effect of Non-compliance.

(a)   Non-Permitted Transfers Null and Void .  ANY ATTEMPTED TRANSFER NOT STRICTLY IN ACCORDANCE WITH THE PROVISIONS OF THIS ARTICLE WILL BE VOID AB INITIO AND OF NO FORCE OR EFFECT WHATSOEVER.

(b)   Other .  Without limiting the foregoing, if any Member Interest or certificate representing it is purported to be transferred in whole or in part in contravention of this Article, the Person to whom the transfer is made will not be entitled to any rights as a Member, including any rights:

(i)            to participate in the management, business or affairs of the Company,

(ii)           to access to information concerning Company transactions,

(iii)          to inspect or copy the Company’s books or records,

(iv)          to receive distributions to which the transferor would otherwise be entitled, or

(v)           to receive upon the dissolution and winding up of the Company the net amount otherwise distributable to the transferor.

ARTICLE VII
Termination

7.1  Termination Generally .

(a)     Unresolved Business Disputes . Either Member may elect to effect the dissolution of the Company in accordance with Article VIII upon the occurrence of a Business Dispute that remains unresolved following the exhaustion of all procedures set forth in Section 5.8 .

(b)   Failure to Achieve Average Cost Savings .  Monaco may elect to effect the dissolution of the Company in accordance with Article VIII by written notice to International within thirty (30) days after the expiration of any Cure Period during which International has failed to achieve Average Cost Savings equal to or in excess of Goal pursuant to Section 5.12(e) .

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(c)   Non-Renewal .  A Member may terminate this Agreement, and effect the dissolution of the Company in accordance with Article VIII, at the times and on the terms set forth in Section 2.3 .

7.2  Termination for Default.  This Article applies only if (a) only one Member is a Defaulting Member, in which case the Non-Defaulting Member may elect to terminate the Company in accordance with Section 7.3 , or (b) both Members are Defaulting Members, in which case Section 7.4 will apply.

(a)   Definitions—Defaulting Member and Non-Defaulting Member and Default Event .  “ Defaulting Member” is a Member with respect to which any Default Event has occurred.  A “Non-Defaulting Member” is a Member with respect to which no Default Event has occurred.  Each of the following is a “Default Event”:

(i)            Material Default .  Any material default by the Member in the performance of any covenant in this Agreement or in the performance of any material provision of any Related Agreement, which default continues for a period of 30 days after written notice thereof has been given by the Non-Defaulting Member to the Defaulting Member (each, a “ Material Default ”).  Without limiting the foregoing, “Material Default” shall include any failure for at least thirty (30) days to make when due any payment required to be made in respect of an Additional Capital Contribution or Member Loan pursuant to Section 3.3 .

(ii)           Material Breach .  A breach of any representation or warranty contained in Attachment 2.4-A or Attachment 2.4-B that would reasonably be expected to have a material adverse effect on either the Company or on the Non-Defaulting Member’s rights or benefits to be derived under this Agreement.

(iii)          Voluntary Termination of Existence by a Member .  A Member commences any proceeding to wind up, dissolve or otherwise terminate its legal existence.

(iv)          Involuntary Termination of Existence by a Member .  Any Proceeding commenced against a Member that seeks or requires the winding up, dissolution or other termination of its legal existence; except if the Member defends or contests that Proceeding in good faith within 15 days of its commencement and obtains a stay of that Proceeding within 90 days of its commencement, a Default Event will not exist so long as the stay continues and the Member pursues the defense or contest diligently thereafter or the Proceeding is dismissed.

(v)           Prohibited Transfer .  The Member consummates any transaction that does, or agrees to any transaction that would, if consummated, breach or result in a default under Section 6.1 .

(vi)          Change of Control .  There is a Change of Control of the Member or Person directly or indirectly controlling the Member, including a transfer prohibited by

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Section 6.1 (each, a “ Target ”).  A “Change of Control” occurs when any of the following occurs:

a.     Change in Ownership.  Any Person that is a Competitor or group of Persons acting in concert that includes a Competitor acquires or agrees to acquire, directly or indirectly, either (A) that percent of the ownership interests of the Target that will provide the acquirer with a sufficient number of the Target’s ownership interests having general voting rights to elect a majority of the directors or corresponding governing body or (B) in the case of a Target that has a class of securities registered under section 12 of the Securities Exchange Act of 1934, as amended, or that is subject to the periodic reporting requirements of that act by virtue of section 15(d) of that act, more than 50% of the Target’s ownership interests having general voting rights for the election of directors or corresponding governing body.

b.     Board Approval of Acquisition.  The Target’s board of directors or corresponding governing body recommends a tender offer for 50% or more of the outstanding ownership interest of the Target by a Person that is a Competitor or a group of Persons acting in concert that includes a Competitor.

(vii)         International Acquisition of a Monaco Competitor .  With respect to International, if International or any Person directly or indirectly controlling International or any subsidiary or affiliate of the foregoing or any group of Persons acting in concert that includes any of the foregoing, directly or indirectly, takes any of the following actions:  (A) acquires or agrees to acquire beneficial ownership of voting securities of a Monaco Competitor representing 15% or more of the then outstanding voting securities of such Monaco Competitor; (B) announces or commences a tender or exchange offer to acquire voting securities of a Monaco Competitor which, if successful, would result in such Person or group owning, when combined with any other voting securities of such Monaco Competitor owned by such Person or group, 15% or more of the then outstanding voting securities of such Monaco Competitor; (C) enters into any merger, sale or other business combination transaction with a Monaco Competitor; or (D) acquires or agrees to acquire all or a substantial portion of a Monaco Competitor’s assets.

(viii)        Insolvency Proceeding .  If any of the following occurs: (A) the Member seeks relief in an Insolvency Proceeding or (B) the institution against the Member of an involuntary Insolvency Proceeding; provided, however, that if the Member defends or contests that Insolvency Proceeding in good faith within 15 days of its commencement and obtains a stay of that Proceeding within 90 days of its commencement, a Default Event will not exist so long as the stay continues and the Member pursues the defense or contest diligently thereafter or the Proceeding is dismissed; (iii) the Member admits the material allegations of a petition against the Member in any Insolvency Proceeding; or (iv) an order for relief (or similar order under non-U.S. law) is issued in any Insolvency Proceeding.

(ix)           Appointment of a Receiver or Levy .  Either (A) a Proceeding has been commenced to appoint a receiver, receiver-manager, trustee, custodian or the like

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for all or a substantial part of the business or assets of the Member or (B) any writ, judgment, warrant of attachment, warrant of execution, distress warrant, charging order or other similar process (each, a “ Levy ”) of any court is made or attaches to the Member’s Member Interest or a substantial part of the Member’s properties; provided, however, that if the Member defends or contests that Proceeding or Levy in good faith within 15 days of its commencement and obtains a stay of that Proceeding or Levy within 90 days of its commencement, a Default Event will not exist so long as the stay continues and it pursues the defense or contest diligently thereafter or the Proceeding is dismissed.

(x)            Assignment for the Benefit of Creditors .  The Member makes a general assignment for the benefit of creditors, composition, marshalling of assets for creditors or other, similar arrangement in respect of the Member’s creditors generally or any substantial portion of those creditors.

7.3  Remedies—Upon Default by One Member.

(a)   By Non-Defaulting Member   A Non-Defaulting Member may, within 90 days of becoming aware of the occurrence of a Default Event, give notice of the Default Event (a “ Default Notice ”) to the Defaulting Member, electing to dissolve the Company in accordance with Article IX.

(b)   Other Remedies .

(i)            Generally .  The Non-Defaulting Member’s election to dissolve the Company under Section 7.3(a) will not preclude its exercise of whatever rights it may also have under Article XI or at law.

(ii)           Certain Other Rights .  Notwithstanding the foregoing, no election under Section 7.3(a) will preclude either (A) recourse by either the Defaulting Member or the Non-Defaulting Member to whatever injunctive relief to which it may otherwise be entitled under this Agreement or any Related Agreement or (B) the recourse by the Non-Defaulting Member under Section 2.10 to recover amounts owing to the Company that are not specifically taken into account in the determination of Fair Market Value.

(iii)          Fees and Expenses .  The Non-Defaulting Member’s legal fees and expenses will be deducted from any distribution otherwise to be made to the Defaulting Member and will be paid to the Non-Defaulting Member or, if the Non-Defaulting Member elects, will be paid by the Defaulting Member to the Non-Defaulting Member.

(c)   Effect of Notice .  If the Non-Defaulting Member elects in its Default Notice the remedy in Section 7.3(a) , it will carry out that dissolution in accordance with Article IX.

7.4  Remedies if Both Members are Defaulting Members .  If both Members are, or become, Defaulting Members, simultaneously or sequentially, then (a) the Members and the Manager will proceed as expeditiously as possible to dissolve the Company in accordance with Article IX as though such dissolution resulted from an election pursuant to Section 7.3(a) , and

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(b) both Defaulting Members will thereafter have whatever rights and remedies available to them under Article XI and under Applicable Law.

7.5  Post-Termination Supply Arrangements.  This Section 7.5 applies irrespective of whether either Member is a Defaulting Member.  Should the Company be dissolved following a termination event pursuant to this Article VII, Monaco shall enter into a supply agreement to meet International’s demand for diesel rear engine chassis for a period of twelve (12) months following such dissolution on commercially reasonable terms, (and shall include terms substantially similar terms to those contained in Sections 5 through 7 and Sections 9 through 12 of the Supply Agreement, but shall not require that International use Monaco as the exclusive supplier).

ARTICLE VIII
Dissolution

8.1  Generally.  Promptly after any election or event resulting in dissolution, liquidation or winding up of the Company, including any election to dissolve pursued under Section 7.3(a) , the Board of Directors will proceed to wind up the affairs of the Company in the manner set forth in this Article.  After such notice or other event, neither Member will be obligated to provide any additional funds that would otherwise be required by the Company except amounts owing by such Member pursuant to this Agreement or other contractual arrangements.

8.2  Liquidation Procedures.   Promptly after any election or event resulting in dissolution, liquidation or winding up of the Company, including any election to dissolve pursued under Section 7.3(a) , the Board of Directors will apply the proceeds of the liquidation of the Company in the following order:

(a)   to the payment of the expenses of liquidation;

(b)   to the payment of the liabilities and obligations of the Company, other than those owing to a Member;

(c)   to the payment of any principal and/or interest due in respect of Member Loans; and

(d)   thereafter in accordance with Section 4.5 .

8.3  Certified Liquidation Statement.  The Members, or the Non-Defaulting Member, if the Company is dissolved pursuant to Section 7.3(a) , will cause the Company’s independent auditors to prepare a certified liquidation statement of the Company.  Each Member agrees to prepare its financial statements and to prepare and file all tax returns required to be filed by it in accordance with that liquidation statement, which will contain:

(a)   a summarized statement of receipts and disbursements (including expenses of dissolution);

(b)   a determination of the Book Capital Account of each Member;

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(c)   a statement of the liabilities of the Company owing to each Member;

(d)   an allocation between the Members of all gains or losses realized on the liquidation of the assets of the Company; and

(e)   an allocation of any tax attributes between the Members.

ARTICLE IX
Reporting and Accounting Provisions

9.1  Books and Records.  The Company will make and keep books, records and accounts that, in reasonable detail, accurately and fairly reflect in all material respects the assets, liabilities and operations of the Company.  The Company will also maintain a system of internal accounting controls that complies with industry standards and Applicable Law and that will provide reasonable assurance that:

(a)   transactions are executed in accordance with the Board of Directors’ general or specific authorization;

(b)   transactions are recorded as necessary (i) to permit preparation of financial statements in conformity with GAAP and (ii) to maintain accountability for assets;

(c)   access to assets is permitted only in accordance with the Board of Directors’ general or specific authorization; and

(d)   the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences .

9.2  Other Accounting and Tax Provisions.  Attachment 9 contains additional accounting and tax provisions applicable to the Company.

9.3  Distribution of Financial Statements and Other Reports .  The Company will distribute to each Member:

(a)   Monthly Information .  As soon as practical after the end of each of the first three quarterly periods in each calendar month and in any event within ten (10) Business Days after the end of each such calendar month, a balance sheet as of the end of the month and statements of income and cash flow, both for the month and for the year to date, which financial statements shall fairly present in all material respects the Company’s financial position as of that date and the results of its operations for those periods in accordance with GAAP (subject to normal year-end adjustments and the furnishing of notes; provided, however, that notes will be furnished to the extent necessary to make the statements not misleading);

(b)   Annual Information .  As soon as practical after the end of each Fiscal Year and in any event within ten (10) Business Days thereafter:

(i)            a balance sheet as of the year-end and statements of income and cash flow, both for the fourth quarter and for the year; and

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(ii)           a draft of the Company’s tax return in accordance with Section 5.2(a) of Attachment 9 hereto, and information that will be required to permit the Member to prepare its tax return.

The year-end balance sheet and the statements for the year will be examined in accordance with generally accepted auditing standards by the Company’s independent certified public accountants, who will render their opinion on whether those statements fairly present in all material respects the Company’s financial position as of that date and the results of its operations for those periods in accordance with GAAP.

9.4  Right of Inspection and Examination.  At all reasonable times, each Member, through its representatives, has the right to inspect and copy the records of the Company and to examine the employees of the Company with regard to its activities.  These rights may be exercised through any agent or employee of the Member designated by notice to the Board of Directors.  The inspecting Member will bear all expenses incurred in the inspection or examination.

9.5  Auditors.  The initial auditors of the Company are KPMG LLP.

ARTICLE X
Dispute Resolution

10.1         Generally.

(a)   Applies Only to Legal Claims .  This Article 10 governs only those disputes that arise under this Agreement, the outcome of which depends solely on whether the Company, a Member or any of its Affiliates is in default of its contractual or other legal obligations (a “ Legal Claim ”).  “Legal Claims” include (i) disputes as to indemnification under Article XI or any of the Related Agreements and (ii) the formation, validity, binding effect, applicability, scope, interpretation, performance, breach or termination of this Agreement or any Related Agreement.

(b)   Matters Specifically Not Subject to Article 10 Dispute Resolution Procedures .  Without limiting Section 10.1(a) :

(i)            Business Disputes: any Business Dispute (as defined in Section 5.8) is not considered a Legal Claim subject to resolution under Section 10.2 but will be subject instead to Section 5.8 ; and

(ii)