Early Retirement Agreement

SEVERANCE AND EARLY RETIREMENT AGREEMENT

AND GENERAL RELEASE OF ALL CLAIMS





THIS SEVERANCE AND EARLY RETIREMENT AGREEMENT AND GENERAL RELEASE OF ALL CLAIMS ("Agreement") is made and entered into this 23rd day of October 2006, between Claire C. Skinner ("Executive") and Coachmen Industries, Inc. ("Company").



WHEREAS, Executive was employed by Company as its Chief Executive Officer and held the position of Chairman of the Board of Directors; and



WHEREAS, Executive has elected to take early retirement and resign from the Board of Directors.



NOW, THEREFORE, in consideration of the mutual promises contained in this Agreement, it is agreed as follows:



1. Termination of Employment and Resignation . The termination of Executive's service with Company shall be effective as of August 31, 2006 ("Termination Date ?). Executive shall resign as an officer and employee of Company (and any of its parent companies, subsidiaries, affiliates and divisions) and as a member of the Company's Board of Directors, including without limitation her position as Chairman of the Board of Directors, effective on the Termination Date. Company will pay Executive her salary and any directors' fees or other amounts earned by and due to Executive for the period through the Termination Date in accordance with past practices.



2. Severance Benefits and Consideration . In consideration of Executive's execution and agreement to the terms and conditions of this Agreement, Company shall provide Executive with the following severance benefits ("Severance Benefits") to which she would otherwise not be entitled but for entry into this Agreement:



a. Health Insurance. Executive has elected to continue her group health insurance coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act ("COBRA") and paid COBRA premiums for the period from the Termination Date through December 31, 2006. The Company shall reimburse Executive for such premium payments not later than three business days after the date on which this Agreement becomes enforceable as set out in Paragraph 17. Company shall reimburse Executive for COBRA premiums attributable to maintaining such insurance coverage for herself and her eligible dependents for the period beginning January 1, 2007, and lasting until 18 months following the Termination Date or until the earlier to occur of (1) Executive becoming enrolled in other health insurance or (2) such COBRA coverage terminating. The Company shall reimburse Executive for such premium payments not later than five business days after Executive delivers proof of payment to Company. Executive's health care expenses incurred after the Termination Date and before Executive has elected and paid for COBRA coverage (including the reimbursement of any covered expenses paid by Executive) shall be paid by the Coachmen Medical Plan in accordance with the terms of the Plan.



b. Severance Payments . Company shall pay (via wire transfer) and provide the following severance payments to Executive (provided Executive is not at any time in material breach of this Agreement or any other agreement with Company), subject to applicable federal and state tax withholding:



(1) Company shall pay Executive $672,750 (representing 23 months of Executive's current regular base salary, excluding incentive pay, bonuses and other compensation or benefits) as follows:



A. On the Company's first regular pay date following the later of the date on which this Agreement becomes enforceable as set forth in paragraph 17 or March 1, 2007, the Company shall pay Executive $175,500 (representing six months of salary). For purposes of this Agreement, the Company's regular pay dates are the 15th day and the last day of each calendar month ("Regular Pay Dates").



B. The balance of $497,250 shall be paid in installments of $14,625 on each of the Company's Regular Pay Dates which are on and after the later of the date on which this Agreement becomes enforceable as set forth in paragraph 17 or March 15, 2007.



(2) Executive shall receive payment of her Deferred Benefit Account ("Account") in the Executive Benefit and Estate Accumulation Plan ("EBP Plan") as a Termination Benefit, pursuant to Section 3.4 of the EBP Plan and Paragraph 8 of her EBP Plan Agreement. Her Account shall be paid to her in a lump sum within three business days following the date on which this Agreement becomes enforceable as set forth in paragraph 17 in the amount of $965,929.00.



(3) Both parties stipulate that payment for any accrued but unused vacation days as of the Termination Date is included in the foregoing amounts, and that under the Company ?s policies there are no payments due for payment of "sick pay"; and



(4) Effective on the Termination Date, Executive shall cease making Salary Reduction Contributions to her SERP Account in the Supplemental Deferred Compensation Plan ( ?ESP Plan"), and accordingly the Company shall discontinue making Employer Matching Contributions to Executive's SERP Account. Executive shall also cease making contributions to the Coachmen Industries, Inc. Retirement Plan and Trust ( ?401(k) Plan") as of the Termination Date, and the Company shall discontinue making Employer Matching Contributions to the Executive's Account in the 401(k) Plan as of said date. No contributions shall be made to Executive's SERP Account or the 401(k) Plan from the severance payments described in Paragraph 2(b)(1) above. Under the terms of the Supplemental Deferred Compensation Plan and the 401(k) Plan, all Employer Matching Contributions in the Executive's SERP Account and 401(k) Account are fully vested, except that Executive's SERP Account remains subject to the claims of creditors of the Company. Executive's 401(k) Plan Account shall be distributed in accordance with the terms of the 401(k) Plan. Company shall distribute to Executive all of the Executive's pre-2005 Salary Reduction and Bonus Reduction sub-Accounts of her SERP Account within 60 to one hundred 100 days following the Termination Date. The Company shall distribute to Executive the balance of her Accounts in the SERP (i.e., all post-December 31, 2004 Salary Reduction and Bonus Reduction sub-Accounts and all Employer Contribution sub-Accounts) no sooner than six months after the Termination Date and no later than seven months after the Termination Date.



c. Vesting in Benefit Programs and Exercise of Stock Options .



(1) Except as specifically otherwise provided herein, all participation in and all vesting in Company benefit programs will end as of the Termination Date. To the extent Executive is vested in options to purchase common stock of the Company, Executive shall exercise all such options within 90 days after the Termination Date. All unvested options shall be forfeited as of the Termination Date, and Executive shall have no further rights under such award agreements as of the Termination Date.



(2) To the extent Executive has participated in other equity-based compensation plans of the Company, and has received restricted stock or other equity-based compensation or awards under Company plans or programs, all further vesting in such compensation and awards shall end as of the Termination Date. Any outstanding equity-based award, including restricted stock granted under the long term incentive program, which has not vested as of the Termination Date shall terminate and be forfeited, and Executive shall have no further rights under such award agreements as of the Termination Date.



(3) In connection with exercises of the Executive's options pursuant to Section 2(c)(1) of this Agreement, the Company agrees with the Executive, and represents and warrants to the Executive, that (A) under the outstanding grants of non-qualified stock options to the Executive under the Plan dated October 9, 2000, February 19, 2002, and March 31, 2003, the Executive had, as of the Termination Date, the fully vested right to purchase an aggregate of 59,500 shares of Common Stock of Coachmen (the option rights with respect to 500 shares not having satisfied the vesting requirements as of the Termination Date), at the prices specified in such grants , and such options are therefore exercisable pursuant to and subject to Section 2(c)(1); (B) the Committee, acting pursuant to Section 6(b) of the Plan and SEC Rule 16b-3(e), has authorized the Executive to deliver to the Company, in connection with any or all exercises of her options pursuant to Section 2(c)(1), certificates for shares of Common Stock of the Company owned by the Executive on the date of each exercise of such options, in payment of some or all of the exercise price(s) applicable to such exercise(s), with the per share value of such already-owned shares for each such exercise being deemed to be equal to the Fair Market Value of the Company ?s shares (as determined in accordance with Section 15 of the Plan) on the applicable exercise date; (C) the Committee, acting pursuant to Section 16 of the Plan and SEC Rule 16b-3(e), has authorized the Executive to require that the Company satisfy all of its withholdings of federal, state and local taxes arising in connection with each exercise of her stock options pursuant to Section 2(c)(1) by withholding shares of Common Stock from the delivery of the shares otherwise deliverable to the Executive that have a Fair Market Value (as determined in accordance with Section 15 of the Plan) equal to the amount to be withheld; and (D) the shares of Company Common Stock that will be issued and delivered to the Executive upon any and all of her exercises of options pursuant to Section 2(c)(1), (i) will be issued pursuant to the prospectus covering such option exercises that is part of a then-effective registration statement under the Securities Act of 1933, as amended (the "Securities Act ?) covering the offer and sale of such shares to the Executive, (ii) will not be "restricted securities" upon issuance by the Company to the Executive, as that term is defined by Rule 144 under the Securities Act, and (iii) will be evidenced by certificates that will not bear any restrictive legends, and will be freely transferable, immediately and fully, by the Executive without being subjected to any "stop transfer" instructions of the Company.



3. Transition Assistance . During the three-month period following the Termination Date, Company may require Executive to provide reasonable transition assistance to Company, at no additional compensation, other than reimbursement of reasonable expenses documented by Executive, if any, on a part-time basis (with the obligation on the part of Executive to make herself reasonably available to satisfy the reasonable transition needs of Company). It is understood and agreed that Executive's obligation to provide ongoing assistance to Company is not, in and of itself, an obligation to receive material non-public information by Executive. However, it is also understood and acknowledged that it may be necessary for Company to disclose such information solely for the limited purpose of facilitating Executive's duty of cooperation.



4. Trade Secrets/Mutual Non-Disparagement/Cooperation/Indemnification . In further consideration of the payments and benefits set forth above, Executive agrees and commits to protect Company from intrusion into its business by not disclosing to any third-party any confidential information or trade secrets of Company, and will abide by all post-employment obligations. Executive further agrees to refrain from any disparaging remarks concerning the Company, its executives, employees, agents, operations, or plans. Likewise, the Company will take reasonable efforts to prevent its Officers and Directors from making any disparaging remarks concerning the Executive, and agrees that employment inquiries will be responded to consistent with the letter of recommendation, attached hereto, and incorporated herein, as Exhibit 1 (a signed copy of which, on Company letterhead, will be forwarded to Executive upon her signing of this Agreement). In further protection of the interests of the Company, Executive agrees that, as to any matters currently pending, or which arise relating to the Executive's employment at Company, she will provide reasonable cooperation to the Company and its attorneys in connection with any proceeding involving the Company before a court, an administrative agency, governmental organization, or an arbitrator. It is understood that Executive's reasonable cooperation includes, but is not limited to, responding to reasonable requests involving: assisting in the preparation and compiling of exhibits; assisting in the preparation of witnesses; appearing at deposition and/or trial; giving truthful testimony; and assisting in any respect in the preparation of Company's case. Executive's failure to provide such reasonable cooperation will be deemed a material breach of this Agreement. Any such reasonable cooperation Executive provides during the first 23 months after the Termination Date will be without any remuneration, except that Executive will be reimbursed for her reasonable and documented expenses relating to such cooperation, including, but not limited to, travel and meal expenses. After 23 months from the Termination Date, in addition to reimbursement for reasonable and documented expenses, the Company shall pay Executive for such cooperation at a rate of $275 per hour, except for any actual time Executive spends on the witness stand as a witness. It is also understood and agreed that Executive shall be provided with full coverage under the Company's Directors and Officers liability insurance policies, including full tail coverage in the event of policy termination, equal to and on the same basis as that provided to retired Officers and Directors of the Company. In addition, the Company agrees to indemnify and hold Executive harmless for any taxes, interest, related reasonable professional fees and costs, and/or penalties payable by Executive under Code Section 409A on account of the failure of the Company to timely amend the EBP Plan or the ESP Plan to comply with Code Section 409A.



5. General Release . In consideration of the promises set forth in this Agreement and other good and valuable consideration, Executive hereby irrevocably and unconditionally releases, acquits, and forever discharges Company, Company's parent companies, subsidiaries, affiliates, and divisions, as well as each of their respective officers, directors, executives, employees, consultants, and agents (being collectively referred to herein as the "Releasees"), or any of them, from any and all charges, complaints, claims (including but not limited to wages, commissions, and bonuses), liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts, and expenses (including attorney fees and costs actually incurred), of any nature whatsoever, known or unknown, in law or equity, arising out of or related in any way to Executive's employment with Company, the termination of that employment, or E ...