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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067 TELEPHONE: (310) 407-4000

LEE R. BOGDANOFF (State Bar No. 119542) JONATHAN S. SHENSON (State Bar No. 184250) DAVID M. GUESS (State Bar No. 238241) KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 Avenue of the Stars, 39th Floor Los Angeles, CA 90067 Telephone: (310) 407-4000 Facsimile: (310) 407-9090 Bankruptcy Counsel for Debtors and Debtors In Possession Debtors' Mailing Address 3411 N. Perris Blvd. Perris, CA 92571 National R.V. Holdings, Inc.'s Tax I.D. #XX-XXX-1079 National R.V., Inc.'s Tax I.D. #XX-XXX-5022

UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA RIVERSIDE DIVISION In re NATIONAL R.V. HOLDINGS, INC., a Delaware corporation; NATIONAL R.V., INC., a California corporation, Debtors. Case No.: 6:07-17941-PC Chapter 11 Jointly Administered with Case No.: 6:07-17937-PC DEBTORS' REPLY TO OPPOSITION OF OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO APPLICATION OF DEBTORS AND DEBTORS IN POSSESSION FOR ORDER (1) AUTHORIZING EMPLOYMENT OF HELLER EHRMAN LLP AS SPECIAL CORPORATE AND LABOR COUNSEL; AND (2) AUTHORIZING HELLER EHRMAN LLP TO DRAW DOWN ON CHAPTER 11 RETAINER; DECLARATIONS OF STEPHEN M. DAVIS AND DAVID J. HUMPHREYS IN SUPPORT THEREOF Date: Time: Place: Hearing January 22, 2008 9:30 a.m. Courtroom 303 U.S. Bankruptcy Court 3420 Twelfth Street Riverside, CA 92501

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067 TELEPHONE: (310) 407-4000

National R.V. Holdings, Inc. ("NRVH") and National R.V., Inc., the debtors and debtors in possession in the above-captioned chapter 11 cases (the "Debtors"), shall, and do hereby, file this reply (the "Reply") to the opposition (the "Opposition") by the Official Committee of Creditors Holding Unsecured Claims (the "Committee") to the Debtors' application (the "Application") to employ Heller Ehrman LLP ("Heller") as their special corporate counsel. The Reply is supported by the accompanying Declaration of Stephen M. Davis and the accompanying Declaration of David J. Humphreys. The Debtors respectfully state as follows: As the Committee's opposition correctly notes, the Debtors no longer seek to employ Heller as their special labor and employment counsel, and to the extent the Application seeks to employ Heller as their special labor and employment counsel, that request is withdrawn. The Debtors, however, continue to seek to employ Heller as their special corporate counsel, and strongly believe doing so is in the best interests of these estates.1 The Debtors' decision to employ Heller is an exercise of reasonable business judgment under the circumstances. The Committee's opposition to Heller as special corporate counsel is premised on the unsupported assertion that a publicly held company such as NRVH does not require the advice of corporate counsel in a liquidating chapter 11 case. Both of the Debtors continue to operate at the ultimate direction of their boards of directors, and the record of these chapter 11 cases demonstrates that the Debtors have been doing an exemplary job. Even though the Debtors are liquidating their assets under the auspices of chapter 11, the Debtors continue to have reporting and other corporate obligations, which simply cannot be ignored because the Debtors are now in bankruptcy. The fact that the Debtors have filed chapter 11 does not mean that they may abrogate their obligations as corporations or their duties to shareholders. Indeed, unlike many bankruptcy cases, these cases may end up generating a surplus for the benefit of shareholders. It should be noted that the common stock of NRVH is publicly traded and the daily trading volume has increased significantly since the chapter 11 filing. As a publicly held
1

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Notwithstanding the Committee's assertion, the Debtors never agreed to refrain from filing the Application. While the Debtors tentatively agreed not to proceed with Heller as special labor counsel, the Debtors always maintained that they needed Heller as special corporate counsel and that an application would be filed, as evidenced by the Debtors' diligent prosecution of the Application.

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067 TELEPHONE: (310) 407-4000

company, NRVH must continue to comply with applicable federal law. The need for special corporate counsel to address these and other matters is manifest. Thus, the only remaining question is: why not Heller? Stephen M. Davis, the corporate attorney principally responsible for Heller's representation of the Debtors, has personally represented the Debtors since 1989, and is intimately familiar with the material aspects of the Debtors' business. Mr. Davis is also intimately familiar with the corporate and securities laws issues that the Debtors will continue to face and the facts and background inextricably linked to such issues. As such, Heller has significant corporate memory that is particularly essential for a company that has terminated or lost most of its employees and needs to wind down its operation as quickly and efficiently as possible. Mr. Davis and his team are, quite literally, irreplaceable. The Committee's objection on the grounds that Mr. Davis is based in New York and is allegedly incurring unnecessary costs is belied by the facts. For all practical purposes, Mr. Davis is able to and has been representing the Debtors from the comfort of his office. The vast majority of the board of directors' meetings are conducted by telephone; and advice is handled by phone and e-mail. (It is also worth pointing out that several of the Debtors' directors live and work on the east coast.) Mr. Davis and his team are likewise always available via phone or e-mail to provide advice to the Debtors' officers and, in particular, to their legal department, but even assuming, for argument sake, that his location in New York would result in any additional expense to the estates, any such costs would be outweighed (significantly) by the benefits of his continuing to serve as the Debtors' long-standing corporate counsel. Finally, there is no basis in fact or law for the Committee's objection to Heller on the grounds that Mr. Davis is allegedly currently serving as member on the Debtors' board of directors (which is simply not the case).2 While Mr. Davis currently is the corporate secretary to

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Although Mr. Davis is a former board member of NRVH, he has not served on the board of directors of NRVH for more than three years. His status as a former board of director, standing alone, would not render him or Heller not "disinterested" under section 101 of the Bankruptcy Code such that Heller would be precluded from being employed under section 327(a). As an aside, even under the pre-BAPCPA Bankruptcy Code, the definition of disinterestedness required one not to have served as a director within two years of the petition date. In any event, the applicant seeks to employ Heller under section 327(e) of the Bankruptcy Code.

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067 TELEPHONE: (310) 407-4000

the board of directors of NRVH (which was disclosed in the Application), that is not a board position. Indeed, this position is largely ministerial and, frankly, economical the vast majority of boards of directors have their attorneys draft the minutes in any event. Subject to certain limitations found in Bankruptcy Code section 327, "[u]nder 1107(a), a debtor in possession may generally select its own professionals without interference." In re Sharon Steel Corp., 152 B.R. 447, 449 (Bankr. W.D. Pa. 1993); see also In re Federated Dep't Stores, 114 B.R. 501, 504 (Bankr. S.D. Ohio 1990) (same). As noted in the Application, Heller is qualified to be employed under section 327. Given that the facts and circumstances of these cases demonstrate a continued need for corporate counsel, there is simply no reason not to grant the Application to employ Heller as the Debtors special corporate counsel. WHEREFORE, the Debtors request that this Court overrule the Opposition in its entirety and authorize the Debtors to employ Heller solely as their special corporate counsel, with compensation that is at the expense of the estates to be in such amounts as this Court may hereafter allow in accordance with applicable law.

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DATED: January 14, 2008

/s/ David M. Guess DAVID M. GUESS, an Attorney with KLEE, TUCHIN, BOGDANOFF & STERN LLP Bankruptcy Counsel for Debtors and Debtors in Possession

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067 TELEPHONE: (310) 407-4000

DECLARATION OF STEPHEN M. DAVIS I, Stephen M. Davis, declare as follows: 1. I am a shareholder of Heller Ehrman LLP ("Heller"), proposed special corporate

counsel to National R.V. Holdings, Inc. and National R.V., Inc., the debtors and debtors in possession in the above-referenced cases (the "Debtors"), which filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code on November 30, 2007 (the "Petition Date"). 2. I submit this Declaration in support of the accompanying Debtors' Reply to

Opposition of Official Committee of Unsecured Creditors to Application of Debtors and Debtors in Possession for Order (1) Authorizing Employment of Heller Ehrman LLP as Special Corporate and Labor Counsel, and (2) Authorizing Heller Ehrman LLP to Draw Down on Chapter 11 Retainer. Except as otherwise stated herein, if called as a witness, I could and would competently testify to the matters set forth herein from my own personal knowledge. 3. I have represented the Debtors since 1989, and am intimately familiar with the

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material aspects of the Debtors' business. I am also intimately familiar with the corporate and securities laws issues that the Debtors will continue to face and the facts and background inextricably linked to such issues. The Debtors became clients of Heller when I joined the

firm in 1999. Since that time, Heller has assisted the Debtors, their officers, and their boards of directors with numerous issues of corporate law on an ongoing basis.
4. I am not currently a member of the Debtors' board of directors, although I was a

member nearly four years ago, at which time my term expired. I chose not to run for reelection. 5. I am, however, currently the corporate secretary of the board of directors of

National R.V. Holdings, Inc. This position, however, is largely ministerial. My appointment as corporate secretary was essentially an economical decision. 6. I primarily represent the Debtors telephonically and by e-mail. I attend virtually

all board of directors meetings telephonically, and have not been to Perris, California since before the commencement of these cases. Coming to California has never been an integral or necessary part of my representation. The vast majority of the board of directors' meetings are

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KLEE, TUCHIN, BOGDANOFF & STERN LLP 1999 AVENUE OF THE STARS, 39TH FLOOR LOS ANGELES, CALIFORNIA 90067 TELEPHONE: (310) 407-4000

DECLARATION OF DAVID J. HUMPHREYS I, David J. Humphreys, declare as follows:

1.

I am the Interim Chief Executive Officer of both National R.V. Holdings, Inc.

("NRVH") and National R.V., Inc., the debtors and debtors in possession in the abovecaptioned chapter 11 cases (the "Debtors"). I am also the Chairman of the board of directors of NRVH (the "Board").
2. In these capacities, and in conjunction with the efforts of other members of the

Debtors' senior management, I am involved in many aspects of the Debtors' affairs, including business operations, strategic planning, and other management activities, including the Debtors' efforts to address their current financial difficulties. With some regularity, I have worked closely with personnel from all aspects of the Debtors' operations. 3. I submit this Declaration in support of the accompanying Debtors' Reply to

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Opposition of Official Committee of Unsecured Creditors to Application of Debtors and Debtors in Possession for Order (1) Authorizing Employment of Heller Ehrman LLP as Special Corporate and Labor Counsel, and (2) Authorizing Heller Ehrman LLP to Draw Down on Chapter 11 Retainer. Except as otherwise stated herein, if called as a witness, I could and would competently testify to the matters set forth herein from my own personal knowledge. 4. I have been a member of the Board since February 16, 2006. I was appointed

Chairman of the Board on May 31, 2007, and have been Chairman ever since. On October 1, 2007, I was also appointed the Debtors' Interim Chief Executive Officer. 5. Stephen M. Davis is the corporate attorney from Heller Ehrman LLP ("Heller")

principally responsible for Heller's representation of the Debtors in corporate matters. Steve has served as corporate counsel to the Debtors for many years. I think that he has served in this capacity longer than any current Board member has been on the Board. In light of this, Steve's detailed knowledge of the company and its history is invaluable to the present Board in making key decisions. Steve has been similarly invaluable to the Debtors' officers, and has been of great use to me personally, both in my capacity as an officer and director of the Debtors.