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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 APPLICATION OF DEBTORS AND DEBTORS IN POSSESSION PURSUANT TO BANKRUPTCY CODE SECTIONS 327(a) AND 1107 AND RULE 2014 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE FOR ORDER AUTHORIZING EMPLOYMENT OF VENABLE LLP AS SPECIAL LABOR AND EMPLOYMENT COUNSEL; DECLARATION OF RONALD W. TAYLOR, ESQ. IN SUPPORT THEREOF No Hearing Required

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

TO THE HONORABLE PETER H. CARROLL, UNITED STATES BANKRUPTCY JUDGE; AND THE OFFICE OF THE UNITED STATES TRUSTEE: As permitted by Bankruptcy Code sections 327(a) and 1107, and Rule 2014 of the Federal Rules of Bankruptcy Procedure, National R.V. Holdings, Inc. and National R.V., Inc., the debtors and debtors in possession in the above-captioned cases (the "Debtors"), hereby submit this application for entry of an order authorizing and approving the retention of the Venable LLP ("Venable") as their special labor and employment counsel effective as of January 2, 2008 (the "Application"). Although the Debtors previously filed an employment application seeking authorization to retain Heller Ehrman LLP ("Heller") as their special labor and employment counsel, the Debtors have chosen to proceed with Venable instead of Heller. In support of the Application, the Debtors rely on the accompanying Declaration of Ronald W. Taylor, Esq. (the "Taylor Declaration"). Notice of the Application was served in accordance with Local Bankruptcy Rule 2014-1(b)(2) & (3) and the Guidelines of the Office of the United States Trustee. The Debtors respectfully represent and show as follows: I. BACKGROUND The Debtors commenced these cases by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code on November 30, 2007 (the "Petition Date"). The Debtors filed these cases in order to conduct an orderly disposition of their assets, and to maximize the value of those assets for the benefit of the economic stakeholders of their estates. The Debtors' principal business is the manufacture and distribution of recreational vehicles throughout the United States and Canada. Since 1964, the Debtors have designed, manufactured, and marketed some of the industry's highest quality "Class A" gas and diesel recreational vehicles across several branded product lines, including Dolphin, Pacifica, Sea Breeze, Surf Side, Tradewinds, and Tropi-Cal. As of the Petition Date, the Debtors were the ninth largest manufacturer of "Class A" motor homes in the country. Prior to commencing these cases, the Debtors explored a variety of approaches to their continuing liquidity crisis, including a sale, a sale of certain underperforming assets, and the

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

infusion of new equity capital. Despite many efforts, it became increasingly clear that the Debtors simply could not continue to operate for any extended period of time. As a result, the Debtors determined they had no choice other than to pursue an orderly liquidation of their assets. To that end, after having conducted substantial "reductions in force," resulting in more than a 90% reduction of their work force, they commenced these cases. The objective of these cases is to maximize value as quickly as possible. This likely will be accomplished through an orderly disposition of the Debtors' assets for the best price. The Debtors believe that value for the benefit of creditors and, with perseverance, shareholders, can be derived from primarily three sources: (a) the successful prosecution of the Kemlite Litigation; (b) the orderly sale of inventory, both finished and unfinished motor homes, parts and replacements, and other valuable items on hand; and (c) the collection of accounts receivable, general intangibles (including intellectual property) and other assets. Additional information concerning the Debtors, their operations, their turnaround efforts, and the commencement of these cases, can be found in the Declaration of Thomas J. Martini in Support of First-Day Motions [Docket #18], on file with the Court. II. RELIEF REQUESTED The Debtors wish to employ Venable as their special labor and employment counsel in connection with these cases, effective as of the Petition Date. For more than 40 years, Venable has employed attorneys whose practices are focused on interpreting and providing legal guidance to clients regarding all aspects of human resource law and legislation, labor relations law, and employee benefits law and regulations. Venable's Labor and Employment Group, currently comprised of 14 partners and of counsel, and 13 associates, routinely provides counsel to clients on a variety of employment issues arising under federal law, including Title VII, the Fair Labor Standards Act, the Family and Medical Leave Act, the Americans with Disabilities Act, the Employee Retirement Income Security Act, the Age Discrimination in Employment Act, the Worker Adjustment and Retraining Notification Act, and the Occupational Safety and Health Act. Venable also has extensive experience in defending employers against employment

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

claims arising under state law, including wage payment claims, overtime claims, discriminatory discharge claims, contract claims, and class action claims brought under the California Labor Code for allegedly unpaid overtime and late payment of wages. Venable's Labor and

Employment Group attorneys are nationally recognized and have been highlighted in Chambers USA Leading Lawyers and Best Lawyers in America. Venable is well qualified to represent the Debtors. A summary of the experience and qualifications of those members of Venable who are expected to render services to the Debtors is attached to the accompanying Taylor Declaration as Exhibit 1. The partners and associates at Venable who will advise the Debtors have wide-ranging experience in labor and employment law, on both the federal and state level, as well as in general litigation. Beginning in January 2008, Venable began providing services to the Debtors, in particular, as defense counsel in the case of Caouette v. National R.V. Holdings, Inc. (In re National R.V. Holdings, Inc.), Bk. Case No. 6:07-17941-PC, Adv. Case No. 6:07-01305-PC (the "WARN Act Proceeding"). The WARN Act Proceeding alleges that the termination of Plaintiff Henry Caouette and all other similarly situated employees on or about November 30, 2007, violated the Work Adjustment and Retraining Notification Act, 29 U.S.C. 2101-2109 (the "WARN Act") and violated similar requirements under California law, Cal. Lab. Code 1400-1408 (the "California WARN Act"). Both the WARN Act and the California WARN Act require an employer, subject to certain statutory exceptions, to give sixty days notice prior to a plant closing or mass layoff. Plaintiff contends that the failure to give him and all other similarly situated employees sixty days notice prior to their layoff violated the WARN Act and the California WARN Act. The WARN Act Proceeding is a proposed class action seeking relief on behalf of all employees who were laid off on or about November 30, 2007. The WARN Act Proceeding seeks an award for each plaintiff of sixty days wages and benefits as well as attorneys' fees. The Debtors require special labor and employment counsel to render the following types of professional services, among others: a. To advise the Debtors regarding matters of labor and employment law;

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

b.

To represent the Debtors in proceedings or hearings in the United States

Bankruptcy Court for the Central District of California (the "Court") involving matters of labor and employment law, including the WARN Act Proceeding; and c. To assist the Debtors with the negotiation, documentation and any

necessary Court approval of transactions relating to labor and employment issues. A true and correct copy of the current retention agreement between Venable and the Debtors is attached to the Taylor Declaration as Exhibit 2. Venable will not undertake

responsibility for those aspects of matters that are not within the scope of its representation as set forth in that agreement without further order of this Court. The Debtors may request that Venable undertake specific matters beyond the limited scope of the responsibilities set forth in the retention agreement. Should Venable agree in its discretion to undertake any such matters, the Debtors will seek further order of this Court. III. COMPENSATION Venable began providing services to the Debtors on January 2, 2008. Venable has agreed to accept as compensation such sums as may be allowed by this Court in accordance with applicable law. A list of the guideline hourly rates for those members of Venable expected to render services to the Debtors is attached to the Taylor Declaration as Exhibit 3. No additional compensation will be paid by the Debtors to Venable except as approved by this Court. Venable will file one or more fee applications seeking Court authority to receive compensation and reimbursement of expenses from the Debtors consistent with any orders of the Court and applicable procedures established by the Office of the United States Trustee. If the Court adopts a monthly fee procedure, Venable will seek monthly compensation pursuant to such procedure. To the extent any fees or expenses paid to Venable are disallowed by this Court, Venable understands that such disallowed amounts may be ordered disgorged by Venable. IV. NO ADVERSE INTERESTS / DISINTERESTEDNESS To the best of the Debtors' knowledge, based upon the accompanying Taylor Declaration,

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

except as they are or have been the attorneys for the Debtors and except as otherwise set forth below, Venable and all of the attorneys comprising or employed by it are disinterested persons who do not hold or represent an interest adverse to the estates and do not have any connection either with the Debtors, their creditors, or any other party in interest in these cases or with their respective attorneys or accountants, or with any judge of the United States Bankruptcy Court for the Central District of California, the United States Trustee, or any person employed in the Office of the United States Trustee. Venable does presently represent the following parties on matters wholly unrelated to Debtors, property thereof, or these chapter 11 cases: Wells Fargo Bank Giant RV O'Melveny & Myers LLP First Industrial Realty Trust Sherwin-Williams Company Bank of America Venable has in the past represented the following parties on matters wholly unrelated to the Debtors, property thereof, or these chapter 11 cases: Baker & McKenzie Heller Ehrman LLP Xerox Corporation Lumbermen's Underwriting Alliance The Debtors respectfully further submit that Venable's joint representation of each of the Debtors will not create a conflict of interest and should be approved by the Court. Among other things, this joint representation would help to protect attorney/client communications between Venable and the Debtors and would reduce the expenses of administering the estates. It would be wasteful and prohibitively expensive to require each of the Debtors to retain separate labor and employment counsel. The Debtors submit that although they are co-defendants in the

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WARN Act Proceeding, because they face the same claims and will raise duplicative defenses,

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

joint representation of both Debtors also does not create a conflict of interest. Because the defenses raised by both defendants will be duplicative, neither defendant will raise any defense which would undermine the other defendant's defense against the claims raised. Joint representation of the Debtors is appropriate for several reasons. The Debtors are affiliates as defined by Bankruptcy Code section 101(2) and Rule 1015(b) of the Federal Rules of Bankruptcy Procedure. National R.V. Holdings, Inc. is the corporate parent and 100% equity owner of National R.V., Inc. The Debtors share common management and the same indirect ownership (i.e., public shareholders). The proposed liquidation of the assets of both entities is part of a fully integrated transaction. Venable is not aware of conflict of interest that would prohibit the joint representation of these entities.1 The following supplemental disclosures are made with respect to Venable's disinterestedness. References to Venable include all attorneys who are expected to render services in these cases. a. Venable is not and was not a creditor, an equity security holder, or an

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insider of the Debtors. b. Venable is not and was not, within two years before the Petition Date, a

director, officer, or employee of the Debtors. c. Pursuant to the disclosures contained in the Taylor Declaration, Venable

has no interest materially adverse to the interest of the estates or of any class of creditors or equity security holders, either by reason of any direct or indirect relationship to, connection with, or interest in the Debtors or for any other reason. Venable will conduct an ongoing review of its files to ensure that no conflicts or other disqualifying circumstances exist or arise. To the extent the Debtors and/or Venable discover during the period of Venable's employment any facts bearing upon the matters described herein,

According to the books and records of the Debtors, there exist intercompany claims between each of the Debtors. In essence, the Debtors have separate functions, and they cross-charge each other to the extent that those functions benefit one other. Neither the Debtors nor Venable believe that this amounts to a conflict that would give rise to denial of this 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

DECLARATION OF RONALD W. TAYLOR, ESQ. I, Ronald W. Taylor, declare as follows: 1. I am a partner with the law firm of Venable LLP ("Venable"), the proposed

special labor and employment counsel to National R.V. Holdings, Inc. and National R.V., Inc., the debtors and debtors in possession in the above-captioned cases (the "Debtors"), which filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code on November 30, 2007 (the "Petition Date").2 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. 2. For more than 40 years, Venable has employed attorneys whose practices are

focused on interpreting and providing legal guidance to clients regarding all aspects of human resource law and legislation, labor relations law, and employee benefits law and regulations. Venable's Labor and Employment Group, currently comprised of 14 partners and of counsel, and 13 associates, routinely provides counsel to clients on a wide-variety of employment issues arising under federal law, including Title VII, the Fair Labor Standards Act, the Family and Medical Leave Act, the Americans with Disabilities Act, the Employee Retirement Income Security Act, the Age Discrimination in Employment Act, the Worker Adjustment and Retraining Notification Act, and the Occupational Safety and Health Act. Venable also has extensive experience in defending employers against employment claims arising under state law, including wage payment claims, overtime claims, discriminatory discharge claims, contract claims, and class action claims brought under the California Labor Code for allegedly unpaid overtime and later payment of wages. Venable's Labor and Employment Group attorneys are nationally recognized and have been highlighted in Chambers USA Leading Lawyers and Best Lawyers in America. 3. A summary of the experience and qualifications of those members of Venable

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who are expected to render services to the Debtors is attached hereto as Exhibit 1. The partners

Undefined capitalized terms in this Declaration have the meaning ascribed to them in 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

and associates at Venable who will advise the Debtors have wide-ranging experience in labor and employment law, on both the federal and state level, as well as in general litigation. 4. Beginning in January 2008, Venable began providing services to the Debtors, in

particular, as defense counsel in the case of Caouette v. National R.V. Holdings, Inc. (In re National R.V. Holdings, Inc.), Bk. Case No. 6:07-17941-PC, Adv. Case No. 6:07-01305-PC (the "WARN Act Proceeding"). The WARN Act Proceeding alleges that the termination of Plaintiff Henry Caouette and all other similarly situated employees on or about November 30, 2007, violated the Work Adjustment and Retraining Notification Act, 29 U.S.C. 2101-2109 (the "WARN Act") and violated a similar requirements under California law, Cal. Lab. Code

1400-1408 (the "California WARN Act"). Both the WARN Act and the California WARN Act require an employer, subject to certain statutory exceptions, to give sixty days notice prior to a plant closing or mass layoff. Plaintiff contends that the failure to give him and all other similarly situated employees sixty days notice prior to their layoff violated the WARN Act and the California WARN Act. The WARN Act Proceeding is a proposed class action seeking relief on behalf of all employees who were laid off on or about November 30, 2007. The WARN Act Proceeding seeks an award for each plaintiff of sixty days wages and benefits as well as attorneys' fees. 5. The Debtors require special labor and employment counsel to render the following

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types of professional services, among others: a. b. To advise the Debtors regarding matters of labor and employment law; To represent the Debtors in proceedings or hearings in the United States

Bankruptcy Court for the Central District of California (the "Court") involving matters of labor and employment law, including the WARN Act Proceeding; and c. To assist the Debtors with the negotiation, documentation and any

necessary Court approval of transactions relating to labor and employment issues. 6. A true and correct copy of the current retention agreement between Venable and

the Debtors is attached hereto as Exhibit 2. Venable will not undertake responsibility for those

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

aspects of matters that are not within the scope of its representation as set forth in that agreement without further order of this Court. 7. The Debtors may request that Venable undertake specific matters beyond the

limited scope of the responsibilities set forth in the retention agreement. Should Venable agree in its discretion to undertake any such matters, the Debtors will seek further order of this Court. 8. Venable began providing services to the Debtors on January 2, 2008. Venable has

agreed to accept as compensation such sums as may be allowed by this Court in accordance with applicable law. A list of the guideline hourly rates for those members of Venable expected to render services to the Debtors is attached hereto as Exhibit 3. No additional compensation will be paid by the Debtors to Venable except as approved by this Court. Venable will file one or more fee applications seeking Court authority to receive compensation and reimbursement of expenses from the Debtors consistent with any orders of the Court and applicable procedures established by the Office of the United States Trustee. If the Court adopts a monthly fee procedure, Venable will seek monthly compensation pursuant to such procedure. To the extent any fees or expenses paid to Venable are disallowed by this Court, Venable understands that such disallowed amounts may be ordered disgorged by Venable. 9. Venable utilizes a number of procedures to determine its relationships, if any, to

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parties that may have connections to a case. Specifically, Venable uses computer programs to review its databases in order to discover relationships. Venable also routinely inquires of attorneys with the firm whether any relationships exist that may escape scrutiny utilizing the computerized systems upon which the firm relies. 10. In the instant case, Venable focused its inquiry on ascertaining whether:

a.

the firm or any attorney thereof currently represents or otherwise

currently has a relationship with any person or entity listed on the Lists of Creditors Holding 20 Largest Unsecured Claims (filed with the Court on the Petition Date) and the List of Equity Security Beneficiaries of NRVH (filed with the Court on the Petition Date), the Debtors' secured creditors, the Debtors' directors and officers, and the Debtors' proposed professionals (collectively, the "Searched Parties"); 3

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

b.

the firm or any attorney thereof represented any of the Searched Parties

during the past year; or c. the firm during the past year derived significant revenue from any of the

Searched Parties. 11. Based on the preceding review, except as they are or have been the attorneys for

the Debtors and except as set forth below, Venable and all of the attorneys comprising or employed by it are disinterested persons who do not hold or represent an interest adverse to the estates and do not have any connection either with the Debtors, their creditors, or any other party in interest in these cases or with their respective attorneys or accountants, or with any judge of the United States Bankruptcy Court for the Central District of California, the United States Trustee, or any person employed in the Office of the United States Trustee. Venable does presently represent the following parties on matters wholly unrelated to Debtors, property thereof, or these chapter 11 cases: Wells Fargo Bank Giant RV O'Melveny & Myers LLP First Industrial Realty Trust Sherwin-Williams Company Bank of America Venable has in the past represented the following parties on matters wholly unrelated to the Debtors, property thereof, or these chapter 11 cases: Baker & McKenzie Heller Ehrman LLP Xerox Corporation Lumbermen's Underwriting Alliance Venable's joint representation of each of the Debtors will not create a conflict of interest. Among other things, this joint representation would help to protect attorney/client communications between Venable and the Debtors and would reduce the expenses of

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

administering the estates. It would be wasteful and prohibitively expensive to require each of the Debtors to retain separate labor and employment counsel. Although they are co-defendants in the WARN Act Proceeding, because they face the same claims and will raise duplicative defenses, joint representation of both Debtors also does not create a conflict of interest. Because the defenses raised by both defendants will be duplicative, neither defendant will raise any defense which would undermine the other defendant's defense against the claims raised. Joint representation of the Debtors is appropriate for several reasons. The Debtors are affiliates as defined by Bankruptcy Code section 101(2) and Rule 1015(b) of the Federal Rules of Bankruptcy Procedure. National R.V. Holdings, Inc. is the corporate parent and 100% equity owner of National R.V., Inc. The Debtors share common management and the same indirect ownership (i.e., public shareholders). The proposed liquidation of the assets of both entities is part of a fully integrated transaction. Venable is not aware of conflict of interest that would prohibit the joint representation of these entities. 12. The following supplemental disclosures are made with respect to Venable's

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disinterestedness. References to Venable include all attorneys who are expected to render services in these cases.

a.

Venable is not and was not a creditor, an equity security holder, or an

insider of the Debtors.

b. Venable is not and was not, within two years before the Petition Date, a

director, officer, or employee of the Debtors. c. Venable has no interest materially adverse to the interest of the estates or

of any class of creditors or equity security holders, either by reason of any direct or indirect relationship to, connection with, or interest in the Debtors or for any other reason. 13. Venable will conduct an ongoing review of its files to ensure that no conflicts or

other disqualifying circumstances exist or arise. To the extent the Debtors and/or Venable discover during the period of Venable's employment any facts bearing upon the matters described herein, the Debtors and/or Venable promptly will inform the Court.

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

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EXHIBIT 1 BIOGRAPHIES OF CERTAIN MEMBERS OF VENABLE LLP

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EXHIBIT 1

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

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EXHIBIT 2 CURRENT RETENTION AGREEMENT BETWEEN DEBTORS AND VENABLE LLP

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EXHIBIT 2

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

EXHIBIT 3 VENABLE LLP RANGE OF GUIDELINE HOURLY RATES 2008 General Range of Rates Partners Of Counsel Associates Paralegals Partners Expected to be Most Active Douglas C. Emhoff Jon-Jamison Hill Ronald W. Taylor Of Counsel Expected to be Most Active Thomas H. Strong Paralegals Expected to be Most Active Pamela Artigiani Cynthia Rubalcava $215 $130 $360 $475 $380 $495 $415-$750 $420-$750 $265-$420 $130-$250

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EXHIBIT 3