SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 1, 1996
Featherlite Mfg., Inc.
(Exact name of registrant as specified in its charter)
Minnesota
(State or other jurisdiction of incorporation)
0-24804 41-1621676
(Commission File Number) (I.R.S. Employer Identification No.)
Highways 63 and 9, Cresco, Iowa 52136
(Address of principal executive offices) (Zip Code)
(319) 547-6000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On July 1, 1996, Featherlite Mfg., Inc. (the "Registrant") acquired
substantially all of the assets and certain liabilities of Vantare
International, Inc. ("Vantare") in a tax-free exchange of Common Stock of the
Registrant for such assets and liabilities. Pursuant to the exchange, Vantare is
receiving up to 400,000 shares of the Registrant's Common Stock, par value $.01
per share, with up to 100,000 of such shares subject to possible downward
adjustment in certain events. Michael Guth is the sole shareholder, director,
and executive officer of Vantare.
Vantare, of Sanford, Florida, manufactures and markets luxury custom
coaches. The assets and business of Vantare acquired by the Registrant will be
operated as a separate division of the Registrant.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired:
It is impracticable to provide, at the time this Report is
being filed, the required financial statements for the
business acquired pursuant to the exchange. Such financial
statements will be filed as an amendment to this Report within
60 days after the date for filing this Report.
(b) Pro Forma Financial Information:
It is impracticable to provide, at the time this Report is
being filed, the required pro forma financial information for
the business acquired pursuant to the exchange. Such pro forma
financial information will be filed as an amendment to this
Report within 60 days after the date for filing this Report.
(c) Exhibits:
(2) Agreement and Plan of Reorganization, dated July 1,
1996, by and among Featherlite Mfg., Inc., Vantare
International, Inc., and Michael Guth. Pursuant to
Item 601(b)(2) of Regulation S-K, upon the request of
the Commission, the Registrant undertakes to furnish
supplementally to the Commission a copy of any
schedules to the Agreement and Plan of
Reorganization, which are listed in such agreement.
(10) Employment Agreement, dated July 1, 1996, between
Featherlite Mfg., Inc. and Michael Guth.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FEATHERLITE MFG., INC.
Date: July 11, 1996 By /s/ Conrad D. Clement
Conrad D. Clement, President
and Chief Executive Officer
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBIT INDEX
to
JULY 1, 1996 FORM 8-K
FEATHERLITE MFG., INC.
Exhibit Number Exhibit Description
(2) Agreement and Plan of Reorganization dated July 1,
1996, among the Registrant, Vantare International,
Inc., and Michael Guth.
(10) Employment Agreement, dated July 1, 1996, between
Featherlite Mfg., Inc. and Michael Guth.
Exhibit 2
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT is made and entered into effective as of July 1, 1996,
by and among Featherlite Mfg., Inc., a Minnesota corporation ("Featherlite"),
Vantare International, Inc., a Florida corporation ("Vantare"), and Michael Guth
("Guth").
RECITALS:
A. Vantare is engaged in the business of manufacturing and marketing
luxury custom coaches. Guth owns all of the outstanding capital stock
of Vantare.
B. Vantare desires to transfer substantially all of its assets to
Featherlite in exchange for shares of capital stock of Featherlite and
the assumption by Featherlite of certain of its liabilities, upon the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, and for other valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the parties mutually
agree as follows:
ARTICLE 1
DEFINITIONS
In this Agreement the following terms shall have the meanings assigned
to them below:
1.1 "Affiliate" of a specified person or entity means a person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified.
1.2 "Assets" means the assets of Vantare associated with the Business
as described in and limited by section 2.2 hereof.
1.3 "Average Market Price" means the average of the closing sale prices
of Featherlite Common Stock on the Nasdaq National Market for the 20 consecutive
trading days ending on the trading day immediately preceding the applicable
date, as reported in the Wall Street Journal.
1.4 "Business" means the business of Vantare, which consists of
manufacturing and marketing luxury custom coaches.
1.5 "Closing" means the meeting of the parties at which the
transactions contemplated herein to occur are completed, which meeting shall be
held commencing at 9:00 a.m., local time, at the offices of Vantare, on the
Closing Date, or at such other time or place as may be mutually agreed upon by
the parties.
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1.6 "Closing Balance Sheet" has the meaning given to such term in
section 2.6.
1.7 "Closing Date" means July 1, 1996, or such other date as may be
mutually agreed upon by the parties.
1.8 "Code" means the Internal Revenue Code of 1986, as amended.
1.9 "Contracts" means the contracts and agreements of Vantare described
in section 2.2.3.
1.10 "Effective Time" means 12:01 a.m. on the Closing Date if the
Closing occurs.
1.11 "Employee Benefit Plan" means an employee benefit plan within the
meaning of ERISA section 3(3) maintained, sponsored or contributed to by
Vantare.
1.12 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.13 "Escrow Amount" means the amount, or number of Featherlite Shares,
retained from the Exchange Consideration, as described in section 2.7.
1.14 "Escrow Period" means the period described in section 2.7.
1.15 "Exchange" means the exchange of the Assets for the Featherlite
Shares as described in section 2.1.
1.16 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.17 "Exchange Consideration" means the aggregate consideration payable
to Vantare, consisting of the Featherlite Shares and the assumption of the
Permitted Liabilities, as described in section 2.4.
1.18 "Excluded Liabilities" has the meaning given to such term in
section 2.5.4.
1.19 "Featherlite Common Stock" means shares of common stock of
Featherlite, without par value.
1.20 "Featherlite Shares" means the Featherlite Common Stock issued
pursuant to the Exchange, as further described in section 2.4 hereof, but
subject to the adjustments described in section 2.7.
1.21 "GAAP" means generally accepted accounting principles applied on a
consistent basis consistent with such party's prior financial statements.
1.22 "Intellectual Property" means patents and patent applications,
copyrights and copyright applications, trademarks, service marks, trade names,
know-how, trade secrets, data, information, technology, processes, formulas,
drawings, designs, computer programs, and license rights to any of the
foregoing.
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1.23 "Letter Agreement" means that certain restated letter of intent
dated June 10, 1996, among Vantare, Guth, and Featherlite.
1.24 "Liens" means any liens, mortgages, pledges, encumbrances,
conditional sales agreements, security interests, or title retention devices of
any nature.
1.25 "Multiemployer Plan" means a Pension Plan that is a multiemployer
plan as defined in ERISA section 4001 (a) (3).
1.26 "Pension Plan" means, at any time, any Employee Benefit Plan
(including a Multiemployer Plan), the funding requirements of which (under ERISA
section 302 or Code section 412) are or, at any time within the six years
immediately preceding the time in question, were in whole or in part, the
responsibility of Vantare.
1.27 "Permitted Liabilities" means the liabilities of Vantare described
as "Permitted Liabilities" in section 2.5.
1.28 "Permitted Liens" means the Liens against the Assets transferred
by Vantare to Featherlite listed on Schedule 1.28.
1.29 "Records" means the documents described in section 2.2.4.
1.30 "SEC" means the Securities and Exchange Commission.
1.31 "SEC Reports" means all periodic and/or current reports,
registration statements and proxy statements filed with the SEC.
1.32 "Securities Act" means the Securities Act of 1933, as amended.
1.33 "Tax" means any tax or other primary, secondary or transferee
liability to any governmental entity, including without limitation, all federal,
state, county, local and foreign income, profits, gross receipts, real and
personal property, franchise, license, payroll, employment, sales, use, value
added, excise, custom, duty, and any other taxes, obligations, and assessments
of any kind whatsoever, together with all interest and penalties; the foregoing
shall include any liability arising as a result of being (or ceasing to be) a
member of any affiliated, consolidated, combined, or unitary group as well as
any liability under any Tax allocation, Tax sharing, Tax indemnity or similar
agreement.
1.34 "3-31-96 Balance Sheet" has the meaning given to such term in
section 3.5.
1.35 "12-31-95 Balance Sheet" has the meaning given to such term in
section 3.5.
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1.36 "Unrecognized Retiree Welfare Liabilities" means with respect to
any Employee Benefit Plan that provides postretirement benefits other than
pension benefits, the amount of the transition obligation, as determined in
accordance with Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions," as of the most
recent valuation date, that has not been recognized as an expense in the income
statement of Vantare. Prior to the date such Statement is applicable, such
amount shall be based on an estimate made in good faith of the transition
obligation.
ARTICLE 2
EXCHANGE OF ASSETS FOR FEATHERLITE SHARES
2.1 Exchange. On the Closing Date, upon the terms and conditions of
this Agreement, Vantare shall transfer to Featherlite all of the Assets and
shall receive in exchange therefor the Exchange Consideration, as described in
section 2.4 (the "Exchange"). Each of the parties intends that the Exchange
constitute and qualify as a tax-free reorganization pursuant to the provisions
of section 368(a)(1)(C) of the Code. All of the Assets shall be free and clear
of all Liens other than Permitted Liens. No consideration of any kind, other
than the Exchange Consideration described in section 2.4 hereof, shall be paid
or transferred by Featherlite to Vantare, or to its shareholders, in connection
with the Exchange.
2.2 Assets to Be Transferred. The Assets to be transferred to
Featherlite by Vantare shall consist of all of the business and assets, tangible
and intangible, of Vantare, except as set forth on Schedule 2.3 (the "Assets").
The Assets comprise substantially all of the assets and properties of Vantare
and include, but are not limited to:
2.2.1 Real Property. All interests in real property, whether
owned of record or beneficially by, or leased by Vantare, including
all buildings and structures located thereon as reflected on Schedule
3.9 attached hereto.
2.2.2 Tangible Personal Property. All of the tangible personal
property, inventory (including but not limited to inventory of used
buses and coaches taken in trade-in, consignment inventory,
work-in-progress inventory, and inventory ordered but not yet
received), and leasehold improvements of Vantare wherever located,
including but not limited to those listed on Schedule 3.9 (which is to
include a list of all buses and coaches stating the status of each),
together with any additions thereto or replacements thereof made in
the ordinary course of business prior to the Closing Date, less any
dispositions made in the ordinary course of business of the Business
prior to the Closing Date of items that either (i) are replaced by
items of comparable quality and function, or otherwise (ii) have an
aggregate original cost of not more than $25,000, and except for
increases and decreases of supplies inventory and receivables in the
ordinary course of Vantare's business under circumstances consistent
with past practice.
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2.2.3 Contracts. The Contracts, and all rights, subject to all
obligations thereunder, of Vantare relating to the Business that (a)
are listed on Schedule 3.14, including all renewals, extensions and
amendments; (b) are not required to be listed on such Schedule, have
been or shall have been entered into by Vantare in the ordinary course
of the Business, and do not represent a breach by Vantare of this
Agreement; or (c) are entered into between the date hereof and the
Closing Date in the ordinary course of business of the Business and do
not represent a breach by Vantare; provided that in no event shall any
Contract be included hereunder under clauses (b) or (c) above, if such
Contract by its terms involves or provides for the right to receive,
or a liability or an obligation valued at, or the payment of, more
than $50,000 per year. Featherlite will assume all of the rights and
obligations of Vantare from and after the Effective Time under the
Contracts described above; provided, however, that Schedule 2.2.3
indicates those contracts that are not to be assigned by Vantare or
assumed by Featherlite pursuant hereto ("Excluded Contracts").
Excluded Contracts will include, whether or not specifically listed on
Schedule 2.2.3, all contracts under which all work has been completed
by Vantare prior to Closing and with respect to which all payments
have been received prior to Closing (except for future obligations
under warranty claims); all contracts and agreements that are
described (or for which their attendant liabilities or obligations are
described) as Excluded Liabilities; and all retention bonus
agreements, severance agreements and deferred compensation agreements.
2.2.4 Business Records. All maps, manuals, files, records, lists,
schedules, accounts, logs, software, mailing lists and customer lists
and other documents maintained by Vantare pertaining to the operation
of the Business (the "Records"); provided, however, that the Records
shall not include corporate records of Vantare, meaning, without
limitation, minute books, stock record books, corporate archives and
similar items not germane to the operation and conduct of the Business
following the Closing Date, and provided, further, that Vantare may
retain copies of such of its Records as it determines it may need
following the Closing or may obtain such copies following the Closing
at reasonable times and at its reasonable expense.
2.2.5 Intellectual Property; Licenses; Goodwill. All Intellectual
Property and licenses owned or held by Vantare and used in the
operation of the Business, and all goodwill and going concern value
associated with the Business, including, but not limited to, the name
"Vantare" and all derivatives thereof and the intellectual property
included on Schedule 3.10.
2.2.6 Accounts Receivable and Prepaid Expenses. All trade and
other miscellaneous accounts receivable arising out of the Business
through the Effective Time and remaining uncollected at the Effective
Time, and all prepaid expenses as of the Effective Time that relate
to, and in the normal course of business of the Business are
chargeable against, the operation of the Business (but only such
prepaid expenses that are realizable through a reduction in future
costs, and only to the extent of the realizable value thereof).
2.2.7 Cash, Customer Deposits, Etc. Vantare's cash, cash
equivalents, short-term investments, and other securities, customer
deposits, letters of credit, deposits in banks and with suppliers, and
investment contracts relating to the Business.
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2.3 Excluded Assets. Notwithstanding anything to the contrary herein,
the assets designated on Schedule 2.3 shall not be included in the Assets, and
shall not be transferred to Featherlite hereunder (the "Excluded Assets").
2.4 Exchange Consideration. Subject to the other provisions of this
Article 2, including specifically the provisions of section 2.7 relating to
possible adjustments to the number of Featherlite Shares issued in the Exchange,
the "Exchange Consideration" shall mean the Permitted Liabilities assumed by
Featherlite as described in section 2.5 and an aggregate four hundred thousand
(400,000) shares of Featherlite Common Stock (collectively, the "Featherlite
Shares") to be paid to Vantare pursuant to the Exchange. If any adjustment is
made pursuant to section 2.7 to the aggregate number of shares of Featherlite
Common Stock issued in the Exchange, references herein to the "Featherlite
Shares" shall be deemed to reflect the aggregate number of shares issued in the
Exchange, as finally adjusted pursuant to section 2.7. The Featherlite Shares
shall, when issued, be duly authorized, validly issued, and fully paid and
nonassessable and shall be subject to no Liens (except securities law
restrictions, restrictions imposed by the terms of this Agreement, and any Liens
caused by Vantare or Guth). The certificates evidencing the Featherlite Shares
shall a contain legend restricting transfer under the Securities Act, such
legend to be substantially as follows:
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of
1933 or under applicable state securities or blue sky laws. Such shares
may not be sold or transferred in the absence of such registrations or
unless exemptions from such registrations are available."
Featherlite shall deliver to Vantare on the Closing Date the certificates
representing the portion of the Featherlite Shares that are not retained in
escrow pursuant to section 2.7.
2.5 Liabilities Assumed; Permitted Liabilities.
2.5.1 As partial consideration for the Assets, Featherlite shall
assume, and agrees with Vantare to pay according to their terms, (i)
all liabilities (determined under GAAP consistent with prior
accounting policies or subsidiary accounting policies as reflected in
the most recent audit reports of Vantare) to the extent reflected on
Schedule 2.5, which shall include normal, current payables incurred in
the regular course of the business of Vantare, (ii) the liabilities of
Vantare to Guth described in section 2.5.2, and (iii) all liabilities
coming due from and after the Effective Time under all assumed
Contracts, whether or not such liabilities under Contracts are
reflected in the Closing Balance Sheet, subject to the further
qualifications of section 2.5.4 hereof (collectively, "Permitted
Liabilities").
2.5.2 The Permitted Liabilities shall include, and Featherlite
shall assume, Vantare's notes payable to Guth as reflected on Schedule
2.5.2, provided that such notes shall be restated as of the Closing
Date as long-term obligations with interest at the minimum rate
required by the applicable provisions of the Code to avoid imputed
interest and with repayment due December 31, 1999. Such restated notes
shall provide to Guth the right to accelerate the payments due
thereunder if and to the extent that Vantare or Guth is required to
pay any liabilities of a type not assumed by Featherlite hereunder and
which are set forth in Schedule 2.5.2.
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2.5.3 For purposes of this Agreement, the Permitted Liabilities
shall mean and include (to the extent properly accrued on the Closing
Balance Sheet if required to be accrued under GAAP) but not be
limited, to the following debts, liabilities, and obligations of
Vantare: (i) obligations for repayment of principal, accrued interest,
deferred fees, and prepayment premiums, if any, to any institutional
and other lenders of Vantare set forth on Schedule 2.5.3(i); (ii)
obligations reflected as long-term debt (both the current and
long-term portion) on the Closing Balance Sheet, and all finance or
capitalized lease obligations set forth on Schedule 2.5.3(ii); (iii)
obligations for the payment of salary, vacation, or other compensation
or Employee Benefits or non-ERISA employee benefits (under employment
agreements or otherwise), but not severance pay, accrued through the
Effective Time as reflected on the Closing Balance Sheet with respect
to any of Vantare's current employees at the Effective Time; (iv)
obligations for intangible and property Taxes, to the extent accrued
by Vantare and set forth on Schedule 2.5.3(iv); and (v) ordinary
course of business payables and trade accounts payable, accrued
pension liabilities, and other accrued liabilities (excluding Taxes),
to the extent reflected on the Closing Balance Sheet.
2.5.4 Notwithstanding anything in this Agreement (or in the
schedules attached hereto or in the documents to be delivered at
Closing pursuant hereto) to the contrary, Featherlite is not assuming,
and shall not be deemed to have assumed and shall not be obligated to
perform or pay liabilities or obligations of Vantare not included in
the Permitted Liabilities and, in particular (but not by way of
limitation), Featherlite shall not be deemed to have assumed and shall
not be obligated to pay any liabilities of Vantare with respect to the
following (all of which are acknowledged to be excluded from Permitted
Liabilities): (A) except as described in section 2.5.3 and set forth
on Schedule 2.5.3(iv), any Taxes, including, without limitation, any
taxes that may be or become payable by reason of, or in connection
with, the transactions effected pursuant to this Agreement (i) based
upon or measured by gross receipts or net income ("Income Taxes") of
the parties, whether or not incurred prior to the Closing Date, and
(ii) Taxes (including Income Taxes) attributable to or incurred in
connection with the Assets or the operation of the Assets prior to the
Closing Date, including, without limitation, any payroll or other
Taxes that are not due until after the Closing Date, but which are
attributable to any period prior to and including the Closing Date,
(B) any liabilities relating to assets of Vantare not being acquired
by Featherlite pursuant to this Agreement; (C) any contract or
agreement that was not specifically assumed hereunder or that was to
be assigned to Featherlite under the terms of this Agreement but was
not validly assigned (except to the extent Featherlite has otherwise
received the benefits of any such contract); (D) any liabilities and
obligations incurred by Vantare as a result of its breach or violation
of any provision of this Agreement or the other agreements, documents
and instruments delivered pursuant hereto; (E) any liabilities of
Vantare that, as a result of either the existence thereof or the
failure of Vantare to disclose such liabilities, cause any of the
representations or warranties of Vantare contained herein to not be
true and correct as of the Closing Date; (F) any liabilities or
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obligations arising out of or related to the provision of any
products or services performed by Vantare prior to the Closing Date,
except for normal warranty claims and except for product liability
claims for which the incident causing liability occurs following the
Effective Time; (G) any liability or obligation resulting from any
breach of any Environmental Laws caused by or arising from the
operation of the Business prior to the Closing Date; (H) any liability
or obligation with respect to or arising out of any action, lawsuit,
claim, proceeding, or investigation described on Schedule 3.12; or (I)
any liability or obligation relating to or arising in connection with
any ERISA plan or non-ERISA employee benefits of Vantare relating to
the period prior to Closing (if not accrued on the Closing Balance
Sheet) and any such liability or obligation relating to any period
following closing except to the extent consistent with the assumption
of certain of such plans by Featherlite as described in section 5.9
hereof. The foregoing liabilities and obligations are referred to as
the "Excluded Liabilities." Notwithstanding the foregoing, the parties
acknowledge and agree that Vantare shall have the right to distribute
prior to the Closing, or accrue prior to the Closing (or on the
Closing Balance Sheet), for distribution following the Closing,
amounts payable to Vantare's shareholders to offset taxes payable by
shareholders on Vantare's S corporation earnings through the Closing
after full utilization of all tax loss carryforwards; to the extent
that any such amounts are reflected as accruals on the Closing Balance
Sheet and are not distributed by Vantare, they shall be deemed to be
Permitted Liabilities.
2.6 Closing Balance Sheet. Within 45 calendar days after the Closing
Date, the parties shall prepare a balance sheet of Vantare as of the Effective
Time (the "Closing Balance Sheet"). The Closing Balance Sheet shall be prepared
in all respects in accordance with GAAP applied consistently with the 12-31-95
Balance Sheet and the 3-31-96 Balance Sheet, including but not limited to
reflecting all proper accruals for Permitted Liabilities (excluding accruals for
all Taxes that are not Permitted Liabilities relating to the period up to the
Effective Time) that have been incurred by Vantare, and shall present fairly the
financial condition of Vantare as of the Effective Time. Within 15 calendar days
after preparation of the Closing Balance Sheet, Vantare will notify Featherlite
in writing of any objections that it may have to the Closing Balance Sheet. If
no such objections are made, the Closing Balance Sheet will be deemed approved
for purposes of determining the Permitted Liabilities. If any such objections
are made and cannot be resolved within an additional period of 10 calendar days,
the dispute shall immediately be referred to an independent accountant jointly
selected by the parties. The determination of such firm with respect to such
dispute, which shall occur no later than 90 calendar days after the Closing
Date, shall be conclusive and binding on Featherlite and Vantare. The fees of
such firm shall be paid one-half each by Featherlite and Vantare.
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2.7 Adjustments to Exchange Consideration; Escrow. An aggregate 100,000
of the 400,000 shares of Featherlite Common Stock comprising the Exchange
Consideration, as described in section 2.4 hereof, shall be subject to downward
adjustment as described in this section 2.7. If Pre-tax Income (as defined
below) for the year ending December 31, 1996, is less than $1,050,000, then the
shares of Featherlite Common Stock issued pursuant to the Exchange shall be
equal to the number of shares of Featherlite Common Stock that bears the same
ratio to 400,000 such shares that Pre-tax Income bears to $1,050,000, with the
result rounded to the nearest whole number of shares; provided, however, that
the parties shall mutually agree to a longer test period in the event that the
ability of the Vantare Division (as defined below) to generate income during the
period ending December 31, 1996, is materially adversely impacted by any
disaster or similar occurrence that is not in Guth's or Featherlite's control.
There shall be no adjustment in the Exchange Consideration if Pre-tax Income for
the year ending December 31, 1996, is $1,050,000 or more. For these purposes,
"Pre-tax Income" shall mean the sum of (i) the net income of Vantare, after
expenses and before income tax, earned from the operation of its business during
the period from January 1, 1996, through June 30, 1996, plus (ii) the net income
of the Vantare Division, after expenses (but excluding any amortization of
intangibles related to the Exchange, and provided that the expenses shall be
generally consistent with the types of expenses of operating the Vantare
Business prior to the Exchange) and before income tax, earned from the operation
of its business during the period from July 1, 1996, through December 31, 1996,
as included in the Featherlite consolidated financial statements for the year
ending December 31, 1996, but shall not include income of other divisions,
affiliates, or subsidiaries of Featherlite (except to the extent that any such
other divisions, affiliates, or subsidiaries subsequently operate, in whole or
in part, the business of the Vantare Division). As used herein, the "Vantare
Division" means the division of Featherlite that operates the business and
assets of Vantare acquired by Featherlite in the Exchange, from and after the
Effective Time, and does not include other divisions or business segments of
Featherlite. Any disputes concerning the calculation by the parties of Pre-tax
Income shall be resolved in the same manner as described in section 2.6 hereof.
During the period beginning on the Closing Date and ending on the earlier of (i)
the date that Featherlite's consolidated financial statements for the year
ending December 31, 1996, are completed, or (ii) March 31, 1997 (unless
otherwise mutually agreed) (the "Escrow Period"), Featherlite shall cause
Firstar Trust Company ("Firstar"), its stock transfer agent, to issue but to
retain and hold in escrow shares of Featherlite Common Stock representing
one-fourth of the Exchange Consideration, or 100,000 such shares (the "Escrow
Amount"), pursuant to the terms set forth in this section. Any cash or other
dividends paid during the Escrow Period on the Featherlite Shares that comprise
the Escrow Amount shall be retained in escrow and paid or distributed in the
same manner as the Escrow Amount, as described in this section 2.7. The
Featherlite Shares that are held in escrow by Firstar shall be retained for the
purpose of satisfying any downward adjustments to the number of Featherlite
Shares issuable to Vantare in the Exchange pursuant to this section. On the day
following the last day of the Escrow Period, Featherlite shall cause Firstar to
distribute to Vantare the balance of the Escrow Amount to the extent that the
Escrow Amount or any portion thereof has not been returned to Featherlite in
satisfaction of any such downward adjustments. As used in this section 2.7 in
connection with the escrow of the Featherlite Shares, or issuance of additional
Featherlite Shares, references to "Vantare" shall mean and refer to Guth
following the distribution by Vantare to Guth of the Featherlite Shares, or
rights with respect to the Featherlite Shares included in the Escrow Amount.
2.8 Distribution to Shareholders. Following the Closing, it is
understood and agreed that Vantare may distribute, in complete liquidation of
Vantare, to the present holders of capital stock of Vantare, the Featherlite
Shares in exchange for the surrender and cancellation of all of such holders'
existing Vantare stock; and that, in connection therewith, Vantare shall
distribute all of its remaining assets and provide for the payment of any
remaining liabilities, as required by law, and shall thereupon dissolve, all
subject to the indemnification provisions set forth in this Agreement. At
Closing, each of the present Vantare shareholders shall deliver to Featherlite
their written acknowledgement (in form reasonably satisfactory to Featherlite)
acknowledging the existence and effect of the indemnification provisions of
Article 9 and the provisions of this section 2.8 upon the Featherlite Shares to
which they will become entitled upon distribution thereof by Vantare in
connection with Vantare's dissolution. Nothing in this section 2.8 shall have
the effect of reducing or mitigating any obligations of Vantare to Featherlite
that it may otherwise have under or as a result of this Agreement and the
transactions contemplated hereby.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF VANTARE AND GUTH
Vantare and Guth, jointly and severally, hereby make the following
representations and warranties to Featherlite, all of which representations and
warranties are true and correct as of the date hereof and shall be true and
correct as of (and as though made at) the Closing.
3.1 Organization. Vantare is a corporation duly organized, validly
existing, and in active status under the laws of the State of Florida. Vantare
is duly qualified or registered to do business as a foreign corporation and is
in good standing in each other jurisdiction that requires such qualification or
registration, except where the failure so to qualify or register would not have
a material adverse effect on Vantare or the Assets. Schedule 3.1 attached hereto
contains a true and accurate list of the states in which Vantare is duly
qualified or registered to do business as a foreign corporation. Vantare has all
necessary corporate power to own its properties, conduct its business as
presently conducted or proposed to be conducted by it, and to do and perform all
acts and things required to be done by it under this Agreement.
3.2 Capitalization. Vantare has duly authorized capital stock
consisting of (i) 20 shares of Vantare Common Stock, of which 20 shares are
issued and outstanding. Guth owns all of such shares. All such outstanding
shares of Vantare Common Stock are duly authorized, validly issued, fully paid
and nonassessable and were issued in compliance with, or pursuant to an
exemption from, all applicable federal and state securities laws. Copies of
Vantare's Articles of Incorporation and Bylaws previously delivered by Vantare
to Featherlite are complete and correct.
3.3 Subsidiaries. The Assets do not include any interest, direct or
indirect, in any other business, corporation, joint venture, partnership, or
proprietorship. The Business has not been conducted through, and the Assets are
not owned by or through, any direct or indirect subsidiary or affiliate of
Vantare.
3.4 Corporate Authority. The execution, delivery and performance by
Vantare of this Agreement and the transactions contemplated hereby have been
duly and validly authorized and approved by all requisite corporate action, and
neither the execution and delivery of this Agreement by Vantare, nor the
consummation of the transactions contemplated hereby, will (i) except as
specifically described in Schedule 3.4, conflict with or result in a breach of
the terms or provisions of or constitute a default under Vantare's Articles of
Incorporation or Bylaws or any material instrument, contract, agreement,
judgment, order, decree, or other restriction to which Vantare is a party or by
which any of its assets is bound or affected, (ii) except as specifically
described in Schedule 3.4, require any affirmative approval, consent, or
authorization of any person, court, or governmental or regulatory authority, or
(iii) except as specifically described in Schedule 3.4, give any party with
rights under any such material instrument, contract, agreement, judgment, order,
decree, or other restriction the right to terminate, accelerate, modify or
otherwise change the rights or obligations of Vantare thereunder. This Agreement
constitutes, and all other agreements and instruments contemplated hereby, when
duly executed and delivered by Vantare, will constitute, valid and binding
obligations of Vantare enforceable in accordance with their respective terms,
except as may be limited by laws affecting creditors' rights generally or by
judicial limitations on the right to specific performance.
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3.5 Financial Statements. The balance sheets of Vantare as of December
31, 1995 (the "12-31-95 Balance Sheet") and March 31, 1996 (the "3-31-96 Balance
Sheet"), and the related statements of income, shareholders' equity, and cash
flows for the periods then ended, true and correct copies of which have been
delivered to Featherlite, have been audited (in the case of the 12-31-95 Balance
Sheet and related statements) or reviewed (in the case of the 3-31- 96 Balance
Sheet and related statements) by Graham and Cottril, P.A., independent certified
public accountants, fairly present the financial position of Vantare as of their
respective dates and the results of operations for the applicable periods ended
on such dates, all in accordance with GAAP consistently applied in all material
respects throughout the periods covered thereby except as stated in the notes
included therein or the accountants' report thereon and except, in the case of
the 3-31-96 Balance Sheet and related statements, for the absence of full
footnote disclosure and subject to year-end audit adjustments. Vantare's books
of account reflect all of Vantare's items of income and expense and all assets
and liabilities and accruals required to be reflected therein in accordance with
generally accepted accounting principles. All financial statement accruals for
liabilities and reserves for contingent liabilities have been established and
maintained as required to be established and maintained (a) under GAAP and (b)
in order for such financial statements to present fairly the financial position
of Vantare as of their respective dates.
3.6 Taxes. Vantare has not failed to file any reports or Tax returns
required by any law or regulation of any jurisdiction to be filed as of the date
hereof, and all such reports and returns are true and correct in all material
respects. Vantare has duly paid, or accrued on its books of account, all Taxes,
duties, and charges pursuant to such reports and returns, or assessed or to be
assessed against Vantare with respect to all periods through the date hereof, or
which Vantare is obligated to withhold from amounts owing to any employee or
other person. Vantare will not be liable for any Taxes with respect to any
periods up to the Effective Time, except for Taxes paid or accrued at or before
the Effective Time. Except as set forth on Schedule 3.6, Vantare has not
received any notice of proposed adjustment, audit report, deficiency notice,
notice of assessment, or similar notification with respect to any Tax that could
become the obligation and liability of Featherlite.
3.7 Absence of Undisclosed Liabilities. There are no material debts,
liabilities, claims against or financial obligations of Vantare, or (to the
knowledge of Vantare and Guth) reasonable legal basis therefor, whether accrued,
absolute, contingent, or otherwise, except to the extent reflected on the
12-31-95 Balance Sheet or on Schedule 3.7.
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3.8 Absence of Certain Changes and Events. Except as contemplated by
this Agreement or as specifically described in Schedule 3.8, since January 1,
1996:
3.8.1 There has not been any material adverse change in the
Assets, the financial condition, business or operations of Vantare.
3.8.2 Vantare has not (1) entered into any contract, license,
franchise, or commitment other than ones that either were entered into
in the ordinary course of business, none of which involves amounts to
be paid or received in excess of $50,000, or, if not entered into in
the ordinary course of business, involved amounts to be paid or
received in excess of $25,000, or made any capital expenditures or
commitment therefor except in the ordinary course of business, none of
which involves amounts to be paid or received in excess of $50,000 or,
if not incurred in the ordinary course of business, in amounts in
excess of $25,000, or waived any material rights, or made, permitted,
or suffered any amendment or termination of any material contract,
license, franchise or agreement; (2) altered or revised its accounting
procedures, methods, or practices except as required by law; (3)
incurred, assumed, discharged, or satisfied any material liability
(absolute or contingent), mortgage, lien, security interest, or
encumbrance, other than in the ordinary course of business, none of
which involves amounts to be paid or received in excess of $50,000 or,
if not in the ordinary course of business, involves amounts in excess
of $25,000 (and otherwise in compliance with this Agreement); (4)
declared, set aside, or paid any dividend or shareholder distributions
in cash, securities, or property or, except for shareholder loans or
repayments thereof described in section 2.5.2, otherwise made any
payments to shareholders or related parties other than normal base
compensation and payments to offset taxes on earnings of Vantare
through the Closing; (5) sold, transferred, or leased any of its
assets except in the ordinary course of business; (6) suffered any
physical damage, destruction, or loss (whether or not covered by
insurance) materially and adversely affecting the properties or
business of Vantare; (7) entered into any material transaction other
than in the ordinary course of business, none of which involves
amounts to be paid or received in excess of an aggregate $50,000; or
(8) agreed to do any of the foregoing other than pursuant hereto.
3.9 Assets. Vantare owns and has good (and, with respect to real
property, marketable) title to all of the Assets described on Schedule 3.9(i)
(except for assets sold or otherwise disposed of in the ordinary course of
business and consistent with this Agreement since May 31, 1996, and except for
consignment inventory, which is subject to valid and enforceable consignment
agreements), or, in the cases of leases, valid and subsisting leasehold
interests in the assets leased thereby, in each case free and clear of all
Liens, except for Permitted Liens and except for other Liens described and
reflected on the Closing Balance Sheet and set forth on Schedule 3.9(ii), and
has full power to transfer the Assets to Featherlite on the Closing Date on the
terms and conditions provided for in this Agreement. Prior to the date hereof,
Vantare has delivered or otherwise made available to Featherlite true and
complete copies of all purchase agreements, finance agreements, leases, options,
title abstracts, insurance, licenses, permits, tax abatement certificates, and
other material documents relating to any of the Assets that it has in its
possession or control. The real and personal properties to be included in the
Assets acquired by Featherlite pursuant to the Exchange include all the
properties used in and necessary to the operation of the Business and taken as a
whole are in a good state of repair, ordinary wear and tear excepted. All Assets
shall, at the Closing Date, be located on the premises of Vantare unless
otherwise noted on Schedule 3.9.
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3.10 Intellectual Property. (i) All Intellectual Property necessary to
or used in the conduct of the Business (all of which is described on Schedule
3.10) is owned by Vantare or licensed to Vantare, in either case free and clear
of any Liens other than Permitted Liens, and Vantare's ownership of such
Intellectual Property has not been challenged in any judicial or administrative
proceeding; (ii) to the knowledge of Vantare and Guth, Vantare's present and
proposed operations do not infringe, misuse, or misappropriate any intellectual
property rights of others; (iii) no employees of Vantare have any right in or to
the Intellectual Property necessary to or used in the conduct of Vantare's
present or proposed operations, and no such employees are subject to restrictive
covenants with any person other than Vantare with respect to such employees'
employment by Vantare or use of Intellectual Property in such employment; and
(iv) to the knowledge of Vantare and Guth, none of Vantare's rights to
Intellectual Property is being infringed, misused, or misappropriated by others.
3.11 Licenses; Compliance with Laws. All material permits, licenses,
and other approvals and authorizations that are necessary to conduct the
Business are set forth on Schedule 3.11, and all of such licenses, permits, and
other approvals and authorizations are in full force and effect. Vantare has
complied, and is in compliance, in all material respects with all applicable
laws, statutes, orders, rules, regulations and requirements promulgated by
governmental or other authorities relating to the conduct of Vantare's
businesses. Vantare is not in material default with respect to any order, writ,
injunction, or decree of any court or of any foreign, federal, state, municipal
or other governmental department, commission, board, bureau, agency, or
instrumentality.
3.12 Litigation; Insolvency. Except as specifically described in
Schedule 3.12, there is no action, lawsuit, claim, proceeding, or investigation
of any kind pending or, to the knowledge of Vantare and Guth, threatened
against, by, or affecting Vantare or the Assets. Vantare (i) has not voluntarily
filed, or had filed against it involuntarily, a petition under the United States
Bankruptcy Code that, in the case of an involuntary petition, shall not have
been vacated or dismissed within 30 calendar days after the filing thereof, and
(ii) has not taken action or otherwise had proceedings commenced to dissolve or
liquidate it.
3.13 Environmental Matters. Vantare has obtained, and is in compliance
in all material respects with, all permits, licenses, or other approvals
necessary under Environmental Laws (as defined below) with respect to Vantare
and its business, operations, products, or properties. Neither Vantare nor its
business, operations, products, or properties, currently or formerly owned,
operated, or leased (i) have violated or violate or, to the knowledge of Vantare
and Guth, have been or are subject to any judicial or administrative
investigations, proceedings or other actions alleging the violation of, any
federal, state, local, or foreign environmental, superfund, conservation,
health, or safety statute, regulation, ordinance, common law, order, or decree
(collectively, "Environmental Laws") governing "Hazardous Substances," which for
purposes hereof means asbestos, urea formaldehyde, polychlorinated biphenyls,
nuclear fuel or materials, chemical waste, medical waste, radioactive materials,
explosives, known carcinogens, petroleum products, or substances defined as
hazardous or as a pollutant or contaminant in, or the generation, handling,
storage, release or disposal of which is regulated by, any Environmental Laws or
(ii) to the knowledge of Vantare and Guth, have been or are the subject of any
federal, state, local or foreign investigation, proceeding or other action
evaluating whether any remedial action is needed to respond to a release of any
Hazardous Substance or (iii) have taken any action or failed to take any action
that might reasonably result in violation of any Environmental Laws. Neither
Vantare, nor, to the knowledge of Vantare and Guth, any prior or current lessee,
owner, occupant, operator or other person has released, spilled or disposed of
any Hazardous Substance in or on the ground of any real property currently or
formerly owned, operated, or leased by Vantare, and no above-ground or
underground storage tanks or Hazardous Substances are or were present on such
real property or any structures thereon. Vantare has no removal, restoration or
similar obligation under any Environmental Laws with respect to any property,
and Vantare has not materially changed its storage or disposal practices with
respect to Hazardous Substances since January 1, 1994. Vantare has delivered to
Featherlite true and complete copies of all reports, studies or tests in the
possession of or initiated by Vantare pertaining to Hazardous Substances or
other environmental concerns regarding Vantare, its business, operations,
products, or properties, whether currently or formerly owned, operated, or
leased.
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3.14 Contracts; Leases. Schedule 3.14 attached hereto contains a list
of each of the following Contracts, including amendments thereto, to which
Vantare is a party or by which any of the Assets are in any way bound or
obligated:
3.14.1 Written employment and compensation agreements and written
employment policies with employees or independent contractors,
officers, or directors and agreements that contain any severance pay
liability or obligation to any employee, former employee, director,
former director, or consultant;
3.14.2 Agreements of guarantee or indemnification;
3.14.3 Loan or credit agreements providing for any extension of
credit for borrowed money to or by Vantare;
3.14.4 Noncompetition agreements;
3.14.5 Leases to or for any personal property that involve the
payment or receipt of annual rent of more than $10,000 individually or
$20,000 in the aggregate, and leases to or for any real property,
regardless of the dollar amount involved;
3.14.6 Contracts for products or services provided by Vantare
that (i) involve the receipt of more than $25,000 individually in any
period of 12 consecutive months, or (ii) commit Vantare to provide
technology or other products, the development of which has not been
completed as of the date hereof; and
3.14.7 Consignment contracts, and executed purchase/sale orders
for finished luxury coaches, which orders have an aggregate gross
sales price of $11,301,000 before deductions for trade-ins, deposits,
and similar charges.
3.14.8 Any other agreement, contract, commitment, or other
arrangement (oral or written) not otherwise described above unless it:
3.14.8.1 is of six-month or shorter duration or Vantare can
terminate it, without liability to Vantare, on notice of 30 days or
less; or
3.14.8.2 requires payment by Vantare of less than $20,000 per
year; provided, however, that the aggregate amount of the obligations
under contracts excluded by reason of these sections 3.14.8.1 and
3.14.8.2 shall not represent obligations in excess of $50,000 with
respect to any period of 12 consecutive months.
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Except as specified in Schedule 3.14, (i) all of the Contracts listed on
Schedule 3.14 or material to the Business are valid, binding and in full force
and effect in accordance with their terms and conditions (except as may be
limited by laws affecting creditors' rights generally or by judicial limitations
on the right to specific performance), and (ii) there is no existing material
default under, or failure by Vantare to perform in substantial compliance with
the terms of, any of the Contracts listed on Schedule 3.14, and no default under
any other Contract which default is material to the Business. Copies of all of
the Contracts (or, in the case of oral Contracts, descriptions of the material
terms thereof) described in Schedule 3.14 have been delivered by Vantare to
Featherlite.
3.15 Insurance. Listed on Schedule 3.15 attached hereto is a list of
all of the policies of fire, liability, life, health, product liability and
other insurance maintained by or on behalf of Vantare, whether for its own
benefit or the benefit and protection of its employees, agents, lessors or
lenders, and copies of such policies have been delivered (or made available upon
request) by Vantare to Featherlite. Vantare's physical assets are and will be
through the Effective Time insured against loss by fire and other insurable
perils to which they may be subject at or above the levels of coverage
maintained by Vantare as of January 1, 1996.
3.16 Accounts Receivable. Except as listed on Schedule 3.16 attached
hereto, all accounts receivable of Vantare reflected on the 12-31-95 Balance
Sheet and the Closing Balance Sheet (i) have arisen in the ordinary course of
business, and (ii) to the knowledge of Vantare and Guth, are collectible in the
amounts at which they are carried on Vantare's books, except to the extent
reflected in the reserve for doubtful accounts reflected on the 12-31-95 Balance
Sheet. To the knowledge of Vantare and Guth, such reserve is adequate to cover
accounts not collectible in the ordinary course of business consistent with
standard and reasonable business practices. In the event that the insurance
receivable in the amount of $122,386.29 reflected on the 12-31-95 Balance Sheet
is not collectible in full in the ordinary course of business during the
two-year period following the Effective Time, Featherlite shall have a claim
against Vantare and Guth in an amount equal to the amount of such receivable not
so collected, and Featherlite shall have the right to satisfy such claim by
offsetting the amount thereof against its obligations under the restated notes
to Guth described in section 2.5.2.
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3.17 ERISA Matters. Schedule 3.17 attached hereto contains a complete
list and description of all Employee Benefit Plans of Vantare and any Affiliate
("Scheduled Plans"). True and correct copies of all Scheduled Plans have been
delivered to Featherlite. Each Employee Benefit Plan of Vantare and any
Affiliate is in compliance with ERISA and the Code, where applicable, in all
material respects. At the date hereof and during the six years preceding the
date hereof, neither Vantare nor any Affiliate has contributed to a Pension
Plan. Neither Vantare nor any Affiliate has ever been required to contribute to
a Multiemployer Plan. At the date hereof, there is no amount of Unrecognized
Retiree Welfare Liability under any Employee Benefit Plan maintained or
contributed to by Vantare or any Affiliate. Vantare and/or any Affiliate has, as
of the date hereof, made all contributions or payments to or under each
Scheduled Plan required by law or by the terms of such Scheduled Plan or any
contract or agreement, or Vantare and/or any Affiliate has made or accrued
reserves adequate for such purposes. All reports and disclosures relating to
such Scheduled Plans required to be filed or distributed under ERISA as of the
Effective Time shall have been filed or distributed. Each Scheduled Plan that is
a group health plan within the meaning of Code section 5000(b)(1) is in
substantial compliance with the continuation of health coverage requirements of
Code section 4980B.
3.18 Employee Matters. Vantare is not a party to any collective
bargaining agreement with any labor organization. Vantare has complied in all
material respects with all applicable federal and state laws relating to the
employment of labor, including the provisions thereof relating to wages, hours,
collective bargaining, occupational health and safety, and the payment of all
payroll, withholding and social security taxes, and is not liable for any wages,
taxes or penalties for the failure to comply with any of the foregoing. All
amounts due to employees of Vantare for commissions, salaries, wages, bonuses,
fringe benefits and vacation benefits accrued through the Effective Time shall
have been paid in the ordinary course or accrued, as appropriate, before the
Effective Time. Except for ERISA Plans disclosed in Schedule 3.17, Vantare has
not (i) promulgated any policy or entered into any written agreements relating
to the payment of severance pay to employees whose employment is terminated or
suspended, voluntarily or involuntarily, or otherwise, or (ii) entered into any
written employment agreements with any employee. Schedule 3.18 attached hereto
contains a true and complete list of all full-time and part-time employees of
Vantare and the current level of compensation payable to each. There are no
strikes, work stoppages, or controversies pending or, to the knowledge of
Vantare and Guth, threatened, between Vantare and any of its employees.
3.19 Miscellaneous Information. Schedule 3.19 attached hereto
constitutes a true and complete list of the name of each financial institution
in which Vantare has an account or safety deposit box, the account numbers with
respect thereto, and the names of all persons authorized to draw thereon or who
have access thereto, with respect to all safe deposit boxes.
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3.20 Investment Intent. The Featherlite Shares being acquired by
Vantare pursuant to this Agreement are being acquired for Vantare's own account
and not with a view to, or for resale in connection with, any distribution or
public offering thereof except in compliance with the Securities Act and any
applicable state securities laws. Vantare understands that the Featherlite
Shares have not been registered under the Securities Act or any state securities
laws by reason of their contemplated issuance in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act and any
applicable state securities laws, and that the reliance of Featherlite upon this
exemption is based in part upon this representation and warranty by Vantare.
Vantare further understands that the Featherlite Shares may not be transferred
or resold without (i) registration under the Securities Act and any applicable
state securities laws, or (ii) the existence of an exemption from the
registration requirements of the Securities Act and such state securities laws.
3.21 U.S. Real Property Interest. No tax is required to be withheld or
paid pursuant to section 1445 of the Code as a result of the transfer of the
Assets to Featherlite in the transactions contemplated by this Agreement.
3.22 No Finders. No act of Vantare or Guth or their representatives has
given or will give rise to any valid claim against any of the parties hereto for
a brokerage commission, finder's fee or other like payment.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FEATHERLITE
Featherlite hereby makes the following representations and warranties
to Vantare and Guth, all of which representations and warranties are true and
correct as of the date hereof and shall be true and correct as of (and as though
made at) the Closing.
4.1 Organization. Featherlite is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota and is
duly qualified or registered to do business as a foreign corporation and is in
active status or good standing, as applicable, in the State of Florida and each
other jurisdiction that requires such qualification or registration, except
where the failure so to qualify or register would not have a material adverse
effect on Featherlite. Featherlite has all necessary corporate power to own its
properties, conduct its businesses as presently conducted or proposed to be
conducted by it, and to do and perform all acts and things required to be done
by it under this Agreement.
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4.2 Capitalization. Featherlite has 50,000,000 shares of duly
authorized capital stock consisting of (i) 40,000,000 shares of Featherlite
Common Stock, of which 5,955,000 shares were issued and outstanding as of May
31, 1996, and no shares are held in treasury; and (ii) 10,000,000 undesignated
shares, none of which is outstanding or held in treasury. All such outstanding
shares of Featherlite Common Stock are duly authorized, validly issued, fully
paid and nonassessable and were issued in compliance with, or pursuant to an
exemption from, all applicable federal and state securities laws. In addition,
as of May 31, 1996, warrants to purchase 120,000 shares of Featherlite Common
Stock were outstanding, and a total of 550,000 shares of Featherlite Common
Stock have been reserved for issuance under its stock option plan, of which
249,380 shares are subject to outstanding stock options granted under such plan.
Except as described in this section 4.2, there is no other outstanding
Featherlite Common Stock or other outstanding rights to acquire such stock, the
holders of the outstanding shares of Featherlite Common Stock have no preemptive
rights, and there are no outstanding subscriptions, options, warrants, calls,
contracts, demands, commitments, conversion rights or other agreements or
arrangements of any character or nature whatsoever, under which Featherlite is
or may be obligated to issue any capital stock or other securities of
Featherlite; and Featherlite has no obligation for the repurchase of any of its
outstanding securities. Any and all preemptive or similar rights to purchase any
capital stock or securities of Featherlite to which any holders of capital stock
or any other security of Featherlite may have been entitled with respect to
prior issuances of Featherlite Common Stock or rights to acquire Featherlite
Common Stock shall have, on or before the Closing Date, been validly and
enforceably waived by all such holders or are otherwise no longer of any force
or effect. There are no shareholder agreements or other agreements,
understandings or commitments relating to or otherwise affecting the Featherlite
Common Stock. Copies of Featherlite's Articles of Incorporation and Bylaws
previously delivered by Featherlite to Vantare are complete and correct.
4.3 Corporate Authority. The execution, delivery and performance by
Featherlite of this Agreement and the transactions contemplated hereby have been
duly and validly authorized and approved by all requisite corporate action, and
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will conflict with or result in a breach of the
terms or provisions of or constitute a default under its Articles of
Incorporation or Bylaws or any material instrument, contract, agreement,
judgment, order, decree or other restriction to which Featherlite is a party or
by which any of its assets is bound or affected, or require any affirmative
approval, consent, or authorization of any person, court, or governmental or
regulatory authority. This Agreement constitutes, and the other agreements and
instruments contemplated hereby, when duly executed and delivered by
Featherlite, will constitute, valid and binding obligations of Featherlite
enforceable in accordance with their respective terms, except as may be limited
by laws affecting creditors' rights generally or by judicial limitations on the
right to specific performance.
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4.4 SEC Filings and Financial Statements. Featherlite has heretofore
furnished to Vantare copies of all registration statements ever filed by
Featherlite with the SEC and all other SEC Reports filed by Featherlite with the
SEC on or after January 1, 1996. Each of the SEC Reports was complete and
correct in all material respects as of its effective date and, as of its
effective date, did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which made, not
misleading. The financial statements of Featherlite and the notes thereto
contained in the SEC Reports are correct and complete and fairly present the
combined financial position of Featherlite and its subsidiaries as of the
respective dates thereof and the results of operations for the periods then
ended, except as disclosed therein or in the notes thereto or in the
explanations thereof contained in the SEC Reports; and the balance sheets and
notes thereto contained therein show and properly reflect all material
liabilities of Featherlite and its combined subsidiaries on the respective dates
thereof, except for any claims and lawsuits against Featherlite and its combined
subsidiaries now pending, the total liability from which would not materially
adversely affect the business, properties, or financial condition of Featherlite
and its combined subsidiaries, taken as a whole. Each such financial statement
was prepared in conformity with generally accepted accounting principles
consistently applied (except, in the case of unaudited statements, as permitted
by the SEC for its Quarterly Reports on Form 10-Q).
4.5 No Material Adverse Changes. Except as otherwise disclosed herein
or in the SEC Reports or press releases issued by Featherlite, since January 1,
1996, there has not been any material adverse change in the financial condition
or in the business operations, properties, assets or liabilities of Featherlite
and its subsidiaries, taken as a whole, whether or not arising in the ordinary
course of business.
4.6 Products Liability Insurance. Featherlite maintains products
liability insurance on an "occurrence" basis, rather than on a "claims-made"
basis.
4.7 No Finders. No act of Featherlite or its representatives has given
or will give rise to any valid claim against any of the parties hereto for a
brokerage commission, finder's fee or other like payment.
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ARTICLE 5
COVENANTS
5.1 Access. Vantare shall, during the period prior to the Closing, give
Featherlite and its representatives full access during regular business hours to
Vantare's properties, records and personnel and such other information of
Vantare as Featherlite may reasonably request to analyze Vantare and its
business, assets, and prospects. Featherlite agrees to maintain, and to cause
its representatives to maintain, the confidentiality of any information that
they receive as a result of such access and to obtain Vantare's consent prior to
disclosing any of such information to any other person or entity.
5.2 Conduct of Business Until Effective Time. Except as Featherlite may
otherwise consent in writing or as otherwise contemplated by this Agreement,
from the date hereof until the Effective Time, Vantare shall operate the
Business only in the usual, regular, and ordinary manner and Vantare shall not
(i) amend its Articles of Incorporation; (ii) make or grant any increase in the
compensation payable to or to become payable to any officer, employee, director,
or consultant or any increase in any officer, employee, director, or consultant
benefit plan; (iii) merge with or enter into, consolidate with or acquire all or
substantially all of the stock or assets of any other corporation, partnership,
limited partnership, joint venture, association, or other entity; (iv) issue,
deliver or sell, or authorize or propose the issuance, delivery, or sale of, any
shares of its capital stock of any class or series, any securities or debt
convertible into, or any rights, warrants, calls, subscriptions or options to
acquire, any such shares, convertible securities, or debt; (v) declare or pay
any dividend or distribution in cash, securities, or property (except as
specifically permitted by this Agreement); (vi) incur, assume, discharge or
satisfy any material liability (absolute or contingent), mortgage, lien,
security interest or encumbrance other than trade payables or other obligations
in the ordinary course of business (and in compliance with this Agreement);
(vii) sell, assign, lease, or otherwise transfer or dispose of any of its Assets
without the replacement thereof with a substantially equivalent asset of
substantially equivalent kind, condition, and value, except for increases and
decreases in supplies and receivables in the ordinary course of business under
circumstances consistent with past practice; (viii) enter into any material
transaction other than in the ordinary course of business (subject to the
exceptions stated above); (ix) take any action that would cause the
representations and warranties of Vantare contained in Article 3 hereof to be
untrue in any material respect as of the Closing; or (x) agree to any of the
foregoing other than pursuant hereto.
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5.3 Approvals and Consents. As promptly as possible, each of Vantare
and Featherlite shall take all corporate and other action, make all filings with
courts or governmental authorities, and use their respective best efforts to
obtain in writing all approvals and consents (including specifically all Vantare
shareholder approvals) required to be taken, made, or obtained by each of them
in order to effectuate the Exchange and the transactions contemplated hereby.
The parties agree to cooperate jointly to use their best efforts in taking
actions so as to effect the transfer and assignment of the approvals, permits,
licenses and certifications set forth on Schedule 3.11 to Featherlite. The
parties shall cooperate with each other in effecting the foregoing; and shall
deliver promptly to the other copies of such filings, approvals, and consents.
Guth agrees to vote all shares of capital stock of Vantare that are owned by him
or under his voting control in favor of this Agreement and the Exchange and to
take other necessary and appropriate actions consistent therewith.
5.4 Exclusive Dealing. Vantare agrees not to (and to cause its
affiliates and representatives not to) solicit, negotiate, discuss or entertain
any offers or acquisition or investment inquiries or proposals, or otherwise
provide information to any other person, with regard to the businesses that are
the subject of this Agreement from any other person, or to furnish information
to any other person for any such purpose, during the period beginning on the
date hereof and ending on the Closing Date, unless this Agreement is terminated
pursuant to Article 8. Vantare hereby confirms and represents that it has
accepted no other offer regarding the purchase, sale, investment in, or similar
transaction with respect to all or any portion of its business or assets that
are the subject of this Agreement, nor has any letter of intent or other
agreement to do so been signed with any other party.
5.5 Risk of Loss. Prior to the Effective Time, the risk of loss or
destruction to any of the Assets shall be that of Vantare. At and after the
Effective Time, if the Closing occurs and except as otherwise provided in this
Agreement, the risk of loss or destruction to any of the Assets shall be that of
Featherlite. If the Business is materially curtailed or interrupted prior to the
Effective Time by loss, destruction, or damage due to fire or any other
casualty, Featherlite shall have the right to terminate this Agreement by
written notice delivered to Vantare.
5.6 Costs and Fees. Except as specifically provided otherwise in this
Agreement, whether or not the Exchange is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby will be paid by the party incurring such costs and expenses. The
reasonably estimated amount of all out-of-pocket expenses and fees incurred by
Vantare in connection with the Exchange (including but not limited to fees and
expenses payable to all banks, investment banking firms, other financial
institutions and other persons and their respective agents and counsel and all
fees and expenses of Vantare's counsel, accountants, experts and consultants)
shall be listed and described on Schedule 5.6.
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5.7 Sales and Transfer Taxes. Notwithstanding anything to the contrary
set forth herein, any applicable sales, value added, transfer, documentary, use,
filing and other Taxes and fees (other than income Taxes) that may be levied in
connection with the Exchange shall be borne by Vantare. Each of the parties
shall use its best efforts, however, to obtain all necessary exemptions from
such Taxes.
5.8 Employment Agreement. At the Closing, Featherlite and Guth shall
enter into an employment agreement providing for the employment of Guth by
Featherlite following the Closing, in the form attached hereto as Schedule 5.8.
5.9 Employment; Benefits. As of the Effective Time, Featherlite shall
offer to each current employee of the Business (limited to those individuals
whose individual compensation and benefits are listed on Schedule 5.9 and such
ordinary course of business replacements as may be hired between the date hereof
and the Effective Time) a position of employment in Featherlite at pay and
benefits for the position offered no less favorable as a whole than those
provided by Vantare to its employees in such positions immediately prior to the
Effective Time. Effective as of the Effective Time, Featherlite shall become the
employer of and employ each such employee who so accepts such employment.
Subject to the requirements of law and any employment agreements to which such
employees may be a party following the Closing Date, the employment of all such
employees will be at will.
5.10 Plant-Closing Notices. Vantare, after written notice to
Featherlite, shall provide on a timely basis, all notices required under the
Worker Adjustment and Retraining Notification Act and comparable state laws with
respect to the employees employed in the Business and such other notices as may
be required by union contracts to which Vantare is a party with respect to the
transactions contemplated by this Agreement.
5.11 Prorations. Except as otherwise specifically provided herein, the
prorations and adjustments described in this section shall be made and fully
reflected on the Closing Balance Sheet. The Business operations of Vantare and
the income and expenses attributable thereto through the Effective Time shall be
for the account of Vantare and thereafter shall be for the account of
Featherlite, and all such items of income and expense shall be reflected on the
Closing Balance Sheet so as to reflect such proration. Allocation of items under
these proration provisions shall include but not be limited to employee
compensation, power and utilities charges, real and personal property taxes, and
rents and payments pertaining to the Contracts being transferred to Featherlite
pursuant hereto.
5.12 Reorganization Treatment. Vantare shall take all actions necessary
to cause the Exchange and the other transactions contemplated by this Agreement
to be treated for tax purposes as a reorganization under section 368(a)(1)(C) of
the Code, including all actions necessary to comply with the "continuity of
business enterprise" and "continuity of interest" requirements with respect
thereto and Featherlite will cooperate to the extent necessary. The parties
acknowledge that the Exchange does not qualify for "pooling-of-interests"
treatment for financial accounting purposes.
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5.13 Affiliates' Letters. Prior to the Effective Time, Vantare shall,
upon advice of counsel, furnish Featherlite with a list identifying all persons
who may be considered, in its opinion, to be "affiliates" of Vantare, as that
term is used in paragraphs (c) and (d) of Rule 145 under the Securities Act (the
"Vantare Affiliates"). Vantare shall use its reasonable best efforts to cause
each person who is so identified as a Vantare Affiliate to deliver to
Featherlite on or prior to the Closing Date a written agreement, in the form
previously approved by the parties, that such Vantare Affiliate (a) will not
offer to sell, transfer or otherwise dispose of any Featherlite Common Stock
issued pursuant to the Exchange, except pursuant to an effective registration
statement or in compliance with Rule 145 or another exemption from the
registration requirements of the Securities Act (the availability of such other
exemption to be reasonably satisfactory to Featherlite's counsel), and (b) has
no present intention to sell, transfer or otherwise dispose of (and does not
have any short position in or agreement to sell) any of such Featherlite Common
Stock except in compliance with all applicable federal and state securities
laws.
5.14 Expansion. Following the Closing, Featherlite will begin
immediately to make arrangements to take such actions as are reasonably
necessary to enter into the necessary lease agreement with the Port of Sanford
for an addition of approximately 20,000 square feet to the current Vantare
manufacturing facility, assuming that all necessary regulatory permits and
similar approvals can reasonably be obtained with respect thereto, and
Featherlite further commits to provide such cash and operating capital as may
reasonably be necessary to equip and operate such expansion space.
5.15 Name Change. Immediately following the Closing, Vantare shall take
such action as may be necessary to cease using, and to change its name from, any
name that includes the word "Vantare" or any derivatives thereof.
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ARTICLE 6
REGISTRATION RIGHTS
6.1 Right to Demand Registration. If at any time following the
Effective Time, Guth shall request in writing (the "Registration Request") to
Featherlite that it register under the Securities Act the sale by Guth of all or
any portion of the shares of Featherlite Common Stock issued in the Exchange and
received by Guth from Vantare in connection therewith, or shares of capital
stock that are issued to Guth in respect of, or in exchange or in substitution
for, any shares of Featherlite Common Stock by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, stock split, sale of assets, distribution
to shareholders or combination of the shares of Featherlite Common Stock or any
other change in Featherlite's capital structure ("Registrable Shares"), then
Featherlite shall, as expeditiously as possible, prepare and file with the SEC a
registration statement on Form S-3 or any successor form to Form S-3 that has
substantially similar requirements (the "Registration Statement") covering
Guth's sale of the Registrable Shares; provided, however, that the shares of
Featherlite Common Stock received in the Exchange shall cease to be Registrable
Shares upon any sale, to the extent they are sold, pursuant to a registration
statement under the Securities Act or upon such time as and to the extent that
such shares in the hands of Guth are eligible for sale in a single transaction
under Rule 144 under the Securities Act and Featherlite shall have provided Guth
an opinion acceptable to Guth from counsel acceptable to Guth to such effect.
Featherlite shall use all reasonable efforts to cause the Registration Statement
to remain effective until the earlier of (i) three years after the Effective
Time, or (ii) such earlier time (not earlier than two years after the Effective
Time) if all Registrable Shares included therein that have not yet been sold and
which are in the hands of Guth can then be sold by Guth in a single transaction
pursuant to Rule 144 under the Securities Act, or (iii) such time as all
Registrable Shares included therein have been sold or cease to be Registrable
Shares. Before filing the Registration Statement or the prospectus contained
therein, or any amendment or supplement thereto, with the SEC, Featherlite will
furnish to one counsel selected by Guth copies of all such documents proposed to
be filed, which documents will be subject to the review of such counsel. Prior
to filing such Registration Statement, prospectus, or amendment or supplement
thereto, Featherlite shall make such corrections thereto, if any, reasonably
requested by Guth. Featherlite will promptly notify Guth of any stop order
issued or threatened by the SEC and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered. Guth, with the
consent of Featherlite (which consent shall not be unreasonably withheld), shall
have the right to select the investment bankers and manager or co-managers that
will administer an offering of Registrable Shares pursuant to this section 6.1.
Notwithstanding the foregoing provisions of this section 6.1, the right given to
Guth to demand registration hereunder shall continue in effect only so long as
either (i) Guth continues to be employed by Featherlite at the time that such
right is exercised or (ii) if Guth is not then employed by Featherlite, Guth's
termination of employment shall not have been voluntary or based on termination
for "cause," as such term is defined in the employment agreement described in
section 5.8.
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6.2 Actions in Connection with Registration. Featherlite shall,
promptly upon receipt by Featherlite of the Registration Request, undertake the
following:
6.2.1 prepare and file with the SEC, as soon as practical, the
Registration Statement and use its best efforts to cause such
Registration Statement to become effective as quickly as possible and,
thereafter, to remain effective as otherwise set forth in section 6.1
above;
6.2.2 as expeditiously as possible prepare and file with the SEC
any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary
to keep the Registration Statement effective for the period(s)
specified in section 6.1 above;
6.2.3 as expeditiously as possible furnish to Guth and each
underwriter, if any, such reasonable numbers of copies of the
Registration Statement and each amendment thereto (in each case
including all exhibits), the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act,
and such other documents as Guth may reasonably request in order to
facilitate the public sale or other disposition of the Registrable
Shares owned by Guth;
6.2.4 as expeditiously as possible use all reasonable best
efforts to register or qualify the Registrable Shares covered by the
Registration Statement under the securities or Blue Sky laws of such
states and the District of Columbia as Guth and their underwriters, if
any, shall reasonably request, and do any and all other acts and
things that may be reasonably necessary or desirable to enable Guth
and his underwriters, if any, to consummate the public sale or other
disposition of the Registrable Shares owned by Guth in such states
and/or the District of Columbia; provided, however, that Featherlite
shall not be required in connection with this paragraph to qualify as
a foreign corporation (where it would not otherwise be required to
qualify but for this paragraph) or execute a general consent to
service of process in any jurisdiction;
6.2.5 if Featherlite has delivered preliminary or final
prospectuses to Guth and after having done so the prospectus is
amended to comply with the requirements of the Securities Act,
promptly notify Guth and, if requested, Guth shall immediately cease
making offers of Registrable Shares and return all prospectuses to
Featherlite. Featherlite shall promptly provide Guth with revised
prospectuses and, following receipt of the revised prospectuses, Guth
shall be free to resume making offers of the Registrable Shares;
6.2.6 immediately notify Guth of the receipt by Featherlite of
any notification with respect to the suspension of the qualification
or registration of the Registrable Shares for sale in any jurisdiction
or the initiation or threat of any proceeding for such purpose, or the
occurrence of any event that comes to Featherlite's attention if as a
result of such event the prospectus included in the Registration
Statement contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading and, in each such case,
Featherlite will promptly prepare and furnish to Guth a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of the Registrable Shares, such prospectus will not contain
an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading;
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6.2.7 enter into such customary agreements (including an
underwriting agreement) and take all such other actions as Guth or the
underwriters, if any, retained by Guth reasonably request in order to
expedite or facilitate the public sale or other disposition of the
Registrable Shares, including the provision of customary opinions and
indemnification; provided, however, that no shareholders other than
Guth shall be required to sign a standstill agreement in connection
with the underwritten sale of securities;
6.2.8 make available for inspection by Guth, any underwriter
participating in any public sale or other disposition pursuant to the
Registration Statement and any attorney, accountant or other agent
retained by Guth or any underwriter (collectively, the "Inspectors")
all financial and other records, pertinent corporate documents and
properties of Featherlite and its subsidiaries as shall be reasonably
necessary to enable them to exercise their due diligence
responsibility, and cause the officers, directors and employees of
Featherlite and its subsidiaries to supply all information and respond
to all inquiries reasonably requested by any such Inspector in
connection with the Registration Statement;
6.2.9 otherwise use its reasonable best efforts to comply in all
material respects with all applicable rules and regulations of the
SEC, and make available to its security holders, as soon as reasonably
practical, an earnings statement covering a period of at least 12
months, beginning with the first month after the effective date of the
registration statement and the effective date of each post-effective
amendment thereto (as the term "effective date" is defined in Rule
158(c) under the Securities Act), which earnings statement shall
satisfy the provision of Section 11(a) of the Securities Act and Rule
158 thereunder; and
6.2.10 use its reasonable best efforts to effect the listing of
Guth's Registrable Shares covered by the Registration Statement on any
securities exchange or other association on which the Featherlite
Common Stock is then listed.
6.3 Delay in Registration. Notwithstanding the foregoing, if at the
time the Registration Statement is to be filed, Featherlite reasonably believes
that there are pending potential material developments or activities that would
be required to be disclosed in the Registration Statement, the disclosure of
which, in the good faith determination of Featherlite, may materially adversely
affect Featherlite, then Featherlite may delay the filing of the Registration
Statement subject to the period limitations set forth below. Furthermore, if an
amendment to the Registration Statement is required by virtue of the existence
of an undisclosed potential material development or activity the disclosure of
which, in the good faith determination of Featherlite, may materially adversely
affect Featherlite, then Featherlite shall notify Guth that such material
development or activity exists (without disclosing the nature or specifics
thereof) and Guth shall thereupon cease all sales of Registrable Shares subject
to the period limitations set forth below. The aggregate number of days by which
the filing of the Registration Statement is delayed or for which Guth is
prevented from selling Registrable Shares pursuant to this section 6.3 shall not
exceed a cumulative 60 days in any 12-month period. Guth shall hold in
confidence all information provided to him pursuant to this section and shall
not use such information in violation of any applicable securities laws.
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6.4 Expenses. Featherlite will pay all of the registration expenses of
and incident to the Registration Statement filed pursuant to this Article 6 and
Featherlite's compliance with or performance of this Article 6, including,
without limitation, all registration and filing fees, exchange listing and other
fees, printing expenses, fees and disbursements of counsel for Featherlite (and
counsel for the underwriters in connection with Blue Sky qualification of the
Registrable Shares), state Blue Sky fees and expenses, the expense of any audits
and "cold comfort" letters incident to or required by any such registration, and
the fees and disbursements of underwriters customarily paid by issuers of
securities when no shares are being sold by the issuers, but excluding
underwriting discounts and selling commissions with respect to Guth's shares,
and the fees and expenses of Guth's own counsel, which shall in all events be
paid by Guth.
6.5 Featherlite Obligations. So long as Featherlite has a class of
securities registered under section 12 of the Exchange Act, Featherlite agrees
to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(ii) use all reasonable efforts to file with the SEC in a timely
manner all reports and other documents required of Featherlite under
the Securities Act and the Exchange Act; and
(iii) furnish to Guth upon request a written statement by
Featherlite as to its compliance with the reporting requirements of
Rule 144, and of the Securities Act and the Exchange Act, a copy of
the most recent annual or quarterly report of Featherlite, and such
other reports and documents of Featherlite as Guth may reasonably
request to avail itself of any similar rule or regulation of the SEC
allowing him to sell any such securities without registration and
otherwise take such action as Guth may reasonably request in order to
avail himself of any such rule or regulation of the SEC.
In addition, Featherlite agrees to remove the restrictive legend on the
certificates evidencing Shares of Featherlite Common Stock that Guth sells in
accordance with Rule 144.
6.6 Compliance with Securities Act. The Registration Statement and any
amendments or supplements thereto will comply in all material respects with the
Securities Act, and none of the information relating to Featherlite or its
affiliates (including, without limitation, the Exchange Act filings) included or
incorporated therein or in any amendments or supplements thereto, or any
schedules required to be filed with the SEC in connection therewith will, at the
time the Registration Statement becomes effective, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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6.7 Indemnification. Featherlite will, and it hereby does, indemnify
and hold harmless, to the full extent permitted by law, (i) Guth and (ii) each
other person who participates as an underwriter or selling agent in the offering
or sale of the Registrable Shares and each other person, if any, who controls,
is controlled by or is under common control with Guth or any such underwriter or
selling agent within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act (for purposes of this paragraph, "Indemnified Person"),
against any and all losses, claims, damages or liabilities, joint or several,
and expenses (including any amounts paid in any settlement effected with
Featherlite's consent) to which such Indemnified Person may become subject under
the Securities Act, the Exchange Act, state securities or Blue Sky laws, common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) or expenses arise out of or are based
upon (A) any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in the Registration Statement, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, (B) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (C) any violation by Featherlite of any federal,
state or common law, rule or regulation applicable to Featherlite in connection
with any such registration, and, in each case, Featherlite will reimburse such
Indemnified Person for any reasonable legal or any other expenses reasonably
incurred by him, her or it in connection with investigating or defending such
loss, claim, liability, action or proceeding; provided, however, that
Featherlite shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense is caused by any untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement or amendment or
supplement thereto or in any such preliminary, final or summary prospectus in
reliance upon and in conformity with written information furnished to
Featherlite through an instrument duly executed by such Indemnified Person
specifically stating that it is for inclusion therein or if an underwriter fails
to deliver a final prospectus in accordance with the Securities Act and such
delivery would have cured the defect causing such loss, claim, damage or
liability. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Person and shall
survive the transfer of such securities by such Indemnified Person.
Featherlite may require, as a condition to including the Registrable Shares in
the Registration Statement, that Featherlite shall have received an undertaking
reasonably satisfactory to it from Guth or any underwriter or selling agent, to
severally and not jointly indemnify and hold harmless (in the same manner and to
the same extent as set forth in the first paragraph of this section 6.7),
Featherlite and its directors, officers, controlling persons, any underwriter or
selling agent and all other prospective sellers and their respective directors,
officers, and partners, and their respective controlling persons (for purposes
of this paragraph, "Indemnified Persons") but only with respect to (A) any
untrue statement or alleged untrue statement of any material fact contained, on
the effective date thereof, in the Registration Statement, any preliminary,
final or summary prospectus contained therein, or any amendment or supplement
thereto, (B) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case in reliance upon and in conformity with written
information furnished to Featherlite or its representatives through an
instrument duly executed by or on behalf of Guth, other selling person or
underwriter or selling agent specifically stating that it is for inclusion
therein, or (C) any violation by Guth or any underwriter or selling agent of any
federal, state or common law, rule or regulation applicable to any of them in
connection with any such registration, and, in each case, the indemnifying party
will reimburse such Indemnified Person for any reasonable legal or any other
expenses reasonably incurred by Featherlite in connection with investigating or
defending such loss, claim, liability, action or proceeding. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Persons and shall survive the transfer of such
securities by such indemnifying party; provided, however, that no such
indemnifying party shall be liable under this paragraph for any amounts
exceeding the product of the price per Registrable Share at which such
Registrable Shares are sold in the offering multiplied by the number of
Registrable Shares being sold pursuant to the Registration Statement or
prospectus by such indemnifying party.
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Promptly after receipt by an indemnified party hereunder of written
notice of the commencement of any action or proceeding (including any
governmental investigation with respect to which a claim for indemnification may
be made pursuant to this section 6.7, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, promptly give
written notice to the latter of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding paragraphs of this section 6.7, except to the extent that the
indemnifying party is actually materially prejudiced by such failure to give
notice. In case any such action is brought against an indemnified party, unless
in such indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist in respect of such claim,
the indemnifying party will be entitled to participate in and, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, to
the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties arises in
respect of such claim after the assumption of the defense thereof, and the
indemnifying party will not be subject to any liability for any settlement made
without its consent (which consent shall not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of an unconditional release
from all liability arising out of such claim or litigation. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel (and
one local counsel) for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels. All fees and expenses incurred by an indemnified
person that are covered by the indemnity will be paid on a current basis when
billed.
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6.8 Contribution. If the indemnification provided for in section 6.7 is
unavailable to the indemnified parties in respect of any losses, claims, damages
or liabilities referred to herein, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (i) as between Featherlite and Guth on the one hand and the
underwriters on the other hand, in such proportion as is appropriate to reflect
the relative benefits received by Featherlite and Guth on the one hand and the
underwriters on the other hand from the offering of all of the securities sold
in the offering or, if such allocation is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits but
also the relative fault of Featherlite and Guth on the one hand and of the
underwriters on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations and (ii) as between Featherlite on the
one hand and Guth on the other hand, in such proportion as is appropriate to
reflect the relative fault of Featherlite and of Guth in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by Featherlite and Guth on the one hand and the
underwriters on the other hand shall be deemed to be in the same proportion that
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by Featherlite and Guth bear
to the total underwriting discounts and commissions received by the
underwriters, in each case as set forth in the table on the cover page of the
prospectus. The relative fault of Featherlite and Guth on the one hand and of
the underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by Featherlite and Guth or by the underwriters. The
relative fault of Featherlite on the one hand and of Guth on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
Featherlite and Guth agree that it would not be just and equitable if
contribution pursuant to this section 6.8 were determined by pro rata allocation
(even if the underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this section 6.8, no underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and Guth shall not be required to contribute any
amount in excess of the amount by which the total price at which the securities
of Guth were offered to the public exceeds the amount of any damages that Guth
has otherwise been required to pay be reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Guth's obligations to contribute pursuant to this
section 6.8 are several in the same proportion that the proceeds of the offering
received by Guth bear to the total proceeds of the offering received by all Guth
and not joint.
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6.9 Agreements by Guth. Guth shall take the following actions:
6.9.1 In connection with any registration pursuant to this
Article 6, Guth shall furnish to Featherlite such information
regarding Guth and the distribution proposed by Guth as Featherlite
may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this
Agreement.
6.9.2 If, during the effectiveness of the Registration Statement
filed pursuant to this Article 6, an intervening event ("Intervening
Event") occurs that, in the reasonable good faith opinion of
Featherlite's Board of Directors, with the advice of counsel, causes
the prospectus included in the Registration Statement to no longer
comply with the Securities Act, then, after notice from Featherlite to
Guth of the occurrence of such an Intervening Event, Guth shall make
no further sales, or other dispositions or offers therefor, of
Registrable Shares under such Registration Statement until he receives
from Featherlite copies of a new, amended, or supplemented prospectus
complying with the Securities Act. Promptly after such Intervening
Event has been publicly disclosed, the disclosure of which will not be
unreasonably delayed by Featherlite, or has been rendered moot,
Featherlite will prepare and file an amendment or supplement as
provided in section 6.2.5.
6.10 Featherlite Right of First Refusal. In the event that Guth desires
to sell or offers for sale all or any portion of the Featherlite Shares (the
"Offered Shares") received by him as a result of the Exchange, Guth shall give
written notice of such offer for sale to Featherlite prior to making any public
or private sale. Featherlite shall then have the option, at its discretion, to
purchase all of the Offered Shares. In such event, Featherlite shall exercise
such purchase option, if at all, by providing written notice to Guth, within
five business days after receipt of the notice of offer for sale pursuant to
this section, that it will purchase all of the Offered Shares for cash in an
amount per share equal to the Average Market Price, with the applicable date for
these purposes being the date of Guth's notice to Featherlite. If Featherlite
exercises its right of first refusal hereunder, the closing of the purchase of
the shares of Featherlite Common Stock with respect to which such right has been
exercised shall take place at the offices of Featherlite within 10 business days
after Featherlite gives notice of such exercise, which period of time shall be
extended if necessary in order to comply with applicable securities laws and
regulations. Notwithstanding the foregoing, Guth shall have the right to make
open market sales of 25,000 or fewer Featherlite Shares in any 30-day period
without giving rise to Featherlite's right of first refusal described in this
section 6.10.
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ARTICLE 7
CLOSING
7.1 Closing. The consummation of the deliveries, exchanges, and
transactions described herein shall occur on the Closing Date, but to be
effective as of the Effective Time.
7.2 Mutual Conditions to Closing. The obligations of each of the
parties under this Agreement to consummate the Closing shall, at the discretion
of each such party, be subject to the satisfaction, on or prior to the Closing
Date, of all of the following conditions, any of which conditions may be waived
in writing by a party:
7.2.1 Required Approvals. The parties shall have obtained the
permissions, consents, releases, or approvals, governmental or
otherwise, set forth on Schedule 7.2.1.
7.3 Conditions to Featherlite's Obligations. The obligations of
Featherlite under this Agreement to consummate the Closing shall, at its
discretion, be subject to the satisfaction, on or prior to the Closing Date, of
all of the following conditions, any of which conditions may be waived in
writing by Featherlite:
7.3.1 No Misrepresentations, Breaches or Adverse Events. All
representations and warranties of Vantare in this Agreement shall be
true and correct as of the Closing Date with the same force and effect
as though made on such date, and there shall have been no material
breach by, or material failure or inability of, Vantare in the
performance of any of its material covenants or obligations herein.
7.3.2 Shareholder and Board Approvals. Vantare shall have
obtained all necessary approvals by its shareholders and board of
directors to this Agreement and the Exchange.
7.3.3 Approvals; Consents. All other permissions, consents,
releases, or approvals, governmental or otherwise, necessary on the
part of Vantare to consummate the transactions contemplated by this
Agreement shall have been obtained by Vantare and delivered to
Featherlite.
7.3.4 Delivery of Documents. Vantare shall have executed and
delivered to Featherlite all of the documents and instruments required
to be delivered by Vantare to Featherlite at or prior to the Closing,
including each of the following:
7.3.4.1 Certified copy of resolutions of Vantare's
Board of Directors and shareholders authorizing the execution
and delivery of this Agreement and performance of the
transactions contemplated herein, including specifically the
authorization of the Exchange.
7.3.4.2 A bill of sale and any other appropriate
instruments of assignment from Vantare transferring and
assigning all of the Assets to Featherlite, free and clear of
all encumbrances, liens, security interests, and indebtedness
of whatever nature other than Permitted Liens.
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7.3.4.3 Physical possession of the Assets.
7.3.4.4 Warranty deeds conveying to Featherlite
marketable fee simple title to the real property included in
the Assets and all rights appurtenant thereto, and other
real estate title and related documents required in
connection therewith.
7.3.4.5 An assignment and assumption agreement
assigning to Featherlite all of Vantare's right, title, and
interest in the Contracts included in the Assets.
7.3.4.6 The employment agreement described in section
5.8.
7.3.4.7 A certificate signed by the chief executive
officer and the chief financial officer of Vantare with
respect to the matters described in section 7.3.1 hereof.
7.3.5 Legal Opinion. Featherlite shall have received a favorable
opinion, addressed to Featherlite, of Dean, Mead, Egerton, Bloodworth,
Capouano & Bozarth, P.A., counsel to Vantare, dated as of the date of
the Closing, in the form attached as Schedule 7.3.5.
7.3.6 Vantare Income. Featherlite shall be satisfied with the
results of its due diligence review of Vantare to the extent that
Featherlite shall have obtained adequate comfort that Vantare's income
before taxes for the quarter ended March 31, 1996 was not less than
$300,000 and for the year ending December 31, 1996 will be not less
than $1.3 million.
7.4 Conditions to Vantare's Obligations. The obligations of Vantare
under this Agreement to consummate the Closing shall, at its discretion, be
subject to the satisfaction, on or prior to the Closing Date, of all of the
following conditions, any of which conditions may be waived in writing by
Vantare:
7.4.1 No Misrepresentations, Breaches or Adverse Events. All
representations and warranties of Featherlite in this Agreement shall
be true and correct as of the Closing Date with the same force and
effect as though made on such date, and there shall have been no
material breach by, or material failure or inability of, Featherlite
in the performance of any of its material covenants or obligations
herein.
7.4.2 Board Approval. Featherlite shall have obtained all
necessary approvals by its board of directors to this Agreement and
the Exchange.
7.4.3 Approvals; Consents. All other permissions, consents,
releases, or approvals, governmental or otherwise, necessary on the
part of Featherlite to consummate the transactions contemplated by
this Agreement shall have been obtained by Featherlite and delivered
to Vantare.
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7.4.4 Delivery of Documents. Featherlite shall have executed and
delivered to Vantare all of the documents and instruments required to
be delivered by Featherlite to Vantare at or prior to the Closing,
including each of the following:
7.4.4.1 Certified copy of resolutions of Featherlite's Board
of Directors authorizing the execution and delivery of this
Agreement and performance of the transactions contemplated
herein, including specifically the authorization of the Exchange.
7.4.4.2 Certificates representing the Featherlite Shares
(other than the Escrow Amount).
7.4.4.3 The employment agreement described in section 5.8.
7.4.4.4 The restated notes to Guth described in section
2.5.2.
7.4.4.5 A certificate signed by the chief executive officer
and the chief financial officer of Featherlite with respect to
the matters described in section 7.4.1 hereof.
7.4.5 Legal Opinion. Vantare shall have received a favorable
opinion, addressed to Vantare, of Fredrikson & Byron, P.A., counsel to
Featherlite, dated as of the date of the Closing, in the form attached
as Schedule 7.4.5.
ARTICLE 8
TERMINATION
8.1 Termination Prior to Closing. The obligation of the parties hereto
to consummate the Closing may be terminated and abandoned at any time on or
before the Closing as follows:
8.1.1 By and at the option of Featherlite, upon written notice to
Vantare, if the conditions set forth in sections 7.2 and 7.3 have not
been satisfied and the Closing shall not have occurred by July 15,
1996.
8.1.2 By and at the option of Vantare, upon written notice to
Featherlite, if the conditions set forth in sections 7.2 and 7.4 have
not been satisfied and the Closing shall not have occurred by July 15,
1996.
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8.1.3 At any time, without liability of any party to the others,
upon the mutual written consent of Vantare and Featherlite.
8.2 Consequences of Termination Prior to Closing. In the event of
termination of this Agreement prior to the Closing, (i) each of the parties may
pursue any remedies for any breach of this Agreement available at law or in
equity (subject to section 10.6 hereof), (ii) each party will return to the
others all documents and materials obtained from the others pursuant to this
Agreement, and (iii) the confidentiality obligations described in section 5.1
shall remain in effect.
ARTICLE 9
SURVIVAL; INDEMNIFICATION
9.1 Survival. All representations, warranties, covenants, and
agreements contained in this Agreement, or any Schedule, certificate, agreement,
document, or statement delivered pursuant hereto, shall survive (and not be
affected in any respect by) the Closing, any investigation conducted by any
party hereto, or any information that any party may receive, and shall remain in
full force and effect until the close of business on the date that is three
years after the Effective Time (the "Indemnity Period"). Upon the expiration of
the Indemnity Period, all such representations, warranties, covenants, and
agreements shall expire, terminate, and be of no further force or effect;
provided, however, that the covenants and agreements contained herein, to the
extent that they specifically require performance following the Effective Time
(all such specified covenants and agreements are referred to herein collectively
as the "Specified Provisions") shall not expire but shall continue in
perpetuity.
9.2 Indemnification by Vantare and Guth. Vantare and Guth shall
indemnify, defend and hold harmless Featherlite and its officers, directors,
shareholders, employees, agents and affiliates (collectively, all such
indemnitees are referred to in this section as "Featherlite") against and in
respect of any and all claims, demands, losses, obligations, liabilities,
damages, deficiencies, actions, settlements, judgments, costs and expenses
(including reasonable costs and legal fees incident thereto or in seeking
indemnification therefor) that Featherlite may incur or suffer, arising out of
or based upon the breach by Vantare or Guth of any of their respective
representations, warranties, covenants or agreements contained or incorporated
in this Agreement or any agreement, certificate or document executed and
delivered to Featherlite by Vantare in connection with the transactions
hereunder. The indemnification provided for under this section 9.2, as it
relates to breaches of Vantare's and Guth's representations, warranties,
covenants and agreements contained herein, shall specifically be interpreted to
mean and include occurrences prior to the Effective Time (that result in any
such breach giving rise to indemnification hereunder), regardless of when the
claim is made or the loss is booked, for which Vantare and Guth shall be liable
pursuant hereto. The indemnification provided for under this section 9.2, and
claims with respect thereto, shall be satisfied out of, and recourse shall be
limited to, the aggregate number of Featherlite Shares paid to Vantare pursuant
to the Exchange; provided, however, that (i) in the event that Vantare sells or
transfers all or any portion of the Featherlite Shares held by Vantare prior to
the date of a claim by Featherlite pursuant hereto, the indemnification provided
for under this section 9.2 shall be limited to the aggregate number of
Featherlite Shares that continue to be held by Vantare plus (A) the aggregate
proceeds received from any bona fide public sale(s) of the Featherlite Shares
and (B) the aggregate value of the Featherlite Shares sold or transferred in a
transaction other than a bona fide public sale, valuing any Featherlite Shares
so sold or transferred at the Average Market Price (with the applicable date,
for purposes of calculating the Average Market Price, being the Effective Time),
and (ii) Vantare shall be permitted to satisfy a claim for indemnification
against Vantare either in cash or by returning to Featherlite the number of
Featherlite Shares equal in value to the amount of the claim, valuing the
Featherlite Shares so returned at the Average Market Price (with the applicable
date, for purposes of calculating the Average Market Price, being the date of
payment of the claim). As used in this section 9.2 in connection with
satisfaction of claims for indemnification from the Featherlite Shares,
references to "Vantare" shall mean and refer to Guth following the distribution
by Vantare to Guth of the Featherlite Shares, or rights with respect to the
Featherlite Shares included in the Escrow Amount.
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9.3 Indemnification by Featherlite. Featherlite shall indemnify, defend
and hold harmless Vantare, and its officers, directors, shareholders, employees,
agents and affiliates (collectively, all such indemnitees are referred to in
this section as "Vantare") against and in respect of any and all claims,
demands, losses, obligations, liabilities, damages, deficiencies, actions,
settlements, judgments, costs and expenses (including reasonable costs and legal
fees incident thereto or in seeking indemnification therefor) that Vantare may
incur or suffer and which are not reimbursed by insurance, arising out of or
based upon the breach by Featherlite of any of its representations, warranties,
covenants or agreements contained or incorporated in this Agreement or any
agreement, certificate or document executed and delivered to Vantare by
Featherlite in connection with the transactions hereunder.
9.4 Procedure for Claims. If a claim by a third party is made against
any indemnified party, and if the indemnified party intends to seek indemnity
with respect thereto under this Article 9, such indemnified party shall promptly
provide written notice to the indemnifying party of such claim, including the
amount of the claim to the extent then known. With respect to claims for
indemnification made under this Article 9, other than claims with respect to the
Specified Provisions, an indemnifying party shall be liable to an indemnified
party only if such written notice of the claim for indemnification is given by
the indemnified party to the indemnifying party prior to the expiration of the
Indemnity Period; with respect to claims under the Specified Provisions, such
notice can be given at any time after the Effective Time. If such notice is
timely given, the indemnifying party's obligation to indemnify the indemnified
party shall survive the expiration of the Indemnity Period until resolved. If
the indemnifying party hereunder is Vantare, references in this section 9.4 to
actions to be taken by the indemnifying party shall mean and refer to the
actions to be taken by Vantare and Guth collectively. The indemnifying party
shall have 20 days after receipt of the above-mentioned notice to begin to
undertake, conduct and control, through counsel of its own choosing (subject to
the consent of the indemnified party, such consent not to be unreasonably
withheld) and at its expense, the settlement or defense therefor, and the
indemnified party shall cooperate with it in connection therewith; provided
that: (i) the indemnifying party shall not thereby permit to exist any Lien upon
any asset of any indemnified party, (ii) the indemnifying party shall permit the
indemnified party to participate in such settlement or defense through counsel
chosen by the indemnified party, with the fees and expenses of such counsel to
be borne by the indemnifying party only if and to the extent that such counsel
is necessary by reason of a demonstrable conflict of interest, and (iii) the
indemnifying party shall agree promptly to reimburse the indemnified party for
the full amount of any loss (subject to the limitations contained in sections
9.2 and 9.3) resulting from such claim and all related expenses incurred by the
indemnified party pursuant to this Article 9. So long as the indemnifying party
is reasonably contesting any such claim in good faith, the indemnified party
shall not pay or settle any such claim. If the indemnifying party does not
notify the indemnified party within 20 days after receipt of the indemnified
party's notice of a claim of indemnity hereunder that it elects to undertake the
defense thereof, the indemnified party shall have the right to contest, settle
or compromise the claim in the exercise of its exclusive discretion at the
expense of the indemnifying party.
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ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors or assigns of the
parties hereto.
10.2 Further Assurances; Copies. Vantare shall, at the request of
Featherlite and without further consideration, execute and deliver such
instruments of assignment, transfer, license or assumption and take such further
actions as Featherlite may reasonably request in order more effectively to carry
out the intents and purposes of this Agreement and the transactions contemplated
hereby. All out-of-pocket expenses involved in compliance with this section
shall be promptly reimbursed by the requesting party(ies) to the other.
10.3 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be personally delivered or telecopied
(with confirmation of transmission) to the party receiving such notice or shall
be delivered by Federal Express or similar overnight courier, addressed as
follows:
if to Featherlite to: Featherlite Mfg., Inc.
Highways 63 and 9
P.O. Box 320
Cresco, Iowa 52136
Attention: Conrad Clement
Telecopy No. (319) 547-6099
with a copy to: Fredrikson & Byron, P.A.
900 Second Avenue South, Suite 1100
Minneapolis, Minnesota 55402-3397
Attention: Timothy M. Heaney, Esq.
Telecopy No. (612) 347-7077
if to Vantare or Guth to: Vantare International, Inc.
1550 Dolgner Place, Port of Sanford
Sanford, Florida 32771
Attention: Michael Guth
Telecopy No. (407) 323-1945
with a copy to: Dean, Mead, Egerton, Bloodworth,
Capouano & Bozarth, P.A.
800 North Magnolia Avenue, Suite 1500
P.O. Box 2346
Orlando, Florida 32802
Attention: Jane D. Callahan, Esq.
Telecopy No. (407) 423-1831
Any party may change the above-specified recipient and/or mailing address by
notice to the other party given in the manner herein prescribed. All notices
shall be deemed given on the day when actually delivered as provided above, if
delivered personally or by telecopy, or the business day after the date
deposited, if delivered by Federal Express or similar overnight courier.
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10.4 Public Announcement. Each of the parties to this Agreement hereby
agrees with the other parties hereto that, except as may be required to comply
with the requirements of applicable law and the Nasdaq National Market, no press
release or similar public announcement or communication will be made or caused
to be made concerning the execution or performance of this Agreement unless
specifically approved in advance by Featherlite and Vantare. The foregoing shall
not restrict Featherlite's and Vantare's internal communications with employees.
10.5 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Minnesota, including all matters of
construction, validity, performance and enforcement, without giving effect to
principles of conflict of laws.
10.6 Arbitration. Any dispute arising out of or relating to this
Agreement or the alleged breach of it, or the making of this Agreement,
including claims of fraud in the inducement, shall be discussed between the
disputing parties in a good-faith effort to arrive at a mutual settlement of any
such controversy. If, notwithstanding, such dispute cannot be resolved, such
dispute shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon the
award may be entered in any court having jurisdiction of the controversy. The
arbitrator shall be a retired state or federal judge or an active or retired
attorney experienced in business or commercial litigation selected by agreement
of the parties. If they cannot so agree within 20 days, any party may request
that the chief judge of the District Court for Hennepin County, Minnesota (or
such other court elsewhere as may have jurisdiction of the parties and
appropriate subject matter jurisdiction), select a retired judge or an attorney
experienced in business or commercial litigation. The costs of the proceedings
shall be shared equally by the disputing parties.
10.7 Severability and Interpretation. In the event that any provision
of this Agreement is held invalid by a court of competent jurisdiction, the
remaining provisions shall nonetheless be enforceable according to their terms.
Any provision held overbroad as written shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable under
applicable law, and enforced as amended. This Agreement shall be construed
without regard to any presumption or other rule requiring construction hereof
against the party causing this Agreement to be drafted.
10.8 Benefit. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective permitted successors or assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
10.9 Entire Agreement; Modification and Waiver. This Agreement,
together with the Schedules and the related written agreements specifically
referred to herein, represents the only agreement among the parties concerning
the subject matter hereof and supersedes all prior proposals or agreements,
whether written or oral, relating to the subject matter hereof, including but
not limited to the Letter Agreement. No purported amendment, modification, or
waiver of any provision hereof shall be binding unless set forth in a written
document signed by all parties. Any waiver shall be limited to the circumstance
or event specifically made subject thereto and shall not be deemed a waiver of
any other term hereof or of the same circumstance or event upon any recurrence
thereof.
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10.10 Counterparts. This Agreement may be executed in counterparts and
by different parties on different counterparts with the same effect as if the
signatures thereto were on the same instrument. This Agreement shall be
effective and binding upon all parties hereto at such time as all parties have
executed a counterpart of this Agreement.
IN WITNESS WHEREOF, each of the parties has duly executed this
Agreement effective as of the day and year first above written.
FEATHERLITE MFG., INC.
By /s/ Conrad D. Clement
Its President and Chief Executive Officer
VANTARE INTERNATIONAL, INC.
By /s/ Michael Guth
Its President
/s/ Michael Guth
Michael Guth
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SCHEDULES
1.28 Permitted Liens
2.2.3 Excluded Contracts (Not Assigned or Assumed)
2.3 Excluded Assets
2.5 Permitted Liabilities
2.5.2 Notes to Guth; Certain Obligations Not Assumed
2.5.3 Specific Permitted Liabilities
3.1 Foreign Qualifications
3.4 Corporate Authority Matters
3.6 Tax Notices
3.7 Liabilities
3.8 Changes and Events
3.9 Assets and Liens
3.10 Intellectual Property
3.11 Licenses, Permits, Etc.
3.12 Litigation
3.14 Contracts
3.15 Insurance
3.16 Accounts Receivable
3.17 Scheduled Plans (ERISA and non-ERISA)
3.18 Employees
3.19 Bank Accounts
5.6 Vantare's Expenses
5.8 Form of Employment Agreement
5.9 Employment Matters
7.2.1 Required Approvals
7.3.5 Form of Opinion of Vantare's Counsel
7.4.5 Form of Opinion of Featherlite's Counsel
40
Exhibit 10
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into effective as of July 1, 1996,
by and between Featherlite Mfg., Inc., a Minnesota corporation ("Featherlite"),
and Michael Guth ("Guth").
RECITALS:
A. Featherlite is in the business of, among other things, manufacturing and
marketing luxury custom coaches.
B. Guth has considerable knowledge and experience relating to the business
of Featherlite as a result of his previous employment by Vantare International,
Inc. ("Vantare"), all of the assets and business of which (the "Vantare
Business") have been acquired by Featherlite as of the date hereof pursuant to a
certain Agreement and Plan of Reorganization dated July 1, 1996 (the "Exchange
Agreement") among Featherlite, Vantare, and Guth.
C. Featherlite desires to employ Guth and Guth desires to be employed by
Featherlite, on the terms and conditions set forth in this Agreement.
Featherlite and Guth also acknowledge that Featherlite would be irreparably
harmed in the event that Guth competed with Featherlite during the
noncompetition period described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
AGREEMENTS:
10.10.1 Term of Employment. Subject to the provisions for termination
contained in section 9 hereof, Featherlite hereby employs Guth for a term
beginning on the date hereof and ending on December 31, 1999 (the "Employment
Term").
10.10.2 Employment Duties. During the Employment Term, Featherlite shall
employ Guth as President of the Vantare Division of Featherlite, which shall be
a management position commensurate with his knowledge, experience and skills. As
used in this Agreement, the "Vantare Division" means the division of Featherlite
that operates the Vantare Business from and after the date hereof, and does not
include other divisions or business segments of Featherlite. Guth shall have all
of the rights, duties, and obligations implied by his title(s), as it or they
may change from time to time, and shall perform such other duties and
responsibilities as may be delegated to him by the Board of Directors or the
Chief Executive Officer of Featherlite from time to time. Guth shall diligently
and conscientiously devote his full time and attention and best efforts to the
performance of the duties of his position(s), as it or they may change from time
to time; provided, however, that this shall not prohibit Guth from making
passive investments in other companies or ventures that do not require that he
expend time or provide services or otherwise interfere with his duties
hereunder. Guth agrees to comply in all respects with the general standards,
policies, and procedures of Featherlite or relevant affiliates of Featherlite as
in effect from time to time, and Guth shall not be engaged or employed in any
capacity whatsoever by any other person or business entity, or for his own
account.
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10.10.3 Base Compensation. As compensation for his services rendered
hereunder, Guth shall receive an annual base salary during the Employment Term
equal to Fifty-Two Thousand Dollars ($52,000). Such salary will be payable on
Featherlite's normal payroll cycle and shall be prorated for any calendar year
during the Employment Term during which Guth's employment hereunder begins or
terminates.
10.10.4 Incentive Compensation. In addition to the salary to be paid to
Guth as provided in section 3 hereof, Featherlite shall pay to Guth, as
incentive compensation, as soon as practical after the end of each fiscal year
of Featherlite (December 31, 1996, 1997, 1998, and 1999) but in no event more
than 120 days after the end of any such fiscal year during the Employment Term,
a bonus equal to five percent (5%) of the Vantare Division's Pre-tax Income. For
these purposes, "Pre-tax Income" shall mean the net income of the Vantare
Division, after expenses including amortization of intangibles including those
arising from the transaction contemplated by the Exchange Agreement and before
income tax, earned from its operation of the Vantare Business for the applicable
fiscal year but shall not include income of other divisions, affiliates, or
subsidiaries of Featherlite (except to the extent that any such other divisions,
affiliates, or subsidiaries subsequently operate, in whole or in part, the
Vantare Business), or any other indirect corporate allocations not directly
related to the Vantare Business, and provided that the expenses shall be
generally consistent with the types of expenses of operating the Vantare
Business prior to the exchange pursuant to the Exchange Agreement (but as may
differ to account for any infusion of capital after the date of such exchange,
and except for the amortization of intangibles related to such exchange and
other expenses strictly related to the operation of the Vantare Division). The
aggregate sum of the base salary described in section 3 and the bonus described
in this section 4 shall not exceed the following amounts for the following
years, respectively: $200,000 for 1996, $210,000 for 1997, $220,000 for 1998,
and $230,000 for 1999. The bonus described herein, and the aggregate annual
maximum amounts of salary and bonus payable hereunder, shall be prorated for any
calendar year during the Employment Term during which Guth's employment
hereunder begins or terminates. If Featherlite expands the Vantare Division
through the infusion of additional capital and plant expansion (in addition to
the expansion already contemplated by Featherlite and Vantare, as described in
section 5.14 of the Exchange Agreement), the bonus described herein shall be
renegotiated so as to reflect appropriately the additional capital and
contributions of Featherlite, by providing to Featherlite a 10-percent return on
its capital investment (including but not limited to real estate and equipment)
in any such expansion. This amount shall be deducted from Pre-tax Income prior
to calculation of the bonus payable to Guth.
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10.10.5 Benefits. During the term of Guth's employment by Featherlite
pursuant to this Agreement, he shall be eligible for and receive the standard
benefits paid to employees of comparable positions in Featherlite and its
subsidiaries, as such benefits may change from time to time. With regard to all
insured benefits to be provided, benefits shall be subject to due application by
Guth, and Featherlite shall have no obligation to pay insured benefits directly,
such benefits to be payable to Guth only by the insurers in accordance with
their policies. In addition to the standard benefits payable to employees in
comparable positions, Featherlite will provide to Guth during the Employment
Term a Jeep Cherokee, Ltd. or similar automobile and will pay or reimburse all
of the reasonable expenses of maintaining and operating such automobile incurred
in connection with Guth's employment; such automobile and related expense
reimbursements shall be treated as income to Guth to the extent required by
applicable law.
10.10.6 Covenant Not to Compete. During the three-year period beginning
on the day that Guth's employment with Featherlite terminates (the
"Noncompetition Term"), in consideration of the Noncompetition Compensation to
be provided by Featherlite to Guth under section 7 hereof, and in further
consideration of Featherlite's agreement to consummate the Exchange and to
employ Guth pursuant hereto, Guth hereby agrees that he will not, directly or
indirectly, compete with Featherlite anywhere in North America (the
"Territory"). For purposes of this Agreement, "compete" shall mean engaging,
directly or indirectly, in a business similar in whole or in part to the Vantare
Business. This covenant not to compete shall be interpreted to prohibit Guth,
among other things, from serving as a proprietor, shareholder, partner, joint
venturer, lender, director, officer, employee, consultant, or independent
contractor to any person or entity that directly or indirectly competes with
Featherlite in the Territory. During the Noncompetition Term, Guth shall not
interfere in any way in the relationships between Featherlite and its employees,
vendors or former vendors, or customers or former customers (including
specifically the employees, vendors or former vendors, and customers or former
customers of the Business) with the objective of facilitating or encouraging (i)
the departure of any employee for the purpose of joining any other employer that
may compete with Featherlite, or (ii) the transfer of all or any portion of any
customer's or vendor's business from Featherlite to another person or entity
that competes with Featherlite.
10.10.7 Compensation for Covenant Not to Compete. In consideration of
Guth's covenant not to compete described in section 6 hereof, upon the
completion of each year of the three-year term of the covenant not to compete,
Guth shall have the right to purchase from Featherlite one luxury motor coach,
at Featherlite's cost (which includes the cost of the shell, manufacturing labor
and overhead, and raw materials and components), to use or sell such motor
coach, and retain the proceeds therefrom (the "Noncompetition Compensation").
Guth shall be responsible for the payment of all taxes in connection therewith,
including but not limited to income tax and sales tax.
10.10.8 Confidentiality. During his employment by Featherlite and at all
times thereafter, Guth shall hold in the strictest confidence and will not,
without the prior written authorization of Featherlite or its legal counsel,
disclose, furnish, convey, communicate, make accessible to any person, or use
any way Confidential Information (as hereinafter defined) of Featherlite or any
affiliate thereof (further references to "Featherlite" in this section shall
also mean and include any such affiliate) for Guth's own or another's benefit or
permit the same to be used in competition with Featherlite. For purposes of this
Agreement, "Confidential Information" means any information or compilation of
information, not generally known, that is proprietary to Featherlite and relates
to Featherlite's existing or reasonably foreseeable business that is not readily
disclosed by inspection or analysis of Featherlite's products or services and
which has been expressly or implicitly protected by Featherlite from
unrestricted use by persons not associated with Featherlite, including
proprietary rights and data, ideas, know-how, and trade secrets.
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10.10.9 Termination. Guth's employment with Featherlite shall terminate
prior to the end of the Employment Term described in section 1 only as follows:
(a) By mutual written agreement of the parties.
(b) Upon the voluntary resignation or death of Guth.
(c) Upon the occurrence of physical or mental disability of Guth to
such extent that he is unable to carry on a substantial portion of his
usual and customary duties, and such inability continues for a period of
six months.
(d) At the election of Featherlite, and immediately upon written
notice to Guth, for cause, which shall mean any one or more of the
following:
(i) The conviction of Guth for any felony or misdemeanor
committed in the course of his employment by Featherlite, or the entry
of any final civil judgment against him in connection with any
allegation against him of fraud, misrepresentation, misappropriation
of property, any other intentional tort, or violation of any statute
committed in the course of his employment by Featherlite.
(ii) The gross misconduct, dishonesty, or disloyalty on the part
of Guth in the performance of his duties hereunder, including without
limitation the making by Guth of material unauthorized or unbudgeted
expenditures; the receipt by Guth, directly or indirectly, of a
material improper personal benefit (as referred to in Minnesota
Statutes section 302A.251) from Featherlite that is not authorized by
the Board of Directors of Featherlite; or a material conflict of
interest involving Guth and a customer, a business associate, or a
competitor of Featherlite that is not disclosed by Guth in writing to
Featherlite and approved in writing by Featherlite.
(iii) After written notice thereof and 30 days in which to cure,
the material failure of Guth to perform his duties on behalf of
Featherlite or an affiliate of Featherlite in a reasonable and timely
manner or the failure of Guth to comply substantially with the
standard, generally applicable material policies and procedures of
Featherlite as in effect from time to time.
10.10.10 Injunctive Relief. The parties recognize that irreparable damage
will result to Featherlite if Guth violates or threatens to violate the terms of
the covenant not to compete, and that the damages would be difficult to prove
and quantify, and it is therefore agreed that, in the event of a breach of the
covenant, Featherlite shall be entitled to injunctive relief to enforce the
covenant, in addition to all other legal and equitable remedies available to it,
including but not limited to the cessation of further Noncompetition
Compensation to Guth. Featherlite shall also be entitled to receive from Guth
the costs of obtaining such injunction or other legal or equitable remedies,
including reasonable attorneys' fees.
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10.10.11 Severability and Interpretation. In the event that any provision
of this Agreement is held invalid by a court of competent jurisdiction, the
remaining provisions shall nonetheless be enforceable according to their terms.
Any provision held overbroad as written shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable under
applicable law, and enforced as amended. This Agreement shall be construed
without regard to any presumption or other rule requiring construction hereof
against the party causing this Agreement to be drafted.
10.10.12 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be personally delivered or telecopied
(with confirmation of transmission) to the party receiving such notice or shall
be delivered by Federal Express or similar overnight courier, addressed to the
party to whom such notice is intended to be given, at the address for such party
given in the Exchange Agreement or such other address as a party may specify by
notice to the other party in the manner described therein. All notices shall be
deemed given on the day when actually delivered as provided above, if delivered
personally or by telecopy, or the business day after the date deposited, if
delivered by overnight courier.
10.10.13 Amendments. This Agreement expresses the entire understanding of
the parties and supersedes all prior agreements concerning the same subject
matter, including but not limited to the restated letter of intent dated as of
June 10, 1996, among Guth, Vantare, and Featherlite. It may not be changed
orally. Any change or modification must be made in writing and signed by the
parties.
10.10.14 Governing Law. The validity, enforceability, construction, and
interpretation of this Agreement shall be governed by the laws of the State of
Florida.
10.10.15 Arbitration. Any dispute arising out of or relating to this
Agreement or the alleged breach of it, or the making of this Agreement,
including claims of fraud in the inducement, shall be discussed between the
disputing parties in a good-faith effort to arrive at a mutual settlement of any
such controversy. If, notwithstanding, such dispute cannot be resolved, such
dispute shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon the
award may be entered in any court having jurisdiction of the controversy. The
arbitrator shall be a retired state or federal judge or an active or retired
attorney experienced in business, commercial, or employment litigation selected
by agreement of the parties. If they cannot so agree within 20 days, any party
may request that the chief judge of the District Court for Seminole County,
Florida, select a retired judge or an attorney experienced in business,
commercial, or employment litigation. The arbitration proceeds shall take place
in Seminole County, Florida. The costs of the proceedings shall be shared
equally by the disputing parties.
10.10.16 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors and permitted
assigns of the parties hereto. No party may assign or delegate its obligations
hereunder without the written consent of the other parties, and no party may
assign its rights hereunder, without the written consent of the other parties,
to any person or entity; provided, however, that Featherlite may assign its
rights and obligations hereunder to an affiliate of Featherlite or a business
organization that shall succeed to substantially all the Vantare Business.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
FEATHERLITE MFG., INC.
By /s/ Conrad D. Clement
Its President and Chief Executive Officer
/s/ Michael Guth
Michael Guth
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