EXHIBIT 2.3
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDMENT is made and entered in to effective as of December 30,
1996, by and among Featherlite Mfg., Inc., a Minnesota corporation
("Featherlite"), Vantare International, Inc., a Florida corporation ("Vantare"),
and Xxxxxxx Xxxx ("Xxxx").
RECITALS:
A. Pursuant to an Agreement and Plan of Reorganization (the "Exchange
Agreement") dated as of July 1, 1996, among the parties hereto, Vantare
transferred substantially all of its assets to Featherlite in exchange for
shares of common stock of Featherlite and the assumption by Featherlite of
certain of its liabilities, upon the terms and conditions set forth in the
Exchange Agreement.
B. Section 2.7 of the Exchange Agreement provided for the escrow of
100,000 of the aggregate shares issuable to Vantare pursuant to the Exchange
but, as contemplated by the Exchange Agreement, the parties have determined that
the test period and other factors set forth in the Exchange Agreement for
calculating the number of shares so issuable do not permit the parties to
accurately reflect the performance of the Vantare Division (as defined in the
Exchange Agreement), and the parties therefore desire to amend the Exchange
Agreement to establish more appropriate performance standards.
NOW, THEREFORE, in consideration of the premises and the agreements
contained herein, and for other valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties mutually agree as follows:
1. Subject to and conditioned upon the approval of this Amendment by
the Board of Directors of Featherlite, which approval shall be sought at the
first meeting of the Board of Directors that occurs following the date hereof
(with notice of such approval, or failure to approve, to be provided to Xxxx and
Vantare promptly thereafter), section 2.7 of the Exchange Agreement is hereby
amended to read as follows:
"2.7 Adjustments to Exchange Consideration;
Contingent Shares. 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 issuable to Vantare only as
and to the extent described in this section 2.7. The "Earnout Period"
shall be the period beginning on January 1, 1997, and ending on
December 31, 2000. During the Earnout Period, a maximum of 100,000
shares may be earned. The actual number of shares earned during the
Earnout Period shall be determined annually based on the Net Income (as
defined below) earned, on a cumulative basis, through the year of
determination. During the first three years of the Earnout Period,
Vantare shall earn 25,000 shares upon achievement of each of the
following levels of cumulative Net Income: $1,200,000, $2,800,000, and
$4,400,000; provided, however, that (i) shares shall not be prorated on
the basis of the achievement of less than the full amount of cumulative
Net Income required for any of such levels; and (ii) no more than
25,000 shares may be earned for each completed year since the beginning
of the Earnout Period, but such annual limitation may (if not earned in
any year) be carried over to the succeeding year(s) of the first three
years of the Earnout Period. In the fourth year of the Earnout Period,
Vantare shall earn shares equal to the following: (i) the number of
shares of Featherlite Common Stock that bears the same ratio to 100,000
such shares that aggregate Net Income for the Earnout Period bears to
$6,000,000, with the result rounded to the nearest whole number of
shares, minus (ii) the aggregate number of shares of Featherlite Common
Stock earned by Vantare during the first three years of the Earnout
Period; provided, however, that no shares shall be earned unless the
aggregate Net Income for the Earnout Period equals or exceeds
$1,200,000. Vantare shall have the right to earn all or any portion of
the aggregate 100,000 shares issuable pursuant to this section 2.7
(less any shares paid in the first three years of the Earnout Period)
in the fourth year of the Earnout Period.
For these purposes, "Net Income" shall mean the net income of
the Vantare Division earned from the operation of its business during
the Earnout Period, as included in the Featherlite consolidated
financial statements for the applicable year(s), 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), and shall specifically (i) reflect all income
and expense related to the operation of the Vantare Division, including
interest expense or income on the cumulative Intercompany Balance (as
defined below), amortization of intangibles related to the Exchange,
and an allocation of income taxes based on the overall corporate income
tax rate, which tax rate shall not exceed 40 percent; and (ii) not
reflect gains or losses realized on the sale of the 1994 used Marathon
and the two Featherlite coaches, serial nos. C002 and C004, transferred
to Vantare by Featherlite.
As used herein, the "Intercompany Balance" shall (i) include
but not be limited to such items as cash transfers between the Vantare
Division and the corporate division of Featherlite ("Corporate"),
expenses paid by Corporate that directly relate to the Vantare Division
(such as salaries and insurance), and interest expense or income
calculated at the rate paid by Corporate on its line of credit; and
(ii) not include any general corporate allocations or management fees.
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 Net Income
shall be resolved in the same manner as described in section 2.6
hereof. Following the end of any year of the Earnout Period for which
Vantare earns shares of Featherlite Common Stock pursuant to this
section 2.7, Featherlite shall cause Firstar Trust Company ("Firstar"),
its stock transfer agent, to issue and to distribute to Vantare the
shares of Featherlite Common Stock so earned by Vantare, pursuant to
the terms set forth in this section. Until the shares are so earned and
issued, they shall not be treated as outstanding for any purpose. If
the outstanding Featherlite Common Stock changes into a different
number of shares or a different class, by reason of any
reclassification, recapitalization, split-up, combination, exchange of
shares, stock dividend, or similar event, between the Effective Time
and the date of any issuance under this section 2.7, the number and
class of shares to be so issued shall be appropriately adjusted. As
used in this section 2.7 in connection with the issuance of additional
Featherlite Shares, references to "Vantare" shall mean and refer to
Xxxx following the distribution by Vantare to Xxxx of the Featherlite
Shares, or rights with respect to the Featherlite Shares included in
the Escrow Amount."
2. The remaining provisions of the Exchange Agreement are hereby deemed
amended solely to the extent necessary so as not to be inconsistent with the
amendment made to section 2.7, and the Exchange Agreement shall otherwise remain
in full force and effect.
IN WITNESS WHEREOF, each of the parties has duly executed this
Amendment effective as of the day and year first above written.
FEATHERLITE MFG., INC.
By
Its President and Chief Executive Officer
VANTARE INTERNATIONAL, INC.
By
Its President
Xxxxxxx Xxxx