AGREEMENT AND PLAN OF REORGANIZATION


     THIS AGREEMENT is made and entered into effective as of May 8, 1998, by and
among Featherlite Mfg., Inc., a Minnesota corporation ("Featherlite"),  Mitchell
Motorcoach Sales, Inc., a Florida corporation ("Mitchell Motorcoach"), Harvey G.
Mitchell  and  Patricia  A.  Mitchell   (jointly   referred  to  herein  as  the
"Mitchells"),  Robert M. Meixner  ("Meixner")  and Mark Molder  ("Molder")  (the
Mitchells,  Meixner  and  Molder  are  collectively  referred  to  herein as the
"Shareholders").


                                    RECITALS:

     A.  Mitchell  Motorcoach  is engaged in the business of  manufacturing  and
marketing  luxury custom coaches.  The  Shareholders  own all of the outstanding
capital stock of Mitchell Motorcoach.

     B. Mitchell Motorcoach desires to transfer  substantially all of its assets
to Featherlite  in exchange for shares of capital stock of  Featherlite  and the
assumption by Featherlite only of certain of its specified 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 Mitchell  Motorcoach  associated  with the
Business  and being  acquired  by  Featherlite  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 by Nasdaq.

     1.4 "Business" means the business of Mitchell Motorcoach, which consists of
manufacturing  and marketing  luxury custom coaches and includes the business of

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Mitchell Coach Manufacturing,  Inc., an affiliated Florida corporation which has
been acquired by Mitchell Motorcoach prior to the date of this Agreement.

     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 Mitchell  Motorcoach in
Pryor, Oklahoma 74362 on the Closing Date, or at such other time or place as may
be mutually agreed upon by the parties.

     1.6 "Closing  Balance  Sheet" has the meaning given to such term in section
2.6 hereof.

     1.7 "Closing Date" means May 8, 1998, 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  "Contested  Assets" has the meaning  given to such term in section 2.3
hereof.

     1.10 "Contracts" means the contracts and agreements of Mitchell  Motorcoach
described in section 2.2.3.

     1.11 "Earnout Period" has the meaning given the term in section 2.7 hereof.

     1.12 "Earnout Shares" has the meaning given the term in section 2.7 hereof.

     1.13  "Effective  Time" means the close of business on the Closing  Date if
the Closing occurs.

     1.14  "Employee  Benefit  Plan" means an employee  benefit  plan within the
meaning  of ERISA  section  3(3)  maintained,  sponsored  or  contributed  to by
Mitchell Motorcoach.

     1.15 "ERISA" means the Employee  Retirement Income Security Act of 1974, as
amended.

     1.16 "Exchange" means the exchange of the Assets for the Featherlite Shares
as described in section 2.1 hereof.

     1.17 "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     1.18 "Exchange  Consideration" means the aggregate consideration payable to
Mitchell Motorcoach,  consisting of the Featherlite Shares and the assumption of
the Permitted Liabilities, as described in section 2.4.

     1.19 "Excluded  Liabilities"  has the meaning given to such term in section
2.5.3 hereof.

     1.20   "Featherlite   Common   Stock"  means  shares  of  common  stock  of
Featherlite, without par value.

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     1.21  "Featherlite  Vogue  Division:  has the meaning given to such term in
section 2.7 hereof.

     1.22  "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 hereof.

     1.23 "GAAP" means generally  accepted  accounting  principles  applied on a
consistent basis consistent with such party's prior financial statements.

     1.24  "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.

     1.25 "Letter Agreement" means that certain letter of intent dated March 17,
1998, among Mitchell Motorcoach, the Shareholders and Featherlite.

     1.26 "Liens" means any liens, mortgages, pledges, encumbrances, conditional
sales agreements, security interests, or title retention devices of any nature.

     1.27  "Litigation  Matters" has the meaning given such term in section 5.19
hereof.

     1.28 "Multiemployer Plan" means a Pension Plan that is a multiemployer plan
as defined in ERISA section 4001 (a) (3).

     1.29  "Negative  Net Worth" has the meaning  given such term in section 2.7
hereof.

     1.30  "Operating  Income  Before  Tax" has the  meaning  given  the term in
section 2.7 hereof.

     1.31  "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 Mitchell Motorcoach.

     1.32 "Permitted  Liabilities" means the liabilities of Mitchell  Motorcoach
described as "Permitted Liabilities" in section 2.5 hereof.

     1.33  "Permitted  Liens" means the Liens against the Assets  transferred by
Mitchell Motorcoach to Featherlite listed on Schedule 1.33 hereof.

     1.34  "Proportional  Shares" has the meaning given such term in section 9.2
hereof.

     1.35 "Records" means the documents described in section 2.2.4 hereof.

<PAGE>

     1.36 "SEC" means the Securities and Exchange Commission.

     1.37 "SEC Reports" means all periodic and/or current reports,  registration
statements and proxy statements filed with the SEC.

     1.38 "Securities Act" means the Securities Act of 1933, as amended.

     1.39  "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.

     1.40 "12-31-97 Balance Sheet" has the meaning given to such term in section
3.5 hereof.

     1.41 "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  Mitchell  Motorcoach.   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,  Mitchell  Motorcoach 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 Mitchell Motorcoach, or to the Shareholders, in
connection with the Exchange.

     2.2 Assets to Be  Transferred.  The Assets to be transferred to Featherlite
by Mitchell  Motorcoach shall consist of all, except the "Excluded  Assets" and,
at least until ownership is finally  determined,  the "Contested  Assets" as set
forth on Schedule 2.3, of the business and assets,  tangible and intangible,  of
Mitchell Motorcoach (the "Assets"). The Assets comprise substantially all of the
assets and properties of Mitchell  Motorcoach  and include,  but are not limited
to:


<PAGE>

          2.2.1 Real Property. All interests in real property,  whether owned of
     record or beneficially by, or leased by Mitchell Motorcoach,  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 new and used
     buses and coaches,  trade-ins  received as customer  deposits,  consignment
     inventory,  work-in-progress  inventory,  and inventory ordered but not yet
     received),   other  vehicles,   machinery  and  equipment,   and  leasehold
     improvements of Mitchell  Motorcoach  wherever  located,  including but not
     limited  to those  listed on  Schedule  3.9,  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 inventory and  receivables in the
     ordinary  course of  Mitchell  Motorcoach's  business  under  circumstances
     consistent with past practice.

          2.2.3  Contracts.  The  Contracts,  and  all  rights,  subject  to all
     obligations  thereunder,  of Mitchell  Motorcoach  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 Mitchell Motorcoach in the ordinary
     course  of  the  Business,  and do  not  represent  a  breach  by  Mitchell
     Motorcoach  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  Mitchell  Motorcoach  of this
     Agreement;  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 except
     contracts for the purchase or sale of  motorcoaches  in the ordinary course
     of business,  copies of which have been delivered to  Featherlite  prior to
     the  Closing  and  identified  in writing as being  delivered  pursuant  to
     section 2.2.3 and 3.8.2 of this Agreement.  Featherlite  will assume all of
     the  rights  and  obligations  of  Mitchell  Motorcoach  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
     Mitchell  Motorcoach 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 Mitchell Motorcoach prior to Closing and with respect to which
     all  payments  have been  received  prior to  Closing;  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 engineering  drawings,  specifications and
     computer  records and files related  thereto,  customer  lists,  Vogue club
     member ship lists,  past sales histories by model type,  records of coaches
     under warranty,  manuals, files, records, lists, schedules,  accounts, logs
     and other  documents  maintained by Mitchell  Motorcoach  pertaining to the
     
<PAGE>

     operation of the Business  (the  "Records");  provided,  however,  that the
     Records  shall  not  include  corporate  records  of  Mitchell  Motorcoach,
     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 Mitchell
     Motorcoach may retain copies of such of its Records as it determines it may
     need following the Closing.

          2.2.5  Intellectual  Property;  Licenses;  Goodwill.  All Intellectual
     Property and licenses owned or held by Mitchell  Motorcoach 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
     "Vogue" 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,  except
     accounts  receivable  from any  Shareholder,  but including all deposits on
     coach shells held by Prevost Car Company and all prepaid expenses as of the
     Effective  Time that relate to and in the normal  course of business of the
     Business  will  be  realizable  by  Featherlite  in  the  operation  of the
     Business.

          2.2.7  Cash,  Etc.  Mitchell   Motorcoach's  cash,  cash  equivalents,
     short-term  investments,  and other  securities,  deposits  in  banks,  and
     investment  contracts  relating to the Business to the extent the aggregate
     of such  amounts  exceeds the amount  necessary  to pay accrued  salary and
     related payroll and  unemployment  taxes and the estimated  amount required
     for distribution to Shareholders for the payment of Subchapter S taxes.

     2.3 Excluded Assets.  Notwithstanding  anything to the contrary herein, the
assets  designated on Schedule 2.3,  including (i) accounts  receivable from and
notes or other  amounts due from any  Shareholder,  shall not be included in the
Assets,  and shall not be transferred  to  Featherlite  hereunder (the "Excluded
Assets"). In addition,  there shall not be included in the Assets at the time of
Closing  motorcoach   #IM9AKXJ1V1379026,   as  to  which  ownership  is  legally
contested,  and Mitchell Motorcoach's judgment deposit in the amount of $153,000
(collectively referred to herein as the "Contested Assets").

     2.4 Exchange Consideration. Subject to the other provisions of this Article
2, the "Exchange  Consideration" shall mean the Permitted Liabilities assumed by
Featherlite  as  described  in  section  2.5  and  shares  of  Common  Stock  of
Featherlite with an aggregate  Average Market Price as of the Closing Date of $6
million  (collectively,  the  "Featherlite  Shares").  If any adjustment is made
subsequent to the Closing pursuant to section 2.7 hereof 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
hereof.  The  Featherlite  Shares shall,  when issued,  be duly issued,  be duly
authorized,  validly issued,  and fully paid out and  nonassessable and shall be
subject to no Liens (except securities laws restrictions, liens and restrictions
imposed  by the  terms of this  Agreement,  and any  Liens  caused  by  Mitchell
Motorcoach or the  Shareholders).  The  certificates  evidencing the Featherlite
Shares shall contain a legend  restricting  transfer under the  Securities  Act,
such legend to be substantially as follows:


<PAGE>


     "The shares  represented by this certificate 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, transferred,  assigned,  offered,  pledged or
otherwise  distributed for value in the absence of such  registrations or unless
the Company  receives an opinion of counsel  acceptable  to the company  stating
that such sale,  transfer,  assignment,  offer,  pledge or other distribution is
exempt from the  registration and the prospectus  delivery  requirements of such
Act and such laws."

     2.5 Liabilities Assumed; Permitted Liabilities.

          2.5.1 As  partial  consideration  for the  Assets,  Featherlite  shall
     assume, and agrees with Mitchell Motorcoach to pay according to their terms
     only:  (i)  liabilities  (determined  under GAAP)  reflected on the Closing
     Balance Sheet, which shall include normal, current payables incurred in the
     regular course of the business of Mitchell Motorcoach, and (ii) liabilities
     arising  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 sections
     2.5.2 and 2.5.3 hereof (collectively, "Permitted Liabilities").

          2.5.2 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 Mitchell Motorcoach:  (i)
     obligations for repayment of principal,  accrued  interest,  deferred fees,
     and prepayment premiums,  if any, to any institutional and other lenders of
     Mitchell  Motorcoach  set  forth on  Schedule  2.5.2(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  2.5.2(ii);  (iii) obligations for vacation,  or Employee
     Benefits or non-ERISA  employee  benefits (under  employment  agreements or
     otherwise),  but not severance pay,  accrued  through the Effective Time as
     set forth on Schedule  2.5.2(iii)  and as reflected on the Closing  Balance
     Sheet with respect to any of Mitchell Motorcoach's current employees at the
     Effective  Time;  and (iv) ordinary  course of business  payables and trade
     accounts payable and other accrued  liabilities  (excluding Taxes) but only
     to the extent set forth on Schedule  2.5.2(iv) and reflected on the Closing
     Balance Sheet.

          2.5.3 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 Mitchell  Motorcoach  not  included in the
     Permitted  Liabilities  and detailed in the  supporting  Schedules  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
     Mitchell  Motorcoach  with  respect  to the  following  (all of  which  are
     acknowledged  to be excluded from  Permitted  Liabilities):  (A) any Taxes,

<PAGE>

     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, personal
     or real  property  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 Mitchell Motorcoach
     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 Mitchell Motorcoach or the Shareholder as a result
     of breach or  violation  of any  provision  of this  Agreement or the other
     agreements,  documents and instruments  delivered  pursuant hereto; (E) any
     liabilities  of  Mitchell  Motorcoach  that,  as a  result  of  either  the
     existence thereof or the failure of Mitchell Motorcoach or the Shareholders
     to  disclose  such  liabilities,   cause  any  of  the  representations  or
     warranties of Mitchell  Motorcoach or the Shareholders  contained herein to
     not be true and  correct as of the Closing  Date;  (F) any  liabilities  or
     obligations  arising out of or related to the  provision of any products or
     services  sold or  performed  by Mitchell  Motorcoach  prior to the Closing
     Date,  except normal  warranty claims in an amount not to exceed the amount
     of the accrual for warranty  claims  reflected in the Closing Balance Sheet
     and except  product  liability  claims but only to the extent the liability
     and any defense or other related  costs are fully covered by  Featherlite's
     insurance  including  the  amounts of  deductibles  payable by the  insured
     pursuant to the terms of such  insurance;  (G) any  liability or obligation
     resulting  from any breach of any  Environmental  Laws caused by or arising
     from  the  operation  of  the  Business;  (H)  any  expense,  liability  or
     obligation  with respect to or arising out of any action,  lawsuit,  claim,
     proceeding,  or investigation  described on Schedule 3.12 or any other such
     matter now existing or subsequently arising which arises from or is related
     to the conduct of the business of Mitchell  Motorcoach prior to the Closing
     Date and which has not been specifically assumed by Featherlite pursuant to
     the terms of this Agreement; (I) any liability or obligation relating to or
     arising in connection with any ERISA plan or non-ERISA employee benefits of
     Mitchell Motorcoach 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; (J) any liabilities for wages, salary or other compensation for
     services or claims arising out of the  performance of services by others to
     or for Mitchell Motorcoach;  or (K) any liability for workers' compensation
     claims or  insurance  premiums  or premiums  for other  types of  insurance
     including product liability (or retroactive  adjustment of such premiums to
     the extent such  adjustments  relate to periods prior to the Closing Date);
     (L) any payables or other obligations to any Shareholder except obligations
     for  vacation  and  employee  benefits  included as  Permitted  Liabilities
     pursuant to section  2.5.2(iii) of this Agreement;  or (M) any liability in
     connection  with  consignment  sales by Mitchell  Motorcoach or any related
     party; (N) any liability in connection with manufacture or sale of products
     by  Mitchell  Motorcoach  or its  predecessors  prior to the  Closing  Date
     arising from failure of Mitchell  Motorcoach or its  predecessors to comply
     with federal or state statutes or regulations  relating to the  manufacture
     or  certification  of such products or compliance  with  applicable  safety
     provisions,  including  but not  limited to  liabilities  such as fines and

<PAGE>

     penalties payable to government agencies, or tort, contract or other claims
     by any person  alleging  injuries  or damages  arising out of or related to
     such  failures or lack of  compliance;  or (O) any  liability in connection
     with the  termination of dealer,  distributor or similar  relationships  or
     contracts by Mitchell  Motorcoach,  whether such action  occurs prior to or
     after closing,  and including  terminations  contemplated  by section 7.3.7
     hereof.  The foregoing  liabilities  and obligations are referred to as the
     "Excluded  Liabilities" which also includes all liabilities and obligations
     not explicitly specified as Permitted Liabilities.

     2.6 Closing Balance Sheet.  Within 30 calendar days after the Closing Date,
Mitchell  Motorcoach  shall  prepare a balance  sheet of  Assets  and  Permitted
Liabilities as of the Effective Time (the "Closing Balance Sheet").  The Closing
Balance  Sheet  shall be  prepared  in all  respects  in  accordance  with GAAP,
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
Mitchell  Motorcoach,   and  shall  present  fairly  the  Assets  and  Permitted
Liabilities of Mitchell  Motorcoach as of the Effective Time. Within 15 calendar
days after  delivery to Mitchell  Motorcoach of an audit of the Closing  Balance
Sheet by McGladrey & Pullen,  LLP or other auditors  acceptable to  Featherlite,
Mitchell Motorcoach will notify Featherlite in writing of any objections that it
may have to the Closing  Balance Sheet.  The fees of McGladrey & Pullen,  LLP or
other  auditor  selected by  Featherlite  for such audit of the Closing  Balance
Sheet shall be paid directly by Featherlite. If no such objections are made, the
Closing  Balance Sheet will be deemed  approved for all purposes,  including the
determination  of the amounts of the  Permitted  Liabilities  and  Negative  Net
Worth.  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 by a firm of independent  accountants jointly selected by Mitchell Motorcoach
and  Featherlite and if they cannot agree to such a firm designated by the chief
judge of the courts for the County of Tulsa,  Oklahoma (the "Arbitration Firm").
The  determination of such Arbitration Firm with respect to such dispute,  shall
be  conclusive  and  binding  on  Featherlite,   Mitchell   Motorcoach  and  the
Shareholders.  The fees of such  Arbitration Firm shall be paid one-half each by
Featherlite and Mitchell Motorcoach.

     2.7   Issuances  of   Featherlite   Shares  and   Adjustment   to  Exchange
Consideration.  Featherlite  Shares  comprising the Exchange  Consideration,  as
described in section 2.4 hereof,  shall be issuable to Mitchell  Motorcoach only
as and to the extent  described in this section 2.7. At the Closing  there shall
be issued and  delivered  to  Mitchell  Motorcoach,  Featherlite  Shares with an
aggregate Average Market Price on the Closing Date of $2,500,000.  Subsequently,
when the  Closing  Balance  Sheet has been  accepted or  determined  to be final
pursuant to section 2.6 hereof,  a  calculation  shall be made to determine  the
number of "Earnout  Shares." The maximum  number of Earnout  Shares shall be the
number  derived by dividing  the amount of the Negative Net Worth by the Average
Market Price as of Closing. If the maximum number of Earnout Shares is less than
the number of Featherlite  Shares derived by dividing  $3,500,000 by the Average
Market  Price as of  Closing,  Featherlite  promptly  shall  deliver to Mitchell
Motorcoach  the  number of shares  equal to such  difference.  If the  number of
Earnout  Shares is greater  than the  number of  Featherlite  Shares  derived by
dividing  $3,500,000  by  the  Average  Market  Price  as of  Closing,  Mitchell
Motorcoach  promptly shall deliver to Featherlite  the number of shares equal to
such difference.  Earnout Shares shall be issued to Mitchell Motorcoach when and
if earned during the period beginning January 1, 1999 and ending on December 31,
2001 (the "Earnout Period") in accordance with the following  provisions of this
section 2.7.

<PAGE>

     The actual  number of shares  earned  during the  Earnout  Period  shall be
determined  annually based on Operating  Income Before Taxes (as defined below).
For calendar year 1999,  Mitchell Motorcoach shall earn one-third of the Earnout
Shares  if its  Operating  Income  Before  Tax for  1999 is not less  than  $2.4
million. For calendar year 2000, Mitchell Motorcoach shall earn one-third of the
Earnout Shares if its Operating Income Before Tax for 2000 is not less than $3.5
million. For calendar year 2001, Mitchell Motorcoach shall earn one-third of the
Earnout Shares of its Operating Income Before Tax for 2001 is not less than $4.8
million.  If Shares have not been earned by Mitchell Motorcoach for any calendar
year and if in any subsequent year of the Earnout Period Operating Income Before
Tax exceeds the minimum  Operating  Income  Before Tax  required to earn Earnout
Shares for such  subsequent  year, then at the close of such subsequent year the
Operating Income Before Tax for the prior year(s) shall be recalculated with the
excess of Operating Income Before Tax earned in the subsequent year added to the
Operating Income Before Tax of the prior year(s).  No shares shall be earned for
any Operating  Income Before Tax earned after  December 31, 2001. If 100% of the
Earnout Shares have not been earned by Mitchell  Motorcoach by December 31, 2001
based on the annual  calculations  previously set forth, a look back calculation
shall be made based on the cumulative Operating Income Before Tax of the Earnout
Period and Mitchell  Motorcoach  shall earn a number of Earnout  Shares equal to
the following:  (i) the number of shares that bears the same ratio to the number
of Earnout Shares as aggregate  Operating  Income Before Tax for 1999,  2000 and
2001 (to a maximum  of $10.7  million)  bears to $10.7  million,  minus (ii) the
cumulative number of Earnout Shares already earned;  provided,  however, that no
such shares shall be earned in such look back if the cumulative Operating Income
Before Tax for 1999,  2000 and 2001 is less than $5 million.  No shares shall be
earned for any  Operating  Income  Before Tax earned  before  January 1, 1999 or
after December 31, 2001.

     "Net Sales" shall mean the gross revenues of the Featherlite Vogue Division
of Featherlite less returns, discounts and allowances.

     "Operating  Income  Before  Tax" shall  mean the income of the  Featherlite
Vogue  Division  of  Featherlite  as included  in the  Featherlite  consolidated
financial  statements  for the  applicable  period  including but not limited to
interest charges (at Featherlite's  then current borrowing rate from its primary
bank lender) on debt of Featherlite Vogue Division books owed to the Featherlite
corporate account, compensation (including bonuses) of officers and employees of
the Featherlite Vogue Division, premiums paid on insurance on the life of Harvey
G.  Mitchell  pursuant  to  Section  5.17 of  this  Agreement,  compensation  of
personnel assigned to the Featherlite Vogue Division but paid by the Featherlite
corporate  account and a pro rata share of expenses  such as insurance  incurred
for the Featherlite Vogue Division but paid by the Featherlite corporate account
and other expenses  directly  attributable  to the operations of the Featherlite
Vogue  Division  but without any  allocation  of general  Featherlite  corporate
overhead  and  excluding  the  amortization  of goodwill  and other  intangibles
generated by the  transactions  contemplated by this  Agreement.  In calculating


<PAGE>

Operating  Income  Before  Tax,  revenue  from  intracompany  division  sales of
products (e.g.,  Featherlite Vogue Division sales of Vantare coaches and Vantare
sales of Vogue coaches) shall be based on dealer price to be determined for each
model based upon its manufacturing cost and normal wholesale profit margin which
will achieve  established  earn-out goals, and revenue from sales of Vogue model
motorcoaches or used motorcoach  inventory of the Featherlite  Vogue Division by
executive officers of Featherlite to customers in the motorsports industry shall
be attributed  entirely to the  Featherlite  Vogue  Division.  Any proceeds from
insurance on the life of Harvey G. Mitchell  received by Featherlite  during the
Earnout  Period  shall  be  included  in  Operating  Income  Before  Tax and the
calculation  of Earnout  Shares  earned for the year in which such  proceeds are
received by Featherlite.  Any disputes concerning the calculation by the parties
of Operating Income Before Tax shall be resolved in the same manner as described
in section 10.6 hereof.

     "Negative  Net  Worth"  shall  mean the  excess  of the  dollar  amount  of
liabilities assumed by Featherlite from Mitchell Motorcoach over the fair market
value of tangible assets acquired by Featherlite  from Mitchell  Motorcoach with
inventories valued at the lower of cost or market, property and equipment valued
in accordance with appraisal and other assets valued at net realizable amounts.

     "Featherlite  Vogue  Division"  means  the  division  of  Featherlite  that
operates the Business and Assets of Mitchell  Motorcoach acquired by Featherlite
in the  Exchange,  from and after the Effective  Time,  and does not include any
other divisions or business segments of Featherlite.

     If  and  when  subsequent  to  the  Closing,  there  is  a  final  judicial
determination  or settlement by the  interested  parties that all or part of the
Contested  Assets as  defined in section  2.3  hereof  are  rightfully  owned by
Mitchell Motorcoach,  and if the value of such Contested Assets determined to be
owned by Mitchell  Motorcoach  exceeds the amount of expenses  (including  legal
fees  and  costs,   settlement  amounts  and  judgments)  incurred  by  Mitchell
Motorcoach  subsequent  to the  Closing  Date  directly in  connection  with the
litigation  disclosed on Schedule  3.12,  then the net amount of such  Contested
Assets shall be delivered  promptly to Featherlite  and there shall be issued to
Mitchell  Motorcoach a number of the Featherlite  Shares  determined by dividing
the value of the Contested  Assets at the time of delivery to Featherlite by the
Average  Market  Price  as of the  Closing.  Such  number  of  shares  shall  be
subtracted from and reduce the maximum number of Earnout Shares.

     2.8  Distribution  by Mitchell  Motorcoach to  Shareholders.  Following the
Closing and receipt of the Closing  Balance  Sheet,  it is understood and agreed
that Mitchell  Motorcoach may  distribute,  in complete  liquidation of Mitchell
Motorcoach, to the present holders of capital stock of Mitchell Motorcoach,  the
Featherlite Shares in exchange for the surrender and cancellation of all of such
holders' existing Mitchell Motorcoach stock; and that, in connection  therewith,
Mitchell Motorcoach 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.  Subsequent  to the  dissolution  of Mitchell  Motorcoach,  all
Earnout Shares to be issued by  Featherlite to Mitchell  Motorcoach but for such
dissolution  shall  be  issued  to  the  Shareholders  in  proportion  to  their
respective  shares in  Mitchell  Motorcoach  as  reflected  in section 3.2 below
subject to all other  provisions  of this  Agreement.  At  Closing,  each of the
present  Mitchell  Motorcoach  shareholders  shall deliver to Featherlite  their

<PAGE>

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 them and the  Featherlite
Shares to which they will become entitled upon distribution  thereof by Mitchell
Motorcoach in connection  with Mitchell  Motorcoach's  dissolution  and upon any
subsequent  issuances of Earnout Shares.  Nothing in this section 2.8 shall have
the effect of reducing or mitigating any  obligations of Mitchell  Motorcoach or
the Shareholders to Featherlite that it or they may otherwise have under or as a
result of this Agreement and the transactions contemplated hereby.


                                    ARTICLE 3
   REPRESENTATIONS AND WARRANTIES OF MITCHELL MOTORCOACH AND THE SHAREHOLDERS

     Mitchell  Motorcoach  and  the  Shareholders,  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.  Mitchell  Motorcoach is a corporation  duly  organized,
validly  existing,  and in good standing under the laws of the State of Florida.
Mitchell  Motorcoach 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 Mitchell  Motorcoach or the
Assets.  Schedule 3.1 attached  hereto  contains a true and accurate list of the
states in which  Mitchell  Motorcoach  is duly  qualified  or  registered  to do
business  as a  foreign  corporation.  Mitchell  Motorcoach  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.  Mitchell Motorcoach has duly authorized capital stock
consisting of (i) 7,500 shares of Mitchell  Motorcoach  Common  Stock,  of which
6,000 shares are issued and outstanding.  Such shares are owned by the following
persons in the amounts  indicated:  Harvey G.  Mitchell and Patricia A. Mitchell
(as  tenants by the  entirety) - 5,000,  Mark Molder - 500 and Robert  Meixner -
500. The  acquisition  of all of the assets and  liabilities  of Mitchell  Coach
Manufacturing,  Inc. by Mitchell  Motorcoach  has been  completed and the entire
business formerly conducted by Mitchell Coach  Manufacturing,  Inc. is now being
conducted  by  Mitchell  Motorcoach.  All such  outstanding  shares of  Mitchell
Motorcoach  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 Mitchell
Motorcoach's  Articles  of  Incorporation  and Bylaws  previously  delivered  by
Mitchell Motorcoach 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 is not conducted  through,  and the Assets are not
owned by or through,  any direct or indirect subsidiary or affiliate of Mitchell
Motorcoach.

     3.4  Corporate  Authority.  The  execution,  delivery  and  performance  by
Mitchell  Motorcoach of this Agreement and the transactions  contemplated hereby

<PAGE>

have been duly and validly  authorized  and approved by all requisite  corporate
action,  and neither the  execution  and delivery of this  Agreement by Mitchell
Motorcoach,  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  Mitchell
Motorcoach's  Articles of  Incorporation  or Bylaws or any material  instrument,
contract,  agreement,  judgment,  order,  decree,  or other restriction to which
Mitchell  Motorcoach  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
Mitchell  Motorcoach  thereunder.  This  Agreement  constitutes,  and all  other
agreements and instruments contemplated hereby, when duly executed and delivered
by  Mitchell  Motorcoach,  will  constitute,  valid and binding  obligations  of
Mitchell  Motorcoach  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.

     3.5 Financial  Statements.  The pro forma  consolidated  balance  sheets of
Mitchell  Motorcoach and Mitchell Coach  Manufacturing,  Inc. as of December 31,
1997 (the  "12-31-97  Balance  Sheet") and as of March 31, 1998, and the related
statements of income and  shareholders'  equity for the periods then ended, true
and correct copies of which have been delivered to  Featherlite,  fairly present
the financial  position of Mitchell  Motorcoach 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  for the  absence  of  footnotes  and the
accounting for capitalized lease  obligations.  Mitchell  Motorcoach's  books of
account reflect all of Mitchell Motorcoach'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 Mitchell  Motorcoach as of their  respective dates except
for the accounting for capitalized lease of obligations.

     3.6 Taxes.  Mitchell  Motorcoach  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. Mitchell Motorcoach 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  Mitchell  Motorcoach  with  respect to all
periods  through the date hereof,  or which Mitchell  Motorcoach is obligated to
withhold from amounts owing to any employee or other person. Mitchell Motorcoach
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. Mitchell
Motorcoach  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.

<PAGE>

     3.7  Absence  of  Undisclosed  Liabilities.  There are no  material  debts,
liabilities,  claims against or financial obligations of Mitchell Motorcoach, or
reasonable  legal basis therefor,  whether  accrued,  absolute,  contingent,  or
otherwise, except to the extent reflected on the 12-31-97 Balance Sheet, 3-31-98
Balance Sheet or on Schedule 3.7.

     3.8 Absence of Certain  Changes and Events.  Except as contemplated by this
Agreement or as specifically described in Schedule 3.8, since March 31, 1998:

          3.8.1 There has not been any  material  adverse  change in the Assets,
     the financial condition, business or operations of Mitchell Motorcoach.

          3.8.2  Mitchell  Motorcoach  has not  (except  for  contracts  for the
     purchase or sale of motorcoaches in the ordinary course of business, copies
     of which  have been  delivered  to  Featherlite  prior to the  Closing  and
     identified  in writing as being  delivered  pursuant  to section  2.2.3 and
     3.8.2 of this Agreement) (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 of less than $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 Mitchell Motorcoach 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 Mitchell  Motorcoach;  (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.  Mitchell  Motorcoach  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 December 31, 1997),  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


<PAGE>

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,  Mitchell  Motorcoach  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,  to the best
knowledge of Mitchell  Motorcoach and the  Shareholders,  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 Mitchell  Motorcoach  unless  otherwise  noted on
Schedule 3.9(iii).

     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 Mitchell  Motorcoach or licensed to Mitchell  Motorcoach,  in either
case  free and clear of any Liens  other  than  Permitted  Liens,  and  Mitchell
Motorcoach's  ownership of such Intellectual Property has not been challenged in
any judicial or administrative  proceeding;  (ii) Mitchell  Motorcoach's present
and  proposed  operations  do  not  infringe,   misuse,  or  misappropriate  any
intellectual  property rights of others  including  rights of others to computer
software and programs (except as to the Autocad software litigation disclosed in
Schedule 3.12);  (iii) no employees of Mitchell  Motorcoach have any right in or
to the  Intellectual  Property  necessary  to or used in the conduct of Mitchell
Motorcoach's present or proposed  operations,  and no such employees are subject
to  restrictive  covenants with any person other than Mitchell  Motorcoach  with
respect  to  such  employees'  employment  by  Mitchell  Motorcoach  or  use  of
Intellectual Property in such employment;  and (iv) to the knowledge of Mitchell
Motorcoach  and  the  Shareholders,  none of  Mitchell  Motorcoach'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. Except as further set
forth on Schedule 3.11, Mitchell Motorcoach 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 Mitchell Motorcoach's businesses. Mitchell Motorcoach
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 or proceeding of any kind pending or,
to the best knowledge of Mitchell  Motorcoach and the  Shareholders,  threatened
against,  by, or affecting  Mitchell  Motorcoach or the Assets,  or, to the best
knowledge of Mitchell  Motorcoach and the  Shareholders,  any  investigation  of
Mitchell Motorcoach or the Assets pending or threatened. Mitchell Motorcoach (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.

<PAGE>

     3.13 Environmental  Matters.  Mitchell  Motorcoach 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
Mitchell Motorcoach and its business,  operations,  products, or properties. All
such required  permits,  licenses and approvals are set forth on Schedule  3.11.
Neither  Mitchell  Motorcoach  nor  its  business,   operations,   products,  or
properties,  currently or formerly owned,  operated, or leased (i) have violated
or violate or, to the  knowledge of Mitchell  Motorcoach  and the  Shareholders,
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,  clean air, 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 Mitchell Motorcoach and the Shareholders,  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.  Prior to the execution of this  Agreement,  there has been
delivered by Mitchell  Motorcoach to  Featherlite  in writing and  identified as
delivered  pursuant  to this  provision  a  chronological  record of all testing
performed  and  compliance   procedures   followed  by  Mitchell  Motorcoach  in
connection with  Environmental  Laws. Neither Mitchell  Motorcoach,  nor, to the
knowledge  of Mitchell  Motorcoach  and the  Shareholders,  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 Mitchell Motorcoach,  and no
above-ground or underground storage tanks, other than six above-ground  moveable
250 gallon tanks currently present at Mitchell Motorcoach's Pryor facility,  and
an  above-ground  diesel  storage  tank  which  was  removed  prior to 1997,  or
Hazardous Substances are or were present on such real property or any structures
thereon.  Mitchell Motorcoach has no removal,  restoration or similar obligation
under  any  Environmental  Laws  with  respect  to any  property,  and  Mitchell
Motorcoach  has not  materially  changed its storage or disposal  practices with
respect to Hazardous  Substances since January 1, 1994.  Mitchell Motorcoach has
delivered to  Featherlite  true and complete  copies of all reports,  studies or
tests in the  possession  of or initiated by Mitchell  Motorcoach  pertaining to
Hazardous   Substances  or  other  environmental   concerns  regarding  Mitchell
Motorcoach, its business, operations, products, or properties, whether currently
or formerly owned, operated, or leased.

     3.14  Contracts;  Leases.  Schedule 3.14 attached hereto contains a list of
each of the following Contracts, including amendments thereto, to which Mitchell
Motorcoach  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;


<PAGE>


          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 Mitchell Motorcoach;

          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  Mitchell
     Motorcoach  that (i) involve the receipt of more than $25,000  individually
     in any period of 12 consecutive  months, or (ii) commit Mitchell Motorcoach
     to provide  technology or other products,  the development of which has not
     been completed as of the date hereof; and

          3.14.7 Any other agreement, contract, commitment, or other arrangement
     (oral or written) not otherwise described above unless it:

               3.14.7.1  is  of  six-month  or  shorter   duration  or  Mitchell
          Motorcoach can terminate it, without liability to Mitchell Motorcoach,
          on notice of 30 days or less; or

               3.14.7.2  requires  payment by Mitchell  Motorcoach  of less than
          $20,000 per year; provided,  however, that the aggregate amount of the
          obligations  under  contracts  excluded  by reason  of these  sections
          3.14.7.1 and 3.14.7.2  shall not  represent  obligations  in excess of
          $50,000 with respect to any period of 12 consecutive months.

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  Mitchell  Motorcoach  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
Mitchell Motorcoach 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 Mitchell Motorcoach, 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 Mitchell Motorcoach to Featherlite.  Mitchell  Motorcoach's physical

<PAGE>

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 Mitchell Motorcoach as of December 31, 1997. Except as
set forth on Schedule 3.15,  Mitchell  Motorcoach  currently maintains in effect
insurance coverage for all of its properties and assets.

     3.16  Accounts  Receivable.  Except  as listed on  Schedule  3.16  attached
hereto,  to the best  knowledge of Mitchell and the  Shareholders,  all accounts
receivable of Mitchell  Motorcoach  reflected on the 12/31/97  Balance Sheet and
the Closing  Balance  Sheet (i) have arisen in the ordinary  course of business,
and (ii) are  collectible  in the  amounts at which they are carried on Mitchell
Motorcoach's  books,  except to the extent reflected in the reserve for doubtful
accounts  reflected on the 12/31/97  Balance Sheet.  Such reserve is adequate to
cover  accounts not  collectible in the ordinary  course of business  consistent
with standard and reasonable business practices.

     3.17 ERISA Matters.  Schedule 3.17 attached hereto contains a complete list
and  description  of all Employee  Benefit Plans of Mitchell  Motorcoach and any
Affiliate  ("Scheduled  Plans").  True and correct copies of all Scheduled Plans
have been  delivered  to  Featherlite.  Each  Employee  Benefit Plan of Mitchell
Motorcoach  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 Mitchell  Motorcoach nor any Affiliate
has contributed to a Pension Plan. Neither Mitchell Motorcoach 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 Mitchell Motorcoach or any
Affiliate.  Mitchell Motorcoach 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
Mitchell  Motorcoach  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. Mitchell Motorcoach is not a party to any collective
bargaining  agreement  with any  labor  organization.  Mitchell  Motorcoach  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 Mitchell Motorcoach 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, Mitchell Motorcoach 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 (i) a true
and  complete  list  of  all  full-time  and  part-time  employees  of  Mitchell
Motorcoach and the current level of compensation payable to each and (ii) a true
and  correct  list of all  former  employees  of  Mitchell  Motorcoach  for whom

<PAGE>

Featherlite is assuming  responsibility  for COBRA coverage  pursuant to section
5.9.3 of this Agreement.  There are no strikes, work stoppages, or controversies
pending  or,  to the  knowledge  of  Mitchell  Motorcoach  or the  Shareholders,
threatened, between Mitchell Motorcoach 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
Mitchell  Motorcoach 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.

     3.20 Investment  Intent.  The Featherlite Shares being acquired by Mitchell
Motorcoach  pursuant to this Agreement are not being acquired 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,  provided  that  Mitchell  Motorcoach  may make the  distributions  of the
Featherlite  Shares to the  Shareholders  contemplated  by  section  2.8 of this
Agreement and Harvey G. Mitchell may transfer some Featherlite Shares to Charles
Fulton in  accordance  with the  provisions  of section 6.11 of this  Agreement.
Mitchell  Motorcoach  and  the  Shareholders  understand  that  issuance  of the
Featherlite  Shares by Featherlite has not been registered  under the Securities
Act or any state  securities  laws by reason of their  contemplated  issuance in
transactions 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  the
representations,  warranties and agreements made by Mitchell  Motorcoach and the
Shareholders.  Mitchell Motorcoach and the Shareholders  further understand 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 Mitchell Motorcoach or the Shareholders 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
Mitchell  Motorcoach  and the  Shareholders,  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
good  standing  in  each  jurisdiction  that  requires  such   qualification  or

<PAGE>

registration and in which it owns or leases any material  properties or conducts
any material business,  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.

     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 6,255,000  shares were issued and outstanding as of March 31, 1997, 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 March
31, 1997,  120,000  shares of  Featherlite  Common Stock have been  reserved for
issuance under outstanding warrants and a total of 550,000 shares of Featherlite
Common  Stock have been  reserved  for  issuance  under its stock option plan of
which 311,380 shares are subject to outstanding stock options granted under such
plan; a proposal to reserve an additional  1,100,000  shares for such plan is to
be  submitted  at the  next  meeting  of  Featherlite  shareholders.  Except  as
described  in this  section  4.2 and  footnotes  to  Featherlite's  consolidated
financial  statements  for the year ended  December 31, 1997,  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 Mitchell  Motorcoach  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.

<PAGE>

     4.4 SEC  Filings  and  Financial  Statements.  Featherlite  has  heretofore
furnished to Mitchell  Motorcoach and the Shareholders copies of all SEC Reports
filed by Featherlite  with the SEC on or after January 1, 1998.  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 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, 1998,
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 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 with the exception of a
fee due to CIBC Oppenheimer Corp.,  payment of which fee shall be the obligation
of Featherlite.


                                    ARTICLE 5
                                    COVENANTS

     5.1  Access.  Mitchell  Motorcoach  shall,  during the period  prior to the
Closing,  give  Featherlite and its  representatives  full access during regular
business hours to Mitchell  Motorcoach's  properties,  records and personnel and
such other  information  of Mitchell  Motorcoach as  Featherlite  may reasonably
request to analyze Mitchell Motorcoach 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  Mitchell  Motorcoach'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, Mitchell Motorcoach shall operate

<PAGE>

the  Business  only in the usual,  regular,  and  ordinary  manner and  Mitchell
Motorcoach 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; (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  sales,  transfers  and
assignments  consistent with past practice,  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  Mitchell  Motorcoach  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.

     5.3 Approvals and Consents.  As promptly as possible,  Mitchell  Motorcoach
and the Shareholders and Featherlite shall take all corporate and other actions,
make all filings  with courts or  governmental  authorities,  and use their best
efforts to obtain in writing all approvals and consents (including  specifically
all required  shareholder  approvals) required to be taken, made, or obtained by
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. The Shareholders agree to vote all shares of capital stock of Mitchell
Motorcoach that are owned by them or under their voting control in favor of this
Agreement and the Exchange and to take other necessary and  appropriate  actions
consistent therewith.

     5.4 Exclusive Dealing.  Mitchell  Motorcoach and the Shareholders agree not
to  (and  to  cause  their  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.
Mitchell  Motorcoach and the Shareholders hereby confirm and represent that they
have 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.

<PAGE>

     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 Mitchell  Motorcoach.  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
Mitchell Motorcoach.

     5.6 Costs  and Fees.  Except as  otherwise  specifically  provided  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
aggregate  amount of all  out-of-pocket  expenses and fees  incurred by Mitchell
Motorcoach 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 Mitchell  Motorcoach's  counsel,  accountants,  experts and
consultants) and unpaid at the time of Closing shall  constitute  liabilities of
Mitchell Motorcoach and/or the Shareholders,  as the case may be, and whether or
not such  expenses and fees are  reflected on the Closing  Balance  Sheet,  they
shall constitute Excluded Liabilities.

     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  Mitchell  Motorcoach  and the
Shareholders. 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 Harvey Mitchell
shall enter into an employment  agreement providing for the employment of Harvey
Mitchell by Featherlite  following the Closing,  in the form attached  hereto as
Schedule 5.8.

     5.9 Employment; Benefits.

          5.9.1 Employment. As of the Effective Time, Featherlite shall offer to
     each current employee of Mitchell  Motorcoach (limited to those individuals
     listed as current  employees on Schedule 3.18 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 Mitchell Motorcoach 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,  except for the
     employment  of Harvey  Mitchell  which  shall be  governed by the terms and
     conditions of the  Employment  Agreement  attached  hereto as Schedule 5.8.
     From and  after  the  Effective  Time,  Featherlite  shall  give  each such
     employee  full credit for all vacation  time accrued by such employee as of
     the Effective Time to the extent of the dollar amounts accrued  therefor on
     the  Closing  Balance  Sheet,  and  Featherlite  agrees  that to the extent
     required by law it shall pay any employee  for his or her accrued  vacation
     time to the extent  reflected on the Closing Balance Sheet if such employee
     terminates his or her  employment.  After the Effective  Time,  Featherlite
     shall, for all seniority,  eligibility,  and vesting purposes,  credit such
     employees  for their past service with  Mitchell  Motorcoach  (and any past
     service with a predecessor  previously  recognized by Mitchell Motorcoach);
 
<PAGE>

     provided,  however,  that with  respect to  calculation  of benefits  under
     Featherlite severance policies,  only past service with Mitchell Motorcoach
     shall be credited to an employee of  Featherlite,  and not any past service
     with any predecessor of Mitchell Motorcoach. Employees hired by Featherlite
     shall be governed by, and shall be entitled to benefits under,  Featherlite
     severance pay policies with respect to  termination  of such  employment by
     Featherlite after Closing.

          5.9.2 Benefits;  General. As of the Effective Time,  Featherlite shall
     assume and become the  sponsor  of all  health,  dental and life  insurance
     plans, and the cafeteria plan,  currently maintained by Mitchell Motorcoach
     for its  employees.  Except as provided in this  section  5.9,  Featherlite
     shall not assume any other  Employee  Benefit  Plan or  non-ERISA  employee
     benefit program sponsored by Mitchell Motorcoach.  Mitchell Motorcoach will
     appropriately  deal  with  all  employees  engaged  in the  conduct  of the
     Business if such  employees  are not to be made an offer of  employment  by
     Featherlite,  at  Mitchell  Motorcoach's  own  cost  and  risk,  except  as
     otherwise specifically provided in this Agreement. Mitchell Motorcoach will
     be solely  responsible  for payment or  satisfaction  of all severance pay,
     retention bonus, deferred  compensation,  unemployment  compensation or any
     other consequences or obligations,  incurred as a result of any termination
     of employment by Mitchell  Motorcoach of any of its employees not reflected
     on  Schedule  5.9 (other than  employees  hired in the  ordinary  course of
     business  between the date hereof and Closing in accordance  with the terms
     of this  Agreement,  that  otherwise  would have been  included on Schedule
     5.9),    whether   such   termination   by   the   party   occurs   before,
     contemporaneously with, or following the Effective Time.

          5.9.3 Cobra  Obligations.  Featherlite  assumes all responsibility and
     liability  for  providing  continued  health,  dental  and  life  insurance
     coverage ("COBRA coverage") to those employees of Mitchell Motorcoach,  and
     their spouses or dependents,  who,  before  Closing,  had elected or became
     entitled  to elect such COBRA  coverage.  Featherlite  further  assumes all
     responsibility   and  liability  for  providing  COBRA  coverage  to  those
     employees of Mitchell Motorcoach, and their spouses and dependents, who, at
     or after  Closing,  have a "qualifying  event"  (within the meaning of Code
     section  4980B(f)(3) or applicable  state law) which entitles them to elect
     such COBRA  coverage.  Such COBRA  coverage  will  continue  for the period
     required by and shall,  in all respects,  comply with the  requirements  of
     Code  section  4980B and  sections  601 through 609 of ERISA or  applicable
     state law.

     5.10 Plant-Closing Notices.  Mitchell Motorcoach 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  Mitchell  Motorcoach  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 Mitchell
Motorcoach  and  the  income  and  expenses  attributable  thereto  through  the


<PAGE>

Effective  Time shall be for the account of Mitchell  Motorcoach  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.  Mitchell Motorcoach and Featherlite 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.

     5.13  Shareholders'  Letters.  Each of the  Shareholders  shall  deliver to
Featherlite  on or prior to the Closing  Date a written  agreement,  in the form
previously approved by the parties,  that such Shareholder (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  Purchase  of  Used  Motorcoaches.  If any of  the  used  motorcoaches
included  among the Assets  purchased  by  Featherlite  are  offered for sale by
Featherlite  through  June 30,  1999,  and  during  at least  the  three  months
preceding such date are offered at prices not more than their respective  values
on the Closing Balance Sheet,  and (i) remain unsold on such date, the Mitchells
on June 30, 1999 will  purchase all such unsold used  motorcoaches  at an amount
equal to (a) the aggregate value of all such unsold motorcoaches as reflected in
the detailed  schedule  supporting the Closing Balance Sheet,  plus or minus (b)
the  aggregate  net  amount  by  which  net  revenues  from  the  sale  of  used
motorcoaches  included  among the Assets  exceeds or is less than the  aggregate
value of such motorcoaches as reflected in the detailed schedule  supporting the
Closing Balance Sheet or (ii) all of such used  motorcoaches  have been sold and
if the net revenue from the sale of all such motorcoaches included in the Assets
is less  than the  aggregate  value of such  motorcoaches  as  reflected  in the
detailed schedule supporting the Closing Date Balance Sheet, the Mitchells shall
immediately pay to Featherlite, such shortfall. In order to partially secure the
Mitchells' contingent  obligation  hereunder,  Mitchells at Closing shall either
provide  Featherlite with a letter of credit from a bank and in substantive form
acceptable to Featherlite in the amount of $300,000.

     5.15  Payment  of  Excluded   Liabilities.   Mitchell  Motorcoach  and  the
Shareholders  shall  make  provision  for  and  perform  and  pay  all  Excluded
Liabilities.

     5.16  Provisions  for Working  Capital.  During the period from the Closing
Date through  December 31, 2001,  Featherlite  shall provide to the  Featherlite
Vogue Division of  Featherlite  working  capital of up to $3 million  (including
payment of bank overdrafts as of the Closing Date),  consistent with performance
and growth in the Net Sales and Operating Income Before Tax of such Division.

<PAGE>

     5.17 Harvey Mitchell Life  Insurance.  Featherlite  shall assume,  maintain
ownership of and pay premiums on the  insurance  policy on the life of Harvey G.
Mitchell  currently owned by Mitchell  Motorcoach  until the earlier of December
31, 2001 or the  termination of employment of Harvey G. Mitchell by Featherlite.
Featherlite  shall  designate  itself  as  beneficiary  so long  as it pays  the
premiums on such policy. On the earlier of January 1, 2002 or the termination of
employment of Harvey G. Mitchell by Featherlite,  Featherlite shall allow Harvey
G. Mitchell or his designee to assume  ownership of the portion  Featherlite  is
discontinuing,  to the  extent  permitted  by and  subject  to the  terms of the
insurance  policy.  In the  event of the death of  Harvey  G.  Mitchell  and the
receipt by Featherlite of insurance proceeds,  the amount of such proceeds shall
be included in the Operating Income Before Tax of the Featherlite Vogue Division
and the  calculation of Earnout Shares to the extent  provided in section 2.7 of
this Agreement.

     5.18 Product  Liability  Insurance.  Featherlite shall use its commercially
reasonable best efforts to have the coverage of its product liability  insurance
extended to cover  motorcoaches  manufactured  and sold by  Mitchell  Motorcoach
prior to the Closing Date and to maintain such  insurance  through  December 31,
2001,  it  being  acknowledged  by  the  parties  that  due  to  differences  in
manufacturing  operations between  Featherlite and Mitchell Motorcoach and other
factors,  identical  coverage  may not be  available  or may not be available at
commercially reasonable rates.

     5.19  Pledge for  Litigation  Exposure.  In order to  partially  secure the
obligation of Mitchell Motorcoach and the Shareholders to indemnify  Featherlite
pursuant  to section  9.2 of this  Agreement  as it  applies  to the  litigation
matters  identified  in  Schedule  3.12  hereto  and any  additional  litigation
initiated against Featherlite  subsequent to the Closing Date and arising from a
matter as to which  Mitchell  Motorcoach and the  Shareholders  are obligated to
indemnify Featherlite pursuant to section 9.2 (the "Litigation Matters"),  until
such time as the Litigation Matters are resolved to the reasonable  satisfaction
of  Featherlite,   Mitchell   Motorcoach  and  the  Shareholders   shall  pledge
Featherlite Shares with an aggregate Average Market Price as of the Closing Date
of $500,000 in  accordance  with the terms of the  Litigation  Pledge  Agreement
attached to this Agreement as Appendix A which shall be executed at the Closing.
By way of non-exclusive example, the Litigation Matters shall be resolved to the
reasonable  satisfaction  of  Featherlite  if  they  become  subject  to a final
non-appealable  judgment,  or upon execution of binding settlement agreements in
full  release of all claims.  If  Mitchell  Motorcoach  is required  pursuant to
section 2.7 of this  Agreement to deliver  shares of  Featherlite to Featherlite
upon acceptance of the Closing Balance Sheet, the number of pledged shares shall
be reduced for such  purpose and  Mitchell  Motorcoach,  Harvey G.  Mitchell and
Patricia A. Mitchell shall maintain such pledge obligation with a bank letter of
credit in form and substance reasonably satisfactory to Featherlite in an amount
equal to the aggregate Average Market Price as of the Closing Date of the number
of  shares  withdrawn  from  the  pledge  to meet  the  delivery  obligation  to
Featherlite.


                                    ARTICLE 6
                               REGISTRATION RIGHTS

     6.1 Right to Demand  Registration.  If at any time following the adjustment
of the number of Featherlite Shares upon acceptance of the Closing Balance Sheet
in accordance  with the first  paragraph of section 2.7 of this  Agreement,  the

<PAGE>

holders of a majority of the  Featherlite  Shares  issued in the Exchange  shall
request in writing to Featherlite  that it register under the Securities Act the
sale by the Shareholders of all or any portion of the Featherlite  Shares issued
in the Exchange and received by the  Shareholders  from  Mitchell  Motorcoach in
connection  therewith,  or  shares  of  capital  stock  that are  issued  to the
Shareholders  in  respect  of,  or in  exchange  or  in  substitution  for,  any
Featherlite   Shares  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 prepare and file with the SEC a registration statement on Form
S-3  (the  "Registration  Statement")  covering  the  Shareholders'  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 the  Shareholders  are  eligible  for sale in a single  transaction
under Rule 144 under the Securities  Act.  Featherlite  shall use all reasonable
efforts  to cause  the  Registration  Statement  to remain  effective  until the
earlier  of (i) two years  after the  Effective  Time,  or (ii) such time as all
Registrable  Shares in the hands of any single  Shareholder  can then be sold by
such  Shareholder  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 the
Shareholders  copies of all such documents proposed to be filed, which documents
will be subject to the review of such counsel.  Featherlite will promptly notify
the  Shareholders 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. The Shareholders,  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 the Shareholders to
demand  registration  hereunder  shall continue in effect only so long as either
(i) Harvey  Mitchell  continues to be employed by  Featherlite  at the time that
such right is  exercised  or (ii) if Harvey  Mitchell  is not then  employed  by
Featherlite,  Harvey  Mitchell'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.

     6.2 Actions in Connection with Registration. Featherlite shall:

          6.2.1 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 above;

          6.2.2 as  expeditiously  as possible  furnish to the  Shareholders 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 the Shareholders may

<PAGE>

         reasonably  request in order to  facilitate  the  public  sale or other
         disposition of the Registrable  Shares owned by the  Shareholders,  the
         Shareholders  and their  underwriters,  if any, shall have the right to
         comment  upon any  information  provided by them for  inclusion  in the
         Registration Statement;

          6.2.3 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 the  Shareholders 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 the  Shareholders and their
     underwriters, if any, to consummate the public sale or other disposition of
     the Registrable  Shares owned by the Shareholders 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;

          6.2.4 if Featherlite has delivered  preliminary or final  prospectuses
     to the  Shareholders  and after having done so the prospectus is amended to
     comply with the  requirements  of the Securities  Act,  promptly notify the
     Shareholders  and, if requested,  the Shareholders  shall immediately cease
     making  offers  of  Registrable  Shares  and  return  all  prospectuses  to
     Featherlite.  Featherlite  shall  promptly  provide the  Shareholders  with
     revised  prospectuses and,  following receipt of the revised  prospectuses,
     the  Shareholders  shall be free to resume making offers of the Registrable
     Shares;

          6.2.5   immediately   notify  the   Shareholders  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 the  Shareholders  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;

          6.2.6 enter into such customary agreements  (including an underwriting
     agreement)  and take all such  other  actions  as the  Shareholders  or the
     underwriters,  if any, retained by the Shareholders  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 the
     Shareholders shall be required to sign a standstill agreement in connection
     with the underwritten sale of securities;

          6.2.7  make  available  for  inspection  by  the   Shareholders,   any
     underwriter  participating in any public sale or other disposition pursuant
     to the Registration  Statement and any attorney,  accountant or other agent
    
<PAGE>

     retained  by  the  Shareholders  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; and

          6.2.8  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.

     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 the Shareholders that such material
development  or activity  exists  (without  disclosing  the nature or  specifics
thereof) and the  Shareholders  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 the Shareholders are prevented from selling Registrable Shares pursuant to
this section 6.3 shall not exceed a cumulative  90 days in any 18-month  period.
The  Shareholders  shall hold in  confidence  all  information  provided to them
pursuant to this section and shall not use such  information in violation of any
applicable  securities laws. Any such delay shall extend the registration period
otherwise provided in section 6.1 hereof.

     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 the Shareholders'
shares, and the fees and expenses of the Shareholders' own counsel,  which shall
in all events be paid by the Shareholders.

<PAGE>

     6.5  Featherlite  Obligations.  So long as (i) any  Featherlite  Shares are
outstanding,  owned by any of the  Shareholders  and not yet  eligible  for sale
pursuant to Rule 144(k) under the  Securities  Act, and (ii)  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(c) 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  the  Shareholders   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
          the Shareholders 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  the
          Shareholders  may reasonably  request in order to avail himself of any
          such rule or regulation of the SEC.

     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 and during the effectiveness
thereof,  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.

     6.7  Indemnification.  Featherlite will, and it hereby does,  indemnify and
hold harmless,  to the full extent  permitted by law, (i) the  Shareholders  and
(ii) each other person who  participates  as an  underwriter or selling agent in
the offering or sale of  Featherlite  Shares and each other person,  if any, who
controls,  is controlled by or is under common control with the  Shareholders 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 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

<PAGE>

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  the  Shareholders  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 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 the  Shareholders,  other selling  person or underwriter or selling
agent  specifically  stating  that  it is for  inclusion  therein,  or  (C)  any
violation  by the  Shareholders  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.

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

<PAGE>

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.

     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 the Shareholders 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 the  Shareholders 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  the
Shareholders  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  the
Shareholders  on the other hand, in such proportion as is appropriate to reflect
the relative fault of Featherlite  and of the  Shareholders  in connection  with
such  statements  or  omissions,   as  well  as  any  other  relevant  equitable
considerations.   The  relative   benefits   received  by  Featherlite  and  the
Shareholders  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 the  Shareholders  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 the  Shareholders on the one hand and of the underwriters on the


<PAGE>

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 the Shareholders or by the  underwriters.  The relative fault of Featherlite
on the one hand and of the Shareholders 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 the  Shareholders  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 the Shareholders
shall not be required to contribute  any amount in excess of the amount by which
the total price at which the securities of the Shareholders  were offered to the
public  exceeds the amount of any damages that the  Shareholders  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.  The Shareholders' obligations to contribute pursuant to this
section 6.8 are several in the same proportion that the proceeds of the offering
received by the Shareholders bear to the total proceeds of the offering received
by all the Shareholders and not joint.

     6.9  Agreements  by the  Shareholders.  The  Shareholders  shall  take  the
following actions:

          6.9.1 In connection with any registration  pursuant to this Article 6,
     the Shareholders  shall furnish to Featherlite  such information  regarding
     the  Shareholders  and the  distribution  proposed by the  Shareholders  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 the Shareholders of the occurrence
     of such an Intervening Event, the Shareholders shall make no further sales,


<PAGE>

     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  any  necessary
     amendment or supplement as provided in section 6.2.5.

     6.10 Featherlite Right of First Refusal.  In the event that any Shareholder
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,  such
Shareholder  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 the Shareholder, 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 the
Shareholder'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, each of Molder, Meixner and jointly the Mitchells
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.

     6.11.   Pledge  To  and   Participation  by  Charles  Fulton.   Featherlite
acknowledges  that  after  issuance  a number of the  Featherlite  Shares may be
pledged to Charles Fulton.  If Charles Fulton  subsequently  acquires the pledge
Shares,  then subject to  requirements  of applicable  securities laws including
receipt  of  representations  by Fulton  that he has  received  all  appropriate
information  concerning Featherlite and that he is acquiring such Shares not for
resale or redistribution  in the absence of effective  registration or exemption
under the  Securities Act of 1933,  Featherlite  agrees that it will permit such
transfer to Fulton and provide  Fulton all of the rights,  subject to all of the
obligations, provided to Shareholders under Article 6 of this Agreement.


                                    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:

<PAGE>

          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 Mitchell Motorcoach and the Shareholders
     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, Mitchell
     Motorcoach  or any  Shareholder  in  the  performance  of  any of  material
     covenant or obligation herein.

          7.3.2 Shareholder and Board Approvals.  Mitchell Motorcoach shall have
     obtained all necessary approvals by its shareholders and board of directors
     to this  Agreement  and the Exchange and  Featherlite's  board of directors
     shall have given final approval to the Exchange.

          7.3.3 Approvals; Consents. All other permissions,  consents, releases,
     or approvals,  governmental or otherwise, necessary on the part of Mitchell
     Motorcoach to consummate the  transactions  contemplated  by this Agreement
     shall  have  been  obtained  by  Mitchell   Motorcoach   and  delivered  to
     Featherlite.

          7.3.4 Delivery of Documents. Mitchell Motorcoach and the Shareholders,
     each as  appropriate  to the  particular  document or  instrument at issue,
     shall have executed and delivered to  Featherlite  all of the documents and
     instruments  required to be  delivered  to  Featherlite  at or prior to the
     Closing, including each of the following:

               7.3.4.1  Certified copy of  resolutions of Mitchell  Motorcoach'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 Mitchell Motorcoach  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.

               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.

<PAGE>

               7.3.4.5 An  assignment  and  assumption  agreement  assigning  to
          Featherlite all of Mitchell Motorcoach'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 Mitchell Motorcoach with respect to the
          matters described in section 7.3.1 hereof.

               7.3.4.8  The  written   acknowledgements   of  the   Shareholders
          described in section 2.8 hereof.

          7.3.5  Legal  Opinion.  Featherlite  shall have  received a  favorable
     opinion,  addressed  to  Featherlite,  of Jones,  Givens,  Gotcher & Bogan,
     counsel to Mitchell  Motorcoach and the Shareholders,  dated as of the date
     of the Closing, in the form attached as Schedule 7.3.5.

          7.3.6 Due Diligence.  Featherlite  shall be reasonably  satisfied with
     the results of its due diligence review of Mitchell Motorcoach.

          7.3.7  Termination of Dealers.  Mitchell  Motorcoach  shall have given
     timely notice of termination to any and all of its dealers and distributors
     such that all dealer and  distributor  agreements  are terminated as of the
     Closing Date.

     7.4 Conditions to Mitchell  Motorcoach's  Obligations.  The  obligations of
Mitchell  Motorcoach and the Shareholders under this Agreement to consummate the
Closing shall, at their 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 Mitchell Motorcoach:

          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 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  Mitchell
     Motorcoach.

          7.4.3  Delivery of  Documents.  Featherlite  shall have  executed  and
     delivered  to Mitchell  Motorcoach  all of the  documents  and  instruments
     required to be delivered by Featherlite to Mitchell  Motorcoach at or prior
     to the Closing, including each of the following:

<PAGE>

               7.4.3.1  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.

               7.4.3.2 Certificates representing the Featherlite Shares.

               7.4.3.3 The employment agreement described in section 5.8.

               7.4.3.4 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.

          7.4.4  Legal  Opinion.  Mitchell  Motorcoach  shall  have  received  a
     favorable opinion, addressed to Mitchell Motorcoach, of Fredrikson & Byron,
     P.A., counsel to Featherlite,  dated as of the date of the Closing,  in the
     form attached as Schedule 7.4.4.


                                    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
     Mitchell  Motorcoach,  if the  conditions set forth in sections 7.2 and 7.3
     have not been satisfied and the Closing shall not have occurred by June 30,
     1998.

          8.1.2  By  and  at  the  option  of   Mitchell   Motorcoach   and  the
     Shareholders,  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 31, 1998.

          8.1.3 At any time, without liability of any party to the others,  upon
     the mutual written consent of Mitchell Motorcoach 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),  and (ii) each party will return to the
others all  documents and  materials  obtained from the others  pursuant to this
Agreement.

<PAGE>

                                   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 six 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  except as to claims
asserted prior to the  expiration of the Indemnity  Period;  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 Mitchell  Motorcoach and the Shareholders.  Mitchell
Motorcoach and each of the  Shareholders  jointly and severally 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 (i) the breach by
Mitchell  Motorcoach  or  the  Shareholders  of any  of  their  representations,
warranties,  covenants or agreements contained or incorporated in this Agreement
or any agreement,  certificate or document executed and delivered to Featherlite
by Mitchell  Motorcoach or any Shareholder in connection  with the  transactions
hereunder and (ii) Excluded Liabilities.  The indemnification provided for under
this  section  9.2, as it relates to breaches of Mitchell  Motorcoach's  and the
Shareholders'  representations,  warranties,  covenants and agreements contained
herein,  shall  specifically  be  interpreted  to mean and  include,  but not be
limited to, the following  occurrences for which Mitchell Motorcoach and each of
the  Shareholders  jointly and severally  shall be liable pursuant  hereto:  (i)
occurrences prior to the Effective Time that result in any breach giving rise to
indemnification  hereunder,  regardless of when the claim is made or the loss is
booked;  (ii) any  losses  resulting  from  returns  of  product  sold after the
Effective  Time that was  manufactured  and booked by Mitchell  Motorcoach  as a
receivable  prior to the Effective Time, but only to the extent that such losses
exceed the reserve for returns  reflected  on the Closing  Date  Balance  Sheet;
(iii) any  inventory of Mitchell  Motorcoach  as of the  Effective  Time that is
subsequently  written off, but only to the extent that the  aggregate  amount of
such  inventory  so written  off exceeds  the  reserve  for  obsolete  inventory
reflected on the Closing Date Balance Sheet; and (iv) failure to perform and pay
any Excluded Liabilities.  Claims for indemnification shall be satisfied out of,
and recourse  shall be limited to, the aggregate  number of  Featherlite  Shares
paid to Mitchell Motorcoach pursuant to the Exchange;  provided,  however,  that
(i) in the event that Mitchell  Motorcoach sells or transfers all or any portion
of the  Featherlite  Shares held by Mitchell  Motorcoach  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 Mitchell  Motorcoach  plus (A) a dollar amount equal
to 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

<PAGE>

Effective  Time),  and (ii) Mitchell  Motorcoach shall be permitted to satisfy a
claim  for  indemnification  against  Mitchell  Motorcoach  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  Effective  Time).  As used in  this  section  9.2 in
connection with satisfaction of claims for indemnification  from the Featherlite
Shares,  references  to  "Mitchell  Motorcoach"  shall  mean  and  refer  to the
Shareholders   following  the   distribution  by  Mitchell   Motorcoach  to  the
Shareholders  of  the  Featherlite   Shares,  or  rights  with  respect  to  the
Featherlite Shares held in escrow.

     9.3 Indemnification by Featherlite. Featherlite shall indemnify, defend and
hold harmless Mitchell Motorcoach,  and its officers,  directors,  shareholders,
employees,  agents  and  affiliates  (collectively,  all  such  indemnitees  are
referred  to  in  this  section  as  "Mitchell  Motorcoach")  and  each  of  the
Shareholders  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  Mitchell
Motorcoach or the  Shareholders may incur or suffer and which are not reimbursed
by insurance,  arising out of or based upon (i) 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 Mitchell Motorcoach or the Shareholders by Featherlite
in connection with the transactions hereunder; (ii) any occurrence subsequent to
Closing (except where such occurrence  constitutes a breach of  representations,
warranties or covenants of Mitchell Motorcoach and/or the Shareholders) relating
to the post-closing manufacture and/or sale of products by Featherlite; or (iii)
any claim for employee benefits,  salary,  compensation or any other claim by an
employee of  Featherlite  based upon any  representation  by Featherlite to such
employee  in  connection  with  this  agreement  or based on any  occurrence  in
Featherlite's control subsequent to Closing.

     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 Mitchell  Motorcoach or the  Shareholders,
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  the   Shareholders
collectively.  The  indemnifying  party shall have 20 days after  receipt of the
above-mentioned notice 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

<PAGE>

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.


                                   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;  provided  that  the  rights  of  Mitchell  Motorcoach  and the
Shareholders herein may not be assigned, and all or any portion of the rights of
Featherlite  may be assigned  only to a  subsidiary  of  Featherlite  or to such
business  organization  that shall succeed to the business of  Featherlite or of
such  subsidiary to which this  Agreement  relates,  provided  that  Featherlite
remains liable for the fulfillment by such  assignee(s),  in accordance with and
subject  to the  terms  and  conditions  hereof,  of  Featherlite's  obligations
hereunder.

     10.2 Further Assurances;  Copies. Mitchell Motorcoach, the Shareholders and
Featherlite  each  shall,  at the  request  of the  other  and  without  further
consideration,  execute and deliver such  instruments of  assignment,  transfer,
license or assumption and take such further actions as the others 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:



<PAGE>


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 Mitchell Motorcoach or the Shareholders to:
                                    Mitchell Motorcoach Sales, Inc.
                                    P.O. Box 339
                                    Pryor, Oklahoma  74362
                                    Attention:  Harvey G. Mitchell, Patricia A.
                                    Mitchell, Robert Meixner and Mark Molder
                                    Telecopy No. (918) 825-2105

with a copy to:                     C. Michael Copeland
                                    Jones, Givens, Gotcher & Bogan
                                    3800 First National Tower
                                    Tulsa, Oklahoma  74103
                                    Telecopy No. (918) 583-1189

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.

     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 Mitchell Motorcoach.

     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.

<PAGE>

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, if one is not available,  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.

     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.



<PAGE>


     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/ C. Clement
                                     Its President


                                   MITCHELL MOTORCOACH SALES, INC.


                                   By  /s/ Harvey G. Mitchell
                                      Its President



                                       /s/ Harvey G. Mitchell
                                   Harvey G. Mitchell


                                      /s/ Patricia A. Mitchell
                                   Patricia A. Mitchell


                                      /s/ Robert M. Meixner
                                   Robert M. Meixner


                                      /s/ Mark Molder
                                   Mark Molder





<PAGE>



                                    SCHEDULES


           1.33              Permitted Liens
           2.2.3             Excluded Contracts (Not Assigned or Assumed)
           2.3               Excluded Assets
           2.5.2(i)          Obligations to Institutional and Other Lenders
           2.5.2(ii)         Finance and Capital Lease Obligations
           2.5.2(iii)        Accrued Benefit Obligations
           2.5.2(iv)         Other Permitted Liabilities
           3.1               Foreign Qualifications
           3.4               Corporate Authority Matters
           3.7               Liabilities
           3.8               Changes and Events
           3.9(i), (ii)
             and (iii)       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
           5.8               Form of Employment Agreement
           5.9               Employment Matters
           7.2.1             Required Approvals
           7.3.5             Form of Opinion of Mitchell Motorcoach's Counsel
           7.4.4             Form of Opinion of Featherlite's Counsel


                                   APPENDICES

                    A.       Litigation Pledge Agreement