SECOND AMENDMENT TO AMENDED AND RESTATED
                          CREDIT AND SECURITY AGREEMENT

         This Second  Amendment to the Amended and Restated  Credit and Security
Agreement  ("Second  Amendment") is dated effective July 31, 1997, and is by and
between the following identified parties:

         Featherlite  Mfg.,  Inc.,  a  corporation  duly  organized  and validly
         existing  under the laws of the State of Minnesota,  with its principal
         place of business at Hwy. 63 & 9, Cresco, Iowa 52136 ("Borrower");

         Conrad  Clement,  Larry Clement,  Kathy  Clement,  residents of Iowa,
         and Tracy Clement and Nancy Clement, residents of Minnesota (the 
         "Clements"); and

         Firstar Bank Iowa, N.A., a national banking institution ("Bank").

                                    RECITALS

     A. Borrower,  Clements and Bank entered into an Amended and Restated Credit
and Security  Agreement  dated as of December 30, 1996  ("Restated  Agreement"),
which was amended by a First Amendment dated June 18, 1997.

     B.  Borrower has  requested  that the Bank review and extend the  revolving
line of credit to amend certain terms and conditions in the Restated  Agreement,
and waive certain financial covenants.

     C. Bank is willing to grant the request subject to the terms of this Second
Amendment.

     The parties agree:

     1. Amend Definitions and Accounting. Section 1, Definitions and Accounting,
is amended to modify the following definitions:

                  "Borrowing  Base"  means  an  amount  equal  to the  sum of 80
         percent of Eligible  Receivables of Borrower  outstanding  from time to
         time applicable  thereto plus 65 percent of Eligible Finished Inventory
         of  Borrower  and 65 percent of  Eligible  Raw  Material  Inventory  of
         Borrower as Bank shall deem  acceptable.  Such  Borrowing Base shall be
         determined  by  submission of a monthly  Accounts  Receivable  and Loan
         Reconciliation  Certificate  by the end of each month,  accurate to the
         first of such month.

and to add the following new definitions:

<PAGE>

                  "Eligible   Raw  Material   Inventory"   means  raw  materials
         purchased by Borrower which has not been  processed by Borrower  valued
         at the lower of cost or market  value on a "first  in-first  out" basis
         which is acceptable to Bank, in its sole discretion.

                  "Eligible Finished  Inventory" means finished trailers,  ready
         for  sale,  which are  owned by  Borrower  and  located  at  Borrower's
         facilities,  valued at the  lower of cost or  market  value on a "first
         in-first out" basis which is acceptable to Bank, in its sole discretion
         and excludes  inventory  that is slow moving or obsolete (as determined
         by the Bank in its sole discretion).

     2.  Amendment  to Revolver.  Section  5(a) of Revolving  Line of Credit and
Payment Provisions, is amended to read as follows:

          a)  Borrowing.  Subject to the terms and  conditions  of this Restated
          Agreement, the Bank shall, in its sole discretion,  make loans (each a
          "Revolving  Loan") to the Borrower in such amounts as the Borrower may
          from time to time  request in  increments  of at least  $50,000 and at
          such intervals as the Bank may from time to time  determine,  provided
          that the aggregate  principal  amount of Revolving  Loans  outstanding
          hereunder,  together with the principal  amount of such Revolving Loan
          requested,  shall not exceed the Borrowing  Limit,  less the aggregate
          face  amount of any  outstanding  letters of credit  issued by Bank on
          behalf of Borrower.

     3.  Letters of Credit.  A new Section 5A dealing  with Letters of Credit is
added after Section 5 as follows:

                  5A. (a)  Letters of Credit.  Bank  agrees to issue  letters of
         credit  for the  account  of  Borrower  from  time to  time  until  the
         Termination Date in such amounts as Borrower shall request, provided no
         letter of  credit  will be issued in any  amount  which,  after  giving
         effect to such issuance,  would cause the aggregate principal amount of
         Revolving  Loans  plus the face  amount  of any  outstanding  letter of
         credit to exceed the  Borrowing  Limit.  Each  request  for a letter of
         credit shall be made by the Borrower in writing on the Bank's letter of
         credit  application  and  reimbursement  agreement form. The Bank shall
         charge its  reasonable  and  customary  fees for such letters of credit
         (which  shall be shared  prorate  with any bank  participating  in this
         credit facility).

                  (b) Agreement to Repay Letter of Credit Drawings.  If the Bank
         has received  documents  that it determines  are  satisfactory  to draw
         under a Letter of Credit, Borrower shall reimburse the Bank immediately
         in an amount equal to the amount of such drawing.  If Borrower fails to
         reimburse Bank  immediately,  Bank is authorized by Borrower to draw on
         the  Revolving  Line of  Credit in an  amount  sufficient  to cover the
         deficiency,  which draw shall be treated as a loan under the  Revolving
         Line of Credit.

     4. Amended Negative Covenant. Section 9, Negative Covenants subpart (b)(iv)
is amended to allow $5,000,000 in floor plan financing for the Vantare division.

<PAGE>

     5. Amended Financial Covenant. Section 11, Financial Covenants of Borrower,
as follows:

          a) Minimum Working Capital. Maintain at all times an excess of current
     assets over current liabilities of not less than $8,000,000.

          b) Minimum  Tangible Net Worth.  Maintain at all times as Tangible Net
     Worth of not less than $17,500,000.

          c) Capital Expenditures. Refrain from making expenditures for fixed or
     capital  assets which would cause the  aggregate  of all such  expenditures
     made by  Borrower  to exceed  $4,000,000  for fiscal  year  ending 1997 and
     $2,000,000 for fiscal year ending 1998.

          d) Current  Ratio.  Maintain at all times a ratio of current assets to
     current liabilities of not less than 1.5 to 1.

          e) Leverage Ratio.  Maintain at all times a ratio of total liabilities
     to Tangible Net Worth of not greater than 2.5 to 1.

          f) Cash Flow/Debt Service.  Maintain a ratio of 1.5 to 1 measured on a
     year to date actual basis of Operating  Cash Flow to Total Debt Service and
     as of September 30, 1997 and quarterly thereafter,  maintain a ratio of 1.5
     to 1 measured on a trailing four-quarter average basis.

     6.  Representations and Warranties.  All the representations and warranties
of Borrower as set forth in the Restated  Agreement  are true and correct in all
material respects as of the date of this Second Amendment.

     7.  Acknowledgment of Receipt. By their execution of this Second Amendment,
the parties acknowledge receipt of a copy of this document.

     8. Savings.  All other terms and conditions of the Restated Agreement,  not
specifically  modified by this Second Amendment,  shall remain in full force and
effect.

     9.  Representation.  The Borrower  represents  that no Event of Default has
occurred and is  continuing  under the Restated  Agreement,  as amended,  and no
event or  circumstance  has occurred and is continuing  that, with the giving of
notice, the passage of time, or both, would constitute an Event of Default under
the Restated Agreement,  as amended.  Further,  the Borrower represents that the
representations  and  warranties  as  contained in the  Restated  Agreement,  as
amended, continue to be true.

<PAGE>

     10.  Counterparts.  This Second  Amendment may be executed in any number of
counterparts,  each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.

IMPORTANT:  READ  BEFORE  SIGNING.  THE TERMS OF THIS  AMENDMENT  SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR
ORAL  PROMISES  NOT  CONTAINED IN THIS  WRITTEN  AGREEMENT  (EXCEPT THE RESTATED
AGREEMENT  AS  PREVIOUSLY  AMENDED AND  DOCUMENTS  REFERRED  TO IN THE  RESTATED
AGREEMENT AS  PREVIOUSLY  AMENDED) MAY BE LEGALLY  ENFORCED.  YOU MAY CHANGE THE
TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

                                   FEATHERLITE MFG., INC.


                                   BY:
                                       Conrad Clement, President


                                   BY:
                                     Tracy J. Clement, Executive Vice President

       
                                   FIRSTAR BANK IOWA, N.A.


                                   BY:
                                      Mitch McElree, Vice President