8-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

          ------------------------------------------------------------

                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

       -------------------------------------------------------------------

       Date of Report (Date of earliest event reported): October 31, 2006

                               BNS HOLDING , INC.
                               ------------------
               (Exact Name of Registrant as Specified in Charter)



    Delaware                          1-5881                      N/A
    --------                          ------                      ---
 (State or other            (Commission File Number)        (IRS Employer
  jurisdiction                                            Identification No.)
 of incorporation)


          25 Enterprise Center, Suite 104,
             Middletown, Rhode Island                           02842
     ------------------------------------------              ------------
      (Address of principal executive offices)                (Zip Code)

       Registrant's telephone number, including area code: (401) 848-6300


             ------------------------------------------------------
          (Former name or former address, if changed since last report)

================================================================================

         Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)

[ ] Soliciting  material  pursuant to Rule 14a-12 under the Exchange Act (17 DFR
240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement  communications  pursuant  to  Rule  13e-4  (c)  under  the
Exchange Act (17 CFR 240.13e-4(c))






                           CURRENT REPORT ON FORM 8-K

                                BNS HOLDING, INC.


                                TABLE OF CONTENTS


                                                                            Page

Item 1.01.   Entry into a Material Definitive Agreement........................1

Item 2.01.   Completion of Acquisition or Disposition of Assets................5

Item 2.03    Creation of a Direct Financial Obligation or an Obligation
             Under an Off-balance Sheet Arrangement of a Registrant...........55

Item 5.02.   Departure of Directors or Principal Officers; Election
             of Directors; Appointment of Principal Officers..................55

Item 5.03.   Amendments To Articles Of Incorporation Or Bylaws;
             Change In Fiscal Year............................................56

Item 5.06.   Change in Shell Company Status...................................56

Item 9.01.   Financial Statements and Exhibits................................56

             Signatures.......................................................58


                                       i






ITEM 1.01.     ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

         MERGER

         THE PARTIES: The following entities are parties to the various material
definitive agreements entered into by BNS Holding, Inc., referred to herein as
the "Company," with respect to the acquisition by the Company of 80% of the
equity interest in Collins I Holding Corp., an entity that acquired Collins
Industries, Inc., a Missouri corporation.

         BNS Holding, Inc. is a publicly-held shell corporation organized under
the state of Delaware whose shares of common stock are publicly traded on the
Over the Counter Bulletin Board.

         Collins Industries, Inc., which we refer to as "Collins", is a Missouri
corporation which manufactures small school buses, ambulances built from
modified cargo vans, terminal trucks, road construction and industrial rental
sweeper equipment and certain other commercial and shuttle buses.

         Steel Partners II, L.P., which we refer to as "Steel," is a private
investment partnership that invests in small-cap companies. Steel is a limited
partnership organized under the state of Delaware.

         CS Acquisition Corp., which we refer to as "Purchaser," was initially
formed as a subsidiary of Steel. Purchaser has not engaged in any business
activity. Purchaser is incorporated under the laws of the State of Missouri.

         American Industrial Partnership, which we refer to as "AIP," is a
manager of private equity funds with a focus on investing in and improving
American industrial companies. AIP is a limited partnership organized under the
laws of the State of Delaware.

         Collins I Holding Corp., which we refer to as "Holding," was formed
solely for the purpose of acquiring all outstanding shares of Purchaser,
assuming all the rights of Purchaser pursuant to the Merger Agreement (as
defined hereinafter) and merging with Collins.

         RELATIONSHIPS OF THE PARTIES

         Steel is a principal shareholder of the Company. Prior to the closing
of the Merger, (i) Steel owned all the outstanding equity interest in Purchaser
and AIP owned all of the outstanding equity interest of Holding. Upon the
closing of the Merger, the Company owns 80% of the outstanding equity interest
in Holding and Holding owns 100% of the outstanding equity interest in the
surviving company in the merger of Purchaser with and into Collins.

         BACKGROUND: Steel entered into an Agreement and Plan of Merger (the
"Merger Agreement") as of September 26, 2006 with Purchaser and Collins. The
Merger Agreement provided that upon the closing of the Merger, Purchaser would
merge with and into Collins and Collins would become a subsidiary of Steel and
the shareholders of Collins would receive $12.50 per share in cash. REFERENCE IS
MADE TO ITEM 2.01 OF THIS CURRENT REPORT ON FORM 8-K FOR A MORE DETAILED
DESCRIPTION OF THE TERMS AND CONDITIONS OF THE MERGER AGREEMENT.

         On September 27, 2006, the Company entered into a Memorandum of
Understanding (the "Memorandum of Understanding") with Steel, Purchaser, AIP and
Holding. The Memorandum of Understanding reflected the intent of Steel to assign
its rights under the Merger Agreement. Pursuant to the Memorandum of
Understanding, subject to a drafting and execution of definitive documents and
final board approval by the Board of Directors of the Company, the Company would
acquire an 80% interest in Holding, which would be the holding company for


                                      -1-



Collins after giving effect to the Merger and the transactions contemplated by
the Memorandum of Understanding. Accordingly, upon the consummation of the
transactions contemplated by the Merger Agreement and Memorandum of
Understanding are consummated, the Company, through its ownership interest of
Holding, owns 80% of Collins.

         Immediately prior to the closing of the Merger, Steel assigned its
rights and obligations pursuant to the Merger Agreement and Memorandum of
Understanding to Holding and transferred all of the outstanding capital stock of
Purchaser to Holding. The Company gave Holding $29.7 million in cash to be used
to purchase the outstanding shares of Collins upon the closing of the Merger. Of
this amount, $15.7 million was funded from working capital and $14.0 million was
funded through a long term loan with Steel. In exchange for such assignment,
transfer and payment of cash, Holding issued 26,400 units of Holding equity
securities, constituting 80% of the outstanding equity interest of Holding. Each
unit is composed of one share of Holding common stock and a warrant to purchase
up to 1.4509 shares of Holding common stock or an aggregate of up to 38,304
shares of Holding common stock. The exercise price of the Warrant is $.01 and is
exerciseable if the Company has received notice of a sale or liquidation of
Holding. In such event, the Company can exercise the warrant for an amount equal
to the lesser of 38,304 shares of Holding and the number of shares of Holding
which would cause the Internal Rate of Return (as such term is defined in the
Warrant) to equal, but not exceed, eight percent (8%). The other ownership
interest of Holding is as follows: AIP will hold 6,100 shares of Holding common
stock and the management of Collins will hold 500 shares of Holding common stock
and options exercisable for up to an additional 3,300 shares of Holding common
stock. The entity controlled by AIP paid $2.8 million for its interest in
Holding and AIP will provide management oversight for the operations of Collins.

         STOCKHOLDERS' AGREEMENT WITH AIP: As of October 31, 2006, the Company,
Holding, Collins, AIP and certain employee shareholders (collectively, the
"Holding Stockholders") entered into a Stockholders' Agreement (the "Holding
Stockholders Agreement") which provides, among other things, (i) that Holding
Stockholders will vote for a Board of Directors of Holding consisting of one
director appointed by AIP and four directors appointed by the Company and (ii)
that certain major corporate actions (i.e. a material corporate transaction or a
sale of all of the assets of Holding) cannot be made without the approval of the
Company and AIP. In addition, the Holding Stockholders Agreement provides that
the Company may initiate a sale of Collins, subject to the approval of the
director designated by AIP. If such sale is initiated, the other shareholders
must go along with such sale as long as such other shareholders receive the same
per share consideration. The Holding Stockholders Agreement further provides
that under certain circumstances as described therein, AIP may commence
negotiations providing for the Company's purchase of AIP's interest. If such
circumstances are triggered, for a period of 90 days AIP and the Company will
negotiate exclusively. If they cannot reach an agreement, then Goldman Sachs
will be engaged to conduct an auction of Holding. The Holding Stockholders
Agreement shall terminate upon an initial public offering, liquidation, sale, or
the agreement of a majority of the shares held in Holding by the Company (or
shareholders of the Company) and a majority of the shares held in Holding by AIP
and the employees of Holding or its subsidiaries.

         MANAGEMENT SERVICES AGREEMENT WITH THE COMPANY: As of October 31, 2006,
the Company and Collins entered into a Management Services Agreement wherein the
Company will provide general management, financial and other corporate advisory
services to Collins and its subsidiaries in exchange for an annual payment of
$500,000 by Collins. Such fee shall be payable quarterly in arrears on each
April 30, July 31, October 31 and January 31 during the term of the Management
Agreement.

         MANAGEMENT AGREEMENT WITH AIP IV, LLC: As of October 31, 2006, the
Company and AIP IV, LLC ("AIP IV"), an entity controlled by AIP, entered into a
Management Services Agreement wherein AIP IV will provide general management,
financial and other corporate advisory services to Collins and its subsidiaries
in exchange for an annual payment of $1.0 million by Collins. Such fee shall be


                                      -2-


paid quarterly in arrears on each April 30, July 31, October 31, and January 31
during the term of the Management Services Agreement.

         STEEL PARTNERS ADVISORY FEE: At the closing of the Merger, Collins paid
Steel a $1.0 million advisory fee in connection with various services Steel
provided relating to the acquisition of Collins including, but not limited to
indicating its willingness to provide a financing commitment to fully fund the
acquisition, as well as assisting in arranging for a revolving line of credit
and term loan and lien with GMAC Commercial Finance LLC and a second lien with
Orix Finance Corp.

         FINANCING DOCUMENTS

         TERM LOAN AGREEMENT WITH STEEL PARTNERS: As of October 31, 2006, the
Company entered into a $14.0 million Term Loan Agreement with Steel (the "Steel
Term Loan"). The Term Loan incurs interest at a rate of 15% per annum and
matures on August 31, 2011. Interest shall be payable quarterly and may be paid
in kind. Proceeds of the Steel Term Loan shall be used by the Company as partial
payment to Holding for 80% of its outstanding equity interest. As collateral for
the Steel Term Loan, the Company granted Steel a continuing first priority
security interest in any interest or right in any kind of property or asset,
whether real, personal, or mixed, owned or leased, tangible or intangible, and
whether now held or hereafter acquired by the Company. In addition, Steel shall
also receive a first priority pledge of all outstanding capital stock or other
beneficial interest of Holding.

         GMAC CF LOAN AND SECURITY AGREEMENT

         On October 31, 2006, Purchaser entered into a Loan and Security
Agreement, or the GMAC CF loan agreement, with GMAC Commercial Finance LLC, or
GMAC CF, as a lender and as agent thereunder, which effective upon the Merger
was assumed by Collins, Collins Bus Corporation, Wheeled Coach Industries, Inc.,
Capacity of Texas, Inc., Mid Bus, Inc., and Mobile Products, Inc., as borrowers
and guarantors thereunder, and Collins Ambulance Corp., Wheeled Coach
Enterprises, Inc., Mobile-Tech Corporation, World Trans, Inc., Brutzer
Corporation, Collins Financial Services, Inc., as guarantors thereunder. The
GMAC CF loan agreement provides for a $40.0 million revolving loan facility and
a $16.0 million term loan. The revolving loan facility includes a $10.0 million
letter of credit subfacility and a $10.0 million swingline subfacility, in each
case the drawings under which reduce the amount available under the revolving
loan facility.

         Borrowings under the GMAC CF loan agreement bear interest at annual
floating rates equal, at Collins' option, to either the (1) current base rate as
determined under the terms of the GMAC CF loan agreement or (2) the London
interbank offered rate, or LIBOR, plus, in either case, an applicable margin.
For LIBOR loans, the applicable margin will vary from 2.75% in the case of
revolving loans to 3.25% in the case of term loans, and for base rate loans, the
applicable margin will vary from 0.75% in the case of revolving loans to 1.25%
in the case of term loans.

         In order to secure the obligations under the GMAC CF loan agreement and
as a condition of the lenders agreeing to enter into the GMAC CF loan agreement
and make extensions of credit thereunder, the borrowers and guarantors granted
GMAC CF as agent a security interest, lien and mortgage, as the case may be, in
all of such borrowers' and guarantors' present and future assets.

         Availability under the GMAC CF revolving loan facility is subject to
various conditions precedent typical of syndicated loans, including, the
requirement that no default or event or default under the GMAC CF loan agreement
shall have occurred and be continuing.

                                      -3-


         Commitments under the GMAC CF loan agreement terminate on the earlier
of (a) October 31, 2011, (b) ninety (90) days prior to the termination date
under the ORIX second lien loan agreement described below and (c) the
acceleration of all obligations thereunder. The borrowers may prepay the term
loan or terminate the revolving loan commitment provided, however, the revolving
loan commitment may not be terminated until all the obligations are paid in
full. Scheduled repayments of the term loan begin in October 2007 pursuant to
the schedule of installment payments set forth in the GMAC CF loan agreement.

         The GMAC CF loan agreement requires the borrowers and guarantors to pay
customary commitment, letter of credit and other fees.

         The GMAC CF loan agreement includes covenants which are customary for
credit facilities of this nature. In addition it includes customary events of
default, including failure to pay principal on amounts outstanding under the
GMAC CF loan agreement when due, or to pay interest or other amounts due
thereunder or other transaction documentation, breach of specified covenants
contained in the loan agreement, in certain cases, after specified cure periods,
breach of representations and warranties, and cross-default to certain other
indebtedness.

         Borrowings under the GMAC CF loan agreement were used by the borrowers
and guarantors thereunder to retire existing indebtedness, pay costs and
expenses in connection with the Merger, and to fund working capital and other
general corporate purposes. For the complete terms of the GMAC CF loan
agreement, we recommend that you read the GMAC CF loan agreement, a copy of
which is attached as Exhibit 10.3 hereto.

         ORIX LOAN AND SECURITY AGREEMENT

         On October 31, 2006, Purchaser entered into a Loan and Security
Agreement, or the ORIX second lien loan agreement, with ORIX Finance Corp., or
ORIX, as a lender and as agent thereunder, which effective upon the Merger was
assumed by Collins, Collins Bus Corporation, Wheeled Coach Industries, Inc.,
Capacity of Texas, Inc., Mid Bus, Inc., and Mobile Products, Inc., as borrowers
and guarantors thereunder, and Collins Ambulance Corp., Wheeled Coach
Enterprises, Inc., Mobile-Tech Corporation, World Trans, Inc., Brutzer
Corporation, Collins Financial Services, Inc., as guarantors thereunder. The
ORIX second lien loan agreement provides for a $45.0 million term loan.

         The ORIX term loan bears interest at annual floating rates equal, at
Collins' option, to either the (1) current base rate as determined under the
terms of the ORIX second lien loan agreement or (2) the London interbank offered
rate, or LIBOR, plus, in either case, an applicable margin of 4.25% for base
rate loans and 6.25% for LIBOR loans.

         In order to secure the obligations under the ORIX second lien loan
agreement and as a condition of the lenders thereunder agreeing to enter into
the ORIX second lien loan agreement and make the term loan, the borrowers and
guarantors granted ORIX as agent a second lien security interest, lien and
mortgage, as the case may be, in all of such borrowers' and guarantors' present
and future assets, subordinate to the rights of the lenders under the GMAC CF
loan agreement.

         Commitments under the ORIX second lien loan agreement terminate on the
earlier of (a) October 31, 2011, and (b) the acceleration of all obligations
thereunder. The borrowers may prepay the ORIX term loan subject to the terms of
the subordination to the GMAC CF loan agreement. The ORIX term loan principal
amount is payable in full on the termination date.

                                      -4-


         The ORIX second lien loan agreement requires the borrowers and
guarantors to pay customary commitment and other fees.

         The ORIX second lien loan agreement includes covenants which are
customary for credit facilities of this nature. In addition it includes
customary events of default, including failure to pay principal on amounts
outstanding when due, or to pay interest or other amounts due thereunder or
other transaction documentation, breach of specified covenants contained in the
loan agreement, in certain cases, after specified cure periods, breach of
representations and warranties, and cross-default to certain other indebtedness.

         The ORIX term loan was used by Purchaser to fund the Merger. For the
complete terms of the ORIX second lien loan agreement, we recommend that you
read the ORIX second lien loan agreement, a copy of which is attached as Exhibit
10.4 hereto.

ITEM 2.01.     COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

         AS USED IN THIS CURRENT REPORT ON FORM 8-K, THE DEFINITIONS ASSIGNED TO
EACH ENTITY IDENTIFIED IN ITEM 1.01 SHALL HAVE THE SAME DEFINITION AS IN THIS
ITEM 2.01. REFERENCE IS ALSO MADE TO ITEM 1.01 WITH RESPECT TO THE DESCRIPTION
OF THE MATERIAL RELATIONSHIP AMONG THE PARTIES TO THE PROPOSED MERGER.

         MERGER DESCRIPTION

         Steel entered into the Merger Agreement as of September 26, 2006 with
Purchaser and Collins. The Merger Agreement provides that upon the closing of
the Merger, Purchaser would merge with and into Collins and Collins would become
a subsidiary of Steel and the shareholders of Collins would receive $12.50 per
share in cash.

         On September 27, 2006, the Company entered into the Memorandum of
Understanding with Steel, Purchaser, AIP and Holding. The Memorandum of
Understanding reflected the intent of Steel to assign its rights under the
Merger Agreement. Pursuant to the Memorandum of Understanding, subject to a
drafting and execution of definitive documents and final board approval by the
Board of Directors of the Company, the Company would acquire an 80% interest in
Holding, which would be the holding company for Collins after giving effect to
the Merger and the transactions contemplated by the Memorandum of Understanding.
Accordingly, upon the consummation of the transactions contemplated by the
Merger Agreement and Memorandum of Understanding, the Company, through its
ownership interest of Holding, now owns 80% of Collins.

         Immediately prior to the closing of the Merger, Steel assigned its
rights and obligations pursuant to the Merger Agreement and Memorandum of
Understanding to Holding and transferred all of the outstanding capital stock of
Purchaser to Holding. The Company gave Holding $29.7 million in cash to be used
to purchase the outstanding shares of Collins upon the closing of the Merger. Of
this amount, $15.7 million was funded from working capital and $14.0 million was
funded through a long term loan with Steel. In exchange for such assignment,
transfer and payment of cash, Holding issued 26,400 units of Holding equity
securities, constituting 80% of the outstanding equity interest of Holding. Each
unit is composed of one share of Holding common stock and a warrant to purchase
up to 1.4509 shares of Holding common stock or an aggregate of up to 38,304
shares of Holding common stock. The exercise price of the Warrant is $.01 and is
exerciseable if the Company has received notice of a sale or liquidation of
Holding. In such event, the Company can exercise the warrant for an amount equal


                                      -5-


to the lesser of 38,304 shares of Holding and the number of shares of Holding
which would cause the Internal Rate of Return (as such term is defined in the
Warrant) to equal, but not exceed, eight percent (8%). The other ownership
interest of Holding is as follows: AIP will hold 6,100 shares of Holding common
stock and the management of Collins will hold 500 shares of Holding common stock
and options exercisable for up to an additional 3,300 shares of Holding common
stock. The entity controlled by AIP paid $2.8 million for its interest in
Holding and AIP will provide management oversight for the operations of Collins.

         In addition, pursuant to the terms and conditions of the Merger
Agreement:

         o  All outstanding stock options will be vested immediately prior to
                the effective time of the Merger. Holders of stock options of
                Collins, whether or not exercisable, will be entitled to receive
                a cash payment from Collins immediately prior to the effective
                time of the Merger equal to the excess, if any, of $12.50 over
                the exercise price of such stock option, multiplied by the
                number of shares subject to such stock option, without interest
                and subject to any applicable withholding taxes.

         o  Upon shareholder approval of the Merger, the restricted stock
                automatically became unrestricted and, along with the other
                shares of Collins common stock, be converted into the right to
                receive $12.50 in cash, without interest and subject to any
                applicable withholding tax, for each share of restricted stock.

         o  Collins has entered into an employment agreement with Cletus C.
                Glasener providing among other things, for payments equal to Mr.
                Glasener's current annual base salary of $251,578 plus target
                bonus payable (i) upon his termination by Collins without cause
                or (ii) upon a change of control of Collins if, following such
                change in control, Mr. Glasener's position with Collins is
                eliminated or if he is not offered a comparable position at
                comparable compensation. On October 31, 2006, immediately after
                the closing of the Merger, Collins exercised its right to
                terminate Mr. Glasener.

         o  Collins has entered into separation and severance agreements with
                Don L. Collins and Donald Lynn Collins providing, among other
                things, for a lump sum payment equal to one month's salary for
                each full year of the officer's employment with Collins, but not
                less than 12 times nor more than 24 times the officer's monthly
                salary, plus the then current monthly rate of family coverage
                under the company's group health plan multiplied by 18 months,
                payable upon a change in control of Collins. The total amount
                due on such contracts is $883,156.

         o  Collins has also entered into severance agreement with Randall A.
                Swift and Kent E. Tyler providing, among other things, for a
                lump sum payment equal to one month's salary for each full year
                of the officer's employment with Collins, but not less than 12
                times nor more than 24 times the officer's monthly salary, plus
                the then current monthly rate of family coverage under Collins'
                group health plan multiplied by 18 months, payable upon the
                officer's termination by Collins other than for disability,
                retirement or cause or the officer's termination by the officer
                for good reason within one year after a change in control of
                Collins. The total amount due on such contracts is approximately
                $530,000.

         o  Collins has entered into severance agreements with other executive
                officers and key personnel providing, among other things, for a
                lump sum payment equal to twelve times the officer's monthly
                salary, payable upon the officer's termination by Collins other
                than for disability, retirement or cause or the officer's
                termination by the officer for good reason within one year after
                a change in control of Collins.

                                      -6-


         o  The Company will, or will cause Collins as the surviving corporation
                to, for a period of not less than six years, provide and honor
                all rights to indemnification now existing in favor of any
                director, officer or employee of Collins and its subsidiaries as
                provided in their respective charters or by laws or by contract.
                Collins will purchase prepaid insurance policies with a claims
                period of at least six years with respect to directors' and
                officers' liability insurance in amount and scope at least as
                favorable as Collins' existing policies for claims arising from
                the facts or events that occurred on or prior to the effective
                time of the Merger, provided that the aggregate premium of such
                policies do not exceed $50,000.

         o  The Merger and its related transactions were approved by the holders
                of a requisite number of shares of Collins' capital stock in a
                special meeting of shareholders on October 30, 2006. Under
                Missouri corporate law, Collins' stockholders who did not vote
                in favor of the Merger may demand in writing, pursuant to the
                exercise of their appraisal rights, that Collins pay them the
                fair value of their shares. Determination of fair value is based
                on all relevant factors, except for any appreciation or
                depreciation resulting from the anticipation or accomplishment
                of the Merger.

         o  The Company intends to carry on Collins' business as its sole line
                of business.

         o  Except for the resignation of Richard Donnelly as described in Item
                5.02, there will be no changes to the members of the Board of
                Directors and executive officers of the Company as a result of
                the Merger. The names and other information of the directors and
                executive officers of Collins are provided below under the
                Section entitled "Directors and Executive Officers of Collins."

         o  Accounting Treatment; Change of Control. - The Company will
                implement the rules for purchase accounting, which among other
                items will require the Company to record the assets and
                liabilities at fair value and record the excess of the purchase
                price paid over the fair value of asset and liabilities acquired
                as Goodwill.

         After the closing of the Merger, the Company became the holder of 80%
of the outstanding equity interest of Holding, the new parent of Collins.

         BUSINESS - REFERENCE IS MADE TO ITEM 1 AND ITEM 2 OF THE 2005 ANNUAL
REPORT ON FORM 10-K-SB AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MARCH 7, 2006 WITH RESPECT TO THE DESCRIPTION OF THE BUSINESS OF THE COMPANY.
Provided below is a description of the business of Collins we have acquired.

         GENERAL DEVELOPMENT OF BUSINESS

         Collins was founded in 1971 as a manufacturer of small school buses and
ambulances. Collins' initial product was the first "Type A" school bus, designed
to carry 14 to 20 passengers. Today, Collins manufactures specialty vehicles and
accessories for various basic service niches of the transportation industry.
Collins' products include ambulances, small school buses, shuttle and mid-size
commercial buses, terminal trucks, road construction equipment and industrial
rental sweepers. From its inception, Collins' goal has been to become one of the
largest manufacturers of specialty vehicles in the U.S. Collins has grown
primarily through the internal development of new products and the acquisition
of complementary product lines.

                                      -7-


         In the U.S., Collins believes that it is the largest manufacturer of
ambulances, the second largest manufacturer of terminal trucks, the leading
manufacturer of small school buses and a leading manufacturer of sweepers used
in the road construction industry. Collins sells its products under several
well-known trade names, including Wheeled Coach(R) (ambulances), Collins Bus(R)
and Mid Bus(R) (small school buses), World Trans(R) (commercial buses),
Capacity(R) (terminal trucks) and Waldon(R)/Lay-Mor(R) (road construction and
industrial rental sweeper equipment).

         Most of Collins products are built to customer specifications from a
wide range of options it offers. Collins sells to niche markets which demand
manufacturing processes too sophisticated for small job shop assemblers, but do
not require the highly automated assembly line operations of mass production
vehicle manufacturers. Collins emphasizes specialty engineering and product
innovation, and it has introduced new products and product improvements, which
include the Moduvan(R) ambulance, the first ambulance of its size with advanced
life-support system capability; the Dura-Ride(R) suspension system, the first
frame-isolating suspension system for terminal trucks; and the innovation of a
larger seating capacity, Type A Super Bantam(TM) school bus, capable of carrying
up to 30 passengers, one of the largest Type A school buses in the industry.

         DESCRIPTION OF BUSINESS

         Collins principally manufactures and markets specialty vehicles. It has
three reportable segments: AMBULANCES, BUSES AND TERMINAL TRUCKS/ROAD
CONSTRUCTION EQUIPMENT. The ambulance segment produces modular and van type
ambulances for sale to hospitals, ambulance services, fire departments and other
governmental agencies. The bus segment produces small school buses, commercial
buses and shuttle buses for sale to schools, hotel shuttle services, airports,
and other governmental agencies. The terminal trucks/road construction equipment
segment produces off road trucks designed to move trailers and containers for
warehouses, truck terminals, rail yards, rail terminals and shipping ports and
produces a line of road construction equipment.

         Collins accounts for intersegment sales and transfers as if the sales
or transfers were to third parties, with all intercompany sales and profits
eliminated in consolidation.

         Collins' reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business requires different technology and marketing strategies.

         During fiscal years 2005, 2004 and 2003, sales to any one customer were
not in excess of 10% of consolidated sales.

         AMBULANCES. Collins manufactures both modular and van-type ambulances
at its Hutchinson, Kansas and Orlando, Florida plants. Modular ambulances are
produced by attaching an all-aluminum, box-type, patient compartment to a dual
rear-wheel cab chassis ("Type I") ambulance or to a dual rear-wheel, van-type,
cutaway chassis ("Type III") ambulance or to a single rear-wheel cutaway chassis
("Moduvan") ambulance. A cutaway chassis consists of only the front portion of
the driver's compartment, engine, drive train, frame, axle and wheels. Van
("Type II") ambulances are cargo vans modified to include a patient compartment
and a raised fiberglass roof. Type II ambulances are smaller and less expensive
than modular ambulances.

         Collins also produces a limited number of medical support vans designed
to transport medical and life-support equipment. Medical support vans are
modified commercial vehicles which do not have a patient compartment for
advanced life support system.

                                      -8-


         BUSES. Collins manufactures small school and activity buses, and
certain other commercial and shuttle buses at its Bluffton, Ohio and South
Hutchinson, Kansas facilities. Collins produces two categories of bus products
as described below:

         o  SCHOOL AND ACTIVITY BUSES. Collins manufactures small Type A school
                and activity buses which carry from 14 to 24 passengers. The
                majority of Type A school buses currently built by Collins are
                produced by fabricating the body and mounting it on a
                vendor-supplied, dual rear-wheel or single rear-wheel, cutaway
                chassis. Collins was the first manufacturer to produce a Type A
                school bus on this type of chassis, which permits greater
                seating capacity than a van chassis. School and activity buses
                are produced in compliance with federal, state and local laws
                regarding school and activity bus vehicles. In recent years,
                Collins has sold an increasing number of small activity buses
                used by day care, church and other non-profit organizations.

         o  COMMERCIAL AND SHUTTLE BUSES. Collins produces a limited number of
                commercial and shuttle buses for churches, transit authorities,
                hotels and resorts, retirement centers, nursing homes and
                similar users. These buses are built to customer specifications
                and are designed to transport 14 to 30 passengers over short
                distances.

         TERMINAL TRUCKS / ROAD CONSTRUCTION EQUIPMENT. Collins produces two
basic models of terminal trucks at its Longview, Texas facility, the Trailer
Jockey(R) and the Yardmaster(R). Terminal trucks are designed and built to
withstand heavy-duty use by moving trailers and containers at warehouses, rail
yards, rail terminals and shipping ports. Most terminal trucks manufactured by
Collins are built to customer specifications. Collins manufactures the entire
truck except for major drive train components which are purchased from outside
suppliers.

         The road construction equipment produced by Collins includes three and
four wheel sweepers, a full line of articulated four-wheel drive loaders, rough
terrain lift trucks, compact loaders and backhoes. These products are
principally sold in both commercial and rental markets through direct sales and
distributors throughout the United States.

         MANUFACTURING

         Manufacturing consists of the assembly of component parts either
purchased from others or fabricated internally. With the exception of chassis,
chassis components and certain terminal truck components which are purchased
from outside suppliers, Collins fabricates the principal components of its
products. Collins' internal capabilities include CNC gas/plasma shape cutting,
robotic welding of certain subassemblies, CNC routing and cabinetry equipment,
CNC punching and forming of sheet metal, metal stamping, tooling, molding of
fiberglass components, mechanical and electrical component assembly, upholstery,
painting and finishing and Computer-Aided-Design and Manufacturing (CAD/CAM)
systems.

         Collins has improved its manufacturing facilities from time-to-time
through the selective upgrading of equipment and the mechanization or automation
of appropriate portions of the manufacturing process. Management believes
Collins' manufacturing facilities are in good condition and are adequate for the
purposes for which they currently are used. The capacity of Collins' current
facilities, particularly if operated on a multiple shift basis, is adequate to
meet current needs and anticipated sales volumes.

                                      -9-


         NEW PRODUCTS

         Collins is not presently engaged in, and does not anticipate engaging
in, activities which would require significant expenditures or use of material
amounts of assets for development of products.

         SUPPLIERS

         In order to ensure that it has a readily available supply of chassis
for ambulance and bus products, Collins has entered into consignment agreements
with General Motors Corporation ("GMC") and Ford Motor Company ("Ford"). Under
those agreements, chassis are kept at Collins production facilities at no cost
to Collins other than chassis storage costs. However, the consigned chassis are
not the property of Collins and Collins has no obligation to pay for these
chassis unless and until Collins determines to purchase the chassis and use it
in the production process. When an individual chassis is selected from Collins'
consignment pool for use in vehicle production, title to the chassis passes to
Collins and Collins becomes liable to the consignor for the cost of the chassis.
While an interruption in supply from one source may cause a temporary slowdown
in production, Collins believes that it could obtain adequate numbers of chassis
from alternate sources of supply.

         Collins uses substantial amounts of steel in the production of its
terminal truck products and road construction equipment and certain other major
components (primarily engines, transmissions and axles). Collins also uses large
amounts of aluminum, steel, fiberglass and glass in the production of ambulances
and buses. There is substantial competition among suppliers for such raw
materials and components, and Collins does not believe that a loss of a single
source of supply would have a material adverse effect on its business.

         PATENTS, TRADEMARKS AND LICENSES

         Collins owns federal registrations for most of the trademarks which it
uses on its products. Collins also owns patents on its bus body design,
ambulance design, Dura-Ride air suspension system, ambulance warning light
system and air-activated bus door. Collins believes that its patents are
helpful, because they may force competitors to do more extensive design work to
produce a competitive product. Collins believes that its production techniques
and skills are as important as product design, and therefore, in management's
opinion, any lack of patent protection would not adversely affect Collins'
business.

         SEASONALITY OF BUSINESS

         Historically, a major portion of Collins' net income is usually earned
in the second half of its fiscal year ending October 31. The purchasing patterns
of school districts are typically strongest in the summer months and this
accounts for stronger sales of small school buses in the second half of the
fiscal year. Generally, Collins' sales tend to be lower in the winter months and
first half of Collins' fiscal year due to the purchasing patterns of Collins'
customers in general and because purchasing activities are normally lower near
the end of the calendar year.

         SALES TERMS

         Collins produces the majority of its products on an order-only basis.
Most products are delivered on a cash basis. Products sold on a direct basis
(not through dealers) are sold on trade terms common to the respective industry.
Finished goods that are reflected on the financial statements are generally
completed units that are ready for customer delivery. Sales to dealers have
generally been financed for the dealers through an unrelated third party,
resulting in payment generally within days of the sale.

                                      -10-


         CUSTOMER CONCENTRATION

         Collins has no single customer whose loss would have a material adverse
effect on Collins as a whole. During 2005, 2004 and 2003, sales to any one
customer were not in excess of 10% of consolidated sales.

         SALES BACKLOG

         The sales backlog at July 31, 2006, was approximately $109.9 million
compared to $103.6 million at October 31, 2005. In the opinion of management,
the majority of this sales backlog will be shipped during fiscal 2007.

         GOVERNMENTAL SALES

         Collins has pursued, and will continue to pursue, government sales
opportunities as they occur. No material portion of Collins' business, however,
is subject to renegotiation of profits or termination of contracts or
subcontracts at the election of the government. The Terminal Truck / Road
Construction Equipment segment contract with the United States Postal Service
does contain a termination for the customer's convenience clause. This contract
is expected to be less than 10% of Collins' revenue in FY 2006.

         MARKETING AND DISTRIBUTION

         Collins, through its wholly owned subsidiaries, markets its products
throughout the U.S. and, to a limited extent, abroad, through independent
dealers and distributors and the direct sales efforts of Company personnel. Each
of Collins' product groups is responsible for its own marketing activities and
maintains independent relationships with dealers and distributors. Support is
provided to dealers and distributors in bidding, specification writing and
customer service.

         Collins regularly advertises in consumer and trade magazines and other
print media and actively participates in national, regional and local trade
shows. In addition, Collins' representatives attend a number of national
conventions and regional meetings of important constituent groups such as school
boards and emergency medical groups.

         COMPETITION

         The markets for most of Collins' product lines are very competitive,
and Collins currently has several direct competitors in most markets. Some of
these competitors may have greater relative resources. Collins believes it can
compete successfully (i) in the ambulance market on the basis of the quality and
price of its products, its design engineering and product innovation
capabilities and on the strength of the Wheeled Coach brand name, (ii) in the
small school bus market on the basis of its product price and quality and
favorable recognition of Collins Bus and Mid Bus brand names, (iii) in the road
construction equipment market for sweepers on the strength of its Waldon and
Lay-Mor brand names, product quality, price and distribution network, and (iv)
in the terminal truck market on the basis of its Capacity brand name, price,
product quality and customer demand for its exclusive Dura-Ride suspension
system.

         RESEARCH AND DEVELOPMENT COSTS

         The table below sets forth the research and development costs Collins
incurred the past three fiscal years, which are included in general and
administrative expenses. It should be noted that Collins does significant
research and development work on the production line. Accordingly, the major


                                      -11-


costs of new programs are recorded as cost of sales and are expensed as
incurred.

                                                  2005        2004        2003
                                               ---------   --------    --------
         Research and Development Expenses     $ 101,578   $ 82,537    $ 93,527

         REGULATION

         Collins is subject to various laws and regulations and all of Collins'
on-road vehicles must satisfy certain standards as established by the United
States Department of Transportation. Certain of its products must also satisfy
specifications established by other federal, state and local regulatory
agencies, primarily dealing with safety and performance standards.

         Federal and state authorities have various environmental control
standards relating to air, water, and noise pollution which affect the business
and operations of Collins. For example, these standards, which are generally
applicable to all companies, control choice of paints, discharge of air
compressor, waste water and noise emitted by factories. Collins facilities are
subject to air permitting by the U.S. Environmental Protection Agency and/or
authorized states' under federal and/or state regulations implementing the
Federal Clean Air Act. Each of our facilities is currently operating under valid
permits. Costs to renew these permits are immaterial. Collins relies upon
certifications obtained from chassis manufacturers with respect to compliance of
vehicles with all applicable emission control standards.

         With respect to employees' health and safety, Collins is subject to
various laws and regulations promulgated by the Occupational Safety and Health
Administration or OSHA. Plants are periodically inspected by federal agencies
concerned with health and safety in the work place to ensure that company plants
comply with applicable governmental and industry standards.

         The Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), as amended, and other similar state laws require the
cleanup of hazardous waste disposal sites. Parties that may be liable under
CERCLA for the cleanup of hazardous waste disposal sites include the current
property owner, the operator, owners and operators of the property at the time
of a release of hazardous substances, the arranger of the disposal, and the
transporter of hazardous substances. To date, Collins has not been notified by
the U.S. Environmental Protection Agency, any state agency, or any other private
party that it is considered responsible or potentially responsible for some
aspect of the cleanup of any hazardous waste disposal site under CERCLA or any
other similar state laws.

         In management's opinion, Collins and its products are in compliance in
all material respects with all applicable governmental regulations. A
substantial change in any such regulation could have a significant impact on the
business of Collins.

         EMPLOYEES

         Collins has approximately 1,000 full time employees, including officers
and administrative personnel. No Company employees are represented by unions or
are covered by collective bargaining agreements. Collins has not experienced any
strikes or work stoppages due to labor problems and considers its relations with
its employees to be satisfactory.

         LEGAL PROCEEDINGS

         There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which Collins is a party or of
which any of its property is subject.

                                      -12-



         PROPERTY

         The following table sets forth certain information with respect to
Collins' manufacturing and office facilities. Collins owns all properties listed
below in fee simple, except as otherwise noted.

                                                                                                        Approximate
Location                                  Use                                                           Size (sq ft)
- ---------------------------------------   ------------------------------------------------------------  -------------
Hutchinson, Kansas (1)                    Corporate headquarters                                            4,845

Hutchinson, Kansas (1)                    Ambulance production; Office space                              208,802

South Hutchinson, Kansas (1)              Small school bus and commercial bus production; Office space    258,000

Orlando, Florida (1)                      Ambulance products; Office space                                223,000

Longview, Texas (1)                       Terminal truck/road construction equipment production,
                                          chassis production; Office space                                151,000

Mansfield, Texas (1)                      Ambulance sales, service and distribution center                 25,000

Fairview, Oklahoma (1)                    Road construction equipment fabrication and assembly;
                                          Office space                                                     75,000

Bluffton, Ohio (1) (2)                    Small school bus and commercial bus production; Office space    185,000
- ----------------------------

(1)      This property is pledged as collateral to secure payment of Collins'
         debt obligations.

(2)      This property was leased prior to being purchased for $2.0 million on
         May 13, 2005 with financing under Collins' then existing credit
         facility.

         Collins also leases several other facilities throughout the U.S. for
the sale and distribution of ambulances. Collins believes that its existing
facilities are well maintained and will be adequate to service its needs in the
foreseeable future. Certain Collins facilities have room to expand in existing
buildings and others have land upon which additional buildings can be
constructed.

         FORWARD-LOOKING STATEMENTS

         This "Management's Discussion and Analysis or Plan of Operation" as
well as other portions of this Current Report on form 8-K contain
forward-looking statements, as defined in the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve a number of
assumptions, risks, and uncertainties that could cause the actual results of the
Company and Collins to differ materially from those matters expressed in or
implied by such forward-looking statements. They involve known and unknown
risks, uncertainties, and other factors, which are in some cases beyond the
control of the Company and Collins. No forward-looking statement can be
guaranteed and actual future results may vary materially. The actual results of
the Company and Collins could differ materially from those indicated by the
forward-looking statements because of various risks and uncertainties including
without limitation, changes in funds budgeted by Federal, state and local
governments, the availability and timely delivery of key raw materials,
components and chassis, changes in competition, various inventory risks due to
changes in market conditions, changes in product demand, substantial dependence
on third parties for product quality, interest rate fluctuations, adequate
direct labor pools, development of new products, changes in tax and other
governmental rules and regulations applicable to Collins, reliability and timely
fulfillment of orders and other risks indicated in Collins' filing with the
Securities and Exchange Commission.

                                      -13-


         Additional information regarding these risk factors and uncertainties
is described more fully in the Company's SEC filings. A copy of all filings may
be obtained from the SEC's EDGAR web site, www.sec.gov, or by contacting the
Corporate Secretary at the Company's headquarters or by telephone (401)
848-6400.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

         This "Management's Discussion and Analysis or Plan of Operation" should
be read in conjunction with the Company's Pro-forma Financial Statements and
Collins' Consolidated Financial Statements included as Item 9.01 of this Current
Report. REFERENCE IS MADE TO ITEM 6 OF THE 2005 ANNUAL REPORT OF THE COMPANY ON
FORM 10-KSB AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 7,
2006 WITH RESPECT TO MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE COMPANY.
SEGMENT SALES AMOUNTS REPORTED IN THIS MANAGEMENT'S DISCUSSION AND ANALYSIS
INCLUDE INTER COMPANY SALES. THESE INTER COMPANY SALES ARE ELIMINATED UPON
CONSOLIDATION. Provided below is the Management's Discussion and Analysis of
Collins immediately prior to the Merger.

         OVERVIEW

         Collins is a manufacturer of specialty vehicles and has three
reportable segments: ambulances, buses and terminal trucks/road construction
equipment. The ambulance segment produces modular and van type ambulances for
sale to hospitals, ambulance services, fire departments and other governmental
agencies. The bus segment produces small school buses, commercial buses and
shuttle buses for sale to schools, hotel shuttle services, airports, and other
governmental agencies. The terminal trucks/road construction equipment segment
produces off-road trucks designed to move trailers and containers for
warehouses, truck terminals, rail yards, rail terminals and shipping ports and
produces a line of road construction equipment. Each of Collins' product groups
is responsible for its own marketing activities and maintains independent
relationships with dealers and distributors.

         Collins evaluates performance based on profit or loss from operations
before income taxes not including nonrecurring gains and losses. For the fiscal
years ended October 31, 2005, and 2004 nonrecurring gains or losses were not
material and as such have no impact on this analysis. For fiscal year 2004
Collins had a nonrecurring pretax gain on sale of property in the amount of
$466,733.

         Collins accounts for intersegment sales and transfers as if the sales
or transfers were to third parties, with all intercompany sales and profits are
eliminated in consolidation.

         Collins' reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business requires different technology and marketing strategies.

         The sales backlog at September 30, 2006, was approximately $90.7
million compared to $103.6 million at October 31, 2005. In the opinion of
management, the majority of this sales backlog will be shipped in fiscal 2007.

         RESULTS EXPRESSED AS A PERCENTAGE OF SALES: The following discussion
and analysis provides information which management believes is relevant to an
assessment and understanding of Collins' consolidated results of operations and
financial condition. The discussion should be read in conjunction with the
consolidated financial statements and notes thereto.

                                      -14-


                                                          2005                2004                2003
                                                       ---------           ---------           ---------
Sales                                                    100.0%              100.0%              100.0%
Cost of sales                                             89.9                88.4                88.8
                                                       ---------           ---------           ---------
    Gross profit                                          10.1                11.6                11.2

Selling, general and administrative expenses               8.0                 9.3                 9.1
Research and development expenses                          0.0                 0.0                 0.0

    Income from operations                                 2.1                 2.3                 2.1

Other income(expense):
  Interest, net                                           (0.7)               (0.7)               (0.8)
  Other, net                                               0.0                 0.3                 0.0
                                                       ---------           ---------           ---------
    Income before provision for income taxes               1.4                 1.9                 1.3

Provision for income taxes                                 0.6                 0.8                 0.5
                                                       ---------           ---------           ---------
    Net income                                             0.8%                1.1%                0.8%
                                                       ---------           ---------           ---------

         RESULTS OF OPERATIONS

         NINE MONTHS ENDED JULY 31, 2006 VS JULY 31, 2005

         SALES - AMBULANCE SEGMENT - In the nine-month period ended July 31,
2006, the ambulance segment sales were $81.8 million or 35.5% of Collins'
consolidated sales compared to $73.0 million or 37.7% in the nine-month period
ended July 31, 2005. Unit volume sales of ambulance products increased 2.7% in
the nine-month period ended July 31, 2006 compared to the nine month period
ended July 31, 2005. This increase was principally due to increased requirements
by municipalities and governmental agencies. Segment pretax profits from
ambulance products increased 946.0% in the nine-month period ended July 31, 2006
compared to the nine-month period ended July 31, 2005. Substantially all of this
increase was due to improved margins and a favorable shift in product mix.

         BUS SEGMENT - In the nine-month period ended July 31, 2006, bus segment
sales were $68.0 million or 29.5% of Collins' consolidated sales compared to
$56.2 million or 29.1% in the nine-month period ended July 31, 2005. The
increase was principally the result of increased sales to child care providers
and contractors. Sales of bus products increased by $1.7 million for the
nine-month period ended July 31, 2006 due to the increase in customer-supplied
bus chassis. Units with customer-supplied chassis for the nine-month period
ended July 31, 2006 amounted to 57% of bus units produced compared to 52% for
the same period last year. Unit volume sales of bus products increased by 24% in
the nine month period ended July 31, 2006. This increase was principally due to
increased sales to day-care providers and contractors.

         Segment pretax profits from bus segment products improved by 246% in
the nine-month period ended July 31, 2006 compared to the nine month period
ended July 31, 2005. These improvements were principally due to the higher unit
volumes and product mix.

         TERMINAL TRUCK/ROAD CONSTRUCTION SEGMENT - In the nine-month period
ended July 31, 2006, the terminal truck/road construction segment sales were
$80.7 million or 35.0% of Collins' consolidated sales compared to $64.3 million
or 33.2% in the nine-month period ended July 31, 2005. Unit volume sales of


                                      -15-



terminal truck/road construction products increased 16.5% in the nine-month
period ended July 31, 2006. This unit volume increase was principally due to the
impact of additional export sales associated with foreign stevedoring
operations, the changes in currency exchange rates, greater market penetration
and higher domestic sales to intermodal and warehousing customers. This segment
also experienced a rebound in the number of road sweepers sold to the domestic
rental market.

         Segment pretax profits from terminal truck/road construction products
improved by 57.8% in the nine-month period ended July 31, 2006 compared to the
nine month period ended July 31, 2005. These improvements were principally due
to the higher unit volumes and product mix.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative expenses for the nine-month period ended July 31, 2006 were $15.1
million compared to $16.2 million in the nine-month period ended July 31, 2005.
This decrease principally resulted from $2.1 million of expenses incurred in the
nine months ended July 31, 2005 relating to the restatement of the Collins
financial statement for the year ended October 31, 2004. Such decrease was
offset, in part, by an increase in selling, general and administrative expense
due to higher sales volumes.

         OTHER INCOME (EXPENSE) - Interest expense increased to $1.7 million in
the nine-month period ended July 31, 2006 compared to $1.5 million in the
nine-month period ended July 31, 2005. This increase was principally a result of
an overall increase in interest rates throughout most of the nine-month period
ending July 31, 2006.

         PROVISION FOR TAXES - Income tax expense in the nine-month period ended
July 31, 2006 was $4.5 million compared to $0.5 million in the nine-month period
ended July 31, 2005, while income tax expense as a percentage of pretax income
was 37% and 38%, respectively.

         NET INCOME - Collins' net income in the nine month period ended July
31, 2006 was $7.6 million ($1.20 per share-diluted) compared to $0.9 million
($0.14 per share-diluted) in the nine month period ended July 31, 2005. The
improvement was due to profit on the increased revenue offset by $1.3 million
($0.21 per share - diluted) in after-tax expenses associated with the financial
restatement.

         FISCAL 2005 COMPARED TO FISCAL 2004

         SALES - Ambulance Segment - In fiscal 2005, the ambulance segment sales
were $103.7 million or 38.5% of Collins' consolidated sales compared to $83.2
million or 40.0% in fiscal 2004. Unit volume sales of ambulance products
increased 18.3% in fiscal 2005 compared to 2004. This increase was principally
due to increased requirements by municipalities and governmental agencies.
Ambulance products selling prices increased 6.1% in fiscal 2005 compared to
fiscal 2004. This increase principally resulted from normal price increases
required to offset increases in chassis costs, raw materials and direct labor
and a change in product mix. Segment pretax profits from ambulance products
decreased by 68% in fiscal 2005 compared to 2004. Substantially all of this
decrease was due to increased raw material cost and decreased chassis profit.

         Bus Segment - In fiscal 2005, bus segment sales were $78.0 million or
28.9% of Collins' consolidated sales compared to $57.6 million or 27.7% in
fiscal 2004. The increase was principally the result of increased sales to child
care providers and contractors. Sales of bus products were increased by
approximately $20.3 million for the fiscal year ended October 31, 2005 due to
customer-supplied bus chassis compared to a reduction of $25.1 million for
fiscal 2004. Units with customer-supplied chassis for the fiscal year ended
October 31, 2005 amounted to 36.8% of bus units produced compared to 57% for


                                      -16-



fiscal 2004. Unit volume sales of bus products increased by 9.8% in fiscal 2005.
This increase was principally due to increased sales to day-care providers and
contractors. The average unit price of bus products increased by 22.8% in fiscal
2005. Substantially all of this increase resulted from the lower percentage of
customer supplied chassis.

         In fiscal 2003, the Kansas bus plant completed mechanization projects
and made major product and manufacturing process improvements. These projects
and improvements were significant factors for the increased bus margins achieved
in both fiscal 2005 and 2004. Segment pretax profits from bus products improved
by 16% in fiscal 2005 compared to fiscal 2004.

         Terminal Truck/Road Construction Segment - In fiscal 2005, the terminal
truck/road construction segment sales were $88.6 million or 32.9% of the
Company's consolidated sales compared to $67.4 million or 32.4% in fiscal 2004.
Unit volume sales of terminal truck/road construction products increased 24% in
fiscal 2005. This unit volume increase was principally due to the impact of
additional export sales associated with foreign stevedoring operations, the
changes in currency exchange rates, greater market penetration and higher
domestic sales to intermodal and warehousing customers. This segment also
experienced a rebound in the number of road sweepers sold to the domestic rental
market. The average unit price of terminal truck/road construction products
increased by 19% in fiscal 2005 compared to fiscal 2004. Substantially all of
this increase related to the product mix of terminal truck products and unit
price increases required to offset higher steel and major component prices of
suppliers.

         Segment pretax profits from terminal truck/road construction products
improved by 101.4% in fiscal 2005 compared to fiscal 2004. These improvements
were principally due to the higher unit volumes and product mix.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES- Selling, general and
administrative expenses for fiscal 2005 were $21.5 million (8.0% of sales)
compared to $19.2 million (9.2% of sales) in fiscal 2004. This increase
principally resulted from expenses associated with the financial restatements
$2.1 million and higher sales volumes.

         OTHER INCOME (EXPENSE) - Interest expense increased to $2.0 million in
fiscal 2005 compared to $1.5 million in fiscal 2004. This increase was
principally a result of an overall increase in interest rates throughout most of
fiscal 2005.

         Other income for the fiscal year ended October 31, 2004 was $.52
million. Of this amount, $.47 million resulted from gains from sales of
buildings and land. Theses properties were comprised of excess office space in
Kansas and excess manufacturing space in Alabama. These properties were not
replaced. Although Collins evaluates opportunities to acquire additional
properties at favorable prices as they arise, it believes that its existing
facilities are well maintained and will be adequate to service its needs in the
foreseeable future. Certain facilities of Collins have room to expand in
existing buildings and others have land upon which additional buildings can be
constructed.

         PROVISION FOR TAXES - Income tax expense in fiscal 2005 was $1.5
million compared to $1.5 million in fiscal 2004, while income tax expense as a
percentage of pretax income was 38% and 39%, respectively.

         NET INCOME - Collins' net income in fiscal 2005 was $2.2 million ($0.36
per share-diluted) compared to $2.3 million ($0.38 per share-diluted) in fiscal
2004. The improvement was due to profit on the increased revenue offset by
approximately $1.3 million ($0.21 per share - diluted) in after-tax expenses
associated with the financial restatement.

                                      -17-



         LIQUIDITY AND CAPITAL RESOURCES

         Collins has principally relied on internally generated funds, supplier
financing, bank borrowings and industrial revenue bonds to finance its
operations and capital expenditures. Collins working capital requirements vary
from period to period depending on the production volume, the timing of vehicle
deliveries and the payment terms offered to its customers.

         Cash provided by operations was $ 0.3 million in fiscal 2005 compared
to $5.4 million in fiscal 2004. Principal sources of the cash provided by
operations in fiscal 2005 were from Company profits and depreciation and
amortization. These sources of cash from operations were partially offset by
increases in receivables and inventories along with decreases in accounts
payable.

         Cash used in investing activities was $5.1 million in fiscal 2005
compared to $1.3 million in fiscal 2004. In fiscal 2005, the principal use of
cash for investing purposes was $4.7 million of capital expenditures with $2.4
million of this spent to purchase a previously leased facility and certain
required facility improvements.

         Cash provided by financing activities was $4.5 million in fiscal 2005
compared to $4.0 million used in financing activities in fiscal 2004. In fiscal
2005, the principal sources of cash from financing activities related to $8.0
million in additional debt financed by Collins' revolving debt credit line and
$3.4 million from the exercise of stock options. These sources of cash from
financing activities were offset by Collins' repurchase and retirement of common
stock of $3.7 million, repayment of debt of $2.2 million and the payment of cash
dividends of $1.0 million. At October 31, 2005, cash balances included
restricted funds of $0.1 million related to the unused proceeds from the new
Industrial Revenue Bonds issued in fiscal 2002.

         Cash provided by operations was $7.9 million in the nine months ended
July 31, 2006 compared to $1.3 million used by operations in the like period in
2005. Principal sources of the cash provided by operations in this nine month
period were from Collins income from operations which improved by $10.9 million
in the current nine month period as compared to the nine month period ended July
31, 2005, offset, in part, by $2.4 million in additional income taxes paid.

         Cash used in investing activities was $1.1 million in the nine months
ended July 31, 2006 compared to $4.3 million in the like period in 2005. The
principal use of cash for investing purposes was $1.3 million of capital
expenditures in the nine month period ended July 31, 2006 compared to $4.2
million in the nine month period ended July 31, 2005


                                      -18-



         Cash used in financing activities was $6.8 million in the nine months
ended July 31, 2006 compared to $5.6 million provided by financing activities in
the like period in 2005. In the nine month period ended July 31, 2006, the
principal uses of cash in financing activities related to $2.0 million
repayments on long term debt and capitalized leases and $2.4 million related to
the company purchase and retirements of common stock In the nine month period
ended July 31, 2005 the main sources of cash provided by financing activities
were drawings under the bank facility of $8.8 million off set by $1.6 million in
repayments on long term debt and capitalized leases and $0.9 million related to
the purchase and retirements of common stock.

         On October 31, 2006 at part of the Merger transaction Collins' existing
senior bank facility with Bank of America as well as all debts outstanding with
the Industrial Revenue Bonds were paid in full and all security was released. A
new senior banking facility with GMAC CF including a $16 million term loan and
$40 million working capital revolver and a $45 million second lien facility with
ORIX was put in place. See "Entry into a Material Definitive Agreement -
Financing Documents" for a description of these two new credit facilities

         On May 17, 2002 Collins entered into a Loan and Security Agreement,
(the "Agreement"), with Fleet Capital Corporation, a Rhode Island Corporation
(the "Bank"). The Agreement was amended in fiscal 2004 and provides a total
credit facility of $39.0 million consisting of a revolving credit facility of
$30.0 million and long-term credit facilities of $9.0 million. The amended
Agreement expires May 17, 2008. The credit facilities bear interest based on a
combination of Eurodollar (LIBOR plus 1.75%) and the Bank's prime lending rate
(6.75% at October 31, 2005). The revolving credit facility also provides for a
maximum of $2.5 million in letters of credit, of which $1.9 million were
outstanding at October 31, 2005. The total amount of unused revolving credit
available to Collins was $11.0 million at October 31, 2005.

         On December 1, 2003 Collins completed a modified Dutch auction tender
offer, which commenced on October 10, 2003 and expired on November 21, 2003. As
a result, Collins purchased and retired 14.4% of its outstanding common stock
(1,050,879 shares) at $4.50 per share or $5.1 million including associated
indirect costs. The purchase of the shares was financed by Collins' revolving
credit facility. The effect of this transaction increased Collins'
interest-bearing debt and reduced its stockholder's equity by $5.1 million.

         Collins obtained a waiver from its lead bank with regard to the
covenant in its credit facility that all audited financial statements be
delivered on a timely basis. The delay in providing audited financial statements
did not result in a default under other debt obligations. Collins has not
received any default notifications. Management believes it is in compliance with
its covenants under the credit facility.

         It is customary practice for companies in the specialty vehicle
industry to enter into repurchase agreements with financing institutions to
provide floor plan financing for dealers. In the event of a dealer default,
these agreements generally require the repurchase of products at the original
invoice price net of certain adjustments. The risk of loss under the agreements
is limited to the risk that market prices for these products may decline between
the time of delivery to the dealer and time of repurchase by Collins. The risk
is spread over numerous dealers and Collins has not incurred significant losses
under these agreements. In the opinion of management, any future losses under
these agreements will not have a material adverse effect on Collins' financial
position or results of operations. Collins' repurchase obligation under these
agreements is limited to vehicles which are in new condition and as to which the
dealer still holds title. Collins' contingent obligation under such agreements
was approximately $2,089,127 at October 31, 2005.


                                      -19-



         OFF-BALANCE SHEET ARRANGEMENTS

         At October 31, 2005, Collins had no off-balance sheet arrangements that
have or are likely to have a material current or future effect on its financial
condition, changes in financial condition, revenues or expense, results of
operations, liquidity, capital expenditures or capital resources.

         CRITICAL ACCOUNTING PRINCIPLES AND ESTIMATES

         Collins' consolidated financial statements are prepared in conformity
with accounting principles generally accepted in the United States. The
preparation of these financial statements requires the use of estimates,
judgments, and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the periods presented. We believe that of our
critical accounting policies, the following may involve a high degree of
judgments, estimates, and complexity:

         INVENTORIES - Collins values its inventories at the lower of cost or
market. Collins has chosen the first-in, first-out (FIFO) cost method of valuing
its inventories. The effect of the FIFO method is to value ending inventories on
the balance sheet at their approximate current or most recent cost. The market
values for finished goods inventories are determined based on recent selling
prices.

         IMPAIRMENT OF LONG-LIVED ASSETS - In June 2001, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142). SFAS
No. 142 was effective for fiscal years beginning after December 15, 2001.
Consequently, goodwill is no longer amortized over future periods, but is
assessed for impairment at least annually using a fair value test. Collins
adopted this new standard on November 1, 2002.

         As of October 31, 2005 and October 31, 2004, Collins tested for
impairment the bus and terminal truck/road construction business segments using
the discounted cash flow approach and determined that the fair values for each
of these segments exceeded the related carrying values. On an on-going basis,
and absent any impairment indicators, Collins will conduct similar tests and
record any impairment loss. Management believes that the estimates of future
cash flows and fair values are reasonable; however, changes in estimates of such
cash flows and fair value could affect the valuations.

         INSURANCE RESERVES - Collins failed to adequately provide for estimated
future Workers Compensation costs related to certain claims that have been
denied by Collins' excess liability insurance carrier and for certain other
claims. When management discovered the error, an independent third party
administrator was retained to estimate and determine the additional potential
liability related to these claims. Collins is currently disputing the denial of
coverage by the excess liability insurance carrier, but the amount of future
recovery, if any, cannot be assured.

         Collins has historically self-insured for workers' compensation, health
insurance, general liability and product liability claims, subject to specific
retention and reinsurance levels. Effective July 1, 2005, however, Collins
purchased guaranteed cost workers' compensation insurance for the states in
which it had previously self-insured.

         Collins continues to be self-insured in certain states for workers'
compensation claims incurred prior to July 1, 2005. Under these plans,
liabilities are recognized for claims incurred (including claims incurred but
not reported) and changes in the case reserves. At the time a worker's
compensation claim is filed, a liability is estimated to settle the claim. The
liability for workers' compensation claims incurred prior to July 1, 2005 is
determined based on management's estimates of the nature and severity of the


                                      -20-


claims and based on analysis provided by third party administrators and by
various state statutes and reserve requirements. Since the liability is an
estimate, the ultimate liability may be more or less than reported. If
previously established accruals are required to be adjusted, such amounts are
included in cost of sales. Group medical reserves are funded through a trust and
are estimated using historical claims' experience.

         Due to the nature of Collins' products, Collins is subject to product
liability claims in the normal course of business. To the extent permitted under
applicable law, Collins maintains insurance with outside insurance carriers to
reduce or eliminate risk to Collins. This insurance coverage includes
self-insured retentions that vary each year. Collins maintains excess liability
insurance with outside insurance carriers to minimize its risks related to
catastrophic claims in excess of all self-insured positions. Any material change
in the aforementioned factors could have an adverse impact on our operating
results.

         WARRANTIES - Collins' products generally carry explicit product
warranties that extend from several months to more than a year, based on terms
that are generally accepted in the marketplace. Certain components included in
Collins' end products (such as chassis, engines, axles, transmissions, tires,
etc.) may include manufacturers' warranties that are generally passed on to the
end customer of Collins' products and the customer generally deals directly with
the applicable component manufacturer. Collins records provisions for estimated
warranty and other related costs at the time of sale based on historical
warranty loss experience and periodically adjust these provisions to reflect
actual experience. Certain warranty and other related claims involve matters of
dispute that ultimately are resolved by negotiation, arbitration or litigation.
Infrequently, a material warranty issue may arise which is beyond the scope of
Collins' historical experience. Collins provides for any such warranty issues as
they become known and estimable. It is reasonably possible that from time to
time additional warranty and other related claims could arise from disputes or
other matters beyond the scope of Collins' historical experience.

         REVENUE RECOGNITION - Collins records vehicle sales, and passes title
to the customer, at the earlier of completion of the vehicle and receipt of full
payment or shipment or delivery to the customer as specified by the customer
purchase order. Customer deposits for partial payment of vehicles are deferred
and treated as current liabilities until the vehicle is completed and recognized
as revenue.

         In certain instances, Collins will recognize revenue when physical
delivery has not occurred when the following criteria are met:

         o  Risk of ownership has passed to the customer;

         o  The customer has made a fixed commitment to purchase the unit;

         o  The customer has requested the transaction be on a bill and hold
            basis and the customer has a substantial business purpose for
            ordering the unit on a bill and hold basis;

         o  There is a fixed schedule for delivery of the unit (normally within
            the next 30 days);

         o  Collins does not retain any specific performance obligations such
            that the earnings process is not complete;

         o  The unit is segregated from Collins' inventory and is not subject to
            being used to fill other orders; and

         o  The unit is complete and ready for shipment.


                                      -21-



         Collins recognized approximately $2.2 million of revenue as of October
31, 2005 under Collect and Hold agreements. Collins had collected the entire
amount of this revenue and had no outstanding accounts receivable on these units
as of October 31, 2005.

         Collins does not offer any return or price protection rights to its
customers. Collins recognizes revenue in accordance with SFAS 48 when the
following conditions are met:

         o  Price to customer is substantially fixed at the date of sale.

         o  Customer has or is obligated to pay seller, and it is not contingent
            on product resale.

         o  Customer obligation is not changed in the event of theft or product
            damage.

         o  Customer acquiring the product for resale has economic substance
            apart from that provided by Collins.

         o  Company does not have significant obligations for future performance
            to bring about resale of the product by the customer.

         o  Amount of future returns can be reasonably estimated.

         PRINCIPAL CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

         Collins' contractual obligations and other commercial commitments as of
October 31, 2005 are summarized below and fully disclosed in Notes 3 and 8 in
Notes to Consolidated Financial Statements:

                                                             PAYMENTS DUE BY PERIOD (IN MILLIONS)

                                                             LESS THAN                          4-5          AFTER 5
                                               TOTAL           1 YEAR         1-3 YEARS        YEARS          YEARS
                                              -------        ---------        ---------       -------        --------
CONTRACTUAL CASH OBLIGATIONS
Long-term debt                                $  21.3         $   1.8         $  17.2         $  1.3         $  1.1
Capital lease obligations                         5.4             1.3             2.1            1.0            0.9
Operating lease obligations                       1.0             0.4             0.5            0.1            --
Purchase obligations                               --             --              --             --             --
Chassis contingent obligations                   19.6            19.6             --             --             --
                                              -------        ---------        ---------       -------        --------
Total contractual cash obligations            $  47.3         $  23.1         $  19.8         $  2.4         $  2.0
                                              -------        ---------        ---------       -------        --------
OTHER COMMERCIAL COMMITMENTS
Lines of credit                               $   --          $   --          $   --          $  --         $   --
Standby letters of credit                         3.2             3.2             --             --             --
Standby repurchase commitments                    2.1             2.1             --             --             --
Other commercial commitments                      --              --              --             --             --
                                              -------        ---------        ---------       -------        --------
Total commercial commitments                  $   5.3         $   5.3         $   --          $  --         $   --
                                              -------        ---------        ---------       -------        --------


                                      -22-




         RECENTLY ISSUED ACCOUNTING STANDARDS

         In May 2005, the FASB issued SFAS No. 154, ACCOUNTING CHANGES AND ERROR
CORRECTIONS, which replaces APB Opinion No. 20, ACCOUNTING CHANGES, and SFAS No.
3, REPORTING ACCOUNTING CHANGES IN INTERIM FINANCIAL STATEMENTS, and provides
guidance on the accounting for and reporting of accounting changes and error
corrections. SFAS No. 154 applies to all voluntary changes in accounting
principle and requires retrospective application (a term defined by the
statement) to prior periods' financial statements, unless it is impracticable to
determine the effect of a change. It also applies to changes required by an
accounting pronouncement that does not include specific transition provisions.
In addition, SFAS No. 154 redefines restatement as the revising of previously
issued financial statements to reflect the correction of an error. The statement
is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. Collins will adopt SFAS No. 154
beginning November 1, 2006.

         In November 2004, the FASB issued FASB Statement No. 151, "Inventory
Costs: an amendment of ARB No. 43". FASB No. 151 will no longer permit companies
to capitalize inventory costs on their balance sheets when the production defect
rate varies significantly from the expected rate. The statement also clarifies
that fixed overhead should be allocated to inventory based on "normal capacity".
The statement is effective for Collins beginning on November 1, 2005. Collins is
unable to estimate the financial statement impact of this statement at this
time.

         In December 2003, the Financial Accounting Standards Board (FASB)
issued Interpretation 46R (FIN 46R), a revision to Interpretation 46 (FIN 46),
Consolidation of Variable Interest Entities. FIN 46R clarifies some of the
provisions of FIN 46 and exempts certain entities from its requirements. FIN 46R
is effective at the end of the first interim period ending after March 15, 2004.
Entities that have adopted FIN 46 prior to this effective date can continue to
apply the provisions of FIN 46 until the effective date of FIN 46R or elect
early adoption of FIN 46R. The adoption of FIN 46 and FIN 46R did not have a
significant impact on our financial statements.

         FASB Statement No. 123, Accounting for Stock-Based Compensation, was
revised in December 2004 ("Revised Statement"). The Revised Statement, Share
Based Payment, also supersedes APB Opinion No. 25, Accounting for Stock Issued
to Employees, and its related implementation guidance. The Revised Statement
establishes standards for the accounting for transactions in which an entity
exchanges its equity instruments for goods or services. It also addresses
transactions in which an entity incurs liabilities in exchange for goods or
services that are based on the fair value of the entity's equity instruments or
that may be settled by the issuance of those equity instruments. For Collins,
the Revised Statement is effective November 1, 2006. The adoption of this
Revised Statement is not expected to have a material impact on our financial
statements.

         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Collins is exposed to market risk relating to interest rates on its
fixed rate debt. Interest rate risk is not material to Collins' consolidated
financial position or results of operations.

         Collins has used derivative financial instruments to reduce exposure to
its variable-rate debt. On July 5, 2002, Collins entered into an interest rate
declining balance swap agreement on term debt of $6.8 million to limit the
effect of potential increases in the interest rates on its floating-rate term
debt through May 2005. The effect of this agreement was to convert the
underlying variable-rate debt based on LIBOR to a fixed-rate debt with an
interest rate between 4.65% and 5.18% plus a margin of 175 basis points. This
swap has expired and Collins had no derivative financial instruments at October
31, 2005. If interest rates for long-term debt under the current credit facility
had averaged 10% more on average variable-rate debt for the entire year,



                                      -23-



interest expense would have increased, and income before taxes would have
decreased by less than $0.15 million for the year ended October 31, 2005.

                                  RISK FACTORS

         Investing in our common stock involves a high degree of risk.
Prospective investors should carefully consider the risks described below,
together with all of the other information included or referred to in this
Current Report on Form 8-K, before purchasing shares of our common stock. There
are numerous and varied risks, known and unknown, that may prevent the Company
from achieving its goals. The risks described below are not the only ones the
Company will face. WE HAVE ALSO INCLUDED RISKS RELATING TO THE BUSINESS OF
COLLINS, OUR ONLY OPERATING SUBSIDIARY. If any of these risks actually occurs,
the Company's business, financial condition or results of operation may be
materially adversely affected. In such case, the trading price of our common
stock could decline and investors in our common stock could lose all or part of
their investment. The risks and uncertainties described below are not exclusive
and are intended to reflect the material risks that are specific to us and
Collins, material risks related to the industry of Collins and material risks
related to companies that undertake a public offering or seek to maintain a
class of securities that is registered or traded on any exchange or
over-the-counter market.

                      RISK FACTORS RELATING TO THE COMPANY

WE CANNOT PREDICT WHAT OUR EXPOSURE TO ENVIRONMENTAL AND PRODUCT LIABILITY
CLAIMS WILL BE IN THE FUTURE.

         Because we and our subsidiaries and predecessors previously conducted
manufacturing operations in locations at which, or adjacent to which, other
industrial operations were conducted from time to time, we are subject to
environmental claims. As with any such operations that involved the use,
generation, and management of hazardous materials, it is possible that prior
practices, including practices that were deemed acceptable by regulatory
authorities in the past, may have created conditions which could give rise to
liability under current or future environmental laws. Because the law in these
areas is developing rapidly, and because environmental laws are subject to
amendment and widely varying degrees of enforcement, we may be subject to, and
cannot predict with any certainty, the nature and amount of environmental and
product liability claims related to these operations or locations that may arise
in the future.

IF WE ARE NOT SUFFICIENTLY INSURED AGAINST POTENTIAL LIABILITIES AT THE RHODE
ISLAND PROPERTY, THIS COULD HAVE A NEGATIVE IMPACT ON OUR CASH FLOW.

         On June 2002, a Phase II environmental investigation (the "Phase II
Report") was completed on a property in Rhode Island previously owned by our
subsidiary, BNS Co. The Phase II Report indicated certain environmental problems
on the property. The results of the study showed that certain contaminants in
the soil under the property and minor groundwater issues exceeded environmental
standards set by the Rhode Island Department of Environmental Management
("RIDEM"). After extensive testing, BNS Co. submitted a Remedial Action Work
Plan ("RAWP") to RIDEM, and on November 7, 2002, RIDEM issued a letter approving
the RAWP. In April of 2003, BNS Co. awarded a contract for the remediation work
and engaged an environmental engineering firm to supervise the remediation work
and perform ongoing monitoring of the affected areas. The remediation work was
substantially complete as of December 2003, and in connection with the August
26, 2003 sale of the Rhode Island Property, BNS Co. established an escrow
account in the amount of $.331 million to cover any additional remediation costs
that may arise. At September 30, 2006, the balance of the escrow account
consisted of $.246 million of restricted funds and $11,000 of unrestricted
accumulated interest. The BNS Co. subsidiary has obtained insurance against



                                      -24-



additional known and unknown environmental liabilities at the Rhode Island
Property. However, we may incur additional costs for remediation above the
escrowed amount and insurance limits, and ongoing monitoring of contaminants may
indicate further environmental problems.

WE MAY HAVE CONTINUING LIABILITIES FROM THE PROPERTY IN THE UNITED KINGDOM THAT
WE SOLD.

         We have obtained contaminated land insurance coverage to insure against
unknown environmental issues relating to the Heathrow property. In addition, we
received a report dated October 2000, which was updated in July 2003, from an
independent environmental consulting firm indicating no evidence of
environmental issues relating to that property. However, such issues may be
identified in the future, through the actions or negligence of the land fill
operator or the buyer of our U.K. interests (the "UK Interests") or other
factors, as the buyer continues to operate the property as a land fill. There is
no assurance that there will be no retained liabilities relating to the
property, although we are not making any environmental representations or
indemnifications under the U.K. Agreement.

WE ARE INVOLVED IN MANY CLAIMS RELATING TO ALLEGED ASBESTOS MATERIAL USED IN
PRODUCTS WE PREVIOUSLY SOLD, AND IF OUR INSURANCE DOES NOT COVER OUR EXPOSURE,
WE MAY NEED TO PAY TO SETTLE SUCH CLAIMS.

         We receive claims from time to time for toxic-tort injuries related to
the alleged use of asbestos material in pumps sold by the former pump division,
which was sold in 1992, and other product liability claims relating to the use
of machine tools sold by our divisions which were also sold many years ago. Most
of these suits are toxic-tort claims resulting primarily from the use of small
internal seals that allegedly contained asbestos and were used in small fluid
pumps manufactured by the Company's former pump division. We have insurance
coverage, but in general the coverage available has limitations. We expect that
it will continue to be subject to additional toxic-tort claims in the future.

         The contingent claims relating to the former pump division pose the
most uncertainty. We have limited information concerning the number and location
of pumps manufactured and, therefore, are unable to estimate the aggregate
number of claims which might be filed in the future, which is necessary in order
to reliably estimate any financial exposure. This product line was introduced in
the late 1800's. The materials alleged to contain asbestos were used for an
undetermined period of time ending in the late 1960's. The claims relate to
exposure to this alleged asbestos material.

DUE TO OUR INCOMPLETE INSURANCE RECORDS, WE MAY NOT BE ABLE TO RECOVER FROM OUR
INSURERS UNDER OUR INSURANCE POLICIES.

         In the late 1980's, insurance companies began issuing polices with
specific exclusions for claims relating to asbestos. BNS Co. has identified
continuous insurance coverage (on an "occurrence" basis) from 1974 through 1988
that does not include such exclusions, with estimated aggregate coverage limits
of approximately $158 million for these policy years. We estimate that the
aggregate remaining self-insured retention (deductible) relating to these policy
years is approximately $3 million. Additionally, we have identified secondary
evidence (such as past billings) indicating that BNS Co. has additional
insurance coverage from 1970 through 1973 that does not include such exclusions.
The insurers involved may not recognize this secondary information as evidence
that the policies were in place due to our incomplete insurance records. We also
do not know if the aforementioned insurance coverage has eroded from past
claims. Policies issued for BNS Co. beginning in 1989 contained exclusions
relating to asbestos. BNS Co.'s insurance records for the periods prior to 1970
are incomplete and do not indicate what insurance coverage is available. The
limits noted above relate to a number of insurance carriers. In general, these
carriers have acknowledged the evidence of coverage but have declined to verify
the limits of coverage until such time as the limits apply. Even if we have
insurance coverage for asbestos and other product liability claims under our


                                      -25-



polices, we may not be able to recover from our insurers in the event that such
insurance companies are no longer solvent, have ceased operations, or choose to
dispute the coverage or limits of the policies identified by the Company.

         Our Recorded Liability On Our Balance Sheet May Not Be Sufficient To
Cover All Of Our Liability Claims. We have recorded a liability of $0.6 million
on the consolidated balance sheet relating to the open and active claims against
BNS Co. as of September 30, 2005. This liability represents an estimate of the
likely costs to defend against or settle these claims by BNS Co. beyond the
amounts reserved by the insurance carriers and previously funded, through the
retroactive billings, by BNS Co. BNS Co. annually receives retroactive billings
or credits from its insurance carriers for any increase or decrease in claims
reserves as claims are filed, settled or dismissed, or as estimates of the
ultimate settlement and defense costs for the then-existing claims are revised.
However, we may need to take additional charges in connection with the defense,
settlement or judgment of existing claims. Also, the costs of future claims and
the related costs of defense, settlements or judgments may not be consistent
with the experience to date relating to existing claims.

THE UNCERTAIN PROSPECT OF FUTURE TOXIC-TORT CLAIMS AND THE UNCERTAINTY OF
VALUING SUCH CLAIMS MAY HAVE A NEGATIVE IMPACT ON OUR ABILITY TO DETERMINE
SHAREHOLDER DISTRIBUTIONS OR TO SELL THE COMPANY.

         It has become apparent that the uncertain prospect of additional
toxic-tort claims being asserted in the future, and the impact of this
uncertainty on the valuation of our business, has had and will continue to have,
at least for the short term, some adverse effects on our ability to determine
prospective distributions to shareholders or to negotiate a satisfactory sale,
merger or other change in control transaction with a third party. These claims
would also affect our ability to carry out an orderly liquidation proceeding,
either through a dissolution, formation of a liquidating trust and liquidation
proceedings in the Chancery Court in Delaware, or in a Chapter 11 federal
bankruptcy reorganization proceeding, both of which would involve provision for
payments to creditors and contemplated distributions to stockholders.

THE COMPANY'S CUMULATIVE NET OPERATING LOSSES ("NOLS") MAY BECOME SIGNIFICANTLY
LIMITED.

         We had NOLs of approximately $54 million at December 31, 2005, which
were available to offset taxable earnings in the future. In the event of a
"change of ownership" within the meaning of Section 382 of the Internal Revenue
Code, our ability to use these NOLs to offset future taxable earnings becomes
significantly limited. While our management and tax advisors believe that we
have not, in connection with our acquisition of an 80% equity interest in the
entity that acquired Collins, experienced such a "change of ownership," based on
an examination of public shareholder documents filed with the SEC, it appears
that we may be close to the threshold for such a change.

OUR INDEPENDENT AUDITORS HAVE REPORTED THAT THEY HAVE DOUBTS REGARDING OUR
ABILITY TO CONTINUE AS A GOING CONCERN.

         We received a report from our independent auditors for the year ended
December 31, 2005, containing an explanatory paragraph stating that we had no
active trade or business which raised substantial doubt about our ability to
continue as a going concern.

OUR FUTURE EXPENSE MAY BE GREATER THAN WE ANTICIPATED SO WE MAY NOT HAVE
ADEQUATE RESOURCES FOR FUNDING OUR OPERATIONS.

         On future expenses (including the expenses of maintaining the Company
as a "public" reporting entity under SEC regulations and the expenses and
liabilities associated with toxic tort asbestos claims against the Company, as


                                      -26-



discussed above) may be greater than anticipated and investment earnings or
profits from any business acquisition may be less than anticipated and that, as
a result, we may not have adequate resources for funding our operations.

OUR SUBSIDIARIES HAVE INCURRED SIGNIFICANT INDEBTEDNESS UNDER THE LOAN
AGREEMENTS.

         On October 31, 2006, Purchaser entered into a new senior loan agreement
with GMAC CF and a new second lien loan agreement with ORIX. Effective upon the
Merger, the loan agreements were assumed by Collins, Collins Bus Corporation,
Wheeled Coach Industries, Inc., Capacity of Texas, Inc., Mid Bus, Inc., and
Mobile Products, Inc., as borrowers and guarantors thereunder, and Collins
Ambulance Corp., Wheeled Coach Enterprises, Inc., Mobile-Tech Corporation, World
Trans, Inc., Brutzer Corporation, and Collins Financial Services, Inc., as
guarantors thereunder. The GMAC CF senior loan agreement provides for aggregate
credit facilities of $56 million and the ORIX second lien loan agreement
provides for a term loan facility of $45 million.

         Substantially all of Collin's cash flow earned during the terms of the
loan agreements will be applied to make interest and principal payments under
the loan agreements. Payment of these debt obligations may limit our ability to
freely conduct our operations and our ability to grow and develop our business
for so long as the loan agreements are in effect.

IF AN EVENT OF DEFAULT OCCURS UNDER THE LOAN AGREEMENTS, IT COULD RESULT IN A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS, OPERATING RESULTS, OR FINANCIAL
CONDITION AS THE LENDERS MAINTAIN PRIORITY SECURITY INTERESTS ON ALL OF THE
ASSETS OF OUR SUBSIDIARIES.

         The lenders under the GMAC CF senior loan agreement and the lenders
under the ORIX second lien loan agreement have first and second priority
security interests, respectively, on all of the assets of the borrowers and
guarantors under the loan agreements. The loan agreements contain events of
default including, but not limited to, the following:

         o     The failure by the borrowers or guarantors to pay interest,
         principal payments under the loan agreements when due;

         o     a breach by the borrowers or guarantors of any covenant in the
         loan agreements;

         o     a default or event of default under the loan agreements;

         o     a breach by the borrowers or guarantors of any representation or
         warranty made by them in the loan agreements;

         o     certain bankruptcy and bankruptcy related matters; and

         o     the failure by the borrowers or guarantors to pay any
         indebtedness having an individual principal amount in excess of
         $250,000 or having an aggregate principal amount in excess of $500,000.

         In the event an event of default occurs under the loan agreements, we
may be forced to restructure, file for bankruptcy, sell assets, or cease
operations, any of which would put the Company and the value of our common
stock, at significant risk. As our subsidiaries' obligations under the loan
agreements are secured by substantially all of their assets, failure by our
subsidiaries to fulfill their obligations under the loan agreements could lead
to loss of these assets.



                                      -27-



THE RESTRICTIONS ON THE ACTIVITIES OF OUR SUBSIDIARIES CONTAINED IN THE LOAN
AGREEMENTS WILL NEGATIVELY IMPACT THE ABILITY OF OUR SUBSIDIARIES TO OBTAIN
FINANCING FROM OTHER SOURCES.

         So long as the GMAC CF and ORIX loan agreements remain outstanding, we
 are restricted from incurring additional indebtedness other than certain
 limited amounts of permitted indebtedness. To the extent that additional debt
 financing is required for us to conduct our operations, the debt incurrence and
 other restrictions contained in the loan agreements will likely materially
 adversely impact our ability to achieve our operational objectives.

THE LOAN AGREEMENTS PROHIBIT OUR SUBSIDIARIES FROM MAKING DISTRIBUTIONS TO US
EXCEPT IN LIMITED AMOUNTS AND IN LIMITED CIRCUMSTANCES.

         The GMAC CF and ORIX loan agreements prohibit the borrowers and
guarantors thereunder from making distributions to us except that for so long as
no event of default is existing or would be created thereby, the borrowers and
guarantors may make aggregate annual payments to us of $500,000. The existence
of these restrictions effectively deprives us of substantially all cash flow
earned by our subsidiaries while the loan agreements are in effect

WE HAVE GRANTED STEEL PARTNERS A SECURITY INTEREST

         As collateral for the Steel Term Loan, we granted Steel a continuing
first priority security interest in any interest or right in any kind of
property or asset, whether real, personal, or mixed, owned or leased, tangible
or intangible, and whether now held or hereafter acquired by us. In addition,
Steel shall also receive a first priority pledge of all outstanding capital
stock or other beneficial interest of ours in Holding. Such requirements may
limit our ability to borrow in the future.

         RISKS RELATING TO BUSINESS OF COLLINS

         PRODUCT LIABILITY

         Collins may incur material losses and costs as a result of product
liability, warranty, recall claims or other lawsuits or claims that may be
brought against it. Collins is exposed to product liability and warranty claims
in the normal course of business in the event that products actually or
allegedly fail to perform as expected or the use of our products results, or is
alleged to result, in bodily injury and/or property damage. Accordingly, Collins
could experience material warranty or product liability costs in the future and
incur significant costs to defend against these claims. Collins cannot be
assured that its insurance coverage will be adequate if such claims do arise,
and any liability not covered by insurance could have a material adverse impact
on our business. A future claim could involve the imposition of punitive
damages, the award of which, pursuant to state laws, may not be covered by
insurance. Any product liability or warranty issues may adversely impact our
reputation as a manufacturer of high quality, safe products and may have a
material adverse effect on our business. The costs associated with complying
with environmental and safety regulations could lower our margins.

         Collins currently carries product liability insurance in amounts which
it deems appropriate and continually monitors the adequacy of such coverage.
Although Collins has not had any significant uninsured product liability losses,
there can be no assurance that it will not experience future product liability
claims which exceed insurance coverage or which are not covered by insurance and
which could have a material adverse effect on our business.

         EXECUTIVE OFFICERS AND OTHER EMPLOYEES

         Collins' ability to operate businesses and implement strategies
depends, in part, on the efforts of executive officers and other key employees.
In addition, our future success will depend on, among other factors, the ability
to attract and retain qualified personnel, including finance personnel, research
professionals, technical sales professionals and engineers. The loss of the
services of any key employee or the failure to attract or retain other qualified
personnel could have a material adverse effect on our business or business
prospects.


                                      -28-



         AVAILABILITY OF CHASSIS

         With the exception of terminal trucks, the major purchased component of
each of Collins' specialty vehicles is a vehicle chassis. Collins currently
purchases most of its vehicle chassis from two suppliers and maintains access to
a two-to-three month supply. In the past, Collins has experienced occasional
interruptions in chassis supply that, in the aggregate, have not had a material
adverse effect on its financial condition. However, a lengthy interruption in
chassis supply could have such an effect.

         COMPETITION

         The markets for most of Collins' product lines are very competitive,
and Collins currently has several direct competitors in most markets. Some of
these competitors may have greater relative resources. In addition, new
competitors may enter the marketplace and may have larger capital bases from
which to develop products and to compete. Additionally, Collins believes that
growth in its sales may depend upon the success of recently introduced and
future products, the markets for which are untested. There can be no assurance
that we will continue to compete successfully in existing product categories or
continue to be able to introduce innovative products or enhance existing
products. Collins believes it can compete successfully (i) in the ambulance
market on the basis of the quality and price of its products, its design
engineering and product innovation capabilities and on the strength of the
Wheeled Coach brand name, and (ii) in the small school bus market on the basis
of its product price and quality and favorable recognition of Collins Bus and
Mid Bus brand names, (iii) in the road construction equipment market for
sweepers on the strength of its Waldon and Lay-Mor brand names, product quality,
price and distribution network, and (iv) in the terminal truck market on the
basis of its Capacity brand name, price, product quality and customer demand for
its exclusive Dura-Ride suspension system.

         SEASONALITY OF BUSINESS

         Historically, a major portion of Collins' net income has been earned in
the second half of its fiscal year ending October 31. The purchasing patterns of
school districts are typically strongest in the summer months and this accounts
for stronger sales of small school buses in the second half of the fiscal year.
Generally, Collins' sales tend to be lower in the winter months and first half
of Collins' fiscal year due to the purchasing patterns of Collins' customers in
general and because purchasing activities are normally lower near the end of the
calendar year.

         REGULATION

         Collins is subject to various laws and regulations and all of Collins'
on-road vehicles must satisfy certain standards as established by the United
States Department of Transportation. Certain of its products must also satisfy
specifications established by other federal, state and local regulatory
agencies, primarily dealing with safety and performance standards. For example,
Collins' operations are subject to a variety of Federal and state environmental
regulations relating to noise pollution and the use, generation, storage,
treatment, emission and disposal of hazardous materials and wastes. Collins'
failure to comply with present or future regulations could result in fines,
potential civil and criminal liability, suspension of production or operations,
alterations to the manufacturing process, costly cleanup or capital
expenditures. Laws mandating greater fuel efficiency and the heightened emission
standards that take effect in 2007 could also increase research and development
costs, increase the cost of components necessary for production and lead to the
temporary unavailability of engines.

         Federal and state authorities have various environmental control
standards relating to air, water, and noise pollution which affect the business
and operations of Collins. For example, these standards, which are generally


                                      -29-



applicable to all companies, control choice of paints, discharge of air
compressor, waste water and noise emitted by factories. Collins' facilities are
subject to air permitting by the U.S. Environmental Protection Agency and/or
authorized states' under federal and/or state regulations implementing the
Federal Clean Air Act. Each of Collins' facilities is currently operating under
valid permits. Costs to renew these permits are immaterial. Collins relies upon
certifications obtained from chassis manufacturers with respect to compliance of
vehicles with all applicable emission control standards.

         With respect to employees' health and safety, Collins is subject to
various laws and regulations promulgated by the Occupational Safety and Health
Administration or OSHA. Plants are periodically inspected by federal agencies
concerned with health and safety in the work place to ensure that company plants
comply with applicable governmental and industry standards.

         The Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), as amended, and other similar state laws require the
cleanup of hazardous waste disposal sites. Parties that may be liable under
CERCLA for the cleanup of hazardous waste disposal sites include the current
property owner, the operator, owners and operators of the property at the time
of a release of hazardous substances, the arranger of the disposal, and the
transporter of hazardous substances. To date, Collins has not been notified by
the U.S. Environmental Protection Agency, any state agency, or any other private
party that it is considered responsible or potentially responsible for some
aspect of the cleanup of any hazardous waste disposal site under CERCLA or any
other similar state laws.

         In our management's opinion, Collins and its products are in compliance
in all material respects with all applicable governmental regulations.
Amendments of the regulations governing Collins' businesses could have a
material impact on its operations because they could significantly increase the
costs of manufacturing, purchasing, operating or selling products and could have
a material adverse effect on the results of operations. Failure to comply with
present or future regulations could result in fines, potential civil and
criminal liability, suspension of sales or production, or cessation of
operations. In addition, a major product recall could have a material adverse
effect on the results of operations.

         RISKS RELATING TO INDUSTRY OF COLLINS

         FUEL AND OIL

         Fuel shortages, or higher prices for fuel, could have a negative effect
on sales. Gasoline or diesel fuel is required for the operation of ambulances,
small school buses, shuttle and mid-size commercial buses, terminal trucks,
commercial bus chassis, road construction equipment and industrial rental
sweepers. Particularly in view of increased international tensions and increased
global demand for oil, there can be no assurance that the supply of these
petroleum products will continue uninterrupted, that rationing will not be
imposed or that the price of or tax on these petroleum products will not
significantly increase in the future. Increases in the price of oil also can
result in significant increases in the price of many of the components in
Collins' products, which may have a negative impact on margins or sales volumes.

         MANUFACTURING COMPONENTS

         The results of operations may be significantly affected by the
availability and pricing of manufacturing components and labor, as well as
changes in labor rates and practices. Increases in raw materials used in
Collins' products could affect the cost of supply materials and components.

         The inability to obtain raw materials, component parts, and/or finished
goods in a timely and cost-effective manner from suppliers would adversely
affect the ability to manufacture and market products. Collins purchases raw



                                      -30-



materials and component parts from suppliers to be used in the manufacturing of
its products. In addition, it purchases certain finished goods from suppliers.
Changes in relationships with suppliers or increases in the costs of purchased
raw materials, component parts or finished goods could result in manufacturing
interruptions, delays, inefficiencies or the inability to market products. In
addition, profit margins would decrease if prices of purchased raw materials,
component parts, or finished goods increase and Collins is unable to pass on
those increases to customers.

         CYCLICALITY OF BUSINESS

         Collins operates in a highly cyclical industry and there can be
substantial fluctuations in manufacturing shipments and operating results, and
the results for any prior period may not be indicative of results for any future
period. Companies within these industries are subject to volatility in operating
results due to external factors such as economic, demographic and political
changes. Factors affecting the manufacture of chassis and ambulances include:
(i) interest rates and the availability of financing; (ii) commodity prices;
(iii) unemployment trends; (iv) international tensions and hostilities; (v)
general economic conditions; (vi) overall consumer confidence and the level of
discretionary consumer spending; (vii) dealers' and manufacturers' inventory
levels; and (viii) fuel availability and prices.

         ECONOMIC CONDITIONS

         Changes in economic conditions, including changes in interest rates,
financial market performance and industry-specific factors could impact the
economy in general, resulting in a downward trend that impacts all companies in
the industry; or, the changes could impact only those parts of the economy upon
which Collins relies in a unique fashion, including, for example, the
introduction of trade barriers that impact our attempts to expand in North
America.

         COMMERCIAL TRUCK MARKET

         The commercial truck market demand is variable. Demand for commercial
vehicles depends to some extent on economic and other conditions in a given
market and the introduction of new vehicles and technologies. Demand may also be
affected by factors impacting new truck prices such as costs of raw materials
and components and cost of compliance with governmental regulations (including
tariffs, engine emissions regulations, import regulation and other taxes).

         TECHNOLOGY

         Collins is engaged in an industry which will be affected by future
technological developments. The introduction of products or processes utilizing
new technologies could render existing products or processes obsolete or
unmarketable. Success will depend upon the ability to develop and introduce on a
timely and cost-effective basis new products, processes and applications that
keep pace with technological developments and address increasingly sophisticated
customer requirements.

         RISKS RELATING TO THE MERGER

AS A RESULT OF THE MERGER, WE HAVE BECOME SUBJECT TO MORE REPORTING REQUIREMENTS
OF FEDERAL SECURITIES LAWS, WHICH CAN BE EXPENSIVE.

         As a result of the Merger, we have become an operating company.
Accordingly, we may be subject to more information and reporting requirements of
the Exchange Act and other Federal securities laws, including compliance with
the Sarbanes-Oxley Act. The costs of preparing and filing annual and quarterly
reports, proxy statements and other information with the SEC (including



                                      -31-



reporting of the Merger) and furnishing audited reports to stockholders may
increase and may cause our expenses to be higher.

         In addition, it may be time consuming, difficult and costly for us to
develop and implement the internal controls and reporting procedures required by
the Sarbanes-Oxley Act. We may need to hire additional financial reporting,
internal controls and other finance personnel in order to develop and implement
appropriate internal controls and reporting procedures. If we are unable to
comply with the internal controls requirements of the Sarbanes-Oxley Act, we may
not be able to obtain the independent accountant certifications required by the
Sarbanes-Oxley Act.

BECAUSE WE WERE PREVIOUSLY A SHELL COMPANY AND ACQUIRED AN OPERATING ENTITY BY
MEANS OF A REVERSE MERGER WITH ONE OF OUR SUBSIDIARIES, WE MAY NOT BE ABLE TO
ATTRACT THE ATTENTION OF MAJOR BROKERAGE FIRMS.

         There may be risks associated with us formerly being a shell company
and acquiring an operating entity through a "reverse merger". Securities
analysts of major brokerage firms may not provide coverage of us since there is
no incentive to brokerage firms to recommend the purchase of our common stock.
No assurance can be given that brokerage firms will, in the future, want to
conduct any secondary offerings on our behalf.

         RISKS RELATING TO THE COMPANY'S COMMON STOCK

OUR STOCK PRICE MAY BE VOLATILE.

         The market price of our common stock is likely to be highly volatile
and could fluctuate widely in price in response to various factors, many of
which are beyond our control, including the following:

         o  Technological innovations or new products and services by us or our
            competitors;

         o  Additions or departures of key personnel;

         o  Sales of our Common Stock;

         o  Our ability to execute our business plan;

         o  Operating results that fall below expectations;

         o  Loss of any strategic relationship;

         o  Industry developments;

         o  Economic and other external factors; and

         o  Period-to-period fluctuations in our financial results.

         In addition, the securities markets have from time to time experienced
significant price and volume fluctuations that are unrelated to the operating
performance of particular companies. These market fluctuations may also
materially and adversely affect the market price of our common stock.


                                      -32-



WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FUTURE. ANY RETURN ON INVESTMENT MAY BE
LIMITED TO THE VALUE OF OUR COMMON STOCK.

         We do not anticipate paying dividends in the foreseeable future. The
payment of dividends on our common stock will depend on earnings, financial
condition and other business and economic factors affecting it at such time as
the board of directors may consider relevant. If we do not pay dividends, our
common stock may be less valuable because a return on your investment will only
occur if our stock price appreciates.

THERE IS CURRENTLY NO LIQUID TRADING MARKET FOR OUR COMMON STOCK AND WE CANNOT
ENSURE THAT ONE WILL EVER DEVELOP OR BE SUSTAINED.

         Our Class A Common Stock was de-listed from the New York Stock Exchange
and commenced trading on the OTC Bulletin Board under the symbol "BNSXA" and was
listed on the Boston Stock Exchange on February 11, 2002. The symbol was
subsequently changed to "BNSIA." There is currently no liquid trading market for
our common stock. We cannot predict how liquid the market for our common stock
might become. Our common stock could also be suspended from the OTC Bulletin
Board, the trading price of our common stock could suffer, the trading market
for our common stock may be less liquid and our common stock price may be
subject to increased volatility.

OFFERS OR AVAILABILITY FOR SALE OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON
STOCK MAY CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE.

         If our stockholders sell substantial amounts of our common stock in the
public market, the price of our common stock could fall and could create a
situation commonly referred to as an "overhang." The existence of an overhang,
whether or not sales have occurred or are occurring, could make our ability to
raise additional financing through the sale of equity or equity-related
securities in the future at a time and price that we deem reasonable or
appropriate more difficult.

OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AUTHORIZES OUR BOARD TO
CREATE NEW SERIES OF PREFERRED STOCK WITHOUT FURTHER APPROVAL BY OUR
STOCKHOLDERS, WHICH COULD ADVERSELY AFFECT THE RIGHTS OF THE HOLDERS OF OUR
COMMON STOCK.

         Our Board of Directors has the authority to fix and determine the
relative rights and preferences of preferred stock. Our Board of Directors also
has the authority to issue preferred stock without further stockholder approval.
As a result, our Board of Directors could authorize the issuance of a series of
preferred stock that would grant to holders the preferred right to our assets
upon liquidation, the right to receive dividend payments before dividends are
distributed to the holders of common stock and the right to the redemption of
the shares, together with a premium, prior to the redemption of our common
stock. In addition our Board of Directors could authorize the issuance of a
series of preferred stock that has greater voting power than our common stock or
that is convertible into our common stock, which could decrease the relative
voting power of our common stock or result in dilution to our existing
stockholders.



                                      -33-




                 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                                 AND MANAGEMENT

         Set forth below are the persons or groups known to the Company who
beneficially own, under the applicable rules and regulations of the Securities
and Exchange Commission, as of October 31, 2006, more than 5% of any class of
the Company's voting securities, each of the Company's directors and named
executive officers and all of the Company's directors and executive officers as
a group.

                                                                                 Amount and
                                                          Title of Class           Nature             Percent
                   Name and Address                          of Common          of Beneficial           of
                  of Beneficial Owner                          Stock            Ownership (1)        Class (2)
- -------------------------------------------------------  ------------------  -------------------  --------------
5% or Greater Stockholders:
Steel Partners II, L.P. (3)
     590 Madison Avenue, 32nd Floor
     New York, NY 10022                                       Class A            1,264,880             41.9%
Warren G. Lichtenstein (3)
Chairman, CEO, and Secretary
Steel Partners, L.L.C.
     590 Madison Avenue, 32nd Floor
     New York, NY 10022                                       Class A            1,264,880             41.9%
Dimensional Fund Advisors Inc. (4)
     1299 Ocean Avenue
     11th Floor
     Santa Monica, CA 90401                                   Class A              182,108              6.0%
Directors and Named Executive Officers:

Kenneth N. Kermes                                             Class A               48,000              1.6%
J. Robert Held                                                Class A               19,800              *
Jack Howard (3)                                               Class A                2,600              *
James Henderson (3)                                           Class A                2,000              *
Michael Warren                                                Class A                    0              0
All directors and executive officers as a group (5
     persons)                                                 Class A               72,400              2.3%
- ----------------------------
* less than one percent (1%)

(1)      Unless otherwise indicated, includes shares owned by a spouse, minor
         children and relatives sharing the same home, as well as entities owned
         or controlled by the named person. Also includes options and warrants
         to purchase shares of common stock exercisable within sixty (60) days.
         Unless otherwise noted, shares are owned of record and beneficially by
         the named person.

(2)      Based on 3,030,444 shares of Class A Stock and no shares of Class B
         Stock outstanding on the record date.

(3)      Steel Partners II, L.P., a Delaware limited partnership whose principal
         business is investing in the securities of small cap companies, has
         sole voting and dispositive power and is deemed to have beneficial
         ownership of the reported shares. Steel Partners, L.L.C., is a Delaware
         limited liability company whose principal business is acting as the
         general partner of Steel Partners II, L.P. Warren G. Lichtenstein is


                                      -34-



         the Chairman, CEO, Secretary and the sole executive officer and
         managing member of Steel Partners L.L.C. By virtue of his relationships
         with Steel Partners L.L.C., and Steel Partners L.L.C.'s relationship
         with Steel Partners II, L.P., both are deemed to have beneficial
         ownership of the reported shares. Mr. Lichtenstein also has sole voting
         and dispositive power over the reported shares. As representatives of
         Steel Partners II, L.P., Messrs. Howard and Henderson may be deemed
         members of the Section 13(d) reporting group. Mr. Howard, who has sole
         voting and dispositive power over his 2,600 shares, holds 600 shares
         through JL Howard, Inc., an entity controlled by Mr. Howard, which may
         also be deemed a member of the group, and 2,000 shares directly. Mr.
         Henderson has sole voting and dispositive power over his 2,000 shares,
         which he owns directly. Messrs. Howard and Henderson claim no voting or
         dispositive power over the Steel Partners II, L.P. shares.

(4)      Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
         advisor, has sole voting and dispositive control over and is deemed to
         have beneficial ownership of the reported shares, all of which shares
         are held in portfolios of various registered investment companies and
         trusts, and for all of which Dimensional serves as investment manager
         or advisor. Dimensional disclaims beneficial ownership of all such
         shares.

         Collins is a wholly-owned subsidiary of Holding. The Company owns 80%
of the equity securities of Holding.

                        DIRECTORS AND EXECUTIVE OFFICERS

         DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         The table below sets forth the name of each director of the Company.
 The director's service as a director of BNS Co., our wholly-owned subsidiary,
 prior to December 14, 2004, the date we reorganized as a holding company, is
 included when determining the year the director was first elected as a director
 of ours. Effective as of October 31, 2006, Richard Donnelly resigned as a
 director of the Company.

                              Year
                              First        Principal Occupation During Last Five
                             Elected            Years and Directorships in
Name (Age)                   Director     Public Reporting and Other Companies
- ---------------------------  --------  ----------------------------------------
J. Robert Held (68)           1996     Since  1996,  Mr.  Held has  served  as a
                                       consultant to the computer industry. From
                                       1988 to  1995,  he was  President,  Chief
                                       Executive   Officer  and  a  Director  of
                                       Chipcom    Corporation,     a    computer
                                       communications   company.   Mr.  Held  is
                                       currently  a Director  of Art  Technology
                                       Group   (Nasdaq:    ARTG),   a   customer
                                       relationship   management  company,   and
                                       Azimuth  Inc., a start-up in the wireless
                                       market.  Until 2004, Mr. Held served as a
                                       director  of   e-studio,   a   webcasting
                                       business, and ESI, a software company.

James Henderson (48)          2004     Mr.   Henderson  has  served  as  a  Vice
                                       President  of  Steel  Partners,  Ltd.,  a
                                       management  and advisory  company,  since
                                       March  2002.  Mr.  Henderson  served as a
                                       Vice    President   of   Steel   Partners
                                       Services,  Ltd.  from August 1999 through
                                       March  2002.  Mr.   Henderson  served  as
                                       President and Chief Operating  Officer of
                                       WebFinancial        Corporation        (a
                                       publicly-traded  company),  a  commercial
                                       and consumer lender, since November 2003


                                      -35-



                                       and  as  Chief  Executive  Officer  and a
                                       Director  since June 2005.  He has served
                                       as  a  Director  of   WebBank,   an  FDIC
                                       Insured,  State of Utah  Industrial  Loan
                                       Corporation,  since  March  2000,  Acting
                                       Chief  Executive  Officer of WebBank from
                                       November  2004  until  May  2005  and  as
                                       Chairman since November 2004. He has also
                                       served   as    President    of    Gateway
                                       Industries,  Inc., a provider of database
                                       development   and   website   design  and
                                       development   services,   since  December
                                       2001.  Mr.  Henderson  served  as  acting
                                       Chief    Executive    Officer    of   ECC
                                       International  Corp., a manufacturer  and
                                       marketer    of    computer     controlled
                                       simulators  for  training   personnel  to
                                       perform    maintenance    and    operator
                                       procedures on military weapons, from July
                                       2002 until March 2003,  and as a director
                                       from December 1999 until  September 2003.
                                       From  January  2001 to August  2001,  Mr.
                                       Henderson  served  as  President  of  MDM
                                       Technologies,  Inc.,  a  direct  mail and
                                       marketing  company.  From  1996  to  July
                                       1999,  Mr.   Henderson  was  employed  in
                                       various positions with Aydin Corporation,
                                       which  included  tenure as President  and
                                       Chief Operating Officer from October 1998
                                       to June  1999.  Prior  to his  employment
                                       with Aydin Corporation, Mr. Henderson was
                                       employed  as  an  executive  with  UNISYS
                                       Corporation,   an  e-business   solutions
                                       provider.  Mr.  Henderson has served as a
                                       director  of  SL   Industries,   Inc.,  a
                                       manufacturer  and  marketer  of power and
                                       data quality  systems and  equipment  for
                                       industrial,    medical,   aerospace   and
                                       consumer   applications,   since  January
                                       2002,  and  of  Del  Global  Technologies
                                       Corp.,  a  manufacturer  and  marketer of
                                       medical   imaging   equipment  and  power
                                       conversion  subsystems,   since  November
                                       2003,  as well as  Chairman of Del Global
                                       since May 2005.

JACK HOWARD (45)              2004     Mr. Howard  co-founded Steel Partners II,
                                       L.P. in October 1993,  where he currently
                                       holds  representative  positions.  He has
                                       served as a  director  since  1996 and as
                                       Vice President since 1997 of WebFinancial
                                       Corp.  (formerly Rose's Holdings Inc.), a
                                       commercial and consumer  lender that owns
                                       WebBank Corp., an FDIC insured industrial
                                       loan  bank  located  in Salt  Lake  City,
                                       Utah.  In 2005,  Mr. Howard began serving
                                       as a director of WHX Corporation. Also in
                                       June 2005,  he joined the board of Cosine
                                       Communications.   From  January  1989  to
                                       present,   Mr.   Howard   has  served  as
                                       Principal at Mutual  Securities,  Inc., a
                                       registered broker-dealer.

KENNETH N. KERMES (71)        2000     Mr.  Kermes has served as our Chairman of
                                       the  Board of  Directors  since May 2001.
                                       From January 2004 to September  2004,  he
                                       served  as  Director   of  Major   Gifts,
                                       Advancement  Department of the University
                                       of  Rhode  Island.  From  April  2002  to
                                       January  2004,  he was Vice  President of
                                       Planning and Service  Development,  South
                                       County  Hospital.  From May 2001 to April
                                       2002, and from 1999 to 2000, he was a


                                      -36-



                                       Partner  at  SeaView  Capital,  a private
                                       equity  firm.  From May 2000 to May 2001,
                                       he  was  Interim   President   and  Chief
                                       Executive Officer of BNS Co. From 1998 to
                                       1999, he was a partner at Bay View Equity
                                       Partners,  a private  equity  firm.  From
                                       1994 to 1998, he served as Vice President
                                       for   Business   and  Finance  and  Chief
                                       Financial and Administrative  Officer for
                                       the University of Rhode Island. From 1998
                                       to date,  he has served as a Director  of
                                       AT Wall, a metal stamping  company.  From
                                       1996 to date, he has served as a Director
                                       of Bradford  Soap  International,  a soap
                                       manufacturing  company,  and from 2005 to
                                       date he has served as a  director  of ION
                                       Signature  Technology,  Inc.,  a software
                                       development    company   for   scientific
                                       analytical equipment.

         The following table summarizes information regarding executive officers
of the Company who are not directors as of October 31, 2006.

Name                         Age       Positions Held During the Last Five Years
- --------------------------  -----      -----------------------------------------
Michael Warren                56       Since  January 24, 2003,  Mr.  Warren has
                                       been   President   and  Chief   Executive
                                       Officer and since December 20, 2002, Vice
                                       President and Chief Financial Officer, of
                                       BNS  Co.  (and  of  BNS   Holding   after
                                       December 13, 2004.  From 2000 to present,
                                       Mr.  Warren  has  been the  President  of
                                       Michael   Warren   Associates,   Inc.,  a
                                       management  consulting firm. From 2000 to
                                       2002,  he  worked  as  a  Consultant  for
                                       Resources,  Inc., a management consulting
                                       firm. From 1997 to 2000, he was Executive
                                       Vice    President,     U.S.    Restaurant
                                       Properties,    Inc.,    a   real   estate
                                       investment  trust. From 1996 to 1997, Mr.
                                       Warren  served as Vice  President and CFO
                                       for South East Fast Food Partners,  Inc.,
                                       a food services corporation.

         Each executive officer of the Company holds office until the first
meeting of the Board of Directors following the next annual stockholders'
meeting of the Company and until his successor is elected or appointed and
qualified, unless he dies, resigns, is removed or replaced.

         There are no family relationships between any of our directors or
executive officers.

         ORGANIZATION AND MEETINGS

         The Board of Directors of the Company (the "Board"), which is comprised
exclusively of non-employee directors, presently maintains standing committees
on audit ("Audit Committee") and corporate governance, compensation and
nominating committee ("Nominating, Compensation and Corporate Governance
Committee"). The Board held six regular meetings and three special meetings in
2005. Each of the directors participated in 75% or more of the aggregate number
of meetings of the Board and of the committees on which he is a member. The
Board does not have a policy requiring attendance by the directors at the
Company's Annual Meetings. One director attended the Company's 2005 Annual
Meeting.

         AUDIT COMMITTEE

         As of the closing of the Merger, the Audit Committee is composed of
Messrs. Kermes (Chairman) and Held. The Audit Committee met four times in 2005.
As of the closing of the Merger, the members of the Audit Committee satisfy the


                                      -37-



independence requirements and other established criteria by the Boston Stock
Exchange and the Securities and Exchange Commission. The Board has determined
that Mr. Kermes, Chairman of the Audit Committee, is an "audit committee
financial expert." The Audit Committee recommends, for approval by the
stockholders, the appointment of a firm of independent certified public
accountants to audit the Company's financial statements. The Audit Committee
approves all audit and non-audit services provided by the Company's independent
auditor. The Audit Committee also meets with the independent accountants and the
Company's chief financial officer to review the scope and results of the audit,
the scope of audit and non-audit services, the range of audit and non-audit
fees, any proposed changes in accounting policies, practices, or procedures,
including those relating to the Company's internal controls, and the Company's
financial statements to be included in the Company's Annual Report on Form
10-KSB and other related matters. A copy of the Charter for the Audit Committee
is attached as Annex A to the Company's Proxy Statement on Schedule 14A filed
with the Securities and Exchange Commission on May 11, 2006.

         NOMINATING, COMPENSATION AND CORPORATE GOVERNANCE COMMITTEE

         As of the closing of the Merger, the Nominating, Compensation and
Corporate Governance Committee is composed of Messrs. Held (Chairman) and
Howard. Each of the members of this committee, other than Mr. Howard, is an
"independent director" under the rules of the Boston Stock Exchange. Pursuant to
the rules of the Boston Stock Exchange, the Board has determined that, based on
Mr. Howard's current and past professional experience, including serving as a
vice president and director of a public company and as a director of several
private companies, his membership on this committee is in the best interests of
the Company and its stockholders. The Nominating, Compensation and Corporate
Governance Committee met once in 2005.

         The purposes of the Nominating, Compensation and Corporate Governance
Committee are (i) to identify individuals qualified to become members of the
Board, (ii) to select, or to recommend that the Board select, the director
nominees for the next annual meeting of stockholders, (iii) to develop and
recommend to the Board a set of corporate governance principles applicable to
the Company, and (iv) to discharge the Board's responsibilities relating to the
compensation of the Company's executives and prepare an annual report on
executive compensation for inclusion in the Company's annual proxy statement in
accordance with the proxy rules. The committee also performs a periodic review
of salaries and compensation/benefit plans for the executive officers and other
key management personnel of the Company and administers the Company's 1999
Equity Incentive Plan. A copy of the charter for the Nominating, Compensation
and Corporate Governance Committee was attached as Annex C to the Company's May
2004 Proxy Statement.

         The Nominating, Compensation and Corporate Governance Committee may
utilize a variety of methods for identifying potential nominees for directors,
including considering potential candidates who come to their attention through
current officers, directors, professional search firms or other persons. Once a
potential nominee has been identified, the Nominating, Compensation and
Corporate Governance Committee evaluates whether the nominee has the appropriate
skills and characteristics required to become a director in light of the then
current make-up of the Board. This assessment includes an evaluation of whether:
(a) the nominee is an individual of the highest personal and professional
integrity; (b) the nominee has substantial experience which is of particular
relevance to the Company; (c) whether the nominee has sufficient time available
to devote to the affairs of the Company; and (d) the nominee will be effective,
in conjunction with the other directors, in collectively serving the interests
of the stockholders.


                                      -38-



         STOCKHOLDER NOMINATIONS

         The Nominating, Compensation and Corporate Governance Committee
considers stockholder nominations for candidates for membership on the Board
when properly submitted in accordance with the Company's By-laws. The
Nominating, Compensation and Corporate Governance Committee will review and
evaluate such stockholder nominations in the same manner as it evaluates all
other nominees.

         The Company's By-laws provide that nominations for the election of
directors may be made by any stockholder entitled to vote in the election of
directors. A stockholder may nominate a person for election as a director at a
meeting only if written notice of such stockholder's intent to make such
nomination has been given to the Company's Secretary pursuant to the By-laws.
Each notice must set forth: (i) the name, business and residential address, and
age of the proposed nominee, (ii) the principal occupation or employment of the
prospective nominee, (iii) the number of shares of the Company's capital stock
which are beneficially owned by the prospective nominee, (iv) a description of
all arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder, (v) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had the nominee been nominated, or
intended to be nominated, by the Board, and (vi) the consent of each nominee to
serve as a director of the Company if so elected. In addition, all nominations,
other than nominations submitted on behalf of the incumbent Board, must be
accompanied by a petition in support of such nomination signed by at least 100
record holders of shares of capital stock of the Company entitled to vote in the
election of such directors, holding in the aggregate not less than 1% of the
voting power of the shares of capital stock of the Company entitled to vote in
the election of such director as of the date the petition is submitted.
Stockholders may make informal recommendations for nominees for directors by
calling the Company's Corporate Secretary at (401) 848-6400. Such
recommendations are not entitled to the benefit of By-law procedures described
above.

         DIRECTOR COMPENSATION

         On January 20, 2005, the Board of the Company voted to pay, as payment
of the Director Retainer Fee, as defined in the 1999 Equity Incentive Plan for
the year 2005, an award of 1,000 restricted shares of Class A Common Stock,
granted under the Plan, plus $15,000 in cash to each of the five directors in
office on January 1, 2005. The restrictions on these shares expired on January
24, 2006. On March 13, 2006, as payment of the Director Retainer Fee for the
year 2006, an award of an additional 1,000 restricted shares of Class A Common
Stock, plus $15,000 in cash to each of the five directors in office on January
1, 2006. No additional retainer is paid to directors who are chairpersons of a
committee.

         For attendance at meetings, each director receives a fee of $750 for
each Board meeting attended and $500 for each Committee meeting attended as well
as a fee of $375 for each teleconference Board meeting, and $250 for each
teleconference Committee meeting, which lasts more than one-half hour in
duration.

         In January 2005, our board of directors authorized a $30,000 cash
payment to Kenneth Kermes, our Chairman of the Board, which was paid on February
8, 2005, as additional compensation for services he rendered in connection with
the negotiation of a proposed acquisition.


                                      -39-



         DIRECTORS AND EXECUTIVE OFFICERS OF COLLINS

         The following table sets forth certain information with respect to the
directors of Collins. Pursuant to the terms of the Merger Agreement, the members
of the board of directors of Collins are the same as the members of the board of
directors of Holding.

                              Year
                              First        Principal Occupation During Last Five
                             Elected            Years and Directorships in
Name (Age)                   Director     Public Reporting and Other Companies
- ---------------------------  --------  ----------------------------------------
John Quicke (57)              2006     Mr.   Quicke  was  named  a  director  of
                                       Holding and Collins on October 31,  2006.
                                       Mr. Quicke has served as a Vice President
                                       of Steel  Partners,  Ltd. since September
                                       2005.  Mr. Quicke has served as Chairman,
                                       President and Chief Executive  Officer of
                                       NOVT  Corporation,  a former developer of
                                       advanced medical  treatments for coronary
                                       and vascular  disease,  since April 2006.
                                       He  has  served  as  a  director  of  WHX
                                       Corporation since July 2005 and as a Vice
                                       President  since October 2005. Mr. Quicke
                                       currently  serves as a director  of Layne
                                       Christensen    Company    and    Angelica
                                       Corporation.  He  served  as a  director,
                                       President and Chief Operating  Officer of
                                       Sequa    Corporation     ("Sequa"),     a
                                       diversified industrial company, from 1993
                                       to  March  2004,  and Vice  Chairman  and
                                       Executive  Officer  of Sequa  from  March
                                       2004 to March 2005.  As Vice Chairman and
                                       Executive  Officer of Sequa,  Mr.  Quicke
                                       was responsible for the Automotive, Metal
                                       Coating, Specialty Chemicals,  Industrial
                                       Machinery  and  Other  Product  operating
                                       segments of the company.  From March 2005
                                       to August 2005,  Mr. Quicke  occasionally
                                       served  as  a  consultant  to  Steel  and
                                       explored other business opportunities.

Kenneth N. Kermes (71)        2006     Mr.   Kermes  was  named  a  director  of
                                       Holding and Collins on October 31,  2006.
                                       Mr.  Kermes has served as the Chairman of
                                       the Board of  Directors  of BNS  Holding,
                                       Inc. since May 2001. From January 2004 to
                                       September  2004, he served as Director of
                                       Major Gifts,  Advancement  Department  of
                                       the  University  of  Rhode  Island.  From
                                       April 2002 to January  2004,  he was Vice
                                       President   of   Planning   and   Service
                                       Development,  South County Hospital. From
                                       May 2001 to April 2002,  and from 1999 to
                                       2000,   he  was  a  Partner   at  SeaView
                                       Capital,  a private equity firm. From May
                                       2000  to  May   2001,   he  was   Interim
                                       President and Chief Executive  Officer of
                                       BNS  Co.  From  1998  to  1999,  he was a
                                       partner at Bay View  Equity  Partners,  a
                                       private  equity firm.  From 1994 to 1998,
                                       he served as Vice  President for Business
                                       and  Finance  and  Chief   Financial  and
                                       Administrative Officer for the University
                                       of Rhode  Island.  From 1998 to date,  he
                                       has  served as a Director  of AT Wall,  a
                                       metal  stamping  company.  From  1996  to
                                       date,  he has  served  as a  Director  of
                                       Bradford  Soap   International,   a  soap
                                       manufacturing  company,  and from 2005 to
                                       date he has served as a  director  of ION
                                       Signature  Technology,  Inc.,  a software
                                       development    company   for   scientific
                                       analytical equipment.


                                      -40-



James Henderson (48)          2006     Mr.  Henderson  was named a  director  of
                                       Holding and Collins on October 31,  2006.
                                       Mr.   Henderson  has  served  as  a  Vice
                                       President  of  Steel  Partners,  Ltd.,  a
                                       management  and advisory  company,  since
                                       March  2002.  Mr.  Henderson  served as a
                                       Vice    President   of   Steel   Partners
                                       Services,  Ltd.  from August 1999 through
                                       March  2002.  Mr.   Henderson  served  as
                                       President and Chief Operating  Officer of
                                       WebFinancial        Corporation        (a
                                       publicly-traded  company),  a  commercial
                                       and consumer lender,  since November 2003
                                       and  as  Chief  Executive  Officer  and a
                                       Director  since June 2005.  He has served
                                       as  a  Director  of   WebBank,   an  FDIC
                                       Insured,  State of Utah  Industrial  Loan
                                       Corporation,  since  March  2000,  Acting
                                       Chief  Executive  Officer of WebBank from
                                       November  2004  until  May  2005  and  as
                                       Chairman since November 2004. He has also
                                       served   as    President    of    Gateway
                                       Industries,  Inc., a provider of database
                                       development   and   website   design  and
                                       development   services,   since  December
                                       2001.  Mr.  Henderson  served  as  acting
                                       Chief    Executive    Officer    of   ECC
                                       International  Corp., a manufacturer  and
                                       marketer    of    computer     controlled
                                       simulators  for  training   personnel  to
                                       perform    maintenance    and    operator
                                       procedures on military weapons, from July
                                       2002 until March 2003,  and as a director
                                       from December 1999 until  September 2003.
                                       From  January  2001 to August  2001,  Mr.
                                       Henderson  served  as  President  of  MDM
                                       Technologies,  Inc.,  a  direct  mail and
                                       marketing  company.  From  1996  to  July
                                       1999,  Mr.   Henderson  was  employed  in
                                       various positions with Aydin Corporation,
                                       which  included  tenure as President  and
                                       Chief Operating Officer from October 1998
                                       to June  1999.  Prior  to his  employment
                                       with Aydin Corporation, Mr. Henderson was
                                       employed  as  an  executive  with  UNISYS
                                       Corporation,   an  e-business   solutions
                                       provider.  Mr.  Henderson has served as a
                                       director  of  SL   Industries,   Inc.,  a
                                       manufacturer  and  marketer  of power and
                                       data quality  systems and  equipment  for
                                       industrial,    medical,   aerospace   and
                                       consumer   applications,   since  January
                                       2002,  and  of  Del  Global  Technologies
                                       Corp.,  a  manufacturer  and  marketer of
                                       medical   imaging   equipment  and  power
                                       conversion  subsystems,   since  November
                                       2003,  as well as  Chairman of Del Global
                                       since May 2005.

John Becker (54)              2006     Mr.  Becker  was named as a  director  of
                                       Holding and Collins on October 31,  2006.
                                       Mr.  Becker  is  a  Partner  of  AIP.  He
                                       initially  joined AIP in 2001. Mr. Becker
                                       also founded Newport Shrimp  Company,  an
                                       international      seafood     processing
                                       business, in 1976 and exited in 1989 with
                                       a sale  to  Clearwater  Fine  Foods.  Mr.
                                       Becker  also  served  as chief  operating
                                       officer of  Clearwater  Fine  Foods,  USA
                                       from  1989  through   1992.   Mr.  Becker
                                       purchased and became  Chairman of Newport
                                       Pacific  Corporation  in 1998. Mr. Becker
                                       graduated  from Oregon  State  University
                                       with a  Bachelor  of  Science  degree  in



                                      -41-



                                       Business in 1974.  Mr.  Becker  served on
                                       the board of directors of Newport  Shrimp
                                       Company,  Inc.,  National  Security  Bank
                                       Holding Co., Inc., Clearwater Fine Foods,
                                       USA,   Consoltex   Holdings  Inc,  Oregon
                                       Oyster  Farms Inc,  and Stolle  Machinery
                                       Company, LLC.

Ken Dabrowski (63)            2006     Mr.  Dabrowski was named as a director of
                                       Holding and Collins on October 31,  2006.
                                       Mr.  Dabrowski  is a partner  of AIP.  He
                                       served as Vice President,  Global Quality
                                       and  Process  Leadership  at  Ford  Motor
                                       Company   where   his    responsibilities
                                       spanned  all   quality  and   information
                                       technology  functions  for the  worldwide
                                       enterprise.   Previous   positions   held
                                       during  his  35-year   career  with  Ford
                                       include   Executive   Director,   Product
                                       Strategy   Office  and   Corporate   Vice
                                       President  which included  responsibility
                                       for  Ford's  worldwide  commercial  truck
                                       business.  Mr.  Dabrowski  also served as
                                       President   of  the   Durant   Group,   a
                                       management consulting firm, and served as
                                       a   member   of   the   faculty   of  the
                                       Massachusetts   Institute  of  Technology
                                       from 1999  through  2005.  Mr.  Dabrowski
                                       received  a   Bachelor's   degree  and  a
                                       Master's degree in Mechanical Engineering
                                       from the University of Detroit and an MBA
                                       from   Wayne   State   University.    Mr.
                                       Dabrowski  has  served  on the  board  of
                                       directors  of:  Air  International   Inc.
                                       (Chairman), Cummins Engine Co., Jiangling
                                       Motors Corp.,  Ltd.,  China,  Ford Design
                                       Institute    (Chairman.),     Engineering
                                       Society   of    Detroit,    Massachusetts
                                       Institute   of   Technology   Center  for
                                       Innovation   in   Product    Development,
                                       University  of  Detroit-Mercy  (Trustee),
                                       Malcolm Baldrige  National Quality Board,
                                       Perceptron,  SanLuis  Rassini  and  Xerox
                                       Engineering Excellence Board.

         The following table sets forth certain information with respect to the
executive officers of Collins immediately after the closing of the Merger.

Name                         Age       Positions Held During the Last Five Years
- --------------------------  -----      -----------------------------------------
Randall Swift                  40      Mr.  Swift was named Vice  President  and
                                       Chief  Operating  Officer  of  Collins on
                                       April 1, 2005. He joined  Collins in 1998
                                       as V.P./Sales  and Marketing for Capacity
                                       of Texas, Inc., a wholly-owned subsidiary
                                       of  Collins.   In  1999,  Mr.  Swift  was
                                       promoted to President  of Capacity  where
                                       he  continued  to  serve  prior  to  this
                                       appointment.   Mr.  Swift   possesses  an
                                       extensive     background     in    sales,
                                       engineering and  manufacturing  with over
                                       six  years at  Cummins  Southern  Plains,
                                       Inc. prior to coming to Capacity.

Kent E. Tyler                  40      Mr. Tyler joined Collins in December 1997
                                       as Vice President of Marketing.  Prior to
                                       joining Collins, he was Vice President of
                                       Ackerman McQueen, a full-service national
                                       marketing  and  advertising   agency.  In
                                       2005, Mr. Tyler was promoted to Corporate
                                       Vice  President of Sales and Marketing of
                                       Collins.


                                      -42-



Paul Bamatter                  50      Mr.  Bamatter  joined  Collins on October
                                       31,  2006  as  interim  Chief   Financial
                                       Officer.  Mr.  Bamatter  is a Partner and
                                       Chief  Financial  Officer at AIP.  He was
                                       also  the  Chief  Financial   Officer  of
                                       Consoltex   Holdings,   Inc.   from  1993
                                       through 2005. Additionally,  Mr. Bamatter
                                       served  as  Chief  Operating  Officer  of
                                       Consoltex   Holdings,   Inc.   from  2001
                                       through 2005 and served as sole  director
                                       of  all   operating   subsidiaries.   Mr.
                                       Bamatter was employed by Price Waterhouse
                                       from  1978  to  1992  where,   as  senior
                                       manager,  he managed the worldwide audits
                                       for  several   multinational   businesses
                                       including  Royal Bank of Canada and Alcan
                                       Aluminum.  Mr.  Bamatter  graduated  from
                                       Bishop's   University   with   majors  in
                                       Accounting and Finance in 1978 and earned
                                       his Chartered Accountancy  designation in
                                       1981.

                           SUMMARY COMPENSATION TABLE

         COMPENSATION OF EXECUTIVE OFFICERS OF THE COMPANY

         The following table sets forth the annual and long-term compensation
during each of the last three fiscal years of Michael Warren, the President,
Chief Executive Officer and Chief Financial Officer of BNS Co. and, after
December 14, 2004, of BNS Holding. Michael Warren became BNS Co.'s President and
Chief Executive Officer on January 24, 2003. Mr. Warren is not an employee but
joined BNS Co. first as a consultant and then as its CFO in December 2002. Mr.
Warren's compensation is set forth in the table and detailed under "Employment,
Severance and other Agreements" below. Any compensation reported in one year is
not reported as compensation for a subsequent year.

                                               Annual Compensation
                             -----------------------------------------------------------
                                                                          Other
Name and                                                                 Annual
Principal Position             Year      Salary ($)     Bonus ($)     Compensation ($)
- ---------------------------  --------  -------------  ------------  -------------------
Michael Warren                 2005       188,330            --                 --
   PRESIDENT, CEO,             2004       164,313       147,675                 --
   AND CFO(1)                  2003       201,524       404,000                 --
- ----------------------------

(1)      Mr. Warren acts as a consultant to the Company pursuant to an agreement
         between Michael Warren Associates, Inc. and the Company. His salary
         represents his consulting fees for 2003, 2004 and 2005. His bonus
         represents incentive compensation payments made as a result of the sale
         of the Rhode Island Property in 2003 and the sale of the U.K.
         subsidiary in 2004.

         OPTION GRANTS IN LAST FISCAL YEAR

         No options or stock appreciation rights were awarded to the named
executive officer in fiscal year 2005.

         AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES

         There were no options exercised by the named executive officer during
fiscal year 2005 and there are no outstanding options being held by the named
executive officer.


                                      -43-



         EMPLOYMENT, SEVERANCE AND OTHER AGREEMENTS

         At fiscal year end 2005, the Company had no retirement plans or
arrangements calling for payments under employment agreements, severance
agreements or change-in-control payments other than the Company's agreement with
Michael Warren Associates, Inc.

         From December 1 to December 20, 2002, Michael Warren, and his firm
Michael Warren Associates, Inc., was engaged as a management consultant to the
Company pursuant to the terms of his November 20, 2002 engagement letter (the
"2002 Warren Agreement"). Mr. Warren became Vice President and Chief Financial
Officer effective December 20, 2002 and, in addition, was elected President and
Chief Executive Officer effective January 24, 2003. Under the 2002 Warren
Agreement, Mr. Warren provided general management consulting services, served as
President, CEO and CFO and performed such other duties as were from time to time
agreed upon.

         Mr. Warren's compensation during 2004 was based on the terms of his
2002 Warren Agreement, which was amended on January 24, 2003, April 8, 2003,
November 3, 2003 and February 23, 2004. The term of the 2002 Warren Agreement
ended on December 31, 2004. Under that agreement, Mr. Warren's compensation was
based on a rate of $180 per hour. Pursuant to the terms of the Agreement, Mr.
Warren received a $404,000 incentive payment in connection with the sale of the
Company's Rhode Island Property on August 26, 2003 and a $147,675 incentive
payment in connection with the sale of the U.K. Subsidiary, which closed on June
16, 2004.

         Mr. Warren's compensation during 2005 was based on the terms of a new
consulting agreement with Michael Warren Associates, Inc. dated as of March 7,
2005 (the "2005 Warren Agreement"), which replaced the expired 2002 Warren
Agreement. The term of the 2005 Warren Agreement expired December 31, 2005.

         The Company entered into a new consulting agreement with Michael Warren
Associates, Inc., dated as of January 1, 2006 (the "2006 Warren Agreement").
Under the 2006 Warren Agreement, Mr. Warren provides general management
consulting services, serves as President, CEO and CFO and performs such other
duties as may from time to time be agreed upon. The term is for a period of one
year or until notice of termination is given by either party. The 2006 Warren
Agreement is terminable by the Company immediately for "cause", as defined
therein, or upon thirty days prior notice by either party. Under the agreement,
Mr. Warren's compensation is based on a rate of $200 per hour. Also under the
agreement, Mr. Warren is entitled to additional incentive compensation in the
form of a cash bonus in an amount equal to no more than 40% of his firm's
billings during the term of the agreement or restricted stock, at the discretion
of the Board of Directors of the Company.




                                      -44-





         COMPENSATION OF EXECUTIVE OFFICERS OF HOLDING AND COLLINS

         The following table sets forth certain information regarding
compensation paid during each of Collins' last three fiscal years ended October
31 to executive officers who will continue to be executive officers of Collins
immediately after the Merger.

                                                                                                   LONG-TERM
                                                          ANNUAL COMPENSATION                     COMPENSATION

                                                                              Other Annual
Name and                                                                      Compensation       Restricted Stock
Principal Position                  Year      Salary ($)       Bonus ($)          ($)            Awards ($) (2)
- --------------------------------  -------   --------------   ------------   ----------------   --------------------
Randall Swift                       2005      237,083           70,000          30,385(1)         133,500(3)
 Vice President and COO             2004      170,000           55,000              --             75,750(3)
                                    2003      172,420           35,000              --             36,000(3)

Kent E. Tyler                       2005      170,000           30,000              --             49,000(4)
 Vice President of                  2004      157,500           25,000          38,550(1)          75,750 (4)
 Sales and Marketing                2003      155,000           20,000              --             54,000 (4)
- ----------------------------

(1)      Relates to company paid relocation expenses associated with relocation
         to Corporate Executive Offices in Southlake, Texas.

(2)      Under the terms of the Restricted Stock Award Agreements granted in
         2003, 2004 and 2005, the Restricted Stock vests four (4) years after
         the date of the initial award. Dividends are paid on Restricted Stock
         at the same rate as paid on all other outstanding shares of the
         Company's common stock.

(3)      Aggregate value at October 31, 2005 amounted to $368,500 based on an
         aggregate total of 55,000 restricted shares

(4)      Aggregate value at October 31, 2005 amounted to $268,000 based on an
         aggregate total of 40,000 restricted shares.

         COLLINS STOCK OPTION GRANTS AND EXERCISES

         Information relating to stock option grants and exercises by executive
officers of Collins are not being provided since all stock option plans of
Collins were terminated immediately after the closing of the Merger. All
outstanding stock options of Collins were vested immediately prior to the
effective time of the Merger. Holders of stock options of Collins, whether or
not exercisable, were entitled to receive a cash payment from Collins
immediately prior to the effective time of the Merger equal to the excess, if
any, of $12.50 over the exercise price of such stock option, multiplied by the
number of shares subject to such stock option, without interest and subject to
any applicable withholding taxes.

         Upon shareholder approval of the Merger, the restricted stock
automatically became unrestricted and, along with the other shares of Collins
common stock, be converted into the right to receive $12.50 in cash, without
interest and subject to any applicable withholding tax, for each share of
restricted stock.


                                      -45-



         EMPLOYEE AGREEMENTS WITH EXECUTIVE OFFICERS OF COLLINS

         Collins has entered into an employment agreement with Cletus C.
Glasener providing among other things, for payments equal to Mr. Glasener's
current annual base salary payable of $251,578, plus target bonus (i) upon his
termination by Collins without cause or (ii) upon a change of control of Collins
if, following such change in control, Mr. Glasener's position with Collins is
eliminated or if he is not offered a comparable position at comparable
compensation. Effective upon the consummation of the Merger on October 31, 2006,
Mr. Glasener was replaced as Chief Financial Officer by Paul Bamatter who became
the interim Chief Financial Officer.

         Collins has also entered into severance agreements with Randall A.
Swift and Kent E. Tyler providing, among other things, for a lump sum payment
equal to one month's salary for each full year of the officer's employment with
Collins, but not less than 12 times nor more than 24 times the officer's monthly
salary, plus the then current monthly rate of family coverage under Collins'
group health plan multiplied by 18 months, payable upon the officer's
termination by Collins other than for disability, retirement or cause or the
officer's termination by the officer for good reason within one year after a
change in control of Collins.

         Collins has entered into severance agreements with other executive
officers and key personnel providing, among other things, for a lump sum payment
equal to twelve times the officer's monthly salary, payable upon the officer's
termination by Collins other than for disability, retirement or cause or the
officer's termination by the officer for good reason within one year after a
change in control of Collins.

                  CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
                            AND DIRECTOR INDEPENDENCE

         TERM LOAN AGREEMENT WITH STEEL PARTNERS: As of October 31, 2006, the
Company entered into a $14,000,000 Term Loan Agreement with Steel (the "Steel
Term Loan"). The Term Loan incurs interest at a rate of 15% per annum and
matures on August 31, 2011. Interest shall be payable quarterly and may be paid
in kind. Proceeds of the Steel Term Loan shall be used by the Company as partial
payment to Holding for 80% of its outstanding equity interest. As collateral for
the Steel Term Loan, the Company granted Steel a continuing first priority
security interest in any interest or right in any kind of property or asset,
whether real, personal, or mixed, owned or leased, tangible or intangible, and
whether now held or hereafter acquired by the Company. In addition, Steel shall
also receive a first priority pledge of all outstanding capital stock or other
beneficial interest of Holding.

         STOCKHOLDERS AGREEMENT BETWEEN THE COMPANY AND AIP

         As of October 31, 2006, the Company, Holding, Collins, AIP and certain
employee shareholders (collectively, the "Holding Stockholders") entered into a
Stockholders' Agreement (the "Holding Stockholders Agreement") which provides,
among other things, (i) that Holding Stockholders will vote for a Board of
Directors of Holding consisting of one director appointed by AIP and four
directors appointed by the Company and (ii) that certain major corporate actions
(i.e. a material corporate transaction or a sale of all of the assets of
Holding) cannot be made without the approval of the Company and AIP. In
addition, the Holding Stockholders Agreement provides that the Company may
initiate a sale of Collins, subject to the approval of the director designated
by AIP. If such sale is initiated, the other shareholders must go along with
such sale as long as such other shareholders receive the same per share
consideration. The Holding Stockholders Agreement further provides that at any
time subsequent to the earlier of (x) October 31, 2011 and (y) any of (1) the
consummation of any transaction (including any merger or consolidation) the
result of which is that any "person" or "group" (as such terms are defined for



                                      -46-



purposes of the Securities Act), other than Steel or one of its affiliates of
which Steel owns at least 20% of the equity interests of each class of equity
interests of such affiliate, becomes the owner, directly or indirectly, of 35%
or more of the issued and outstanding equity interests of the Company, (2) Steel
ceases to (a) beneficially own and control, directly or indirectly, at least 20%
of the equity interests of each class of equity interests of the Company
entitled (without regard to the occurrence of any contingency) to vote for the
election of the members of the board of directors of the Company, or (b) have at
least two representatives on the board of directors of the Company, (3) the
Company ceases to (a) beneficially own and control, directly or indirectly, at
least 80% of the issued and outstanding equity interests of each class of equity
interests of Holding entitled (without regard to the occurrence of any
contingency) to vote for the election of the members of the board of directors
of Holding or (b) have the right to elect or appoint at least four of the five
members of the board of directors of Holding, then the earlier of (A) six months
after the first date subsequent to the closing date that Steel no longer owns at
least 15% of outstanding shares of the Company and (B) October 31, 2009, AIP may
commence negotiations providing for the Company's purchase of AIP's interest.
For a period of 90 days AIP and the Company will negotiate exclusively. If they
cannot reach an agreement, then Goldman Sachs will be engaged to conduct an
auction of the Company. The Holding Stockholders Agreement shall terminate upon
an initial public offering, liquidation, sale, or the agreement of a majority of
the shares held in Holding by the Company (or shareholders of the Company) and a
majority of the shares held in Holding by AIP and the employees of Holding or
its subsidiaries.

         STEEL PARTNERS ADVISORY FEE.

         At the closing of the Merger, Collins paid Steel a $1.0 million
advisory fee in connection with various services Steel provided relating to the
acquisition of Collins including, but not limited to indicating its willingness
to provide a financing commitment to fully fund the acquisition, as well as
assisting in arranging for a revolving line of credit and term loan and lien
with GMAC Commercial Finance LLC and a second lien with Orix Finance Corp.

         CONFIRMATORY AGREEMENT WITH STEEL PARTNERS

         On December 6, 2004, we entered into a Confirmatory Agreement (the
"Confirmatory Agreement") with Steel Partners II, L.P. ("Steel"). On December 8,
2004, Steel held approximately 597,057 shares of our Class A Common Stock
(representing approximately 19.9% of our combined outstanding Class A and Class
B Common Stock at the time). Under the Confirmatory Agreement, Steel acquired
additional shares of our stock from Couchman Partners, L.P., resulting, after
such purchase, in Steel's ownership of our Common Stock increasing to 41.8% of
the outstanding common stock. In connection with these acquisitions, the Company
agreed to amend its Rights Agreement to increase the common stock ownership
threshold applicable to "Existing Persons" (as defined in the Rights Agreement)
from 20% to 45%.

         Pursuant to the terms of the Confirmatory Agreement, following the
acquisition, two of the then five independent directors on the Company's Board
of Directors resigned from the Board and the number of directors on the Board
was fixed at five. Presently two of our five directors, Jack Howard and James
Henderson, are representatives of Steel. The Company has agreed to recommend
election of two representatives of Steel (Messrs. Howard and Henderson) for
election as directors at this Annual Meeting. Until the election of directors at
this Annual Meeting, the Board of Directors then in office will not, without the
prior approval of at least 66.7% of the members of the Board of Directors then
in office, (a) form an executive committee, (b) increase the size of the Board
of Directors above five directors, (c) approve any executive compensation,
including option or stock grants to executives, (d) remove a director without



                                      -47-



cause, or (e) take any other action that would adversely affect the rights and
powers of the Steel representatives as directors or take any action that would
adversely affect the rights and powers of the Non-Steel Representatives as
directors.

         Steel has also agreed in the Confirmatory Agreement that, until the
elections for directors are held at the Annual Meeting, Steel and its affiliates
will vote all shares of common stock beneficially owned by them in favor of
directors who are not affiliated with, nor are representative of, Steel (the
"Non-Steel Representatives") so that at least 60% of the Company's directors are
Non-Steel Representatives.

         Steel has also agreed in the Confirmatory Agreement that at the Annual
Meeting, and at each meeting of stockholders held thereafter prior to December
31, 2009 where directors are elected, Steel will vote its and its affiliates'
shares to elect at least two Non-Steel Representatives as directors who will be
the same as two of the three Non-Steel Representatives on the Existing Non-Steel
Representatives Directors Committee, or successors designated by them as Post
2006 Non-Steel Representatives Nominees (as defined below), or elect at least
two Non-Steel Representatives selected by Steel if there are no Post 2006
Non-Steel Representatives Nominees designated by the Existing Non-Steel
Representatives Directors Committee available for election as the Post 2006
Non-Steel Representatives Directors. The Post 2006 Non-Steel Representatives
Directors will include Messrs. Kermes and Held, or any successors previously
designated by them (the "Post 2006 Non-Steel Representatives Nominees") as long
as they remain qualified as a Non-Steel Representative and are willing to serve
as directors of the Company and at least two of the Post 2006 non-Steel
Representatives Nominees, or successors designated by them from time to time
after the elections at the Annual Meeting, constitute the "Post 2006 Non-Steel
Representatives Directors Committee".

         In the event that none or only one of the Post 2006 Non-Steel
Representatives Nominees, and successors designated by them, are willing and
able to stand for election as Independent Directors, then a committee of the
then Non-Steel Representatives of the Board of Directors will nominate a
replacement (or replacements, if applicable) candidates to fill the Non-Steel
Representatives positions on the Board of Directors. Under the terms of the
Confirmatory Agreement, there will be two Non-Steel Representatives on the Board
of Directors at all times following this Annual Meeting through December 31,
2009. However, in the event that there are no Post 2006 Non-Steel
Representatives Directors (or a successor designated by them) or any Post 2006
Non-Steel Representatives Nominees for the Non-Steel Representatives Directors
Committee at a given time, then the remaining directors will (after good faith
consultation with any available Post 2006 Non-Steel Representatives Nominees)
select new Non-Steel Representatives Directors.

         The Confirmatory Agreement further provides that the approval of the
Non-Steel Representatives will be required, or in certain circumstances the
approval of the stockholders, subject to certain exceptions (all as set out in
the Confirmatory Agreement) before the adoption or consummation of certain
actions, including the following: (1) entering into any contract, arrangement,
understanding or transaction between Steel and the Company; (2) further
amending, modifying or repealing of the Rights Agreement after the amendment
contemplated by the Confirmatory Agreement; and (3) any amendment, modification
or repeal of the Confirmatory Agreement.

         The Confirmatory Agreement terminates on December 31, 2009.

         MICHAEL WARREN ASSOCIATES AGREEMENT

         As of January 2006, the Company entered into an agreement with Michael
Warren Associates, Inc. through the end of 2006. The Company had previously been
a party to a separate agreement with Michael Warren Associates concerning his
compensation in 2005. Michael Warren receives his compensation from the Company



                                      -48-



through Michael Warren Associates, Inc. See "Employment, Severance, and Other
Agreements - Michael Warren Associates Agreements" below in Item 3.02.

         INFORMATION RELATING TO DIRECTOR INDEPENDENCE

         REFERENCE IS MADE TO THE LIST OF DIRECTORS IN THE SECTION ENTITLED
"DIRECTORS AND EXECUTIVE OFFICERS" HEREIN WHICH IDENTIFIES WHO AMONG THE
DIRECTORS OF THE COMPANY ARE INDEPENDENT.

                                LEGAL PROCEEDINGS

         ENVIRONMENTAL MATTERS

         Subsequent to the sale of our subsidiary, Xygent, in 2002, the nature
of the Company's operations are not affected by environmental laws, rules and
regulations relating to these businesses. However, because the Company and its
subsidiaries and predecessors had conducted manufacturing operations in
locations at which, or adjacent to which, other industrial operations were
conducted, from time to time the Company may be subject to environmental claims.
As with any such operations that involved the use, generation, and management of
hazardous materials, it is possible that prior practices, including practices
that were deemed acceptable by regulatory authorities in the past, may have
created conditions which could give rise to liability under current or future
environmental laws.

         A Phase II environmental investigation on the Rhode Island Property,
completed in June 2002, indicated certain environmental problems on the
property. The results of the study showed that certain contaminants in the soil
under the property and minor groundwater issues exceeded environmental standards
set by the Rhode Island Department of Environmental Management ("RIDEM"). After
extensive testing, the Company submitted a Remedial Action Work Plan ("RAWP") to
RIDEM, and on November 7, 2002, RIDEM issued a letter approving the RAWP.

         In April of 2003, the Company awarded a contract for the remediation
work and engaged an environmental engineering firm to supervise the remediation
work and perform ongoing monitoring of the affected areas. The remediation work
was substantially complete as of December 2003, and in connection with the
August 26, 2003 sale of the Rhode Island Property the Company established an
escrow account in the amount of $.331 million to cover ongoing site monitoring
and any additional remediation costs that may arise. The Company has obtained
insurance against additional known and unknown environmental liabilities at the
Rhode Island Property. However, there is no assurance that the Company will not
incur additional costs for remediation above the escrowed amount and insurance
limits, and that ongoing monitoring of contaminants will not indicate further
environmental problems.

         The Company has obtained contaminated land insurance coverage to insure
against unknown environmental issues relating to its gravel extraction and
landfill property in the U.K. In addition, the Company received a report dated
October 2000, which was updated in July 2003, from an independent environmental
consulting firm indicating no evidence of environmental issues relating to the
property. As mentioned above, the Company sold the U.K. property in June 2004.
The Company has made no environmental representations or indemnifications under
this agreement.

         PRODUCT LIABILITY AND OTHER MATTERS

         The Company receives claims from time to time for toxic tort injuries
related to past products manufactured by the Company and other business
activities. Most of these claims result from the use of small internal seals
that allegedly contained asbestos and were used in small fluid pumps
manufactured by the Company's former pump division, which was sold in 1992.



                                      -49-



There have also been tort claims brought by owners and users of machine tools
manufactured and sold by divisions that were sold in 1993, and a few
miscellaneous claims relating to employment activities, environmental issues,
sales tax audits and personal injury claims. The Company has insurance coverage,
but in general the coverage available has limitations.

         The Company expects that it will continue to be subject to additional
toxic-tort claims in the future. As a matter of Delaware law, the directors are
required to take the probability of future claims into consideration and provide
for final resolution of them in any liquidation strategy. Thus far these claims
have not resulted in any material exposure, but there is no assurance that this
will be the result of all such future toxic-tort claims. Because the law in this
area is developing rapidly, and because such environmental laws are subject to
amendment and widely varying degrees of enforcement, the Company may be subject
to, and cannot predict with any certainty the nature and amount of, potential
environmental liability related to these operations or locations that the
Company may face in the future.

         LITIGATION

         The Company is a defendant in a variety of legal claims that arise in
the normal course of business. Beginning in 1994, the Company's BNS Co.
subsidiary has been served notice that it has been named as a defendant in a
total of 662 known asbestos-related toxic-tort claims (as of October 31, 2006).
In many cases these claims involve more than 100 other defendants. Fifty-four of
those claims were filed prior to December 31, 2001. Additional claims were filed
in subsequent years as follows: In 2002, 98 claims; in 2003, 194 claims; in
2004, 178 claims; and in 2005, 76 claims. As of October 31, 2006, there were 62
additional claims filed.

         In 2002, 42 claims were dismissed or settled for an aggregate of
approximately $30,000 exclusive of attorney's fees. In 2003, three claims were
granted summary judgment, and one claim was dismissed and closed. In 2004, eight
claims were granted summary judgment and were closed, and 144 claims were
dismissed, and seven claims were settled for $500 each. In 2005, six claims were
granted summary judgment and were closed, 124 claims were dismissed and 6 were
settled for $500 each. In October 2005, the Company and its insurers settled two
claims for an aggregate of $150,000. As of October 15, 2006, an additional six
claims were granted summary judgment and were closed, five claims were settled
for an aggregate of $2,600 and an additional 84 claims have been dismissed or
agreed to dismiss. There were 234 known claims open and active as of October 31,
2006. However, under certain circumstances, some of the settled claims may be
reopened. Also, there may be a significant delay in receipt of notification by
the Company of the entry of a dismissal or settlement of a claim of the filing
of a new claim.

         The Company believes it has significant defenses to any liability for
toxic-tort claims on the merits. It should be noted that, to date, none of these
toxic-tort claims have gone to trial and, therefore, there can be no assurance
that these defenses will prevail. However, there can be no assurance that the
number of future claims and the related costs of defense, settlements or
judgments will be consistent with the experience to date of existing claims.

         It has become apparent that the possibility that additional toxic-tort
claims will be asserted in the future, and the impact of this possibility on the
valuation of the Company has had and will continue to have, at least for the
short term, some adverse effects on the Company's ability to determine future
distributions to shareholders or to negotiate a satisfactory merger or other
change-in-control transaction with a third party. These potential claims would
also affect the ability of the Company to effect an orderly liquidation
proceeding, either through a dissolution, formation of a liquidating trust and
liquidation proceedings in the Chancery Court in Delaware, or in a Chapter 11



                                      -50-



federal bankruptcy reorganization proceeding, both of which would involve
provisions for payments to creditors and contemplated distributions to
stockholders.

         LEGAL PROCEEDING WITH RESPECT TO HOLDING AND COLLINS

         There is no material pending legal proceeding, other than ordinary
routine litigation incidental to the business, to which either Holding or
Collins is a party or of which any of its property is subject.

                           MARKET PRICE AND DIVIDENDS

         MARKET INFORMATION

         The Company's Class A Common Stock is listed on the Boston Stock
Exchange under the symbol "BNC" and is traded on the NASD Over-the-Counter (OTC)
Bulletin Board, where market makers and other dealers provide bid and ask
quotations. Since December 15, 2004, the Company's Class A Common Stock has
traded on the OTC Bulletin Board under the symbol "BNSIA" and prior to the
Holding Company Reorganization on December 14, 2004, the stock of BNS Co. traded
on the OTC Bulletin Board under the symbol "BNSXA". Set forth below are the high
and low prices for the Class A Common Stock on the OTC Bulletin Board during the
last three fiscal years. The prices state inter-dealer quotations, which do not
include retail mark-ups, mark-downs or commissions. Such prices do not
necessarily represent actual transactions.

                                            High             Low
                                        -----------      ------------
         2006
         -------------------------
         4th Quarter
         (until Oct 31, 2006)            $    6.90        $    5.65
         3rd Quarter                          5.75             5.10
         2nd Quarter                          5.70             5.35
         1st Quarter                          6.02             5.40

         2005
         -------------------------
         4th Quarter                     $    6.60        $    6.00
         3rd Quarter                          6.90             6.45
         2nd Quarter                          7.00             6.50
         1st Quarter                          7.05             6.40

         2004
         -------------------------
         4th Quarter                     $    6.77        $    6.47
         3rd Quarter                          6.60             6.05
         2nd Quarter                          6.40             5.90
         1st Quarter                          6.75             5.55

         At October 31, 2006, the Company had approximately 1,241 shareholders
of record of its Class A Common Stock.

         We have not declared or paid dividends on our Class A Common Stock and
do not anticipate declaring or paying any cash dividends on our Class A Common
Stock in the foreseeable future. We currently expect to retain future earnings,
if any, for the development of our business. Dividends may be paid on our Class
A Common Stock only if and when declared by our board of directors.


                                      -51-



         EQUITY COMPENSATION PLAN INFORMATION

         We maintain a 1999 Equity Incentive Plan. As of February 23, 2006,
there were no restricted shares of Class A Common Stock and no stock options to
purchase shares of Class A Common Stock outstanding under the Plan.

         The following table provides information as of December 31, 2005 with
respect to the shares of Class A Common Stock that may be issued under our
existing equity compensation plan:

                                                                                                         Number of
                                         Number of securities to             Weighted-average            securities
                                             be issued upon                 exercise price of            remaining
                                         exercise of outstanding           outstanding options,        available for
Plan Category                         options, warrants and rights         warrants and rights        future issuance
- ------------------------------------  ----------------------------        ---------------------       ----------------
Equity compensation
plans approved by
security holders (1)                                          0           $                 0               91,645

Equity compensation
plans not approved by
security holders                                              0           $                 0                    0
- -------------

Represents our 1999 Equity Incentive Plan.

                     UNREGISTERED SALES OF EQUITY SECURITIES

         None

                            DESCRIPTION OF SECURITIES

         The Company is authorized to issue 33.0 million shares of common stock,
divided into 30.0 million Class A Common Stock, 2.0 million Class B Common Stock
and 1.0 million Class B Participating Preferred Stock. Immediately following the
Merger, there were 3,030,444 shares of Class A Common Stock issued and
outstanding, no shares of Class B Common Stock issued and outstanding and no
Class B Participating Preferred Stock outstanding.

         CLASS A AND CLASS B COMMON STOCK

         Dividends- Subject to the limitations prescribed in the Company's
Amended and Restated Certificate of Incorporation, any further limitations in
accordance herewith and any resolution or resolutions of the Board of Directors
providing for the issuance of any series of Preferred Stock, holders of shares
of Class A Common Stock and holders of shares of Class B Common Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of the
assets or funds which are by law available therefor, dividends payable in cash,
or in property, or in shares of Class A Common Stock, or in shares of Class B
Common Stock, or in shares of any series of Preferred Stock, or in any
combination thereof. No cash dividend shall be declared or paid on the Class B
Common Stock unless a cash dividend at least equal in amount per share shall
contemporaneously be declared or paid on the Class A Common Stock. In addition,
no dividends payable in stock property (other than cash) shall be declared or
paid on either the Class A Common Stock or the Class B Common Stock unless an
equal per share dividend of stock or property is declared and paid on the shares
of the other class.


                                      -52-



         Voting - Except as provided by law or except as expressly provided
herein, at every meeting of stockholders, every holder of Class A Common Stock
shall be entitled to one vote on all matters in person or by proxy for each
share of Class A Common Stock outstanding in his name on the transfer books and
every holder of Class B Common Stock shall be entitled to ten votes on all
matters in person or by proxy for each share of Class B common Stock outstanding
in his name on the transfer books.

         At every meeting of the stockholders called for the election of
directors, the holders of Class A Common Stock, voting as a class with the
holders of any series of Preferred Stock entitled to vote, shall be entitled to
elect one-third (1/3) of the number of directors to be elected at such meeting
(excluding from such number any directors to be elected solely by the holders of
any series of Preferred Stock), and if one-third (1/3) of such number of
directors is not a whole number, then the holders of Class A Common Stock,
voting as a class with the holders of any series of Preferred Stock entitled to
vote, shall be entitled to elect the next lower whole number of directors to be
elected at such meeting but in any event shall be entitled to elect at least one
director at such meeting, and the holders of Class B Common Stock shall have no
voting rights with respect to the election of such directors. The holders of
Class A Common Stock, Class B Common Stock and any series of Preferred Stock
entitled to vote thereon, voting as a single class, shall be entitled to elect
the remaining directors to be elected at such meeting (excluding from such
number any directors to be elected solely by the holders of any series of
Preferred Stock).

         Except as may otherwise be required by law or the Company's Amended and
Restated Certificate of Incorporation, holders of Class A Common Stock and Class
B Common Stock shall vote together as a single class, subject to any voting
rights which may be granted to holders of any series of Preferred Stock.

         Each share of Class B Common Stock may at any time be converted by the
holder thereof into one fully paid and nonassessable share of Class A Common
Stock. Such right shall be exercised by the surrender to this Corporation of the
certificate representing such shares of Class B Common Stock to be converted at
any time during normal business hours at the principal executive offices of this
Corporation, or if an agent for the registration or transfer of shares of Class
B Common Stock is then duly appointed and acting (said agent being hereinafter
referred to as the "Transfer Agent"), then at the office of the Transfer Agent,
accompanied by a written notice of the election by the holder thereof to convert
and (as so required by this Corporation or the Transfer Agent) by instruments of
transfer, in form satisfactory to the Corporation and the Transfer Agent, duly
executed by such holder or his duly authorized attorney, and by transfer tax
stamps or funds therefore.

         CLASS B PARTICIPATING PREFERRED STOCK

         The Company has a Rights Plan whereby a dividend purchase right (a
Right) was declared for every outstanding share of the Company's Class A Common
Stock and Class B Common Stock. The Rights expire on February 13, 2008 or upon
the earlier redemption of the Rights, and they are not exercisable until a
distribution date on the occurrence of certain specified events.

         Each Right entitles the holder to purchase from the Company one
one-hundredth of a share of Series B Participating Preferred Stock, $.01 par
value per share, at a price of $12.00 per one one-hundredth of a share, subject
to adjustment. The Rights will, on the distribution date, separate from the
Common Stock and become exercisable ten days after a person has acquired
beneficial ownership of 5% (or 45% in the case of stockholders, and certain of
their transferees, who together with their affiliates beneficially held 5% or
more of the Company's outstanding Common Stock on October 6, 2003) or more of
the outstanding shares of Common Stock of the Company or commencement of a
tender or exchange offer that would result in any person owning 5% (or 45% in
the case of stockholders, and certain of their transferees, who together with
their affiliates beneficially held 5% or more of the Company's outstanding
Common Stock on October 6, 2003) or more of the Company's outstanding Common
Stock.


                                      -53-




                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Section 145 of the Delaware General Corporation Law ("DGCL") provides,
in general, that a corporation incorporated under the laws of the State of
Delaware, such as the Company, may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than a derivative action by or in the right of the
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful. In the case of a derivative action, a Delaware corporation may
indemnify any such person against expenses (including attorneys' fees) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification will be made in
respect of any claim, issue or matter as to which such person will have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery of the State of Delaware or any other court in which such
action was brought determines such person is fairly and reasonably entitled to
indemnity for such expenses.

         The Company's Bylaws provide that the Company will indemnify the
Company's directors, officers, employees and agents to the extent and in the
manner permitted by the provisions of the DGCL, as amended from time to time,
subject to any permissible expansion or limitation of such indemnification, as
may be set forth in any stockholders' or directors' resolution or by contract.
In addition, the Company's director and officer indemnification agreements with
each of its executive officers and directors provide, among other things, for
the indemnification to the fullest extent permitted or required by Delaware law,
provided that such indemnitee shall not be entitled to indemnification in
connection with any "Expenses" (as such term is defined in the agreement) if
he/she acted in bad faith and in a manner he/she reasonably believed to be not
in the best interests of the Company.

         Any repeal or modification of these provisions approved by the
Company's stockholders shall be prospective only, and shall not adversely affect
any limitation on the liability of a director or officer of the Company existing
as of the time of such repeal or modification.

         The Company is also permitted to apply for insurance on behalf of any
director, officer, employee or other agent for liability arising out of his
actions, whether or not the DGCL would permit indemnification.

         Pursuant to the Merger Agreement, the Company will, or will cause its
subsidiary, Collins, as the surviving corporation to, provide, for a period of
not less than six years, to honor all rights to indemnification now existing in
favor of any director, officer or employee of Collins and its subsidiaries as
provided in their respective charters or by laws or by contract. Collins will
purchase prepaid insurance policies with a claims period of at least six years
with respect to directors' and officers' liability insurance in amount and scope
at least as favorable as Collins' existing policies for claims arising from the
facts or events that occurred on or prior to the effective time of the Merger,
provided that the aggregate premium of such policies to not exceed $50,000.


                                      -54-


         ANTI-TAKEOVER EFFECT OF DELAWARE LAW, CERTAIN BY-LAW PROVISIONS

         Certain provisions of the Company's By-Laws are intended to strengthen
the Board of Directors' position in the event of a hostile takeover attempt.
These provisions have the following effects:

         o  they provide that only business brought before an annual meeting by
                the Board of Directors or by a stockholder who complies with the
                procedures set forth in the By-Laws may be transacted at an
                annual meeting of stockholders; and

         o  they provide for advance notice or certain stockholder actions, such
                as the nomination of directors and stockholder proposals.

         The Company is subject to the provisions of Section 203 of the DGCL, an
anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. For purposes of Section 203, a
"business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder, and an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years prior, did own, 15% or more of the
voting stock.

                   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         REFERENCE IS MADE TO ITEM 9.01 OF THIS CURRENT REPORT ON FORM 8-K FOR
THE PROFORMA OF THE FINANCIAL STATEMENTS OF THE COMPANY AND THE FINANCIAL
STATEMENTS OF COLLINS.

           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                            AND FINANCIAL DISCLOSURE

         NONE



ITEM 2.03   CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.

         Reference is made to Item 1.01 with respect to the description of the
following loan agreements entered into by the Company or any of its affiliates
in order to close the transaction contemplated by the Merger Agreement.

         o  Term Loan Agreement with Steel Partners

         o  Loan Agreement with GMAC Commercial Finance LLC

         o  Subordinated Loan Agreement with Orix Finance Corp.

ITEM 5.02.  DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.

         Upon completion of the Merger transaction contemplated by the Merger
Agreement described in Item 1.01, (i) the Board of Directors of Collins resigned



                                      -55-



and was replaced by the Board of Directors of Holding and (ii) Richard Donnelly
resigned as a director of the Company. Mr. Donnelly resigned as a director of
the Company to avoid any conflicts of interest since he is also on the board of
directors of OshKosh Truck Corp., a designer and manufacturer of specialty
trucks and truck bodies and a competitor of Collins.

         As of the closing of the Merger, Mr. Paul Bamatter replaced Mr. Cletus
Glasener as Chief Financial Officer of Collins. Information regarding Mr.
Bamatter is provided in Item 2.01 - DIRECTORS AND EXECUTIVE OFFICERS OF COLLINS,
which is incorporated herein by reference.

ITEM 5.03   AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR.

         On October 31, 2006, by unanimous written consent of the Board of
Directors of the Company, the Company changed its fiscal year end from December
31 to October 31. The Company will be filing a transition report for the period
January 1, 2006 to October 31, 2006 on a Form 10-KSB no later than January 29,
2007.

ITEM 5.06.  CHANGE IN SHELL COMPANY STATUS

         As a result of the consummation of the Merger described in Items 1.01
and 2.01 of this Current Report on Form 8-K, we believe that the Company is no
longer a "shell corporation," as that term is defined in Rule 405 of the
Securities Act and Rule 12b-2 of the Exchange Act.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

         (a) Financial Statements of Businesses Acquired.

         In accordance with Item 9.01(a), Collins' audited financial statements
for the fiscal years ended October 31, 2005, 2004 and 2003 and Collins'
unaudited financial statements for the nine-month interim periods ended July 30,
2006 and 2005 are filed in this Current Report on Form 8-K as Exhibit 99.1.

         (b) Pro Forma Financial Information.

         In accordance with Item 9.01(b), our pro forma financial statements are
filed in this Current Report on Form 8-K as Exhibit 99.2.

         (c) Exhibits.

         The exhibits listed in the following Exhibit Index are filed as part of
this Current Report on Form 8-K.

Exhibit No.    Description

       2.1     Merger Agreement dated September 26, 2006 by and among Collins
               Industries, Inc., CA Acquisition Corp. and Steel Partners II,
               L.P.

       3.1     Amended and Restated Certificate of Incorporation of BNS Holding,
               Inc. - incorporated herein by reference to Exhibit 99.2 to the
               Company's Form 8-K filed on December 14, 2004


                                      -56-



       3.2     Amended and Restated By-laws of BNS Holding, Inc. (incorporated
               herein by reference to Exhibit 3.1 to the Company's Form 8-K
               filed on April 8, 2005).

      10.1     Stockholders Agreement dated October 31, 2006 by and among BNS
               Holding, Inc., Collins I Holding Corp., Collins Industries, Inc.,
               American Industrial Partnership and certain employee
               shareholders.

      10.2     Term Loan Agreement dated October 30, 2006 by and between BNS
               Holding, Inc. and Steel Partners II, L.P.

      10.3     Loan and Security Agreement dated as of October 31, 2006 by and
               among CS Acquisition Corp., Collins Industries, Inc., Collins Bus
               Corporation, Wheeled Coach Industries, Inc., Capacity of Texas,
               Inc., Mid Bus, Inc., and Mobile Products, Inc., as borrowers,
               Collins Ambulance Corp., Wheeled Coach Enterprises, Inc.,
               Mobile-Tech Corporation, World Trans, Inc., Brutzer Corporation,
               Collins Financial Services, Inc., as guarantors, and GMAC
               Commercial Finance LLC, as agent and as a lender.

      10.4     Loan and Security Agreement dated as of October 31, 2006 by and
               among CS Acquisition Corp., Collins Industries, Inc., Collins Bus
               Corporation, Wheeled Coach Industries, Inc., Capacity of Texas,
               Inc., Mid Bus, Inc., and Mobile Products, Inc., as borrowers,
               Collins Ambulance Corp., Wheeled Coach Enterprises, Inc.,
               Mobile-Tech Corporation, World Trans, Inc., Brutzer Corporation,
               Collins Financial Services, Inc., as guarantors, and ORIX Finance
               Corp., as agent and as a lender.

      10.5     Management Agreement dated October 31, 2006 by and between BNS
               Holding, Inc. and Collins Industries, Inc.

      10.6     Warrant dated October 31, 2006 issued by Collins I Holding Corp.
               in favor of BNS Holding, Inc.

      10.7     Subscription Agreement dated October 31, 2006 by and among BNS
               Holding, Inc. and Collins I Holding Corp.

      10.8     Pledge and Security Agreement dated October 30, 2006 by and
               between BNS Holding, Inc. and Steel Partners II, L.P.

      10.9     Note from the Term Loan Agreement dated October 30, 2006 by and
               between BNS Holding, Inc. and Steel Partners II, L.P.

      10.10    Letter from Collins Industries, Inc. to Steel Partners II, L.P.,
               dated October 31, 2006 related to the payment of an advisory fee
               of $1.0 million.

      21.1     List of Subsidiaries

      99.1     Collins Industries, Inc. financial statements for the fiscal
               years ended October 31, 2005, 2004 and 2003 and for the nine
               months ended July 31, 2006 and 2005 (unaudited)

     99.2      Unaudited pro forma consolidated balance sheet as of December 31,
               2005 and September 30, 2006 and unaudited pro forma consolidated
               statement of operations for the year ended December 31, 2005 and
               for the nine months ended September 30, 2006



                                      -57-



                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date: November 6, 2006         BNS HOLDING, INC.

                                 By: /s/ Michael Warren
                                    --------------------------------------------
                                    Name: Michael Warren
                                    Title: President,Chief Executive Officer and
                                           Chief Financial Officer






                                      -58-

EX-2.1

                                                                     Exhibit 2.1


                                                                  EXECUTION COPY




                          AGREEMENT AND PLAN OF MERGER

                                  by and among

                            COLLINS INDUSTRIES, INC.,

                              CS ACQUISITION CORP.,

                                       and

                             STEEL PARTNERS II, L.P.

                                   dated as of

                               September 26, 2006




                                TABLE OF CONTENTS

                                                                            PAGE

ARTICLE I THE MERGER...........................................................1

   SECTION 1.1      THE MERGER.................................................1
   SECTION 1.2      EFFECTIVE TIME.............................................1
   SECTION 1.3      EFFECTS OF THE MERGER......................................2
   SECTION 1.4      CONVERSION OF COMMON SHARES................................2
   SECTION 1.5      INTENTIONALLY DELETED......................................2
   SECTION 1.6      OPTIONS; STOCK PLANS.......................................2
   SECTION 1.7      SHAREHOLDERS' MEETING......................................3
   SECTION 1.8      CLOSING....................................................3

ARTICLE II THE SURVIVING CORPORATION...........................................4

   SECTION 2.1      ARTICLES OF INCORPORATION..................................4
   SECTION 2.2      BYLAWS.....................................................4
   SECTION 2.3      DIRECTORS..................................................4
   SECTION 2.4      OFFICERS...................................................4

ARTICLE III DISSENTING SHARES; PAYMENT FOR SHARES..............................4

   SECTION 3.1      DISSENTING SHARES..........................................4
   SECTION 3.2      PAYMENT FOR COMMON SHARES..................................5

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................7

   SECTION 4.1      ORGANIZATION AND QUALIFICATION; SUBSIDIARIES...............7
   SECTION 4.2      CHARTER; BYLAWS AND RIGHTS AGREEMENT.......................7
   SECTION 4.3      CAPITALIZATION.............................................7
   SECTION 4.4      AUTHORITY..................................................9
   SECTION 4.5      NO CONFLICT; REQUIRED FILINGS AND CONSENTS................10
   SECTION 4.6      SEC REPORTS AND FINANCIAL STATEMENTS......................11
   SECTION 4.7      ENVIRONMENTAL MATTERS.....................................12
   SECTION 4.8      COMPLIANCE WITH APPLICABLE LAWS...........................13
   SECTION 4.9      LITIGATION................................................14
   SECTION 4.10     INFORMATION...............................................14
   SECTION 4.11     CERTAIN APPROVALS.........................................14
   SECTION 4.12     EMPLOYEE BENEFIT PLANS....................................14
   SECTION 4.13     INTELLECTUAL PROPERTY.....................................16
   SECTION 4.14     TAXES.....................................................17
   SECTION 4.15     ABSENCE OF CERTAIN CHANGES................................19
   SECTION 4.16     LABOR AND EMPLOYMENT MATTERS..............................20
   SECTION 4.17     RIGHTS AGREEMENT..........................................22
   SECTION 4.18     BROKERS...................................................22
   SECTION 4.19     OPINION OF FINANCIAL ADVISOR..............................23
   SECTION 4.20     MATERIAL CONTRACTS........................................23
   SECTION 4.21     TITLE TO PROPERTIES.......................................23


                                       i


   SECTION 4.22     ACCOUNTS RECEIVABLE.......................................24
   SECTION 4.23     RESTRICTIONS ON BUSINESS ACTIVITIES.......................24
   SECTION 4.24     REPRESENTATIONS COMPLETE..................................24

ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER..........24

   SECTION 5.1      ORGANIZATION AND QUALIFICATION............................24
   SECTION 5.2      AUTHORITY.................................................25
   SECTION 5.3      NO CONFLICT; REQUIRED FILINGS AND CONSENTS................25
   SECTION 5.4      INFORMATION...............................................26
   SECTION 5.5      FINANCING.................................................26
   SECTION 5.6      STOCK OWNERSHIP...........................................26
   SECTION 5.7      PURCHASER'S OPERATIONS....................................26
   SECTION 5.8      REPRESENTATIONS COMPLETE..................................26
   SECTION 5.9      SOLVENCY..................................................27

ARTICLE VI COVENANTS..........................................................27

   SECTION 6.1      CONDUCT OF BUSINESS OF THE COMPANY........................27
   SECTION 6.2      ACCESS TO INFORMATION.....................................30
   SECTION 6.3      EFFORTS...................................................31
   SECTION 6.4      PUBLIC ANNOUNCEMENTS......................................32
   SECTION 6.5      EMPLOYEE BENEFIT ARRANGEMENTS.............................32
   SECTION 6.6      INDEMNIFICATION...........................................33
   SECTION 6.7      NOTIFICATION OF CERTAIN MATTERS...........................34
   SECTION 6.8      RIGHTS AGREEMENT..........................................34
   SECTION 6.9      STATE TAKEOVER LAWS.......................................34
   SECTION 6.10     NO SOLICITATION...........................................34
   SECTION 6.11     SHAREHOLDER LITIGATION....................................36
   SECTION 6.12     RESIGNATIONS..............................................36
   SECTION 6.13     TERMINATION OF CERTAIN INSURANCE POLICIES.................36
   SECTION 6.14     SEVERANCE PAYMENTS........................................36
   SECTION 6.15     DISMISSAL OF LAWSUIT......................................36

ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER..........................36

   SECTION 7.1      CONDITIONS TO EACH PARTY'S OBLIGATIONS....................36
   SECTION 7.2      CONDITIONS TO OBLIGATIONS OF THE PARENT...................37
   SECTION 7.3      CONDITION TO OBLIGATIONS OF THE COMPANY...................38
   SECTION 7.4      FRUSTRATION OF CONDITIONS.................................38

ARTICLE VIII TERMINATION; AMENDMENTS; WAIVER..................................38

   SECTION 8.1      TERMINATION...............................................38
   SECTION 8.2      EFFECT OF TERMINATION.....................................39
   SECTION 8.3      FEES AND EXPENSES.........................................40
   SECTION 8.4      AMENDMENT.................................................40
   SECTION 8.5      EXTENSION; WAIVER.........................................41


                                       ii


ARTICLE IX MISCELLANEOUS......................................................41

   SECTION 9.1      NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.41
   SECTION 9.2      ENTIRE AGREEMENT; ASSIGNMENT..............................41
   SECTION 9.3      VALIDITY..................................................42
   SECTION 9.4      NOTICES...................................................42
   SECTION 9.5      GOVERNING LAW.............................................43
   SECTION 9.6      DESCRIPTIVE HEADINGS......................................43
   SECTION 9.7      COUNTERPARTS..............................................43
   SECTION 9.8      PARTIES IN INTEREST.......................................43
   SECTION 9.9      DEFINITIONS...............................................43
   SECTION 9.10     SPECIFIC PERFORMANCE......................................46

                                    EXHIBITS

Exhibit A           Voting Agreement


                                    SCHEDULES

SCHEDULE 4.1        ORGANIZATION AND QUALIFICATION OF SUBSIDIARIES
SCHEDULE 4.3(b)     OUTSTANDING OPTIONS
SCHEDULE 4.3(d)     RESTRICTED STOCK
SCHEDULE 4.3(h)     INDEBTEDNESS
SCHEDULE 4.3(j)     LIST OF SUBSIDIARIES; JOINT VENTURES; INDEMNITY AGREEMENTS
SCHEDULE 4.5(a)     COMPANY'S REQUIRED FILINGS AND CONSENTS
SCHEDULE 4.6(a)     SEC REPORTS
SCHEDULE 4.6(b)     BALANCE SHEET INFORMATION
SCHEDULE 4.6(c)     MATERIAL LIABILITIES
SCHEDULE 4.7        ENVIRONMENTAL MATTERS
SCHEDULE 4.9        LITIGATION
SCHEDULE 4.12(a)    EMPLOYEE BENEFIT PLANS
SCHEDULE 4.12(c)    QUALIFIED PLANS
SCHEDULE 4.12(e)    MULTIEMPLOYER PLANS
SCHEDULE 4.12(f)    RETIREE HEALTH AND WELFARE BENEFITS
SCHEDULE 4.12(h)    PAYMENTS OR BENEFITS TO COMPANY EMPLOYEES
SCHEDULE 4.12(i)    AMENDMENTS TO EMPLOYMENT AGREEMENTS OR STOCK OPTION AGREEMENTS
SCHEDULE 4.14(a)    TAXES
SCHEDULE 4.15(f)    ABSENCE OF CERTAIN CHANGES
SCHEDULE 4.16(a)    LABOR AND EMPLOYMENT CLAIMS
SCHEDULE 4.16(d)    OFFICER AND DIRECTOR INFORMATION
SCHEDULE 4.18       FEES AND EXPENSES
SCHEDULE 4.20       MATERIAL CONTRACTS
SCHEDULE 4.21       REAL PROPERTY
SCHEDULE 4.23       RESTRICTIONS ON BUSINESS ACTIVITIES
SCHEDULE 6.1        CONDUCT OF BUSINESS OF THE COMPANY
SCHEDULE 6.13       INSURANCE POLICIES
SCHEDULE 6.14       SEVERANCE EXPENSES
SCHEDULE 7.2(d)     CONSENTS


                                       iii


                          AGREEMENT AND PLAN OF MERGER

         AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"),  dated as of September
26, 2006, by and among STEEL PARTNERS II, L.P., a Delaware  limited  partnership
(the "PARENT"), CS ACQUISITION CORP., a Missouri corporation and a subsidiary of
the  Parent  (the  "PURCHASER"),   and  COLLINS  INDUSTRIES,  INC.,  a  Missouri
corporation (the "COMPANY").

         WHEREAS, the general partner of the Parent and the respective Boards of
Directors of the Purchaser  and the Company have approved and adopted,  and deem
it advisable and in the best interests of their respective  limited partners and
shareholders  to  consummate,  the  merger  of the  Purchaser  with and into the
Company, as set forth herein (the "MERGER"),  in accordance with The General and
Business Corporation Law of Missouri (the "GBCL") and upon the terms and subject
to the conditions set forth in this Agreement;

         WHEREAS,  contemporaneously  with the  execution  and  delivery of this
Agreement, and as a condition and inducement to the Parent's and the Purchaser's
willingness to enter into this  Agreement,  certain  shareholders of the Company
(each, a  "SHAREHOLDER")  are each entering into a Voting Agreement (the "VOTING
AGREEMENT")  in the form  attached  hereto as EXHIBIT A,  pursuant to which each
such  Shareholder  has agreed,  among other things,  to grant the Parent a proxy
with  respect to the voting of such Shares in favor of the Merger upon the terms
and subject to the conditions set forth therein;

         WHEREAS,  the Parent,  the  Purchaser  and the  Company  desire to make
certain representations, warranties and agreements in connection with the Merger
and also to prescribe various conditions to the Merger.

         NOW,  THEREFORE,  in  consideration of the foregoing and the respective
representations,  warranties and agreements  set forth herein,  the Parent,  the
Purchaser and the Company agree as follows:

                                   ARTICLE I
                                   THE MERGER

         SECTION 1.1 THE MERGER.

         Upon the  terms  and  subject  to the  satisfaction  or  waiver  of the
conditions hereof, and in accordance with the applicable provisions of the GBCL,
at the Effective  Time the  Purchaser  will be merged with and into the Company.
Following the Merger,  the separate  corporate  existence of the Purchaser  will
cease and the Company will continue as the surviving corporation (the "SURVIVING
CORPORATION").

         SECTION  1.2  EFFECTIVE  TIME.

         Subject to the provisions of this  Agreement,  on the Closing Date, the
parties hereto will  consummate the Merger,  in the manner required by the GBCL,
by  delivering  articles  of  merger to the  Secretary  of State of the State of
Missouri,  and take such other and further  actions as may be required by law to
cause the Merger to become  effective.  The time the Merger becomes effective is
referred to herein as the "EFFECTIVE TIME."


                                       1


         SECTION 1.3 EFFECTS OF THE MERGER.

         The  Merger  will  have the  effects  set  forth in the  GBCL.  Without
limiting the generality of the foregoing,  and subject thereto, at the Effective
Time,  all the  properties,  rights,  privileges,  powers and  franchises of the
Company and the Purchaser will vest in the Surviving Corporation, and all debts,
liabilities  and duties of the Company and the Purchaser  will become the debts,
liabilities and duties of the Surviving Corporation.

         SECTION 1.4  CONVERSION OF COMMON  SHARES.

         At the  Effective  Time, by virtue of the Merger and without any action
on the part of the Parent,  the Purchaser,  the Company or any holders  thereof,
each share of the Company's  common stock, par value $.10 per share (the "COMMON
SHARES")  and  the  one  share  of  Non-Redeemable   Common  Stock,  issued  and
outstanding  immediately  prior to the Effective Time (other than (i) Dissenting
Shares  and (ii) any  Common  Shares in the  treasury  of the  Company or by any
wholly owned  subsidiary of the Company,  which Common Shares,  by virtue of the
Merger  and  without  any  action  on the part of the  holder  thereof,  will be
cancelled  and retired  and will cease to exist with no payment  being made with
respect  thereto) will be cancelled  and retired and will be converted  into the
right to  receive  $12.50 in cash (the  "MERGER  PRICE"),  payable to the holder
thereof,  without interest thereon,  upon surrender of the certificate  formerly
representing such Common Share.

         SECTION 1.5 INTENTIONALLY DELETED.

         SECTION 1.6 OPTIONS;  STOCK PLANS.

         Prior to the Effective Time, the Board of Directors of the Company (the
"COMPANY  BOARD")  (or,  if  appropriate,  any  committee  thereof)  will  adopt
appropriate  resolutions  and take all  other  actions  necessary  or  desirable
(including effecting all necessary amendments to the Stock Plans and Options and
obtaining  all   applicable   consents  from   optionees)  to  provide  for  the
cancellation,  effective at the Effective Time, of all of the outstanding  stock
options (the  "OPTIONS")  heretofore  granted  under any stock option or similar
plan of the Company  (the  "STOCK  PLANS") or under any  agreement,  without any
payment therefor except as otherwise provided in this Section 1.6.

                  (a)  Immediately  prior  to the  Effective  Time,  each of the
         Options  (whether  vested or  unvested)  which are  listed in  SCHEDULE
         4.3(B)  of the  disclosure  schedule  delivered  to the  Parent  by the
         Company prior to the date hereof (the "COMPANY  DISCLOSURE  SCHEDULE"),
         which  list  includes  all  outstanding  Options,  will be  vested  and
         canceled,   to  the  extent  such  Option  remains  outstanding  as  of
         immediately prior to the Effective Time (and to the extent  exercisable
         will no longer be exercisable) and will entitle the holder thereof,  in
         cancellation and settlement therefor,  to a payment, if any, in cash by


                                       2


         the  Company  (less  any  applicable  withholding  taxes)  equal to the
         product of (i) the total number of Common Shares subject to such Option
         (without regard to whether such Option was vested or unvested) and (ii)
         the excess,  if any, of the Merger  Price over the  exercise  price per
         Common  Share  subject  to such  Option  (the  "CASH  -----  Payment");
         provided  that no such  payment will be due until  following  such time
         that the Company has  delivered to the Parent a true and complete  list
         of the Options which remain  outstanding as of immediately prior to the
         Effective Time. If the exercise price per share of any Option equals or
         exceeds the Merger  Price,  the Cash  Payment  therefor  shall be zero.
         Notwithstanding  the foregoing,  payment of the Cash Payment is subject
         to  written  acknowledgment,  in a form  acceptable  to  the  Surviving
         Corporation,  delivered  within five (5) days after the date hereof and
         conditioned on Closing,  that no further  payment is due to such holder
         on account of any Option  and all of such  holder's  rights  under such
         Options have terminated.

                  (b) The Company represents, warrants and covenants that, prior
         to the Effective Time, the Company Board will take all necessary action
         to terminate the 1995 Stock Option Plan and the 1997 Omnibus  Incentive
         Plan,  and all  other  Stock  Plans  and any  other  plan,  program  or
         arrangement,  including under employment agreements,  providing for the
         issuance  or grant of Options or any other  interest  in respect of the
         Capital Stock of the Company or any  subsidiary in each case  effective
         prior to the Effective Time.

                  (c) The  Company and the Parent  agree that the Cash  Payments
         are the sole  payments that will be made with respect to or in relation
         to the Options.

         SECTION 1.7  SHAREHOLDERS'  MEETING.

         The Company, acting through the Company Board, will, in accordance with
applicable law:

                  (a) duly  call,  give  notice of,  convene  and hold a special
         meeting  of  its  shareholders  (the  "SPECIAL  Meeting")  as  soon  as
         practicable  following the execution of this  Agreement for the purpose
         of considering and taking action upon this Agreement;

                  (b)  prepare,   in  consultation  with  the  Parent,  a  proxy
         statement (the "PROXY  STATEMENT") to be mailed to its  shareholders to
         obtain the  necessary  approvals  of the Merger  and  adoption  of this
         Agreement by its shareholders; and

                  (c) subject to Section 6.3(c),  include in the Proxy Statement
         the  recommendation  of the  Company  Board  that  shareholders  of the
         Company  vote in favor of the  approval  of the Merger and  adoption of
         this Agreement.

         SECTION 1.8  CLOSING.

         The  closing of the  Merger  (the  "CLOSING")  will take place at 10:00
a.m.,  on a date  to be  specified  by the  parties,  which  will  be as soon as
practicable,  but  in  no  event  later  than  the  third  business  day,  after
satisfaction  or waiver of all of the conditions set forth in Article VII hereof


                                       3


(the  "CLOSING  DATE"),  at the offices of Olshan  Grundman  Frome  Rosenzweig &
Wolosky LLP, or at such other time, date or place as the parties may agree.  The
parties will use commercially  reasonable  efforts to cause the Closing to occur
on or before October 31, 2006.

                                   ARTICLE II
                            THE SURVIVING CORPORATION

         SECTION 2.1 ARTICLES OF INCORPORATION.

         The  Articles  of  Incorporation   of  the  Purchaser,   as  in  effect
immediately  prior to the Effective Time, will be the Articles of  Incorporation
of the Surviving  Corporation  until  thereafter  amended in accordance with the
provisions  thereof and hereof and applicable law; provided that the name of the
Surviving Corporation will be "Collins Industries, Inc."

         SECTION 2.2 BYLAWS.

         Subject to the provisions of Section 6.6 of this Agreement,  the Bylaws
of the  Purchaser  in effect  at the  Effective  Time will be the  Bylaws of the
Surviving  Corporation  until amended in accordance with the provisions  thereof
and applicable law.

         SECTION 2.3 DIRECTORS.

         Subject to applicable  law, the directors of the Purchaser  immediately
prior to the  Effective  Time will be the  initial  directors  of the  Surviving
Corporation  and will hold office  until their  respective  successors  are duly
elected and qualified, or their earlier death, resignation or removal.

         SECTION 2.4 OFFICERS.

         The officers of the Company  immediately  prior to the  Effective  Time
will be the initial officers of the Surviving Corporation.

                                  ARTICLE III
                      DISSENTING SHARES; PAYMENT FOR SHARES

         SECTION 3.1  DISSENTING  SHARES.

         Notwithstanding  Section 1.4,  Common  Shares  outstanding  immediately
prior to the  Effective  Time and held by a holder who has not voted in favor of
the Merger or consented  thereto in writing and who has demanded  appraisal  for
such Common Shares in accordance with the GBCL ("DISSENTING SHARES") will not be
converted  into a right to receive the Merger Price and the holder  thereof will
be entitled  only to such rights as are granted by the GBCL,  unless such holder
fails to  perfect  or  withdraws  or  otherwise  loses  such  holder's  right to
appraisal. If after the Effective Time such holder fails to perfect or withdraws
or loses such holder's right to appraisal, such Common Shares will be treated as
if they had been  converted as of the Effective Time into a right to receive the
Merger  Price,  and such Common  Shares will not then be deemed to be Dissenting
Shares under this  Agreement.  The Company will give the Parent prompt notice of
any  demands  received by the Company  for  appraisal  of Common  Shares and any


                                       4


objections  to the  Merger,  and the Parent  will have the right to conduct  all
negotiations and proceedings with respect to such demands. The Company will not,
except  with the prior  written  consent of the Parent,  make any  payment  with
respect  to, or settle or offer to  settle,  or  otherwise  negotiate,  any such
demands.

         SECTION 3.2 PAYMENT FOR COMMON SHARES.

                  (a) At Closing,  the Parent or the Purchaser will deposit,  or
         cause to be  deposited,  in trust with such bank or trust company as is
         mutually  acceptable to the Parent and the Company (the "PAYING AGENT")
         the  aggregate  Merger Price to which  holders of Common Shares will be
         entitled at the Effective  Time pursuant to Section 1.4. On the Closing
         Date, the Paying Agent will invest the funds deposited with it pursuant
         to this Section in money market  securities or similar type investments
         as the Parent may direct. From and after the Effective Time, the Paying
         Agent  will  effect  the  payment  of the  Merger  Price in  respect of
         certificates  (the  "CERTIFICATES")  that, prior to the Effective Time,
         represented  Common  Shares  entitled  to payment  of the Merger  Price
         pursuant to Section 1.4.

                  (b) Promptly  after the Effective  Time, the Paying Agent will
         mail to each record holder of  Certificates as of the Effective Time, a
         form of letter of transmittal approved by the Parent which will specify
         that  delivery  will be  effected,  and risk of loss  and  title to the
         Certificates  will pass, only upon proper delivery of the  Certificates
         to the  Paying  Agent and  instructions  for use in  surrendering  such
         Certificates  and receiving the Merger Price in respect  thereof.  Upon
         the  surrender  of  each  such  Certificate  together  with a  properly
         completed and executed letter of transmittal, the Paying Agent will pay
         to the holder of such  Certificate  the Merger Price  multiplied by the
         number of Common Shares formerly  represented by such  Certificate,  in
         consideration   therefor,   and  such  Certificate  will  forthwith  be
         cancelled.  Until so  surrendered,  each such  Certificate  (other than
         Dissenting  Shares or Certificates  representing  Common Shares held by
         the Parent or the Purchaser,  any wholly owned subsidiary of the Parent
         or the Purchaser, in the treasury of the Company or by any wholly owned
         subsidiary of the Company) will  represent  solely the right to receive
         the aggregate Merger Price relating  thereto.  No interest or dividends
         will be paid or accrued on the Merger  Price.  If the Merger  Price (or
         any portion  thereof) is to be  delivered  to any person other than the
         person in whose name the Certificate surrendered is registered, it will
         be a  condition  to such right to receive  such  Merger  Price that the
         Certificate  so  surrendered  be properly  endorsed or  otherwise be in
         proper  form  for  transfer  and  that  the  person  surrendering  such
         Certificate  will pay to the Paying  Agent any  transfer or other taxes
         required by reason of the payment of the Merger Price to a person other
         than the registered holder of the Certificate surrendered, or establish
         to the  satisfaction of the Paying Agent that such taxes have been paid
         or are not applicable.

                  (c)  Promptly  after  the  Surviving   Corporation's   request
         therefor  made at any time  following  the date which is 180 days after
         the  Effective  Time,  the Paying Agent will  deliver to the  Surviving
         Corporation  all  cash,   Certificates   and  other  documents  in  its


                                       5


         possession  relating to the  transactions  described in this Agreement,
         and upon such  delivery  the  Paying  Agent's  duties  will  terminate.
         Thereafter, each holder of a Certificate may surrender such Certificate
         to the  Surviving  Corporation  and  (subject to  applicable  abandoned
         property,  escheat and similar laws) receive in consideration  therefor
         the aggregate  Merger Price relating  thereto,  without any interest or
         dividends thereon.  Notwithstanding the foregoing,  none of the Parent,
         the  Purchaser,  the Company or the Paying  Agent will be liable to any
         person in respect of any cash delivered to a public  official  pursuant
         to any applicable abandoned property, escheat or similar law.

                  (d) After the  Effective  Time,  there will be no transfers on
         the stock  transfer  books of the Surviving  Corporation  of any Common
         Shares which were outstanding  immediately prior to the Effective Time.
         If,  after  the  Effective  Time,  Certificates  are  presented  to the
         Surviving Corporation or the Paying Agent, they will be surrendered and
         cancelled  in return for the  payment  of the  aggregate  Merger  Price
         relating thereto, as provided in this Article III.

                  (e) In the event any Certificates shall have been lost, stolen
         or  destroyed,  upon the  making  of an  affidavit  of that fact by the
         person claiming such  Certificate(s)  to be lost,  stolen or destroyed,
         the Paying Agent will  disburse the Merger Price  payable in respect of
         the  Common  Shares  represented  by such  lost,  stolen  or  destroyed
         Certificates.

                  (f) The Purchaser shall be entitled to deduct and withhold, or
         cause the Paying  Agent to deduct and  withhold,  from the Merger Price
         payable to a holder of Common  Shares  pursuant  to the Merger any such
         amounts as are  required  under the Internal  Revenue Code of 1986,  as
         amended (the "CODE"),  or any applicable  provision of state,  local or
         foreign  Tax law.  To the extent  that  amounts  are so withheld by the
         Purchaser or Paying Agent,  such withheld  amounts shall be treated for
         all purposes of this Agreement as having been paid to the holder of the
         Common Shares in respect of which such  deduction and  withholding  was
         made by the Purchaser.

                  (g) If, at any time after the  Effective  Time,  the Surviving
         Corporation shall consider or be advised that any deeds, bills of sale,
         assignments, assurances or any other actions or things are necessary or
         desirable  to vest,  perfect or confirm of record or  otherwise  in the
         Surviving  Corporation its right, title or interest in, to or under any
         of the rights,  properties or assets of the Purchaser or the Company or
         otherwise carry out this  Agreement,  the officers and directors of the
         Surviving  Corporation  shall be authorized to execute and deliver,  in
         the name and on behalf of the Purchaser or the Company, all such deeds,
         bills of sale,  assignments  and  assurances and to take and do, in the
         name and on behalf of the  Purchaser  or the  Company,  all such  other
         actions and things as may be necessary or desirable to vest, perfect or
         confirm  any and all right,  title and  interest  in, to and under such
         rights,  properties or assets in the Surviving Corporation or otherwise
         to carry out this Agreement.


                                       6


                                   ARTICLE IV
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company makes these  representations  and  warranties  set forth in
this Article IV, except as set forth in the Company Disclosure Schedules, to the
Parent and the  Purchaser.  Items  disclosed  in one  particular  section of the
Company Disclosure  Schedules shall be deemed to be constructively  disclosed or
listed in other sections of the Company Disclosure  Schedules to the extent that
it is reasonably  apparent that the disclosure  relates to such other  sections.
The fact that any item of  information  is contained  in the Company  Disclosure
Schedules  shall  not be  construed  as an  admission  of  liability  under  any
applicable law, or to mean that such information is material.

         SECTION 4.1 ORGANIZATION AND QUALIFICATION;  SUBSIDIARIES.

         The Company is a corporation  duly organized,  validly  existing and in
good  standing  under the laws of the State of Missouri.  Except as set forth in
SCHEDULE  4.1  of  the  COMPANY  DISCLOSURE  SCHEDULE,  each  of  the  Company's
subsidiaries  is a  corporation  duly  organized,  validly  existing and in good
standing under the laws of the  jurisdiction of its  incorporation.  The Company
and each of its subsidiaries has the requisite  corporate power and authority to
own,  operate or lease its  properties and to carry on its business as it is now
being  conducted,  and is duly  qualified or licensed to do business,  and is in
good standing,  in each  jurisdiction in which the nature of its business or the
properties owned,  operated or leased by it makes such qualification,  licensing
or good  standing  necessary,  except  where the  failure  to have such power or
authority,  or the failure to be so  qualified,  licensed  or in good  standing,
would not have a Material  Adverse  Effect on the  Company.  The term  "MATERIAL
ADVERSE EFFECT ON THE COMPANY," as used in this  Agreement,  means any change in
or  effect  on the  business,  financial  condition,  results  of  operation  or
prospects of the Company or any of its  subsidiaries  that could  reasonably  be
expected to have a material  adverse effect on the Company and its  subsidiaries
taken as a whole or could  reasonably be expected to prevent or materially delay
consummation  of the Merger;  provided that the foregoing  shall not include any
change or effect  that  results  or arises  from or  relates  to  changes in (A)
general  economic  or  market  conditions,  except  to the  extent  they  have a
disproportionate  impact on the  Company,  or  prevailing  interest  rates,  (B)
conditions  generally  affecting the industry in which the Company or any of its
subsidiaries  operates,  or  (C)  laws,  regulations  or  accounting  standards,
principles or interpretations.

         SECTION  4.2  CHARTER;  BYLAWS AND RIGHTS  AGREEMENT.

         The  Company  has  heretofore  made  available  to the  Parent  and the
Purchaser a complete and correct copy of the articles of  incorporation  and the
bylaws or comparable organizational documents, each as amended as of the date of
this  Agreement,  of the  Company  and  each of its  subsidiaries  and has  made
available a complete and correct copy of the Rights  Agreement,  dated as of May
25, 2006 between the Company and Mellon  Investor  Services LLC, as Rights Agent
(as amended through the date hereof, the "RIGHTS AGREEMENT").


                                       7


         SECTION 4.3 CAPITALIZATION.

                  (a) The  authorized  capital stock of the Company  consists of
         Seventeen  Million   (17,000,000)  Common  Shares,  One  (1)  share  of
         Non-Redeemable  Common Stock and Two Million  Nine Hundred  Ninety-Nine
         Thousand Nine Hundred Ninety-Nine  (2,999,999) shares of Capital Stock,
         par value $.10 per share (the "CAPITAL STOCK"),  of which Seven Hundred
         Fifty  Thousand  (750,000)  shares  are  designated  as Series A Junior
         Participating Preferred Stock, par value $.10 per share (the "PREFERRED
         STOCK").  As of the close of  business  on the date of this  Agreement,
         6,343,375 Common Shares were issued and  outstanding,  all of which are
         entitled to vote on this  Agreement,  and no Common Shares were held in
         treasury.  As of the close of  business  on the date of this  Agreement
         there were no shares of Capital Stock issued and outstanding. As of the
         close of business on the date of this Agreement there were no shares of
         Preferred  Stock  issued and  outstanding.  The  Company  has no shares
         reserved for issuance,  except that, as of the date of this  Agreement,
         there were 113,300  Common  Shares  reserved  for issuance  pursuant to
         outstanding  Options granted under the Stock Plans and there were Seven
         Hundred Fifty Thousand  shares of Preferred Stock reserved for issuance
         upon  exercise of the rights  issued  pursuant to the Rights  Agreement
         (the "Rights").

                  (b) SCHEDULE  4.3(B) of the COMPANY  DISCLOSURE  SCHEDULE sets
         forth the holder of each  outstanding  Option and the number of shares,
         exercise price and expiration date of each grant to such holder. Except
         as set forth in  SCHEDULE  4.3(B) of the COMPANY  DISCLOSURE  SCHEDULE,
         since June 30, 2006,  the Company has not granted any Options or issued
         any shares of Capital Stock except  pursuant to the exercise of Options
         outstanding as of such date. All the outstanding Common Shares are, and
         all Common  Shares  which may be issued  pursuant  to the  exercise  of
         outstanding  Options  will be, when  issued and paid for in  accordance
         with the respective  terms thereof,  duly  authorized,  validly issued,
         fully  paid and  nonassessable  and are not  subject  to, nor were they
         issued in violation of, any preemptive rights.

                  (c)   There  are  no   bonds,   debentures,   notes  or  other
         indebtedness   having  general  voting  rights  (or  convertible   into
         securities having such rights) ("VOTING DEBT") of the Company or any of
         its subsidiaries issued and outstanding.

                  (d)  Except as set forth  above or in  SCHEDULE  4.3(D) of the
         COMPANY  DISCLOSURE  SCHEDULES  or for the  Rights  and  except for the
         transactions  contemplated  by this  Agreement,  there are no  existing
         options,  warrants, calls,  subscriptions or other rights,  agreements,
         arrangements or commitments of any character, relating to the issued or
         unissued  capital  stock  of the  Company  or any of its  subsidiaries,
         obligating the Company or any of its subsidiaries to issue, transfer or
         sell or cause to be issued,  transferred  or sold, or providing for the
         vesting  of, any shares of  capital  stock or Voting  Debt of, or other
         equity  interest  in,  the  Company  or  any  of  its  subsidiaries  or
         securities  convertible  into or exchangeable for such shares or equity
         interests  and  neither  the  Company  nor any of its  subsidiaries  is
         obligated  to grant,  extend or enter  into any such  option,  warrant,
         call,   subscription   or  other  right,   agreement,   arrangement  or
         commitment.

                  (e) Except as  contemplated  by this  Agreement  or the Rights
         Agreement,  there are no  outstanding  contractual  obligations  of the
         Company or any of its  subsidiaries to repurchase,  redeem or otherwise
         acquire any Common Shares or the capital stock of the Company or any of
         its subsidiaries.



                                       8


                  (f) Except as  contemplated  by this  Agreement  or the Voting
         Agreements,   there  are  no  voting  trusts  or  other  agreements  or
         understandings  to which the  Company  is a party  with  respect to the
         voting of the Company's Common Shares.

                  (g) At and after the Effective Time, no holder of Options will
         have any right to  receive  shares of  capital  stock of the  Surviving
         Corporation upon exercise of Options.

                  (h) Except as  disclosed  in  SCHEDULE  4.3(H) of the  COMPANY
         DISCLOSURE SCHEDULE, no Indebtedness of the Company or its subsidiaries
         contains any prohibition of, or prepayment penalty upon, the prepayment
         of  any  of  such  Indebtedness.   As  used  in  this  Section  4.3(h),
         "Indebtedness" means (A) all indebtedness for borrowed money or for the
         deferred  purchase  price of  property  or  services  including  unpaid
         installments  of the purchase  price for fixed assets  purchased  under
         installment arrangements (other than current trade liabilities incurred
         in the  ordinary  course of  business  and payable in  accordance  with
         customary practices), (B) any other indebtedness that is evidenced by a
         note, bond, debenture or similar instrument,  (C) all obligations under
         financing leases,  (D) all obligations in respect of acceptances issues
         or  created,  and  (E)  all  liabilities  secured  by any  lien  on any
         property.

                  (i)  Except  for the  right of first  refusal  granted  to the
         Company with respect to the  redeemable  Common Shares  pursuant to the
         articles  of  incorporation  of the  Company,  each of the  outstanding
         shares of capital  stock of the  Company  and of each of the  Company's
         subsidiaries  is  duly  authorized,  validly  issued,  fully  paid  and
         nonassessable,  and 100% of such shares of the  Company's  subsidiaries
         are owned by the Company or by a subsidiary of the Company in each case
         free and clear of any lien, claim, option,  charge,  security interest,
         limitation,  encumbrance  and  restriction  of  any  kind  (any  of the
         foregoing being a "LIEN").

                  (j) Set forth in  SCHEDULE  4.3(J) of the  COMPANY  DISCLOSURE
         SCHEDULE  is a complete  and  correct  list of each  subsidiary  of the
         Company and each joint venture or  partnership  in which the Company or
         any  of  its   subsidiaries  has  an  interest  (and  the  amounts  and
         percentages  of any such  interests)  and each such  subsidiary,  joint
         venture  and  partnership  that  has  been  closed  or sold  (i) in the
         five-year  period  preceding  the  date  hereof  or (ii) to the  actual
         knowledge of the Company, in respect of which the Company or any of its
         subsidiaries provided  indemnities,  for representations and warranties
         (including  as  to  environmental   matters)  or  otherwise  for  which
         liabilities remain outstanding as of the date of this Agreement.

         SECTION 4.4 AUTHORITY.

         The Company has all necessary  corporate power and authority to execute
and deliver this  Agreement  and to  consummate  the  transactions  contemplated
hereby.  The  execution  and  delivery of this  Agreement by the Company and the
consummation by the Company of the  transactions  contemplated  hereby have been
duly and validly  authorized  and  approved  by the  Company  Board and no other


                                       9


corporate  proceedings  on the part of the Company are necessary to authorize or
approve this Agreement or to consummate the transactions contemplated hereby and
thereby,  other  than the  approval  of this  Agreement  and the  Merger  by the
affirmative  vote of the holders of  two-thirds of the then  outstanding  Common
Shares entitled to vote thereon (the "REQUISITE VOTE").  This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due and
valid authorization,  execution and delivery of this Agreement by the Parent and
the  Purchaser,  constitutes  a valid  and  binding  obligation  of the  Company
enforceable against the Company in accordance with its terms.

         SECTION 4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.

                  (a)   Assuming   (i)   the   filings    required   under   the
         Hart-Scott-Rodino  Antitrust  Improvements Act of 1976, as amended, and
         the rules and  regulations  thereunder (the "HSR ACT") are made and the
         waiting periods  thereunder have been terminated or have expired,  (ii)
         the  filing of the  articles  of merger  and other  appropriate  merger
         documents, if any, as required by the GBCL, is made, and (iii) approval
         of this  Agreement by the Requisite Vote of the  shareholders,  none of
         the  execution  and  delivery of this  Agreement  by the  Company,  the
         consummation by the Company of the transactions  contemplated hereby or
         compliance  by the Company with any of the  provisions  hereof will (A)
         conflict with or violate the articles of incorporation or bylaws of the
         Company  or  the  comparable  organizational  documents  of  any of its
         subsidiaries, (B) except as set forth in SCHEDULE 4.5(A) of the COMPANY
         DISCLOSURE  SCHEDULE,  result  in a breach or  violation  of, a default
         under or the  triggering  of any  payment or the  increase in any other
         obligations pursuant to, any of the Company's existing Employee Benefit
         Arrangements (as hereinafter  defined) or any grant or award made under
         any of the Employee Benefit  Arrangements,  (C) to the actual knowledge
         of the Company, conflict with or violate any statute,  ordinance, rule,
         regulation,  order,  judgment,  decree, permit or license applicable to
         the Company or any of its subsidiaries,  or by which any of them or any
         of their respective  properties or assets may be bound or affected,  or
         (D) except as set forth in SCHEDULE  4.5(A) of the  COMPANY  DISCLOSURE
         SCHEDULE,  require the consent  from or the giving of notice to a third
         party  pursuant to,  result in a violation or breach of or constitute a
         default  (or an event  which with notice or lapse of time or both would
         become a default)  under,  or give to others any rights of termination,
         amendment,  acceleration or  cancellation  of, or result in any loss of
         any benefit,  the  triggering of any payment by, or the increase in any
         other  obligation  of, the  Company or any of its  subsidiaries  or the
         creation of any Lien on any of the property or assets of the Company or
         any of its  subsidiaries  (any of the  foregoing  referred to in clause
         (B),  (C) or this  clause  (D)  being a  "VIOLATION")  pursuant  to any
         Material Contract.

                  (b) To  the  actual  knowledge  of the  Company,  none  of the
         execution  and  delivery  of  this   Agreement  by  the  Company,   the
         consummation by the Company of the transactions  contemplated hereby or
         compliance  by the  Company  with  any of the  provisions  hereof  will
         require any consent, waiver,  approval,  authorization or permit of, or
         registration  or filing with or  notification  to (any of the foregoing
         with respect to any Governmental Entity (as hereinafter defined) or any
         other third party being a "CONSENT"),  any  government  or  subdivision
         thereof, or any administrative, governmental, legislative or regulatory
         authority,   agency,   commission,   tribunal,   court  or   body,   (a


                                       10


         "GOVERNMENTAL  ENTITY"),  except for (i) the filing of the  articles of
         merger pursuant to the GBCL, (ii) compliance with the HSR Act, or (iii)
         those  situations  in which the failure to obtain such  Consent,  or to
         make such filing or  notification,  would not,  individually  or in the
         aggregate,  be  material  to  the  operations  of  the  Company  or its
         subsidiaries.

                  SECTION 4.6 SEC REPORTS AND FINANCIAL STATEMENTS.

                  (a) The Company  has filed with the  Securities  and  Exchange
         Commission  (the  "SEC") all forms,  reports,  schedules,  registration
         statements and definitive proxy  statements  required to be filed by it
         with the SEC since January 1, 2003 (as amended,  restated or superseded
         since  the  time  of  their  filing  and  prior  to  the  date  hereof,
         collectively,  the "SEC  REPORTS").  Except  as set  forth in  SCHEDULE
         4.6(A) of the COMPANY DISCLOSURE SCHEDULE,  the SEC Reports (including,
         but not limited to, any financial  statements or schedules  included or
         incorporated by reference  therein),  complied in all material respects
         with the  requirements  of the  Securities  Exchange  Act of  1934,  as
         amended  (the  "EXCHANGE  ACT"),  or the  Securities  Act of  1933,  as
         amended,  including the rules and  regulations  promulgated  thereunder
         (the  "SECURITIES  Act")  applicable,  as the case may be,  to such SEC
         Reports  and  the  Sarbanes-Oxley  Act of  2002,  and  none  of the SEC
         Reports,  including  those filed after January 19, 2006,  contained any
         untrue statement of a material fact or omitted to state a material fact
         required to be stated therein or necessary to make the statements  made
         therein,  in light of the circumstances under which they were made, not
         misleading.

                  (b)  Except as set  forth in  SCHEDULE  4.6(B) of the  COMPANY
         DISCLOSURE SCHEDULE the (i) audited  consolidated  balance sheets as of
         October 31, 2005 (the "BALANCE  SHEET DATE" and the balance sheet as of
         such date,  the  "BALANCE  SHEET") and October 31, 2004 and the audited
         consolidated  statements of operations,  shareholders'  equity and cash
         flows for each of the three years in the period ended  October 31, 2005
         (including the related notes and schedules  thereto) of the Company and
         (ii) the unaudited consolidated balance sheet as of August 31, 2006 and
         the  unaudited  consolidated  statements of  operations,  shareholders'
         equity and cash flows for the ten-month period ended August 31, 2006 of
         the  Company  delivered  to  the  Parent  were  prepared  from,  are in
         accordance with and accurately  reflect in all material  respects,  the
         Company's  books  and  records  as of the  times  and for  the  periods
         referred  to  therein,  present  fairly in all  material  respects  the
         consolidated   financial  position  and  the  consolidated  results  of
         operations and cash flows of the Company and its subsidiaries as of the
         dates  or for the  periods  presented  therein  and  were  prepared  in
         accordance with United States generally accepted accounting  principles
         ("GAAP")  consistently  applied during the periods  involved (except as
         set forth in the notes  contained  therein and subject,  in the case of
         unaudited  statements,  to recurring audit adjustments normal in nature
         and amount).  The financial  statements  referred to in clauses (i) and
         (ii) hereof are referred to herein as the "COMPANY FINANCIALS."

                  (c) Except as reserved  against in the unaudited  consolidated
         balance sheet as of August 31, 2006 or as set forth in SCHEDULE  4.6(C)
         of the COMPANY DISCLOSURE SCHEDULE, as of the date hereof,  neither the


                                       11


         Company nor any of its  subsidiaries  have any material  liabilities or
         obligations (absolute,  accrued, fixed, contingent or otherwise), other
         than liabilities incurred in the ordinary course of business consistent
         with past practice since August 31, 2006.

         SECTION  4.7  ENVIRONMENTAL  MATTERS.

         To the actual  knowledge of the senior  officers  and  directors of the
Company, except as set forth in SCHEDULE 4.7 of the COMPANY DISCLOSURE SCHEDULE:

                  (a)  The  Company  and  its  subsidiaries  have  complied  and
         currently comply with all Environmental Laws;

                  (b) Neither the  Company  nor any of its  subsidiaries  is the
         subject of any federal, state, local or foreign investigation,  decree,
         order or judgment  and neither the Company nor any of its  subsidiaries
         has  received  any  written  notice  or  claim,  or  entered  into  any
         negotiations or agreements with any person, relating to compliance with
         or to  any  liability,  investigation  or  remedial  action  under  any
         Environmental Laws;

                  (c)  Neither  the  Company  nor  any of its  subsidiaries  has
         manufactured,  treated,  stored, disposed of, arranged for or permitted
         the disposal of, generated, handled or released any Hazardous Substance
         in a manner that is in violation of any  Environmental  Law or owned or
         operated  any  property  or facility  in a manner in  violation  of any
         Environmental  Law that has given or would  reasonably  be  expected to
         give rise to any liability, including any liability for response costs,
         corrective  action costs,  personal injury,  property  damage,  natural
         resources damages or attorney fees pursuant to any Environmental Laws;

                  (d) No  Hazardous  Substances  or other  conditions  have been
         released or  otherwise  come to be located at any  property or facility
         owned,  operated  or used by on  behalf  of the  Company  or any of its
         subsidiaries in a manner that is in violation of any  Environmental Law
         or has given or will give rise to liability under Environmental Laws or
         against  any  person  whose   liability  the  Company  or  any  of  its
         subsidiaries  retained or assumed either  contractually or by operation
         of law;

                  (e) The Company and each of its  subsidiaries  holds and is in
         compliance  with all  permits  required  to conduct  its  business  and
         operations under all applicable Environmental Laws;

                  (f)  Neither  the  Company  nor  any of its  subsidiaries  has
         received any written  Environmental  Claim against it, nor has any such
         Environmental Claim been threatened in writing;

                  (g) Neither the Company nor any of its subsidiaries has failed
         to timely file all reports and notifications  required to be filed with
         respect to all of its property and facilities or has failed to generate
         and  maintain  all  required  records  and data  under  all  applicable
         Environmental Laws; and


                                       12


                  (h)  Neither  the  Company  nor  any of its  subsidiaries  has
         entered  into any  contract  wherein  it has  continuing  liability  or
         responsibility  relating to  environmental  matters with respect to any
         real property that is no longer owned or leased by any of them.

         "ENVIRONMENTAL CLAIM" means any claim, demand, action, suit, complaint,
proceeding,  directive,   investigation,   lien,  demand  letter  or  notice  of
noncompliance,  violation  or  liability  by any person  asserting  liability or
potential liability (including liability or potential liability for enforcement,
investigatory  costs,  cleanup  costs,   governmental  response  costs,  natural
resource damages,  property damage, personal injury, fines or penalties) arising
out of,  based on or  resulting  from  (x) the  presence,  discharge,  emission,
release or threatened  release of any Hazardous  Substance at any location;  (y)
circumstances  forming the basis of any  violation  or alleged  violation of any
Environmental  Law or any permit  issued  under any  Environmental  Law;  or (z)
otherwise relating to obligations or liabilities under any Environmental Law.

         "ENVIRONMENTAL  LAWS" means any and all  applicable  federal,  state or
local statutes, regulations,  ordinances, guidelines, codes, decrees, permits or
other legally  enforceable  requirement  of any foreign  government,  the United
States, or any state, local, municipal or other governmental entity, regulating,
relating to or imposing liability or standards of conduct concerning  protection
of  the  environment   (including   indoor  air,  ambient  air,  surface  water,
groundwater,  land surface,  subsurface  strata,  or plant or animal species) or
human health as affected by the environment or Hazardous  Substances  (including
employee health and safety).

         "HAZARDOUS  SUBSTANCE"  means all explosive or radioactive  substances,
materials  or  wastes,  hazardous  or toxic  substances,  materials  or  wastes,
asbestos,  asbestos-containing  materials,  mold,  pollutants  and  contaminants
(including  petroleum  or  any  fraction  thereof)  and  all  other  substances,
materials or wastes, whether or not defined as such, that are regulated pursuant
to or that could result in liability under any applicable Environmental Law.

Notwithstanding any of the representations and warranties contained elsewhere in
this  Agreement,  all  environmental  matters are governed  exclusively  by this
Section 4.7.

         SECTION 4.8 COMPLIANCE WITH APPLICABLE LAWS.

                  (a)  The  Company  and  its  subsidiaries  hold  all  material
         permits, licenses,  variances,  exemptions, orders and approvals of all
         Governmental  Entities (the "Company Permits") required in order to own
         their assets and to conduct  their  respective  businesses as currently
         conducted,  except where the failure to hold such Company Permits would
         not, individually or in the aggregate, be material to the operations of
         the Company or its subsidiaries, and are in compliance with all Company
         Permits,  except where the failure to comply would not, individually or
         in the  aggregate,  be material to the operations of the Company or its
         subsidiaries.  The operations of the Company and its subsidiaries  have
         been  conducted  in  compliance  with  all  material  applicable  laws,
         ordinances  and  regulations  of  any   Governmental   Entity,   except
         violations which are not, individually or in the aggregate, material to
         the operations of the Company or its subsidiaries.


                                       13


                  (b) This  Section  4.8 does not  relate  to (i)  environmental
         matters,  which are instead the subject of Section 4.7,  (ii)  employee
         benefits  matters,  which are instead the subject of Section  4.12,  or
         (iii) tax matters, which are instead the subject of Section 4.14.

         SECTION  4.9  LITIGATION.

         Except as set forth in SCHEDULE 4.9 of the COMPANY DISCLOSURE SCHEDULE,
there is no suit,  claim,  action,  proceeding or  investigation  ("LITIGATION")
pending or, to the knowledge of the Company,  threatened  against the Company or
any of its  subsidiaries  which,  if adversely  determined,  would be reasonably
expected to result in a liability to the Company in excess of Two Hundred  Fifty
Thousand  Dollars  ($250,000) in the aggregate.  Except as set forth in SCHEDULE
4.9 of the  COMPANY  DISCLOSURE  SCHEDULE,  neither  the  Company nor any of its
subsidiaries is subject to any material  outstanding order, writ,  injunction or
decree.  Except as disclosed in SCHEDULE 4.9 of the COMPANY DISCLOSURE SCHEDULE,
there is no litigation that the Company or its subsidiaries have pending against
other parties.

         SECTION 4.10  INFORMATION.

         None of the  information  supplied or to be supplied by the Company for
inclusion in (i) the Proxy Statement or (ii) any other document to be filed with
any Governmental Entity in connection with the transactions contemplated by this
Agreement (the "OTHER  FILINGS")  will, at the  respective  times filed with any
Governmental Entity and, in addition, in the case of the Proxy Statement, at the
date it or any amendment or supplement is mailed to shareholders, at the time of
the Special Meeting and at Closing,  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  made  therein,  in  light of the
circumstances  under  which  they were  made,  not  misleading,  except  that no
representation  is made by the Company with respect to  statements  made therein
based on information  supplied by the Parent or the Purchaser  specifically  for
inclusion in the Proxy Statement.

         SECTION 4.11 CERTAIN APPROVALS.

         The  Company  Board  has taken any and all  necessary  and  appropriate
action to render the  provisions  of  Sections  351.407  and 351.459 of the GBCL
inapplicable to the Merger and the transactions  contemplated by this Agreement.
No other  state  takeover  statute or  similar  domestic  or foreign  statute or
regulation  applies  or  purports  to apply to the  Merger  or the  transactions
contemplated by this Agreement.

         SECTION 4.12 EMPLOYEE BENEFIT PLANS.

                  (a)  SCHEDULE  4.12(A)  of  the  COMPANY  DISCLOSURE  SCHEDULE
         includes  a  complete  list of all  material  employee  benefit  plans,
         programs,  agreements and other arrangements  providing benefits to any
         former or current  employee,  officer or director of the Company or any
         of its  subsidiaries or any beneficiary or dependent  thereof,  whether
         covering one person or more than one person, sponsored or maintained by
         the Company or any of its  subsidiaries  or to which the Company or any
         of its  subsidiaries  contributes or is obligated to contribute for the
         benefit of U.S. employees of the Company and its subsidiaries  ("LISTED


                                       14


         PLANS").  Without  limiting the generality of the  foregoing,  the term
         "Listed Plans"  includes all employee  welfare benefit plans within the
         meaning of Section 3(1) of the Employee  Retirement Income Security Act
         of  1974,  as  amended,  and  the  regulations  promulgated  thereunder
         ("ERISA") and all employee  pension benefit plans within the meaning of
         Section  3(2)  of  ERISA  and  all  other  material  employee  benefit,
         employment,  bonus, incentive,  profit sharing,  thrift,  compensation,
         restricted stock,  retirement,  savings,  deferred compensation,  stock
         purchase,  stock  option,  termination,  severance,  change in control,
         fringe  benefit  and  other  similar  plans,  programs,  agreements  or
         arrangements.

                  (b) With  respect to each  Listed  Plan,  the Company has made
         available to the Parent a true,  correct and complete copy of: (i) each
         writing  constituting  a part of such Listed Plan,  including,  without
         limitation,  all plan documents,  benefit schedules,  trust agreements,
         and  insurance  contracts  and other  funding  vehicles;  (ii) the most
         recent Annual Report (Form 5500 Series) and accompanying  schedule,  if
         any;  (iii) the current  summary  plan  description  (and any  material
         modification to such description),  if any; (iv) the most recent annual
         financial report, if any; (v) the most recent actuarial report, if any;
         and (vi) the most recent determination letter from the Internal Revenue
         Service (the "IRS"), if any.

                  (c)  SCHEDULE  4.12(C)  of  the  COMPANY  DISCLOSURE  SCHEDULE
         identifies  each Listed Plan that is intended to be a "qualified  plan"
         within  the  meaning of Section  401(a) of the Code,  and the  Treasury
         Regulations  thereunder  ("QUALIFIED  PLANS").  The  IRS has  issued  a
         favorable  determination  letter  (or,  with  respect  to  standardized
         prototype plans, an opinion letter) with respect to each Qualified Plan
         that has not been revoked,  and, to the Company's knowledge,  there are
         no existing  circumstances nor any events that have occurred that could
         reasonably be expected to adversely  affect the qualified status of any
         Qualified Plan or the related trust. No Listed Plan is intended to meet
         the  requirements  of Section  501(c)(9) of the Code. No Listed Plan is
         subject to Title IV or Section 302 of ERISA.

                  (d) Each Listed Plan has been operated and administered in all
         material  respects in  accordance  with its terms and  applicable  law,
         including  but not limited to ERISA and the Code.  With respect to each
         Listed Plan, no event has occurred and there exists no condition or set
         of  circumstances in connection with which the Company could be subject
         to  any  liability  that,  individually  or  in  the  aggregate,  would
         reasonably  be  expected  to  have a  Material  Adverse  Effect  on the
         Company.

                  (e) Except as set forth in  SCHEDULE  4.12(E)  of the  COMPANY
         DISCLOSURE  SCHEDULE,  neither the Company nor any of its  subsidiaries
         contributes to or has ever contributed to any multiemployer plan within
         the meaning of Section 4001(a)(3) of ERISA ("MULTIEMPLOYER PLAN"). With
         respect to each Multiemployer Plan in which the Company, any subsidiary
         or any ERISA Affiliate  participates or has  participated,  (i) none of
         the  Company,  any  of its  subsidiaries  or any  ERISA  Affiliate  has
         withdrawn,  partially withdrawn, or received any notice of any claim or
         demand for withdrawal liability or partial withdrawal  liability;  (ii)
         none of the Company nor any of its  subsidiaries or any ERISA Affiliate
         has received any notice that any such plan is in  reorganization,  that
         increased  contributions  may be required to avoid a reduction  in plan
         benefits or the  imposition of any excise tax, or that any such plan is
         or  may  become  insolvent;  (iii)  none  of  the  Company,  any of its
         subsidiaries  or any ERISA  Affiliate  has failed to make any  required


                                       15


         contributions; (iv) to the Company's knowledge, no such plan is a party
         to any  pending  merger  or asset  or  liability  transfer;  (v) to the
         Company's knowledge, there are no PBGC proceedings against or affecting
         any such plan; and (vi) none of the Company, any of its subsidiaries or
         any ERISA Affiliate has any withdrawal liability by reason of a sale of
         assets  pursuant  to  Section  4204  of  ERISA.  With  respect  to each
         Multiemployer  Plan,  as of its last  valuation  date,  the  amount  of
         potential  withdrawal liability of the Company, any of its subsidiaries
         and any ERISA  Affiliates  would not  reasonably  be expected to have a
         Material  Adverse  Effect on the Company.  To the best knowledge of the
         Company,  nothing  has  occurred  or is  expected  to occur  that would
         materially  increase  the  amount  of the  total  potential  withdrawal
         liability  for any such  plan  over  the  amount  shown in the  Company
         Disclosure Schedule.

                  (f) Except as set forth in SCHEDULE  4.12(F) of the  COMPANY'S
         DISCLOSURE  SCHEDULE,  neither the Company nor any of its  subsidiaries
         has any liability for life,  health,  medical or other welfare benefits
         to former employees or beneficiaries or dependents thereof,  except for
         health  continuation  coverage as required by Section 4980B of the Code
         or Part 6 of Title I of ERISA or applicable  state law at no expense to
         the Company and its subsidiaries.

                  (g) There are no pending or, to the  knowledge of the Company,
         threatened  claims  (other  than claims for  benefits  in the  ordinary
         course),  lawsuits,  arbitrations or other alternate dispute resolution
         proceedings  which have been asserted or instituted  against the Listed
         Plans,  any  fiduciaries  thereof  with  respect to their duties to the
         Listed Plans or the assets of any of the trusts under any of the Listed
         Plans which could  reasonably be expected to result in any liability of
         the Company or any of its  subsidiaries to any Listed Plan  participant
         or beneficiary, the PBGC, the Department of Treasury, the Department of
         Labor or any Multiemployer Plan.

                  (h) Other than as disclosed in SCHEDULE 4.12(H) of the COMPANY
         DISCLOSURE  SCHEDULE,  neither  the  execution  and  delivery  of  this
         Agreement nor the consummation of the transactions  contemplated hereby
         will (either alone or in conjunction  with any other act required to be
         taken in connection with the transactions  contemplated  hereby) result
         in,  cause the  accelerated  vesting or delivery  of, or  increase  the
         amount or value of,  any  payment or  benefit  to any  employee  of the
         Company or any of its  subsidiaries,  or to fund any  "rabbi"  trust or
         similar trust.

                  (i) Except as set forth in  SCHEDULE  4.12(I)  of the  COMPANY
         DISCLOSURE SCHEDULE,  no employment agreement or stock option agreement
         between the Company and any of its executive  officers has been amended
         subsequent to January 1, 2006.


                                       16


         SECTION 4.13 INTELLECTUAL PROPERTY.

                  (a) Except as would  not,  individually  or in the  aggregate,
         reasonably  be  expected  to  have a  Material  Adverse  Effect  on the
         Company, the Company owns or possesses adequate licenses or other valid
         rights to use all  Intellectual  Property used in  connection  with the
         business of the Company as it has been or is  currently  conducted.  As
         used  herein   "INTELLECTUAL   PROPERTY"  means  all  patents,   patent
         applications,   patent   disclosures,   assumed  names,   trade  names,
         trademarks, trademark registrations and trademark applications, service
         marks,  service  mark  registrations  and  service  mark  applications,
         certification marks, certification mark registrations and certification
         mark applications,  copyrights,  copyright  registrations and copyright
         registration  applications,  databases  and database  rights,  internet
         websites and domain names and applications pertaining thereto, computer
         software (and related documentation),  trade secrets ("TRADE SECRETS"),
         know-how, industrial property, technology and other proprietary rights,
         both domestic and foreign,  which are owned by, used or held for use by
         the Company and its subsidiaries.

                  (b) Except as would  not,  individually  or in the  aggregate,
         reasonably  be  expected  to  have a  Material  Adverse  Effect  on the
         Company,  none of the  licenses  which  are  part  of the  Intellectual
         Property is subject to  termination  or  cancellation  or change in its
         terms or provisions as a result of this  Agreement or the  transactions
         provided for in this Agreement.

                  (c) To the  knowledge of the  Company,  no Person or entity is
         infringing, or has misappropriated,  any Intellectual Property owned by
         the Company or any of its subsidiaries.

                  (d) Except as would  not,  individually  or in the  aggregate,
         reasonably  be  expected  to  have a  Material  Adverse  Effect  on the
         Company, no claims with respect to the Intellectual  Property have been
         asserted or, to the best  knowledge of the Company,  are  threatened by
         any  Person  nor does the  Company  know of any valid  grounds  for any
         claims  (i) to the  effect  that  the  manufacture,  sale or use of any
         product or process or the furnishing of any service as previously used,
         now  used or  offered  or  proposed  for  use or  sale  by the  Company
         infringes on any copyright,  trade secret,  patent, trade name or other
         intellectual  property right of any Person, (ii) against the use by the
         Company or any of its  subsidiaries of any  Intellectual  Property,  or
         (iii)  challenging  the  ownership,  validity or  effectiveness  of any
         Intellectual  Property owned by the Company or any of its subsidiaries.
         Except as would not,  individually  or in the aggregate,  reasonably be
         expected to have a Material Adverse Effect on the Company,  all granted
         and issued patents and all registered  trademarks and service marks and
         all  copyrights  held by the  Company  or any of its  subsidiaries  are
         valid,  enforceable and  subsisting.  The Company has taken all actions
         reasonably   necessary  to  protect  and  enforce  its  rights  in  the
         Intellectual Property.

         SECTION 4.14 TAXES.

                  (a) The  Company and each of its  subsidiaries  has duly filed
         (or has had duly filed on its  behalf) or will duly file or cause to be
         duly filed all material  federal,  state,  local and foreign income and


                                       17


         other Tax Returns (as hereinafter  defined)  required to be filed by it
         (including,  but not  limited to, Tax  Returns  relating  to  estimated
         Taxes),  and  has  duly  paid  or  caused  to be  paid  all  Taxes  (as
         hereinafter  defined) shown to be due on such Tax Returns in respect of
         the periods  covered by such Tax Returns and has paid or made  adequate
         provision according to GAAP in the Company's  financial  statements for
         payment  of all Taxes in  respect of all  taxable  periods or  portions
         thereof ending on or before the date hereof.  All such Tax Returns were
         correct and  complete in all  material  respects  and were  prepared in
         substantial  compliance  with  all  applicable  laws  and  regulations.
         SCHEDULE  4.14(A)  of the  COMPANY  DISCLOSURE  Schedule  lists (i) all
         estimated Tax payments made by the Company and each of its subsidiaries
         for federal,  state and local tax purposes  with respect to the current
         tax year, (ii) the periods through which the Tax Returns required to be
         filed by the Company or its subsidiaries  have been examined by the IRS
         or other appropriate taxing authority,  or the periods during which the
         opportunity  for any  assessments  to be  made  by the  IRS or,  to the
         Company's  knowledge,  other appropriate  taxing authority has expired,
         and (iii) all notices  indicating an intent to open an audit or review,
         or notice of  deficiency or proposed  adjustment  for any amount of Tax
         proposed,  asserted,  or assessed by any taxing  authority  against the
         Company or its subsidiaries.  All material deficiencies and assessments
         asserted in writing as a result of such examinations or other audits by
         federal,  state,  local or foreign taxing  authorities  have been paid,
         fully  settled or  adequately  provided  for  according  to GAAP in the
         Company's financial statements, and no issue or claim has been asserted
         or  threatened  in writing  for Taxes by any taxing  authority  for any
         prior period,  other than those heretofore paid or adequately  provided
         for according to GAAP in the Company's financial statements.  Except as
         set forth in SCHEDULE 4.14(A) of the COMPANY DISCLOSURE SCHEDULE, there
         are no outstanding  agreements or waivers or requests for agreements or
         waivers, extending the statutory period of limitation applicable to any
         material  Tax Return of the Company or any of its  subsidiaries.  There
         are no liens for  amounts of Taxes on the assets of the Company nor any
         of its  subsidiaries  except for statutory  liens for current Taxes not
         yet due and  payable.  Except as set forth in  SCHEDULE  4.14(A) of the
         COMPANY  DISCLOSURE  SCHEDULE,  neither  the  Company  nor  any  of its
         subsidiaries is a party to any agreement,  contract or arrangement that
         could  result,  separately or in the  aggregate,  in the payment of any
         "excess  parachute  payments" within the meaning of Section 280G of the
         Code or that would not be  deductible  pursuant to the terms of Section
         162(a)(l),  162(m)  or  162(n)  of the  Code.  Except  as set  forth in
         SCHEDULE  4.14(A)  of the  COMPANY  DISCLOSURE  SCHEDULE,  neither  the
         Company nor any of its  subsidiaries is a party to a Tax sharing or Tax
         indemnity  agreement or any other  agreement  of a similar  nature that
         remains  in  effect.  Each of the  Company  and its  subsidiaries  have
         withheld and paid all Taxes  required to have been withheld and paid in
         connection with any amounts paid or owing to any employee,  independent
         contractor, creditor, stockholder, or other third party.

                  (b) For purposes of this Agreement,  the term "TAX" or "TAXES"
         means all taxes, charges, fees, levies or other assessments, including,
         without limitation,  income, gross receipts,  excise, property,  sales,
         use, value-added,  transfer,  license,  payroll,  withholding,  export,
         import, and customs duties,  capital stock and franchise taxes, imposed
         by the United  States or any  state,  local or  foreign  government  or
         subdivision  or agency  thereof,  including any interest,  penalties or
         additions  thereto.  For  purposes  of this  Agreement,  the term  "TAX
         RETURN"  means any  report,  return or other  information  or  document
         required to be supplied to a taxing authority in connection with Taxes.


                                       18


         SECTION 4.15 ABSENCE OF CERTAIN CHANGES.

         Since  August 31,  2006  through the date hereof (i) there has not been
any  Material  Adverse  Effect  on the  Company  or any  event,  development  or
circumstance  which could  reasonably  be  expected  to have a Material  Adverse
Effect on the Company;  (ii) the businesses of the Company and its  subsidiaries
have been conducted in the ordinary course and in a manner  consistent with past
practice,  and (iii)  without  limiting the  generality  of the  foregoing,  the
Company and its subsidiaries have not:

                  (a)  incurred  any   liabilities  or  obligations   (absolute,
         accrued,   contingent  or  otherwise)  which  exceed  $250,000  in  the
         aggregate,  except in the ordinary course of business,  consistent with
         past practice;

                  (b) paid,  discharged or satisfied any claims,  liabilities or
         obligations (absolute, accrued, contingent or otherwise) other than the
         payment,  discharge or  satisfaction in the ordinary course of business
         and  consistent  with past  practice  of  liabilities  and  obligations
         reflected or reserved  against in the Balance  Sheet or incurred in the
         ordinary course of business and consistent with past practice since the
         Balance Sheet Date;

                  (c)  permitted  or allowed any of their  properties  or assets
         (real,  personal or mixed,  tangible or  intangible) to be subjected to
         any Lien, except for liens for current taxes not yet due;

                  (d)  cancelled  any  debts or waived  any  claims or rights of
         material value;

                  (e) sold,  transferred,  or otherwise disposed of any of their
         material  properties  or assets (real,  personal or mixed,  tangible or
         intangible), except in the ordinary course of business, consistent with
         past practice;

                  (f) except as  disclosed  in  SCHEDULE  4.15(F) of the COMPANY
         DISCLOSURE  SCHEDULE,  granted  any  increase  in the  compensation  or
         benefits  of any  director,  officer,  employee  or  consultant  of the
         Company  (including any such increase  pursuant to any bonus,  pension,
         profit  sharing or other plan or  commitment)  or any  increase  in the
         compensation or benefits  payable or to become payable to any director,
         officer,  employee or  consultant of the Company or hired or terminated
         any  salaried  employee  with an annual  salary in excess of  $100,000;
         provided, however, that with respect to any increase in compensation or
         benefits  of  any   non-officer   employee  or  any   increase  in  the
         compensation   or  benefits   payable  or  to  become  payable  to  any
         non-officer  employee,  the Company may grant such  increases as are in
         the ordinary course of business, consistent with past practice;

                  (g) made any change in severance policy or practices;


                                       19


                  (h)  declared,  paid or set aside  for  payment  any  dividend
         (other than the dividend  paid on  September  15, 2006 in the amount of
         $315,000) or other distribution (whether in cash, stock or property) in
         respect of their  respective  capital  stock or redeemed,  purchased or
         otherwise acquired, directly or indirectly, any shares of capital stock
         or other securities of the Company;

                  (i) (i) made any changes in any of the accounting methods used
         by it  materially  affecting  its assets,  liabilities,  provisions  or
         business,  except for such  changes  required by GAAP;  or (ii) made or
         changed  any  election  relating  to  Taxes,  adopted  or  changed  any
         accounting method relating to Taxes, entered into any closing agreement
         relating to Taxes,  filed any amended Tax Return,  settled or consented
         to any claim or assessment  relating to Taxes,  incurred any obligation
         to make any  payment  of, or in respect  of,  any Taxes,  except in the
         ordinary course of business, or agreed to extend or waive the statutory
         period of  limitations  for the  assessment or collection of Taxes;  or
         (iii)  made any  changes  in its  reserve  policies,  collect  and hold
         policy,  billing and cash receipts  practices or purchasing and payment
         practices;

                  (j) paid, loaned, modified or advanced any amount to, or sold,
         transferred or leased any material properties or assets (real, personal
         or mixed,  tangible or intangible) to, or entered into any agreement or
         arrangement  with,  any of  their  respective  officers,  directors  or
         shareholders  or any  affiliate or associate of any of their  officers,
         directors  or  shareholders   except  for  directors'   fees,   expense
         reimbursements  in the ordinary course and  compensation to officers at
         rates not inconsistent with the Company's past practice;

                  (k)  suffered  any  impairment  of any  material  Intellectual
         Property or any material  adverse  change in any material  Intellectual
         Property  licensed from a third party, in each case,  other than in the
         ordinary course of business consistent with past practice,  or disposed
         of or disclosed (except as necessary in the conduct of its business) to
         a third party any Trade Secrets owned by the Company;

                  (l) granted, issued,  accelerated,  paid, accrued or agreed to
         pay or make  any  accrual  or  arrangement  for  payments  or  benefits
         pursuant to, or adopted or amended,  any Company  Employee Plans except
         those made in the  ordinary  course of  business  consistent  with past
         practice; or

                  (m)  agreed,  whether  in writing  or  otherwise,  to take any
         action described in this Section 4.15.

         SECTION 4.16 LABOR AND EMPLOYMENT MATTERS.

                  (a) Except as set forth in  SCHEDULE  4.16(A)  of the  COMPANY
         DISCLOSURE  SCHEDULE,  there are no actions,  suits,  claims,  charges,
         labor  disputes,   grievances  or  controversies  pending,  or  to  the
         Company's  knowledge,  threatened  involving  the Company or any of its
         subsidiaries  and any of their  employees or former  employees.  To the
         Company's  knowledge,   no  Governmental  Entity  responsible  for  the
         enforcement  of  labor  or  employment   laws  intends  to  conduct  an


                                       20


         investigation  with respect to or relating to the Company or any of its
         subsidiaries and no such investigation is in progress. To the Company's
         knowledge,  no employee of the Company or any of its  subsidiaries  has
         violated   any   employment   contract,   nondisclosure   agreement  or
         noncompetition  agreement  by which such  employee is bound due to such
         employee being employed by the Company or any of its  subsidiaries  and
         disclosing  to the  Company or any of its  subsidiaries  or using Trade
         Secrets of any other  person.  To the  Company's  knowledge,  there has
         been:  (i) no labor union  organizing  or  attempting  to organize  any
         employee  of the  Company or any of its  subsidiaries  into one or more
         collective  bargaining units; and (ii) no labor dispute,  strike,  work
         slowdown, work stoppage or lock out or other collective labor action by
         or  with  respect  to  any  employees  of  the  Company  or  any of its
         subsidiaries  pending,  or,  to  the  Company's  knowledge,  threatened
         against or affecting  the Company or any of its  subsidiaries.  Neither
         the Company nor any of its subsidiaries is a party to, or bound by, any
         collective  bargaining  agreement  or other  agreement  with any  labor
         organization  applicable  to the employees of the Company or any of its
         subsidiaries and no such agreement is currently being negotiated.

                  (b)  To  the   Company's   knowledge,   the  Company  and  its
         subsidiaries  (i) are in compliance  in all material  respects with all
         applicable Laws respecting employment and employment  practices,  terms
         and  conditions of  employment,  health and safety and wages and hours,
         and is not engaged in any unfair labor practice, (ii) have withheld all
         amounts  required by Law or by agreement to be withheld from the wages,
         salaries and other  payments to employees,  (iii) are not liable in any
         material  respect  for any arrears of wages or any Taxes or any penalty
         for failure to comply with any of the foregoing and (iv) are not liable
         for  any  material  payment  to  any  trust  or  other  fund  or to any
         governmental or administrative  authority, with respect to unemployment
         compensation benefits, social security or other benefits or obligations
         for employees  (other than routine  payments to be made in the ordinary
         course of business and consistent with past practice).

                  (c) To the Company's knowledge,  no employee of the Company or
         any of its subsidiaries has provided or is providing information to any
         law enforcement agency regarding the commission or possible  commission
         of any crime or the violation or possible  violation of any  applicable
         Law involving the Company or any of its subsidiaries.  To the Company's
         knowledge,  neither the Company,  nor any of its  subsidiaries  nor any
         officer, employee, contractor, subcontractor or agent of the Company or
         any of its subsidiaries has discharged, demoted, suspended, threatened,
         harassed or in any other  manner  discriminated  against an employee of
         the Company or any of its  subsidiaries  in the terms and conditions of
         employment  because of any act of such employee  described in 18 U.S.C.
         Section 1514A(a).

                  (d)  SCHEDULE  4.16(D)  of  the  COMPANY  DISCLOSURE  SCHEDULE
         contains a true and  complete  list of (i) the names of all elected and
         appointed  officers of the Company and its subsidiaries,  together with
         such person's  position or function,  annual base salary and incentives
         or bonus  arrangement  and (ii)  the  number  of  Common  Shares  owned
         beneficially or of record,  or both, by each such person and the family
         relationships,  if any, among such persons.  As of the date hereof,  no


                                       21


         key  employee,  director  or  officer  of  the  Company  or  any of its
         subsidiaries  has given  notice to the  Company,  nor,  is the  Company
         otherwise  aware of any  information  that would lead it to  reasonably
         believe,  that any such  person  will or may cease to be engaged by the
         Company or its subsidiaries for any reason prior to the Effective Time.
         Except as set  forth in  SCHEDULE  4.16(D)  of the  COMPANY  DISCLOSURE
         SCHEDULE, no key employee, director or officer of the Company or any of
         its subsidiaries  will have a right of termination or payment under any
         employment  or other  agreement  as a  result  of  consummation  of the
         transactions contemplated by this Agreement.

                  (e) Since October 31, 2005, neither the Company nor any of its
         subsidiaries  has  effectuated  (i) a "plant closing" as defined in the
         Worker  Adjustment  and  Retraining   Notification  Act  ("WARN  ACT"),
         affecting any site of employment or one or more facilities or operating
         units within any site of  employment or facility of the Company or (ii)
         a "mass  layoff"  (as  defined in the WARN Act)  affecting  any site of
         employment  or  facility  of the  Company;  nor  has the  Company  been
         affected  by any  transaction  or  engaged  in  layoffs  or  employment
         terminations  sufficient in number to trigger application of any state,
         local or foreign  law or  regulation  similar  to the WARN Act.  To the
         Company's  knowledge,  none  of  the  Company's  or  its  subsidiaries'
         employees  has  suffered an  "employment  loss" (as defined in the WARN
         Act) in the ninety (90) days prior to the date of this Agreement.

         SECTION 4.17 RIGHTS  AGREEMENT.

         The Company and the Company  Board have taken all  necessary  action to
amend the Rights  Agreement  (without  redeeming the Rights) so that (a) neither
the  execution or delivery of this  Agreement or the Voting  Agreements  nor the
consummation  of the Merger  will (i) cause any Rights  issued  pursuant  to the
Rights   Agreement  to  become   exercisable  or  to  separate  from  the  stock
certificates to which they are attached, (ii) cause the Parent, the Purchaser or
any of their  Affiliates or  Associates to be an Acquiring  Person (as each such
term is defined in the Rights  Agreement) or (iii)  trigger other  provisions of
the  Rights  Agreement,  including  giving  rise  to a  Distribution  Date  or a
Triggering Event (as each such term is defined in the Rights Agreement), and (b)
the Rights Agreement will expire immediately prior to the Effective Time. Copies
of all such amendments to the Rights Agreement have been previously  provided to
the Parent.

         SECTION  4.18  BROKERS.

         Except for the  engagement  of George K. Baum Advisors LLC, none of the
Company, any of its subsidiaries, or any of their respective officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated  by this  Agreement.  The Company has  previously  delivered to the
Parent a copy of the  Company's  engagement  letter with George K. Baum Advisors
LLC.  SCHEDULE 4.18 of the COMPANY  DISCLOSURE  SCHEDULE sets forth a good faith
estimate of the amount of any  brokerage  fees,  commissions  or finders'  fees,
investment  banking fees,  legal fees,  accounting  fees, tax  consultant  fees,
transfer agent and paying agent fees and proxy costs payable in connection  with
the  transactions   contemplated  hereby,  including  expenses  related  to  the
Company's sale process, as of August 31, 2006 and an estimate of such additional
fees and costs to be payable at the Closing.


                                       22


         SECTION 4.19 OPINION OF FINANCIAL ADVISOR.

         The Company has received the written opinion of George K. Baum Advisors
LLC,  its  financial  advisor,  to the effect that,  as of the date hereof,  the
consideration to be received in the Merger by the Company's shareholders is fair
to the Company's shareholders from a financial point of view.

         SECTION 4.20 MATERIAL  CONTRACTS.

         Except  as  set  forth  in  SCHEDULE  4.20  of the  COMPANY  DISCLOSURE
SCHEDULE,  neither the Company nor any of its  subsidiaries  is party to, nor is
the Company or any of its subsidiaries  (or their  respective  assets) bound by,
any contract,  indenture, lease or other agreement which, individually or in the
aggregate,  is material to the  Company and the  subsidiaries  taken as a whole.
Except as set forth in SCHEDULE 4.20 of the COMPANY DISCLOSURE  SCHEDULE,  there
are no (i) contracts, indentures, leases or other agreements between the Company
or any subsidiary, on the one hand, and any current or former director, officer,
employee or 5% or greater  shareholder of the Company or any of their affiliates
or family members, on the other, or (ii) any material non-competition  agreement
or any other agreement or obligation  which purports to limit in any respect the
manner in which, or the localities in which, the business of the Company and its
subsidiaries,  is or would be conducted. All contracts,  indentures,  leases and
agreements  listed on SCHEDULE  4.20 of the  COMPANY  DISCLOSURE  SCHEDULE  (the
"MATERIAL  CONTRACTS")  are  valid and  binding,  in full  force  and  effect in
accordance  with their terms and  enforceable  against the  Company,  and to the
Company's  knowledge against the other parties thereto, in accordance with their
respective terms. There is not under any Material Contract any existing default,
or event,  which after  notice or lapse of time,  or both,  would  constitute  a
default,  by  the  Company  or  any of  its  subsidiaries,  or to the  Company's
knowledge, any other party.

         SECTION  4.21  TITLE  TO  PROPERTIES.

         SCHEDULE 4.21 of the COMPANY DISCLOSURE  SCHEDULE sets forth a complete
list of all real property owned in fee by the Company and its  subsidiaries  and
sets forth all real  property  leased by the  Company  and its  subsidiaries  as
lessee as of the date hereof (such owned and leased real property, including all
improvements thereon,  referred to collectively as the "COMPANY REAL PROPERTY").
The Company has  heretofore  furnished to the Parent true and correct  copies of
all leases,  subleases and other agreements  concerning the real property leased
by the  Company or any of its  subsidiaries  (the  "COMPANY  LEASES").  All such
material  Company  Leases are valid and binding and are in full force and effect
and  enforceable  by the Company or its  subsidiaries  in accordance  with their
respective terms.  Neither the Company,  nor any of its subsidiaries nor, to the
knowledge  of the  Company,  any  other  party  to any  Company  Lease is in any
material respect in breach of or in default under any of the Company Leases. The
Company  Real  Property  set forth in SCHEDULE  4.21 of the  COMPANY  DISCLOSURE
SCHEDULE comprises all of the real property currently  necessary for and/or used
in the  operations  of the  business of the Company  and its  subsidiaries.  The
Company  and its  subsidiaries  have  good and  valid  title to all of the owned
Company Real Property.  The Company Real Property is free of Liens,  except for:
(a) liens with respect to Taxes either not due or being diligently  contested in


                                       23


appropriate  proceedings;  (b) mechanics',  materialmen's  or similar  statutory
liens for  amounts  not yet due or being  diligently  contested  in  appropriate
proceedings;  and (c) other  exceptions  with  respect to title to Company  Real
Property  (including  easements  of  public  record)  that do not and  would not
interfere with the current and intended use of such Company Real Property except
as would not otherwise,  individually  or in the  aggregate,  be material to the
operations of the Company or its subsidiaries (clauses,  (a), (b), and (c) being
referred  to  herein  as  "Permitted  Liens");   and  the  consummation  of  the
transactions  contemplated hereby will not create any Lien (other than Permitted
Liens) on any of the Company Real Property.

         SECTION 4.22 ACCOUNTS RECEIVABLE.

         Subject  to any  reserves  set  forth in the  Company  Financials,  the
accounts  receivable shown in the Company Financials  represent bona fide claims
against  debtors  for sales and other  charges,  and are not subject to discount
except for normal cash and immaterial trade discounts.

         SECTION 4.23 RESTRICTIONS ON BUSINESS  ACTIVITIES.

         Except  as  set  forth  in  SCHEDULE  4.23  of the  COMPANY  DISCLOSURE
SCHEDULE,  there is no, judgment,  injunction,  order or decree binding upon the
Company or its  subsidiaries  which has or could  reasonably be expected to have
the effect of  prohibiting  or impairing  any current  business  practice of the
Company or its  subsidiaries,  any acquisition of property by the Company or its
subsidiaries  or the conduct of business by the Company or its  subsidiaries  as
currently  conducted.  Except  as set  forth  in  SCHEDULE  4.23 of the  COMPANY
DISCLOSURE SCHEDULE or except as would not, individually or in the aggregate, be
material  to the  operations  of the  Company or its  subsidiaries,  there is no
agreement  binding  upon the  Company  or its  subsidiaries  which  has or could
reasonably  be  expected  to have the effect of  prohibiting  or  impairing  any
current business practice of the Company or its subsidiaries, any acquisition of
property  by the Company or its  subsidiaries  or the conduct of business by the
Company or its subsidiaries as currently conducted.

         SECTION 4.24 REPRESENTATIONS  COMPLETE.

         None of the representations or warranties made by the Company herein or
in any Schedule hereto,  including the Company  Disclosure  Schedule,  or in any
certificate  furnished by the Company pursuant to this Agreement,  when all such
documents are read together in their entirety,  contains any untrue statement of
a material  fact, or omits to state any material fact necessary in order to make
the statements  contained herein or therein,  in the light of the  circumstances
under which made, not misleading.

                                   ARTICLE V
           REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER

         The  Parent  and the  Purchaser  hereby  represent  and  warrant to the
Company as follows:


                                       24


         SECTION  5.1  ORGANIZATION  AND  QUALIFICATION.

         The Purchaser is a corporation duly organized,  validly existing and in
good standing  under the laws of the state of Missouri.  The Parent is a limited
partnership duly organized, validly existing and in good standing under the laws
of Delaware.  Each of the Parent and the  Purchaser  has the  requisite  limited
partnership and corporate power, respectively,  and authority to own, operate or
lease its properties and to carry on its business as it is now being  conducted,
and is duly qualified or licensed to do business,  and is in good  standing,  in
each  jurisdiction in which the nature of its business or the properties  owned,
operated or leased by it makes such  qualification,  licensing or good  standing
necessary,  except  where the  failure to have such power or  authority,  or the
failure  to be so  qualified,  licensed  or in good  standing,  would not have a
Material Adverse Effect on the Parent.  The term "MATERIAL ADVERSE EFFECT ON THE
Parent",  as used in this  Agreement,  means  any  change  in or  effect  on the
business,  financial condition,  results of operation or prospects of the Parent
or any of its subsidiaries  that would reasonably be expected to have a material
adverse  effect on the  Parent  and its  subsidiaries  taken as a whole or could
reasonably  be  expected  to prevent or  materially  delay  consummation  of the
Merger;  provided that the foregoing shall not include any change or effect that
results or arises from or relates to changes in (A)  general  economic or market
conditions,  except to the  extent  they have a  disproportionate  impact on the
Parent,  or prevailing  interest rates, (B) conditions  generally  affecting the
industry in which the Parent  operates,  or (C) laws,  regulations or accounting
standards, principles or interpretations.

         SECTION 5.2  AUTHORITY.

         Each  of the  Parent  and  the  Purchaser  has  all  necessary  limited
partnership  and  corporate  power,  respectively,  and authority to execute and
deliver this Agreement and to consummate the transactions  contemplated  hereby.
The execution and delivery of this Agreement by the Parent and the Purchaser and
the  consummation  by the Parent and the Purchaser,  to the extent the Parent or
the Purchaser is a party thereto,  of the transactions  contemplated hereby have
been duly and validly  authorized  and approved by the Board of Directors of the
Purchaser and by the Parent as sole  shareholder of the Purchaser,  and no other
corporate  proceedings  on the part of the Parent or the Purchaser are necessary
to  authorize  or approve  this  Agreement  or to  consummate  the  transactions
contemplated  hereby or thereby (to the extent the Parent or the  Purchaser is a
party  thereto).  This Agreement has been duly executed and delivered by each of
the Parent and the  Purchaser  and,  assuming  the due and valid  authorization,
execution  and  delivery  by  the  Company,  constitutes  a  valid  and  binding
obligation of each of the Parent and the Purchaser  enforceable  against each of
them in accordance with its terms.

         SECTION 5.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.

                  (a)  Assuming (i) the filings  required  under the HSR Act are
         made and the waiting periods thereunder have terminated or have expired
         and (ii) the filing of the  articles  of merger  and other  appropriate
         merger documents, if any, as required by the GBCL, is made, none of the
         execution  and  delivery  of  this  Agreement  by  the  Parent  or  the
         Purchaser,  the  consummation  by the  Parent or the  Purchaser  of the
         transactions  contemplated  hereby or  compliance  by the Parent or the
         Purchaser with any of the  provisions  hereof will (i) conflict with or
         violate the  organizational  documents of the Parent or the  Purchaser,
         (ii) conflict with or violate any statute, ordinance, rule, regulation,


                                       25


         order, judgment,  decree, permit or license applicable to the Parent or
         the Purchaser or any of their subsidiaries,  or by which any of them or
         any of their respective  properties or assets may be bound or affected,
         or (iii) result in a violation  pursuant to any note,  bond,  mortgage,
         indenture,  contract,  agreement,  lease, license, permit, franchise or
         other  instrument or obligation to which the Parent or the Purchaser or
         any of their  subsidiaries  is a party or by which  the  Parent  or the
         Purchaser  or any of  their  subsidiaries  or any of  their  respective
         properties or assets may be bound or affected.

                  (b) None of the  execution  and delivery of this  Agreement by
         the Parent and the Purchaser,  the  consummation  by the Parent and the
         Purchaser of the transactions  contemplated hereby or compliance by the
         Parent and the Purchaser with any of the provisions hereof will require
         any Consent of any  Governmental  Entity,  except for (i) the filing of
         articles of merger  pursuant to the GBCL and (ii)  compliance  with the
         HSR Act.

         SECTION  5.4  INFORMATION.

         None of the  information  supplied  or to be supplied by the Parent and
the Purchaser for inclusion in (i) the Proxy Statement or (ii) the Other Filings
will,  at the  respective  times  filed with any  Governmental  Entity  and,  in
addition, in the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to shareholders,  at the time of the Special Meeting and at
Closing,  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  made therein,  in light of the  circumstances  under which they were
made, not misleading.

         SECTION 5.5 FINANCING.

         The Parent and the Purchaser  collectively will have at Closing and the
Parent  will make  available  to the  Purchaser  sufficient  funds to enable the
Purchaser to pay (i) the aggregate  Merger Price for all Common Shares  pursuant
to Section 1.4, on a fully diluted  basis,  and (ii) the aggregate Cash Payments
for all Options  pursuant to Section  1.6(b),  and to pay all fees and  expenses
related to the transactions contemplated by this Agreement payable by them.

         SECTION 5.6 STOCK OWNERSHIP.

         As of the date hereof,  none of the Parent,  the  Purchaser or American
Industrial Partners or any of their respective  "affiliates" or "associates" (as
those terms are defined  under Rule 12b-2 under the Exchange  Act)  beneficially
own any Common Shares.

         SECTION 5.7 PURCHASER'S OPERATIONS.

         The  Purchaser  was formed  solely for the  purpose of  engaging in the
transactions  contemplated by this Agreement and has not engaged in any business
activities  or  conducted  any  operations  other than in  connection  with such
transactions.


                                       26


         SECTION 5.8  REPRESENTATIONS  COMPLETE.

         None of the  representations  or  warranties  made by the Parent or the
Purchaser herein or in any certificate  furnished by the Parent or the Purchaser
pursuant to this  Agreement,  when all such documents are read together in their
entirety,  contains any untrue  statement of a material  fact, or omits to state
any material fact necessary in order to make the statements  contained herein or
therein, in the light of the circumstances under which made, not misleading.

         SECTION 5.9 SOLVENCY.

         Immediately  after the  Closing,  the Parent will not (i) be  insolvent
(either  because its  financial  condition  is such that the sum of its debts is
greater than the fair value of its assets or because the fair  salable  value of
its assets is less than the amount required to pay its probable liability on its
existing  debts  as  they  mature  and a  reasonable  amount  of all  contingent
liabilities),  (ii) have unreasonably  small capital with which to engage in its
business,  or (iii) have incurred debts beyond its ability to pay as they become
due.

                                   ARTICLE VI
                                    COVENANTS

         SECTION 6.1 CONDUCT OF BUSINESS OF THE COMPANY.

         Except as permitted or required by this Agreement or otherwise with the
prior  written  consent of the  Parent,  during the period from the date of this
Agreement to the Effective  Time,  the Company will,  and will cause each of its
subsidiaries to, conduct its operations only in the ordinary and usual course of
business consistent with past practice and will use all reasonable efforts,  and
will cause each of its subsidiaries to use all reasonable  efforts,  to preserve
intact the business organization of the Company and each of its subsidiaries, to
keep available the services of its and their present officers and employees, and
to  preserve  the good  will of those  having  business  relationships  with it.
Without  limiting  the  generality  of the  foregoing,  and except as  otherwise
permitted  or required by this  Agreement or as set forth in SCHEDULE 6.1 of the
COMPANY  DISCLOSURE  SCHEDULE,  the Company will not, and will not permit any of
its  subsidiaries  to, prior to the  Effective  Time,  without the prior written
consent of the Parent, which will not be unreasonably  withheld,  conditioned or
delayed:

                  (a) adopt any  amendment to its articles of  incorporation  or
         bylaws or comparable  organizational  documents or the Rights Agreement
         or adopt a plan of merger, consolidation,  reorganization,  dissolution
         or liquidation;

                  (b) sell,  pledge or encumber  any stock owned by it in any of
         its subsidiaries;

                  (c) (i) issue,  reissue or sell,  or authorize  the  issuance,
         reissuance  or sale of (A)  additional  shares of capital  stock of any
         class or Voting Debt, or securities  convertible  into capital stock of
         any class or Voting Debt, or any rights, warrants or options to acquire
         any convertible securities or capital stock, other than the issuance of
         Common  Shares,  in  accordance  with  the  terms  of  the  instruments
         governing such issuance on the date hereof, pursuant to the exercise of
         Options  outstanding on the date hereof, or (B) any other securities in
         respect of, in lieu of, or in  substitution  for,  Common Shares or any
         other capital stock of any class or Voting Debt outstanding on the date


                                       27


         hereof or (ii) make any other changes in its capital  structure  (other
         than  incurrence  of  indebtedness  in the amount of up to Five Million
         Dollars  ($5,000,000) in the aggregate under existing  revolving credit
         facilities);

                  (d)   declare,   set  aside  or  pay  any  dividend  or  other
         distribution   (whether  in  cash,   securities   or  property  or  any
         combination  thereof)  in respect of any class or series of its capital
         stock other than between any of the Company and its subsidiaries;

                  (e) split, combine, subdivide,  reclassify or redeem, purchase
         or  otherwise  acquire,  or propose to redeem or purchase or  otherwise
         acquire,  any  shares  of its  capital  stock,  or  any  of  its  other
         securities;

                  (f)  except  as set  forth  in  SCHEDULE  6.1  of the  COMPANY
         DISCLOSURE SCHEDULE, increase in any manner the wages, salaries, bonus,
         compensation  or other  benefits of any of its officers or employees or
         enter into, establish,  amend or terminate any employment,  consulting,
         retention,  change in control,  collective  bargaining,  bonus or other
         incentive compensation,  profit sharing, health or other welfare, stock
         option  or other  equity,  pension,  retirement,  vacation,  severance,
         termination,  deferred  compensation  or other  compensation or benefit
         plan,  policy,  agreement,  trust,  fund or arrangement with, for or in
         respect of, any shareholder,  officer, director, other employee, agent,
         consultant or affiliate other than as required pursuant to the terms of
         agreements  in effect on the date of this  Agreement,  or enter into or
         engage in any agreement,  arrangement  or  transaction  with any of its
         directors,   officers,   employees   or   affiliates   except   current
         compensation   and  benefits  in  the  ordinary   course  of  business,
         consistent with past practice;

                  (g) acquire, mortgage,  encumber, sell, pledge, lease, license
         or dispose of any assets (including  Intellectual  Property or resource
         rights), except in the ordinary course of business consistent with past
         practice;

                  (h) (i) incur, assume or prepay any long-term debt or incur or
         assume  any   short-term   debt,   except  that  the  Company  and  its
         subsidiaries may incur or prepay debt, without prepayment  penalty,  in
         the ordinary course of business in amounts and for purposes  consistent
         with past practice  under  existing  lines of credit,  but in any event
         such  incurrences,  assumptions  or  prepayments  may not  exceed  Five
         Million Dollars ($5,000,000) in the aggregate,  (ii) assume, guarantee,
         endorse or otherwise  become liable or responsible  (whether  directly,
         contingently  or  otherwise)  for the  obligations  of any third  party
         except  in  the  ordinary  course  of  business  consistent  with  past
         practice,  (iii) pay,  discharge or satisfy any claims,  liabilities or
         obligations (absolute, accrued, contingent or otherwise), except in the
         ordinary  course  of  business  consistent  with past  practice  and in
         accordance with their terms,  (iv) make any loans,  advances or capital
         contributions to, or investments in, any other person or entity, except
         for  loans,  advances,  capital  contributions  or  investments  in the
         ordinary  course,  consistent  with past  practice (in an amount not to
         exceed Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate),
         or between any wholly owned  subsidiary  of the Company and the Company
         or another  wholly owned  subsidiary  of the Company,  (v) authorize or
         make capital  expenditures in excess of Five Hundred  Thousand  Dollars
         ($500,000),  (vi)  accelerate or delay  collection of notes or accounts


                                       28


         receivable in advance of or beyond their regular due dates or the dates
         when the same  would  have been  collected  in the  ordinary  course of
         business  consistent with past practice,  or (vii) change any method or
         principle  of  accounting  in a manner that is  inconsistent  with past
         practice  except  to the  extent  required  by GAAP as  advised  by the
         Company's regular independent accountants;

                  (i)  commence,  settle  or  compromise  any  suit or  claim or
         threatened  suit or claim where the amount involved is greater than Two
         Hundred Fifty Thousand Dollars ($250,000);

                  (j) other than in the ordinary  course of business  consistent
         with  past  practice,  (i)  modify,  amend or  terminate  any  material
         contract,  (ii)  waive,  release,  relinquish  or assign  any  material
         contract  (or  any  of  the  rights  of  the  Company  or  any  of  its
         subsidiaries  thereunder),  right or claim, or (iii) cancel, forgive or
         make any changes to the terms or collateral of any indebtedness owed to
         the Company or any of its subsidiaries; provided, however, that neither
         the  Company  nor any of its  subsidiaries  may under any  circumstance
         waive  or  release  any of its  rights  under  any  confidentiality  or
         non-competition agreement to which it is a party;

                  (k) file any  income Tax Return  (other  than in the  ordinary
         course  in a  manner  consistent  with  past  practice),  make  any Tax
         election not required by law, settle or compromise any Tax liability or
         file any amended Tax Return or claim for refund;

                  (l) permit any insurance  policy naming it as a beneficiary or
         a loss  payable  payee to be  canceled  or  terminated,  except  in the
         ordinary course of business consistent with past practice;

                  (m) acquire (by merger, consolidation, acquisition of stock or
         assets,  combination  or other similar  transaction)  any  corporation,
         partnership  or other  business  organization  or  division  or  assets
         thereof;

                  (n) enter into any material  contract or agreement  other than
         in the ordinary course of business consistent with past practice;

                  (o) except as may be  required  as a result of a change in law
         or in GAAP, make any change in its methods of accounting, including Tax
         accounting policies and procedures;

                  (p)  adopt or amend any  resolution  or  agreement  concerning
         indemnification of its directors, officers, employees or agents;

                  (q)  transfer or license to any person or entity or  otherwise
         extend,  amend, modify,  permit to lapse or fail to preserve any of the
         Intellectual  Property  material to the Company's or its  subsidiaries'
         business as presently conducted or proposed to be conducted, other than
         nonexclusive  licenses in the  ordinary  course of business  consistent
         with past practice,  or disclose to any person who has not entered into
         a confidentiality agreement any Trade Secrets;


                                       29


                  (r) fail to maintain  its books,  accounts  and records in the
         usual manner on a basis consistent with that heretofore employed;

                  (s)  establish  any  subsidiary  or enter into any new line of
         business;

                  (t) make  any  changes  to its  current  investment  strategy,
         policy or practices;

                  (u) discharge any  obligations  (including  accounts  payable)
         other than in the  ordinary  course of  business  consistent  with past
         practice,  or delay the  making of any  capital  expenditures  from the
         Company's current capital expenditure schedule;

                  (v)  close  or   materially   reduce  the   Company's  or  any
         subsidiary's  activities,  or other in the ordinary  course of business
         consistent   with  past   practices,   effect   any   layoff  or  other
         Company-initiated   personnel  reduction  or  change,  at  any  of  the
         Company's or any subsidiary's facilities;

                  (w) except as specifically permitted pursuant to Section 6.10,
         take, or agree to commit to take, or fail to take any action that would
         result or is  reasonably  likely to result in any of the  conditions to
         the Merger set forth in Article VII not being satisfied,  or would make
         any   representation  or  warranty  of  the  Company  contained  herein
         inaccurate in any material  respect at, or as of any time prior to, the
         Effective  Time,  or that would  impair the  ability of the  Company to
         consummate the Merger in accordance with the terms hereof or materially
         delay such consummation; or

                  (x) authorize, or agree in writing or otherwise to take any of
         the foregoing actions prohibited under this Section 6.1.

         SECTION 6.2 ACCESS TO INFORMATION.

                  (a) From the date of this Agreement  until the Effective Time,
         the Company will,  and will cause its  subsidiaries,  and each of their
         respective  officers,  directors,   employees,  counsel,  advisors  and
         representatives (collectively,  the "COMPANY REPRESENTATIVES") to, give
         the Parent and the Purchaser and their respective officers,  employees,
         counsel,  advisors  and  representatives  (collectively,   the  "PARENT
         REPRESENTATIVES")  access during normal  business hours, to the offices
         and other  facilities  and to the books and  records of the Company and
         its  subsidiaries  and will cause the Company  Representatives  and the
         Company's  subsidiaries  to furnish the Parent,  the  Purchaser and the
         Parent  Representatives to the extent available with such financial and
         operating  data  and  such  other   information  (with  sensitivity  to
         competitive information and customer relationships) with respect to the
         business  and  operations  of the Company and its  subsidiaries  as the
         Parent  and the  Purchaser  may from  time to time  reasonably  request
         provided that the foregoing  will not require the Company to permit any
         inspection,  or to disclose any information,  which would result in the
         disclosure  of any  trade  secrets  of third  parties  or  violate  any
         obligation  of the  Company  with  respect to  confidentiality  if such
         disclosure  would  reasonably be expected to result in liability to the
         Company,  and provided that the Company shall use its  reasonable  best
         efforts  to  obtain  the  consent  of any  such  third  party  to  such
         inspection  or  disclosure.  The Company will  furnish  promptly to the


                                       30


         Parent and the Purchaser a copy of each report, schedule,  registration
         statement  and  other  document  released  publicly  to  the  Company's
         shareholders by it or its subsidiaries  during such period. The Company
         will cause its independent  auditors to allow the Parent, the Purchaser
         and the  Parent  Representatives  to  review  the work  papers  of such
         auditors  relating  to the  Company  and its  subsidiaries.  No  review
         pursuant to this Section 6.2 will affect any representation or warranty
         given by the Company.

                  (b) Nothing in Section 6.2(a) shall require the Company or any
         of  its  subsidiaries  to  provide  such  access  or to  disclose  such
         information where such access or disclosure would violate the rights of
         the Company's  customers,  jeopardize the attorney-client  privilege of
         the  institution  in  possession  or  control  of such  information  or
         contravene  any  law,  rule,  regulation,   order,  judgment,   decree,
         fiduciary duty or binding  agreement  entered into prior to the date of
         this   Agreement.   The  Company  will  make   appropriate   disclosure
         arrangements  under  circumstances  in which  the  restrictions  of the
         preceding sentence apply.

                  (c) Notwithstanding anything to the contrary in Section 6.2(a)
         or elsewhere in this Agreement,  neither the Parent,  the Purchaser nor
         their  representatives  shall be  entitled  to conduct  any  additional
         environmental  testing,  sampling or  investigation  of soils,  waters,
         sediments or discharges.

                  (d) Each of the  Parent and the  Purchaser  will hold and will
         cause  its  consultants  and  advisors  to  hold in  strict  confidence
         pursuant to the terms of that certain  Confidentiality  Agreement dated
         June  20,  2006  between  Steel  Partners  Ltd.  and the  Company  (the
         "CONFIDENTIALITY  AGREEMENT") all documents and information  concerning
         the Company furnished to the Parent or the Purchaser in connection with
         the transactions contemplated by this Agreement.

         SECTION 6.3 EFFORTS.

                  (a) Subject to the terms and conditions  provided herein, each
         of the Company, the Parent and the Purchaser will, and the Company will
         cause each of its  subsidiaries  to, cooperate and use their respective
         reasonable  best  efforts  to take,  or cause to be made,  all  filings
         necessary, proper or advisable under applicable laws and regulations to
         consummate and make  effective the  transactions  contemplated  by this
         Agreement,  including but not limited to cooperation in the preparation
         and filing of the Proxy Statement, any required filings or requests for
         additional  information  under the HSR Act, and any  amendments  to any
         thereof.  In addition,  if at any time prior to the Effective  Time any
         event or  circumstance  relating to either the Company or the Parent or
         the  Purchaser  or any  of  their  respective  subsidiaries  should  be
         discovered  by the  Company or the  Parent,  as the case may be,  which
         should be set forth in an  amendment  to,  the  discovering  party will
         promptly inform the other party of such event or circumstance.

                  (b) Each of the parties will use its  reasonable  best efforts
         to obtain as promptly as practicable  all Consents of any  Governmental
         Entity or any other person required in connection  with, and waivers of
         any  Violations  that  may  be  caused  by,  the  consummation  of  the
         transactions contemplated by this Agreement.


                                       31



                  (c)  Neither  the  Company  nor  the  Company  Board  nor  any
         committee  thereof  will  withdraw  or modify,  or propose  publicly to
         withdraw or modify, in a manner adverse to the Parent or the Purchaser,
         the  recommendation  of the  Company  Board  of this  Agreement  or the
         Merger,  or approve or  recommend,  or propose  publicly  to approve or
         recommend,  an  Acquisition  Transaction  (as defined in Section 6.10),
         except in connection  with the Company's  termination of this Agreement
         pursuant to Section  8.1(d).  Nothing  contained in this Section 6.3(c)
         prohibits  the  Company  from  making any  required  disclosure  to the
         Company's shareholders if the Company Board determines in good faith by
         a vote of a majority of the members of the full Company Board, based on
         the advice of outside  counsel,  that a failure to so disclose would be
         inconsistent with its obligations under applicable law. Any withdrawal,
         modification  or change of the  recommendation  of the Company Board of
         this  Agreement  or the  Merger  will not change  the  approval  of the
         Company  Board for  purpose of causing  any state  takeover  statute or
         other law or the Rights  Agreement or the Rights to be  inapplicable to
         this Agreement, the Merger and the transactions contemplated hereby.

                  (d) Subject to the terms and conditions herein provided,  each
         of the parties hereto agrees to use their  respective  reasonable  best
         efforts to take, or cause to be taken, all action,  and to do, or cause
         to be done, all things necessary,  proper or advisable under applicable
         laws and regulations to consummate and make effective the  transactions
         contemplated by this Agreement. If at any time after the Effective Time
         any further  action is necessary or desirable to carry out the purposes
         of this  Agreement,  the parties  hereto will take or cause to be taken
         all such necessary action, including, without limitation, the execution
         and  delivery  of such  further  instruments  and  documents  as may be
         reasonably  requested by the other party for such purposes or otherwise
         to consummate and make effective the transactions contemplated hereby.

         SECTION 6.4 PUBLIC ANNOUNCEMENTS.

         The Company, on the one hand, and the Parent and the Purchaser,  on the
other hand, agree to consult promptly with each other prior to issuing any press
release or otherwise  making any public statement with respect to the Merger and
the other transactions  contemplated hereby, agree to provide to the other party
for review a copy of any such press release or statement, and will not issue any
such press release or make any such public statement prior to such  consultation
and review,  unless  required by applicable law or any listing  agreement with a
securities exchange.

         SECTION 6.5 EMPLOYEE BENEFIT ARRANGEMENTS.

                  (a) The Parent shall to the extent practicable either maintain
         and  provide to the  Company's  employees  the  employee  benefits  and
         programs  of the  Company  as  substantially  in  effect as of the date
         hereof or cause the Surviving  Corporation to provide employee benefits
         and programs to the Company's  employees  that, in the  aggregate,  are
         substantially  comparable  to those of the Parent.  The  Company  shall
         provide the Parent with such  information  as the Parent may reasonably


                                       32


         request regarding the Company's employee benefits and programs in order
         to assist  Purchaser  in  complying  with its  obligations  under  this
         Section  6.5(a).  Nothing in this Section  6.5(a) shall be construed to
         prohibit  or  restrict  the Parent or the  Surviving  Corporation  from
         amending,  suspending or terminating any of its employee  benefit plans
         or programs at any time.  Nothing in this  Section 6.5 or  elsewhere in
         this Agreement  shall be construed to create a right in any employee to
         employment  with the  Parent,  the  Surviving  Company  or any of their
         subsidiaries  and the  employment  of each such  employee  shall be "at
         will" employment,  except to the extent otherwise provided in a written
         employment  agreement.  The Parent  shall use  commercially  reasonable
         efforts to maintain in effect  through  December  31, 2006 the existing
         health plans of the Company.

                  (b) For purposes of determining  eligibility  to  participate,
         vesting and accrual or  entitlement to benefits where length of service
         is  relevant  under  any  employee  benefit  plan of the  Parent or the
         Surviving  Corporation  ("PARENT  PLAN"),  the  Employees  will receive
         service credit for service with the Company and any of its subsidiaries
         to the same extent  such  service  credit was granted  under the Listed
         Plans,  subject to offsets for  previously  accrued  benefits and to no
         duplication of benefits (except that no such credit will be applied for
         benefit  accrual or entitlement  purposes under defined benefit pension
         plans).  Such employees also will be given credit for any deductible or
         co-payment  amounts  paid in  respect  of the plan  year in  which  the
         Effective  Time occurs,  to the extent that,  following  the  Effective
         Time,  they  participate  in any Parent Plan for which  deductibles  or
         co-payments  are  required.  The Parent  agrees that it also will cause
         each Parent Plan to waive (i) any  pre-existing  condition  restriction
         which was  waived  under the terms of any  analogous  plan  immediately
         prior to the Effective  Time or (ii) waiting  period  limitation  which
         would  otherwise be applicable to an Employee on or after the Effective
         Time to the extent such  Employee  had  satisfied  any similar  waiting
         period limitation under an analogous plan prior to the Effective Time.

         SECTION 6.6 INDEMNIFICATION.

                  (a) The Parent agrees that,  and agrees to cause the Surviving
         Corporation  to honor,  all rights to  indemnification  now existing in
         favor of any  director,  officer,  or  employee  of the Company and its
         subsidiaries   (the   "INDEMNIFIED   PARTIES")  as  provided  in  their
         respective  charters or bylaws or by contract  will  survive the Merger
         and will  continue  in full  force and  effect for a period of not less
         than six years from the Effective Time.

                  (b) The Company shall purchase prepaid insurance policies with
         a claims  period of at least six years with respect to  directors'  and
         officers' liability insurance in amount and scope at least as favorable
         as the  Company's  existing  policies for claims  arising from facts or
         events that occurred on or prior to the Effective  Time,  provided that
         aggregate premium payments for such policies do not exceed $50,000.

                  (c) In the event the Parent or the  Purchaser  or any of their
         successors or assigns,  (i) consolidates  with or merges into any other
         person and is not the continuing or surviving  corporation or entity of


                                       33


         such  consolidation  or merger,  or (ii)  transfers  or conveys  all or
         substantially all of its properties and assets to any person, then, and
         in each such case, to the extent  necessary to effectuate  the purposes
         of this  Section  6.6,  proper  provision  will  be  made  so that  the
         successors  and  assigns  of the Parent  and the  Purchaser  assume the
         obligations set forth in this Section 6.6.

         SECTION 6.7 NOTIFICATION OF CERTAIN MATTERS.

         The Parent and the Company (the one  required to give notice  hereunder
being referred to herein as the "notifying party") will each promptly notify the
other of (a) the occurrence or  non-occurrence  of any fact or event which would
be  reasonably  likely  (i) to  cause  any  representation  or  warranty  of the
notifying  party  contained in this  Agreement to be untrue or inaccurate in any
material  respect if made at any time from the date hereof to the Effective Time
or (ii) to cause any  covenant  or  agreement  of the  notifying  party,  or any
condition to the  obligations of the party to be notified,  under this Agreement
not to be complied with or satisfied in any material respect and (b) any failure
of the  notifying  party to comply with or satisfy any  covenant,  condition  or
agreement  to be complied  with or  satisfied  by it  hereunder  in any material
respect;   provided,   however,  that  no  such  notification  will  modify  the
representations  or warranties of any party or the conditions to the obligations
of any party hereunder.  Each of the Company,  the Parent and the Purchaser will
give  prompt  notice  to the  other  parties  hereof  of  any  notice  or  other
communication  (a) from any third party  alleging that the consent of such third
party is or may be required in connection with the transactions  contemplated by
this  Agreement  and (b) from any  Governmental  Entity in  connection  with the
transactions contemplated by this Agreement.

         SECTION 6.8 RIGHTS AGREEMENT.

         The  Company  covenants  and  agrees  that it will not (a)  redeem  the
Rights,  (b) amend the Rights Agreement or (c) take any action which would allow
any Person (as  defined  in the Rights  Agreement)  other than the Parent or the
Purchaser to acquire  beneficial  ownership of 20% or more of the Common  Shares
without causing a "Distribution  Date" or a "Triggering Event" to occur pursuant
to the terms of the Rights Agreement.

         SECTION 6.9 STATE TAKEOVER LAWS.

         The  Company  will,  upon  the  request  of  the  Purchaser,  take  all
reasonable  steps to assist in any challenge by the Purchaser to the validity or
applicability to the transactions contemplated by this Agreement,  including the
Merger, of any state takeover law.

         SECTION 6.10 NO SOLICITATION.

                  (a) The Company, its affiliates and their respective officers,
         directors, employees, representatives and agents will immediately cease
         any existing  discussions  or  negotiations,  if any,  with any parties
         conducted heretofore with respect to any acquisition or exchange of all
         or any  material  portion of the assets of, or any equity  interest in,
         the Company or any of its subsidiaries or any business combination with
         the Company or any of its subsidiaries. Except as otherwise provided in
         Section 6.10(b),  the Company agrees that, prior to the Effective Time,


                                       34


         it will not, and will not  authorize or permit any of its  subsidiaries
         or any of its or  its  subsidiaries'  directors,  officers,  employees,
         agents  or  representatives,   directly  or  indirectly,   to  solicit,
         initiate,  encourage or facilitate,  or furnish or disclose  non-public
         information  in  furtherance  of,  any  inquiries  or the making of any
         proposal  with  respect to any merger,  liquidation,  recapitalization,
         consolidation  or other business  combination  involving the Company or
         any of its  subsidiaries  or  acquisition  of any capital  stock or any
         material portion of the assets of the Company or its  subsidiaries,  or
         any  combination of the foregoing (an  "ACQUISITION  TRANSACTION"),  or
         negotiate,  explore or otherwise  engage in discussions with any person
         (other than the Purchaser,  the Parent or their  respective  directors,
         officers,  employees,  agents and representatives)  with respect to any
         Acquisition  Transaction  or enter into any  agreement,  arrangement or
         understanding requiring it to abandon,  terminate or fail to consummate
         the Merger or any other transactions contemplated by this Agreement.

                  (b) Notwithstanding  the provisions of Section 6.10(a),  prior
         to the Effective Time, the Company may furnish information, pursuant to
         a customary  confidentiality agreement with terms not more favorable to
         such third party than the Confidentiality  Agreement, to, and negotiate
         or otherwise engage in discussions  with, any party who delivers a bona
         fide written  proposal  for an  Acquisition  Transaction  for which all
         necessary  financing  is then,  in the  judgment of the Company  Board,
         readily  obtainable,  if (i) the Company Board determines in good faith
         by a vote of a majority of the members of the full  Company  Board that
         failing to take such action would create a reasonable  likelihood  of a
         breach of the fiduciary duties of the Company Board (after consultation
         and receipt of advice from its outside  legal  counsel to such  effect)
         and such a proposal is (based on advice  from  George K. Baum  Advisors
         LLC) more  favorable  to the  Company's  shareholders  from a financial
         point of view than the  transactions  contemplated by this Agreement as
         the same has been  proposed  to be amended by the  Parent  pursuant  to
         Section  6.10(b)  and (ii)  there has been no  violation  of any of the
         restrictions  in  Section  6.10(a)  in  connection  with the  Company's
         receipt  of such  proposal.  An  Acquisition  Transaction  meeting  the
         requirements set forth in this Section 6.10(b),  the proposal for which
         has  been  received  by the  Company  without  violation  of any of the
         restrictions of Section  6.10(a),  is referred to herein as a "Superior
         Transaction."

                  (c)  From and  after  the  execution  of this  Agreement,  the
         Company will promptly (and in any event within  twenty-four  (24) hours
         after receipt) advise the Parent in writing of the receipt, directly or
         indirectly,  of any inquiries,  discussions,  negotiations or proposals
         relating  to an  Acquisition  Transaction,  identify  the  offeror  and
         furnish to the Parent a copy of any such proposal or inquiry,  if it is
         in writing,  relating to an Acquisition  Transaction.  The Company will
         promptly advise the Parent of any material development relating to such
         proposal,  including  the  results of any  substantive  discussions  or
         negotiations  with respect  thereto.  Notwithstanding  anything in this
         Agreement  to the  contrary,  prior to the  approval of an  Acquisition
         Transaction  by the Company  Board,  the  Company  will give the Parent
         sufficient  notice of the  material  terms and  conditions  of any such
         Acquisition  Transaction,  and  negotiate in good faith with the Parent
         for a period of not less than five (5) business days after the Parent's
         receipt of a copy of a written proposal or a written summary of an oral
         proposal  setting forth or describing such  Acquisition  Transaction to


                                       35


         make such  adjustments in the terms and conditions of this Agreement as
         would enable the Company to proceed with the transactions  contemplated
         herein, after taking into account any adjustment or modification of the
         terms of this  Agreement  proposed by the Parent (and any adjustment or
         modification  of the terms of such proposed  Acquisition  Transaction),
         after which, notwithstanding Section 6.10(a), the Company may terminate
         this  Agreement in  accordance  with  Section  8.1(d) and enter into an
         agreement with another party relating to an Acquisition Transaction.

         SECTION 6.11 SHAREHOLDER LITIGATION.

         The Company will  consult with the Parent and keep the Parent  informed
about the defense of any stockholder  litigation  against the Company and/or its
officers  or  directors  relating  to  the  transactions  contemplated  by  this
Agreement.  The Company will not settle any such litigation without the Parent's
prior written consent.

         SECTION  6.12  RESIGNATIONS

         Each  of the  members  of  the  Company  Board  will  resign  as of the
Effective Time.

         SECTION 6.13  TERMINATION OF CERTAIN  INSURANCE  POLICIES.

         The Company  shall  arrange for the  cancellation,  on the Closing Date
immediately  prior to the Effective  Time, of the four life  insurance  policies
listed in SCHEDULE 6.13 of the Company Disclosure Schedule.

         SECTION 6.14 SEVERANCE PAYMENTS.

         On or  before  the  Closing  Date  (but  in any  event  no  later  than
immediately  prior to the Effective  Time), the Company shall make all severance
payments arising as a result of the transactions contemplated by this Agreement,
a good faith  estimate  of which is set forth in  SCHEDULE  6.14 of the  COMPANY
DISCLOSURE SCHEDULE.

         SECTION 6.15 DISMISSAL OF LAWSUIT.

         As a condition and  inducement to the  Company's  willingness  to enter
into this Agreement upon the terms contained herein,  within five (5) days after
the execution of this  Agreement,  the Parent and the Purchaser  will cause that
certain  action  against  the  Company  entitled  AIP  IV,  LLC  d/b/a  American
Industrial Partners against Collins Industries,  Inc. now pending in the Supreme
Court of the State of New York to be dismissed with prejudice.


                                       36


                                  ARTICLE VII
                    CONDITIONS TO CONSUMMATION OF THE MERGER

         SECTION 7.1  CONDITIONS  TO EACH PARTY'S  OBLIGATIONS.

         The respective obligations of the Parent, the Purchaser and the Company
to  consummate  the Merger are  subject  to the  satisfaction,  at or before the
Closing, of each of the following conditions:

                  (a) SHAREHOLDER  APPROVAL.  The Agreement has been approved by
         the Requisite Vote of the shareholders of the Company.

                  (b) INJUNCTIONS; ILLEGALITY. The consummation of the Merger is
         not restrained,  enjoined or prohibited by any order, judgment, decree,
         injunction  or  ruling  of a court  of  competent  jurisdiction  or any
         Governmental  Entity  (provided  that  each  of the  parties  has  used
         reasonable  best efforts to prevent the entry of any such injunction or
         other  order and to appeal any  injunction  or other  order that may be
         entered),  and there has been no statute,  rule or regulation  enacted,
         promulgated  or deemed  applicable  to the  Merger by any  Governmental
         Entity which prevents the consummation of the Merger.  (c) HSR ACT. Any
         waiting period (and any extension thereof) under the HSR Act applicable
         to the Merger has expired or terminated.

         SECTION 7.2 CONDITIONS TO OBLIGATIONS OF THE PARENT.

         The  obligations  of the Parent to consummate the Merger are subject to
the  fulfillment  at  or  before  the  Closing,  of  the  following   additional
conditions:

                  (a)    COMPANY    REPRESENTATIONS    AND    WARRANTIES.    The
         representations  and  warranties  of the  Company  set  forth  in  this
         Agreement  shall be true and correct in all material  respects  (except
         that where any  statement  in a  representation  or warranty  expressly
         includes a "material  adverse effect",  "material" or other materiality
         qualifier, such representation or warranty shall be true and correct in
         all  respects)  as of the date hereof and as of the Closing  Date as if
         made on and as of the Closing Date,  except those  representations  and
         warranties  that  speak of an  earlier  date,  which  shall be true and
         correct as of such earlier date (it being understood that, for purposes
         of determining the accuracy of such representations and warranties, any
         update of or  modification to the Company  Disclosure  Schedule made or
         purported to have been made after the date of this  Agreement  shall be
         disregarded).

                  (b)  PERFORMANCE  BY  THE  COMPANY.  The  Company  shall  have
         performed and complied  with all the  covenants  and  agreements in all
         material  respects  and  satisfied  in all  material  respects  all the
         conditions  required by this Agreement to be performed or complied with
         or satisfied by the Company at or prior to the Effective Time.

                  (c) NO  MATERIAL  ADVERSE  CHANGE.  There  shall  have been no
         change,  condition,  event, or development that has or could reasonably
         be expected to have, a Material Adverse Effect on the Company since the
         date of this Agreement.

                  (d) CONSENTS. The Consents set forth in SCHEDULE 7.2(D) of the
         COMPANY  DISCLOSURE  SCHEDULE  shall have been obtained and shall be in
         full force and effect.


                                       37


                  (e) RIGHTS AGREEMENT. The Rights Agreement has been terminated
         and has no further legal force or effect.

         SECTION 7.3 CONDITION TO OBLIGATIONS OF THE COMPANY.

         The  obligations of the Company to consummate the Merger are subject to
the satisfaction at or before Closing, of the following additional conditions:

                  (a)  REPRESENTATIONS  AND  WARRANTIES  OF THE  PARENT  AND THE
         PURCHASER.  The  representations  and  warranties of the Parent and the
         Purchaser set forth in this Agreement  shall be true and correct in all
         material  respects (except that where any statement in a representation
         or warranty expressly includes a "material adverse effect",  "material"
         or other materiality  qualifier,  such representation or warranty shall
         be true and  correct in all  respects)  as of the date hereof and as of
         the Closing Date as if made on and as of the Closing Date, except those
         representations  and  warranties  that speak of an earlier date,  which
         shall be true and correct as of such earlier date.

                  (b)  PERFORMANCE BY THE PARENT AND THE  PURCHASER.  The Parent
         and the  Purchaser  shall  have  performed  and  complied  with all the
         covenants and agreements in all material  respects and satisfied in all
         material  respects all the conditions  required by this Agreement to be
         performed or complied  with or satisfied by each such party at or prior
         to the Effective Time.

         SECTION  7.4  FRUSTRATION  OF  CONDITIONS.

         Neither  the  Parent  nor the  Company  may rely on the  failure of any
condition  set forth in this  Article VII to be  satisfied  if such  failure was
caused by such party's failure to comply with or perform any of its covenants or
obligations set forth in this Agreement

                                  ARTICLE VIII
                         TERMINATION; AMENDMENTS; WAIVER

         SECTION 8.1  TERMINATION.

         This Agreement may be terminated and the Merger contemplated hereby may
be  abandoned  at any time prior to the  Closing,  notwithstanding  any approval
thereof by the  shareholders  of the Company (with any termination by the Parent
also being an effective termination by the Purchaser):

                  (a) by the  mutual  written  consent  of the  Company  and the
         Parent;

                  (b) by the  Company,  on the one hand,  or the Parent,  on the
         other hand, if the transactions contemplated by this Agreement have not
         been  consummated  on or  before  six  months  from  the  date  of this
         Agreement,  unless such date is extended by the mutual written  consent
         of the  Company  and the Parent  provided,  however,  that the right to
         terminate this  Agreement  pursuant to this Section 8.1(b) shall not be
         available to any party whose failure to perform any of its  obligations
         under  this  Agreement  results  in the  failure  of the  Merger  to be
         consummated by such time;


                                       38


                  (c) by the  Parent  or the  Company  if (i) any court or other
         Governmental Entity has issued an order, decree,  judgment or ruling or
         taken any other action permanently enjoining,  restraining or otherwise
         prohibiting the Merger and such order, decree or ruling or other action
         has become final and  nonappealable  or (ii) the vote of the  Company's
         shareholders  shall have been taken at a meeting duly convened therefor
         or at any adjournment or postponement  thereof,  and such vote shall be
         insufficient to approve the Merger and this Agreement;

                  (d) by the  Company  if the  Company  has  complied  with  its
         obligations  under Section 6.10 and the Company indicates its intention
         to enter into a definitive  agreement with a third party for a Superior
         Transaction;

                  (e)  by  the  Parent,  if  the  Company  breaches  any  of its
         covenants in Sections  6.3(c),  6.8 or 6.10 or if the Company Board has
         (i)  withdrawn  or modified in a manner  adverse to the  Purchaser  its
         approval  or  recommendation  of this  Agreement  or the  Merger,  (ii)
         approved  or  recommended  another  Acquisition  Transaction,  or (iii)
         resolved to effect any of the  foregoing  (and such  resolution is made
         public);

                  (f) by the Parent,  if the Company  shall have breached in any
         material respect any of its representations,  warranties,  covenants or
         other  agreements  contained in this  Agreement  (except that where any
         statement  in  a  representation  or  warranty   expressly  includes  a
         "material adverse effect,"  "material" or other materiality  qualifier,
         such  representation  or  warranty  shall  be true and  correct  in all
         respects),  which  breach or failure to perform is  incapable  of being
         cured or has not been cured  within 45 days after the giving of written
         notice to the Company; or

                  (g) by the Company,  if the Parent shall have  breached in any
         material respect any of its representations,  warranties,  covenants or
         other  agreements  contained in this  Agreement  (except that where any
         statement  in  a  representation  or  warranty   expressly  includes  a
         "material adverse effect,"  "material" or other materiality  qualifier,
         such  representation  or  warranty  shall  be true and  correct  in all
         respects),  which  breach or failure to perform is  incapable  of being
         cured or has not been cured  within 45 days after the giving of written
         notice to Purchaser.

         The  party  desiring  to  terminate  this  Agreement  pursuant  to  the
preceding  paragraphs shall give written notice of such termination to the other
party in accordance with Section 9.4 hereof.

         SECTION 8.2 EFFECT OF  TERMINATION.

         In the event of the  termination of this Agreement  pursuant to Section
8.1, this Agreement will forthwith  become void and have no effect,  without any
liability  on the part of any party or its  directors,  officers,  employees  or
shareholders,  other than the  provisions  of this Section 8.2,  Section 8.3 and
Article IX, which will survive any such  termination.  Nothing contained in this
Article VIII relieves any party from liability for any breach of this Agreement.


                                       39


         SECTION 8.3 FEES AND EXPENSES.

                  (a)  Whether  or not the  Merger  is  consummated,  except  as
         otherwise specifically provided herein, all costs and expenses incurred
         in connection with this Agreement and the transactions  contemplated by
         this  Agreement  will be paid by the  party  incurring  such  expenses;
         PROVIDED  that the Parent shall be  responsible  for all filing fees in
         connection  with (i) the  filings  required by the HSR Act and (ii) any
         other filings with Governmental Entities required to effect the Merger.

                  (b) In the event that this Agreement is terminated pursuant to
         Sections 8.1(d) or 8.1(e), the Company shall promptly,  but in no event
         later than, in the case of termination by the Company, upon delivery of
         the notice of termination, or in the case of termination by the Parent,
         two days after such  termination,  pay to the Parent Three Million Five
         Hundred Thousand Dollars ($3,500,000). In the event that this Agreement
         is terminated  pursuant to Section  8.1(c)(ii)  and the Company  enters
         into and completes a Superior Transaction, within six (6) months of the
         date of termination of this Agreement, the Company shall promptly, upon
         the  closing  of the  Superior  Transaction,  pay to the  Parent  Three
         Million Five Hundred Thousand Dollars  ($3,500,000).  In the event that
         this Agreement is terminated  pursuant to Section  8.1(f),  the Company
         shall promptly,  but in no event later than, in the case of termination
         by the Company,  upon delivery of the notice of termination,  or in the
         case of  termination  by the Parent,  two days after such  termination,
         reimburse the Parent for reasonably  documented  out-of-pocket fees and
         expenses of the Parent and the Purchaser (including reasonable printing
         fees,  filing fees and  reasonable  fees and  expenses of its legal and
         financial  advisors)  related to this Agreement,  the Voting Agreement,
         the  transactions  contemplated  hereby  and  thereby  and any  related
         financing up to a maximum of One Million Dollars ($1,000,000).

                  (c) In the event that this Agreement is terminated pursuant to
         Section 8.1(g),  the Parent shall promptly,  but in no event later than
         two days after such  termination,  reimburse the Company for reasonably
         documented  out-of-pocket  fees and expenses of the Company  (including
         reasonable  printing fees, filing fees and reasonable fees and expenses
         of its legal and financial  advisors) related to this Agreement and the
         transactions contemplated hereby up to a maximum of One Million Dollars
         ($1,000,000).

                  (d)  Notwithstanding  anything  otherwise  contained  in  this
         Agreement,  the fees and  reimbursement  of  expenses  (as  applicable)
         provided for in Section  8.3(b) and Section 8.3(c) will be the sole and
         exclusive  remedy  available  to the Parent and the  Purchaser,  or the
         Company,  respectively,  upon termination of this Agreement pursuant to
         Section 8.1.

                  (e) The  prevailing  party in any legal action  undertaken  to
         enforce  this  Agreement  or any  provision  hereof will be entitled to
         recover  from  the  other  party  the  reasonable  costs  and  expenses
         (including  reasonable  attorneys' and expert witness fees) incurred in
         connection with such action.


                                       40


         SECTION 8.4  AMENDMENT.

         This  Agreement  may be  amended  by the  Company,  the  Parent and the
Purchaser,  provided that any amendment  after approval of this Agreement by the
shareholders  of the  Company may not  decrease  the Merger  Price or  adversely
affect the rights of the Company's  shareholders  hereunder without the approval
of such shareholders.  This Agreement may not be amended except by an instrument
in writing signed on behalf of all the parties.

         SECTION 8.5 EXTENSION; WAIVER.

         At any time prior to the  Effective  Time,  the parties  hereto may (a)
extend the time for the  performance of any of the  obligations or other acts of
any other party hereto,  (b) waive any inaccuracies in the  representations  and
warranties  contained herein by any other party or in any document,  certificate
or writing delivered  pursuant hereto by any other party or (c) waive compliance
with any of the  agreements of any other party or with any conditions to its own
obligations.  Any  agreement  on the part of any party to any such  extension or
waiver  will be valid only if set forth in an  instrument  in writing  signed on
behalf of such party.

                                   ARTICLE IX
                                  MISCELLANEOUS

         SECTION 9.1 NON-SURVIVAL OF REPRESENTATIONS,  WARRANTIES AND COVENANTS.

         The representations, warranties and covenants made in this Agreement do
not survive  beyond the  Effective  Time.  Notwithstanding  the  foregoing,  the
agreements set forth in Articles II and III and Sections 1.3,  6.3(d),  6.5, 6.6
and 9.8 will survive the  Effective  Time  indefinitely  (except to the extent a
shorter period of time is explicitly specified therein). Any and all breaches of
the  non-surviving  representations,  warranties  and  covenants  will be deemed
waived as of the Effective Time.

         SECTION 9.2 ENTIRE AGREEMENT; ASSIGNMENT.

                  (a) This Agreement  (including  the  documents,  schedules and
         instruments  referred  to  herein)  and the  Confidentiality  Agreement
         constitute the entire  agreement and supersede all prior agreements and
         understandings,  both written and oral,  among the  parties,  including
         without  limitation  that certain letter  agreement dated September 18,
         2006 among the Parent, the Company and American Industrial Partners and
         that certain letter  agreement  dated July 11, 2006 between the Company
         and American Industrial Partners.

                  (b) Neither this Agreement nor any of the rights, interests or
         obligations  hereunder  will be assigned  by any of the parties  hereto
         (whether by operation of law or  otherwise)  without the prior  written
         consent  of each  other  party,  except  that the Parent may assign its
         rights  and  the  Purchaser   may  assign  its  rights,   interest  and
         obligations  to any  affiliate or direct or indirect  subsidiary of the
         Parent and the Parent may transfer the stock of the  Purchaser  without
         the consent of the Company  provided that (i) no such  assignment  will
         relieve  the Parent or the Company of any  liability  for any breach by
         such assignee, and (ii) neither the Parent nor the Purchaser may assign
         their rights, interest and obligations prior to the Effective Time (but
         the assignment may occur simultaneously at the Effective Time). Subject


                                       41


         to the preceding  sentence,  this Agreement will be binding upon, inure
         to  the  benefit  of and  be  enforceable  by  the  parties  and  their
         respective successors and assigns.

         SECTION  9.3  VALIDITY.

         The invalidity or  unenforceability  of any provision of this Agreement
in any jurisdiction  will not affect the validity or enforceability of any other
provision of this Agreement,  each of which will remain in full force and effect
or the validity or enforceability of such provisions in any other jurisdiction.

         SECTION 9.4 NOTICES.

         All  notices,   requests,  claims,  demands  and  other  communications
hereunder  must be in  writing  and will be deemed to have been duly  given when
delivered in person, by overnight courier or facsimile to the respective parties
as follows:

                  If to the Parent or the Purchaser:

                  Parent Corp.
                  Purchaser (c/o Parent Corp.)
                  Steel Partners II, L.P.
                  590 Madison Avenue, 32nd Floor
                  New York, New York 10022
                  Attention: Warren Lichtenstein
                  Facsimile: 212-520-2301

                  with a copy (which shall not constitute notice) to:

                  Olshan Grundman Frome Rosenzweig & Wolosky LLP
                  Park Avenue Tower
                  65 East 55th Street
                  New York, New York 10022
                  Attention: Adam W. Finerman, Esq.
                  Facsimile: 212-451-2222

                  If to the Company:

                  Collins Industries, Inc.
                  180 State Street, Suite 240
                  Southlake, Texas 76092
                  Attention: Cletus Glasener
                  Facsimile: 817-310-0907


                                       42


                  with a copy (which shall not constitute notice) to:

                  Blackwell Sanders Peper Martin LLP
                  4801 Main Street, Suite 1000
                  Kansas City, Missouri 64112
                  Facsimile: (816) 983-8080
                  Attention: Gary D. Gilson

or to such  other  address  as the  person  to whom  notice  is  given  may have
previously  furnished  to the other in writing  in the  manner set forth  above;
provided  that  notice of any  change of  address  will be  effective  only upon
receipt thereof.

         SECTION  9.5  GOVERNING  LAW.

         This Agreement will be governed by and construed in accordance with the
laws of the  State of  Missouri,  regardless  of the laws that  might  otherwise
govern under applicable principles of conflicts of laws thereof.

         SECTION 9.6 DESCRIPTIVE  HEADINGS.

         The  descriptive  headings  herein  are  inserted  for  convenience  of
reference  only and are not  intended  to be part of or to affect the meaning or
interpretation of this Agreement.

         SECTION 9.7 COUNTERPARTS.

         This  Agreement  may  be  executed  in  two or  more  counterparts,  by
facsimile, each of which will be deemed to be an original, but all of which will
constitute one and the same agreement.

         SECTION 9.8 PARTIES IN INTEREST.

         This  Agreement will be binding upon and inure solely to the benefit of
each party hereto and their successors and permitted  assigns,  and, except with
respect to  Section  6.6,  nothing in this  Agreement,  express or  implied,  is
intended  to confer  upon any other  person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.

         SECTION 9.9 DEFINITIONS.

                  (a) CERTAIN DEFINED TERMS. As used in this Agreement:

                           (i) the term  "affiliate",  as applied to any Person,
                  means any other  person  directly or  indirectly  controlling,
                  controlled by, or under common control with, that Person.  For
                  the purposes of this definition,  "control"  (including,  with
                  correlative meanings, the terms "controlling," "controlled by"
                  and "under common  control  with"),  as applied to any Person,
                  means the possession,  directly or indirectly, of the power to
                  direct or cause the direction of the  management  and policies
                  of that  Person,  whether  through  the  ownership  of  voting
                  securities, by contract or otherwise;


                                       43


                           (ii)  the  term   "Person"   or   "person"   includes
                  individuals,   corporations,   partnerships,   trusts,   other
                  entities  and groups  (which  term  includes a "group" as such
                  term is defined in Section 13(d)(3) of the Exchange Act); and

                           (iii) the term "subsidiary" or "subsidiaries"  means,
                  with respect to the Parent,  the Company or any other  person,
                  any  corporation,  partnership,  joint  venture or other legal
                  entity of which the Parent,  the Company or such other person,
                  as the case may be (either  alone or through or together  with
                  any other subsidiary),  owns, directly or indirectly, stock or
                  other  equity  interests  the  holders of which are  generally
                  entitled  to 50% or more of the vote for the  election  of the
                  board of directors or other governing body of such corporation
                  or  other  entity  or  50% or  more  of the  profits  of  such
                  corporation or other entity.

                  (b) CROSS-REFERENCE  TABLE. The following terms are defined in
         the corresponding Sections of this Agreement:

Defined Term                                                 Section Reference
- ------------                                                 -----------------
Acquisition Transaction                                      Section 6.10(a)
Agreement                                                    Preamble
Balance Sheet                                                Section 4.6(b)
Balance Sheet Date                                           Section 4.6(b)
Capital Stock                                                Section 4.3(a)
Cash Payment                                                 Section 1.6(a)
Certificates                                                 Section 3.2(a)
Closing                                                      Section 1.8
Closing Date                                                 Section 1.8
Code                                                         Section 3.2(f)
Common Shares                                                Section 1.4
Company                                                      Preamble
Company Board                                                Section 1.6
Company Disclosure Schedule                                  Section 1.6(a)
Company Financials                                           Section 4.6(b)
Company Leases                                               Section 4.21
Company Permits                                              Section 4.8(a)
Company Real Property                                        Section 4.21
Company Representatives                                      Section 6.2(a)
Confidentiality Agreement                                    Section 6.2(d)
Consent                                                      Section 4.5(b)


                                       44


Dissenting Shares                                            Section 3.1
Effective Time                                               Section 1.2
Environmental Claim                                          Section 4.7
Environmental Laws                                           Section 4.7
ERISA                                                        Section 4.12(a)
Exchange Act                                                 Section 4.6(a)
GAAP                                                         Section 4.6(b)
GBCL                                                         Preamble
Governmental Entity                                          Section 4.5(b)
Hazardous Substance                                          Section 4.7
HSR Act                                                      Section 4.5(a)
Indebtedness                                                 Section 4.3(h)
Indemnified Parties                                          Section 6.6(a)
Intellectual Property                                        Section 4.13(a)
IRS                                                          Section 4.12(b)
Lien                                                         Section 4.3(i)
Listed Plans                                                 Section 4.12(a)
Litigation                                                   Section 4.9
Material Adverse Effect on the Company                       Section 4.1
Material Adverse Effect on the Parent                        Section 5.1
Material Contracts                                           Section 4.20
Merger                                                       Preamble
Merger Price                                                 Section 1.4
Multiemployer Plan                                           Section 4.12(e)
Notifying Party                                              Section 6.7
Options                                                      Section 1.6
Other Filings                                                Section 4.10
Parent                                                       Preamble
Parent Plan                                                  Section 6.5(b)
Parent Representatives                                       Section 6.2(a)
Paying Agent                                                 Section 3.2(a)
Permitted Liens                                              Section 4.21
Preferred Stock                                              Section 4.3(a)
Proxy Statement                                              Section 1.7(b)
Purchaser                                                    Preamble
Qualified Plans                                              Section 4.12(c)
Requisite Vote                                               Section 4.4
Rights                                                       Section 4.3(a)


                                       45


Rights Agreement                                             Section 4.2
SEC                                                          Section 4.6(a)
SEC Reports                                                  Section 4.6(a)
Securities Act                                               Section 4.6(a)
Shareholder                                                  Preamble
Voting Agreement                                             Preamble
Special Meeting                                              Section 1.7(a)
Stock Plans                                                  Section 1.6
Superior Transaction                                         Section 6.10(b)
Surviving Corporation                                        Section 1.1
Tax                                                          Section 4.14(b)
Tax Return                                                   Section 4.14(b)
Taxes                                                        Section 4.14(b)
Trade Secrets                                                Section 4.13(a)
Violation                                                    Section 4.5(a)
Voting Agreement                                             Preamble
Voting Debt                                                  Section 4.3(c)
WARN Act                                                     Section 4.16(e)

         SECTION  9.10  SPECIFIC  PERFORMANCE.

         The parties  hereto  agree that  irreparable  damage would occur in the
event  that  any of the  provisions  of this  Agreement  were not  performed  in
accordance  with  their  specific  terms  or  were  otherwise  breached.  It  is
accordingly  agreed  that the  parties  will be  entitled  to an  injunction  or
injunctions to prevent  breaches of this  Agreement and to enforce  specifically
the terms and provisions  hereof,  this being in addition to any other remedy to
which they are entitled at law or in equity.

                            [SIGNATURE PAGES FOLLOW.]




                                       46


         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized,  all
as of the day and year first above written.


                                 STEEL PARTNERS, II L.P.
                                 By: Steel Partners, L.L.C., its General Partner

                                 By: /s/ Warren G. Lichtenstein
                                     -------------------------------------------
                                 Name: Warren G. Lichtenstein
                                 Title: Managing Member


                                 CS ACQUISITION CORP.

                                 By: /s/ Warren G. Lichtenstein
                                     -------------------------------------------
                                 Name: Warren G. Lichtenstein
                                       -----------------------------------------
                                 Title: President
                                        ----------------------------------------




                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]




         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized,  all
as of the day and year first above written.


                                 COLLINS INDUSTRIES, INC.


                                 By:     /s/ Donald Lynn Collins
                                     -------------------------------------------
                                 Name:    Donald Lynn Collins
                                       -----------------------------------------
                                 Title:   President and Chief Executive Officer
                                        ----------------------------------------




                [SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]

EX-10.01

                                                                    Exhibit 10.1





- --------------------------------------------------------------------------------

                             STOCKHOLDERS AGREEMENT

                          DATED AS OF OCTOBER 31, 2006


                                  BY AND AMONG


                            COLLINS I HOLDING CORP.,


                                ITS STOCKHOLDERS

                                       AND

                            COLLINS INDUSTRIES, INC.

- --------------------------------------------------------------------------------




                                TABLE OF CONTENTS
                                                                            PAGE

STOCKHOLDERS AGREEMENT.........................................................1

ARTICLE I......................................................................1
         REPRESENTATIONS AND WARRANTIES OF THE PARTIES.........................1

ARTICLE II.....................................................................2
         VOTING AGREEMENTS.....................................................2

ARTICLE III....................................................................3
         SPECIAL APPROVAL RIGHTS...............................................3

ARTICLE IV.....................................................................5
         TRANSFERS OF SECURITIES...............................................5

ARTICLE V......................................................................6
         TAKE-ALONG RIGHTS; SALE OF THE COMPANY................................6

ARTICLE VI.....................................................................8
         LIQUIDITY EVENT.......................................................8

ARTICLE VII....................................................................9
         PUTS AND CALLS........................................................9

ARTICLE VIII..................................................................12
         AMENDMENT AND TERMINATION............................................12

ARTICLE IX....................................................................13
         MISCELLANEOUS........................................................13




                             STOCKHOLDERS AGREEMENT


                  This Stockholders Agreement (this "AGREEMENT") is entered into
as of October 31,  2006,  by and among (i) Collins I Holding  Corp.,  a Delaware
corporation ("HOLDINGS"),  (ii) Collins Industries, Inc., a Missouri corporation
(the  "COMPANY"),  (iii) the parties to this  Agreement  who are  identified  as
Employees in joinders to this Agreement (each, an "EMPLOYEE," and  collectively,
the  "EMPLOYEES"),  (iv) AIP/CHC  Holdings,  LLC, a Delaware  limited  liability
company ("AIP"), (v) BNS Holding,  Inc., a Delaware corporation ("BNS") and (vi)
each other holder of Securities who hereafter  executes a separate  agreement to
be bound by the terms hereof (a "NEW  STOCKHOLDER").  AIP, BNS and the Employees
are sometimes  referred to herein as "STOCKHOLDERS."  Certain  capitalized terms
used herein are defined in Section 9.1.

                  The parties hereto agree as follows:

                                   ARTICLE I
                  REPRESENTATIONS AND WARRANTIES OF THE PARTIES

                  1.1.  REPRESENTATIONS  AND  WARRANTIES  OF  HOLDINGS  AND  THE
COMPANY.  Each of Holdings and the Company hereby represents and warrants to the
Stockholders that as of the date of this Agreement:

                  (a) it is a corporation  duly organized,  validly existing and
in good standing under the laws of the its jurisdiction of incorporation, it has
full  corporate  power and  authority  to  execute,  deliver  and  perform  this
Agreement  and to  consummate  the  transactions  contemplated  hereby,  and the
execution, delivery and performance by it of this Agreement and the consummation
of the  transactions  contemplated  hereby  have  been  duly  authorized  by all
necessary corporate action;

                  (b) this  Agreement  has been duly and  validly  executed  and
delivered  by  it  and  constitutes  a  legal  and  binding  obligation  of  it,
enforceable against it in accordance with its terms; and

                  (c) the  execution,  delivery  and  performance  by it of this
Agreement and the  consummation by it of the  transactions  contemplated  hereby
will not,  with or without  the  giving of notice or lapse of time,  or both (i)
violate  any  provision  of law,  statute,  rule or  regulation  to  which it is
subject,  (ii) violate any order,  judgment or decree applicable to it, or (iii)
conflict with, or result in a breach or default under,  any term or condition of
its  Articles or  Certificate  of  Incorporation  or Bylaws or any  agreement or
instrument to which it is a party or by which it is bound.

                  1.2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.  Each
Stockholder  represents  and  warrants  to  Holdings,  the Company and the other
Stockholders  that,  as of the time  such  Stockholder  becomes  a party to this
Agreement:


                                       1


                  (a) this Agreement (or the separate joinder agreement executed
by such  Stockholder)  has been duly and validly  executed and delivered by such
Stockholder,  and this Agreement  constitutes a legal and binding  obligation of
such  Stockholder,  enforceable  against such Stockholder in accordance with its
terms; and

                  (b)  the   execution,   delivery  and   performance   by  such
Stockholder  of this  Agreement  (or any  joinder  to  this  Agreement)  and the
consummation by such  Stockholder of the transactions  contemplated  hereby (and
thereby)  will not,  with or without  the giving of notice or lapse of time,  or
both (i) violate any provision of law, statute, rule or regulation to which such
Stockholder is subject, (ii) violate any order, judgment or decree applicable to
such  Stockholder,  or (iii)  conflict  with,  or result in a breach or  default
under,  any term or condition of any agreement or other instrument to which such
Stockholder is a party or by which such Stockholder is bound.

                                   ARTICLE II
                                VOTING AGREEMENTS

                  2.1. ELECTION OF DIRECTORS.

                  (a) Each Stockholder hereby agrees that such Person will vote,
or cause to be voted,  all voting  securities of Holdings over which such Person
has the power to vote or direct the voting, and will take all other necessary or
desirable  action  within such  Person's  control,  and  Holdings  will take all
necessary  and desirable  actions  within its control,  to cause the  authorized
number of  directors  of the  Board  (the  "BOARD")  to be  established  at five
directors,  and to elect or cause to be  elected  to the  Board  and cause to be
continued in office (i) at least one  individual  designated  by AIP and (ii) at
least four individuals designated by BNS.

                  (b) If at any time AIP shall notify the other  parties to this
Agreement  of its  desire to  remove,  with or  without  cause,  any  individual
designated  by AIP from a Holdings  directorship,  all such parties so notified,
will vote,  or cause to be voted,  all voting  securities of Holdings over which
they have the power to vote or direct the voting,  and shall take all such other
actions promptly as shall be necessary or desirable to cause the removal of such
director.

                  (c) If at any time BNS shall notify the other  parties to this
Agreement  of its  desire to  remove,  with or  without  cause,  any  individual
designated  by BNS from a Holdings  directorship,  all such parties so notified,
will vote,  or cause to be voted,  all voting  securities of Holdings over which
they have the power to vote or direct the voting,  and shall take all such other
actions promptly as shall be necessary or desirable to cause the removal of such
director.

                  (d) If at any time any individual ceases to serve on the Board
(whether due to  resignation,  removal or otherwise),  the party that designated
such individual to serve on the Board shall be entitled to designate a successor
director to fill the vacancy created thereby.  Each Stockholder  agrees to vote,
or cause to be voted,  all voting  securities of Holdings over which such Person
has the power to vote or  direct  the  voting,  and  shall  take all such  other
actions as shall be necessary or desirable to cause the designated  successor to
be elected to fill such vacancy.


                                       2


                  (e) Nothing in this Agreement shall be construed to impair any
rights that the  Stockholders may have to remove any director for cause pursuant
to Section  141(k) of the Delaware  General  Corporation  Law (or any  successor
provision).  No such removal for cause of an individual  designated  pursuant to
this Section 2.1 to be elected as a director of Holdings shall affect the rights
of AIP and BNS to designate a different  individual pursuant to this Section 2.1
to fill the directorship from which such individual was removed.

                  (f) The  board of  directors  of the  Company  and each of its
Subsidiaries shall have the same composition as the Board.

                  2.2. OTHER VOTING MATTERS. Each Stockholder hereby agrees that
such Person will vote, or cause to be voted,  all voting  securities of Holdings
over which such  Person  has the power to vote or direct the  voting,  either in
person or by proxy, whether at a stockholders meeting, or by written consent, in
the manner in which a Required  Majority of the Board shall direct in connection
with the approval of any  amendment or amendments  to Holdings'  Certificate  of
Incorporation,  the merger,  share  exchange,  combination or  consolidation  of
Holdings with any other Person or Persons,  the sale,  lease, or exchange of all
or  substantially  all of the property  and assets of Holdings,  the Company and
their  respective  Subsidiaries,   and  the  reorganization,   recapitalization,
liquidation, dissolution or winding-up of Holdings or the Company.

                                  ARTICLE III
                             SPECIAL APPROVAL RIGHTS

         3.1 RESTRICTED ACTIONS. None of Holdings,  the Company nor any of their
respective  Subsidiaries  shall take any of the actions set forth in clauses (a)
through (l) below without the Required Consent of the Stockholders:

                  (a) except as provided  in Article VI,  enter into any merger,
consolidation,  business combination,  joint venture or other material corporate
transaction;

                  (b)  sell,  assign,  convey  or  otherwise  dispose  of all or
substantially all of its assets;

                  (c) adopt  any plan or  proposal  for a  complete  or  partial
liquidation or dissolution or any reorganization or recapitalization or commence
any case,  proceeding or action seeking relief under any existing or future laws
relating to bankruptcy, insolvency, conservatorship or relief of debtors;

                  (d) enter into any  transaction  with any  Stockholder  or any
Affiliate of a Stockholder, other than Permitted Stockholder Transactions;

                  (e)  authorize  or issue,  or  obligate  itself to issue,  any
equity  security  (including  a  security  convertible  into or  exercisable  or
exchangeable for any equity security);

                  (f) change its fiscal year or make any material  change in its
accounting  policies or procedures,  unless  required under GAAP or the Internal
Revenue Code of 1986, as amended;


                                       3


                  (g) take, or permit to be taken, any action that would prevent
the  business of the Company,  as it currently  exists,  from  continuing  on an
ongoing basis;

                  (h) modify,  amend or take any action in  contravention of its
articles  of  incorporation  or  bylaws  (or  equivalent  governing  documents),
including, without limitation, any term of the AIP Securities;

                  (i) except as provided in Section 3.2,  below,  establish  any
committee of the Board, the Company or any Subsidiary;

                  (j)  establish  or  acquire  any  subsidiaries  that  are  not
wholly-owned by the Company or any of its Subsidiaries;

                  (k)  commingle or permit to be  commingled  any funds with the
funds of any other Person; or

                  (l) agree or commit to any of the foregoing.

                  (m) Notwithstanding  the foregoing,  nothing in this Agreement
shall be  construed  to in any way  limit  or  impair  the  rights  or  remedies
available  to the Agent or Lenders  under the Credit  Agreement  or the  related
security  documents  entered into in  connection  therewith,  or the Orix Credit
Agreement  or  the  related  security   documents  entered  into  in  connection
therewith.

         3.2 OPERATIONS COMMITTEE.

                  (a)   The   Board   shall   have  a   committee   having   the
responsibilities and authority set forth in this Section 3.2, and which shall be
designated the "OPERATIONS COMMITTEE." Except upon the occurrence and during the
continuation  of a Suspension  Event,  the members of the  Operations  Committee
shall  consist of the member of the Board  designated by AIP pursuant to Section
2.1(a),  above.  Subsequent to the occurrence and during the  continuation  of a
Suspension  Event, the members of the Operations  Committee shall consist of all
of the members of the Board.

                  (b) The  Operations  Committee  shall have the  authority  and
responsibility to:

                           (i)  supervise  the  overall  implementation  of  the
Company's Business Plan; and

                           (ii)  supervise  the  development  of  the  Company's
annual operating and capital budgets, which shall be subject to Board approval.


                                       4


                                   ARTICLE IV
                             TRANSFERS OF SECURITIES

                  4.1. RESTRICTIONS ON TRANSFER OF SECURITIES.

                  (a)  EMPLOYEE  SECURITIES.  GENERAL.  No  holder  of  Employee
                  Securities may Transfer any Employee  Securities  except in an
                  Exempt Employee Transfer.

                  (b) INVESTOR SECURITIES RIGHT OF FIRST OFFER.  Neither AIP nor
                  BNS may Transfer any Securities  except,  respectively,  in an
                  Exempt AIP Transfer or an Exempt BNS Transfer.

                  (c) EXCLUDED TRANSFERS.  The rights and restrictions contained
in Section 4.1(a) shall not apply with respect to any of the following Transfers
of Securities:

                           (i)  any   Transfer  of   Securities   to  and  among
stockholders  of Holdings  (subject to compliance with Sections 4.2 and 4.3, and
except as provided in Section 6.1);

                           (ii) any Transfer of Securities  in  accordance  with
Section 5.1;

                           (iii) any Transfer of  Securities  incidental  to the
exercise,  conversion or exchange of such  securities  in accordance  with their
terms,  any  combination  of shares  (including  any reverse stock split) or any
recapitalization,  reorganization  or  reclassification  of,  or any  merger  or
consolidation involving, Holdings; and

                           (iv) any  Transfer  of  Securities  to members of the
management  of  Holdings,  management  of the  Company  or  management  of their
respective  Subsidiaries  (other than a Transfer of all or substantially  all of
the Securities held by BNS).

                  4.2.   SECURITIES  ACT   COMPLIANCE.   No  Securities  may  be
transferred by a Stockholder  (other than pursuant to an effective  registration
statement  under the Securities Act) unless such  Stockholder  first delivers to
Holdings an opinion of counsel,  which  opinion and counsel  shall be reasonably
satisfactory  to Holdings to the effect that such Transfer is not required to be
registered under the Securities Act.


                                       5


                  4.3.  CERTAIN  TRANSFEREES  BOUND  BY  AGREEMENT.  Subject  to
compliance  with the other  provisions of this Article IV, any  Stockholder  may
Transfer any Securities  held by such  Stockholder in accordance with applicable
law;  PROVIDED,  HOWEVER,  that if the Transfer is not made pursuant to a Public
Sale or a Sale of the Company,  then the transferor of such Security shall first
deliver to Holdings a written  agreement of the proposed  transferee,  including
the transferee in an Exempt  Transfer that is not pursuant to a Public Sale or a
Sale of the  Company,  to become a  Stockholder  and to be bound by the terms of
this Agreement,  including,  without limitation, the requirements of Section 2.3
(unless  such  proposed  transferee  is  already a  Stockholder).  All  Employee
Securities  will  continue  to be  Employee  Securities  in  the  hands  of  any
transferee  (other  than the  Company,  Holdings or any  transferee  in a Public
Sale). All AIP Securities will continue to be AIP Securities in the hands of any
transferee  (other  than the  Company,  Holdings or any  transferee  in a Public
Sale). All BNS Securities will continue to be BNS Securities in the hands of any
transferee  (other than the Company,  the  Employees,  AIP or a transferee  in a
Public Sale). All New Stockholder Securities will continue to be New Stockholder
Securities  in the hands of a  transferee  (other  than the  Company,  BNS,  the
Employees, AIP or any transferee in a Public Sale).

                  4.4.  TRANSFERS  IN VIOLATION  OF  AGREEMENT.  Any Transfer or
attempted  Transfer of any  Securities  in  violation  of any  provision of this
Agreement  shall be void,  and  Holdings  shall not record such  Transfer on its
books or treat any purported  transferee of such Securities as the owner of such
Securities for any purpose.

                                   ARTICLE V
                     TAKE-ALONG RIGHTS; SALE OF THE COMPANY

                  5.1.  TAKE-ALONG RIGHTS.

                  (a) SALE OF THE COMPANY.  Each of Holdings or BNS , subject to
the approval of a Required  Majority of the Board,  (such party the  "INITIATING
PARTY")  may elect to  consummate,  or to cause the  Company  to  consummate,  a
transaction constituting a Sale of the Company. If an Initiating Party wishes to
exercise its rights under this Section 5.1(a), the Initiating Party shall notify
the Company and the  Stockholders in writing of such election.  If an Initiating
Party  delivers  such  notice,  the  Stockholders  will  consent to and raise no
objections to the proposed  transaction,  and the  Stockholders  and the Company
will take all other  actions  reasonably  necessary  or  desirable  to cause the
consummation of such Sale of the Company on the terms proposed by the Initiating
Party.  Without limiting the foregoing,  (i) if the proposed Sale of the Company
is  structured  as  a  sale  of  assets  or  a  merger  or  consolidation,   the
Stockholders,  will vote or cause to be voted all  Securities  that they hold or
with  respect to which such  Stockholder  has the power to direct the voting and
which are entitled to vote on such  transaction in favor of such transaction and
will waive any appraisal rights which they may have in connection therewith, and
(ii) if the proposed  Sale of the Company is structured as or involves a sale or
redemption of  Securities,  the  Stockholders  will agree to sell their PRO RATA
share of  Securities  being  sold in such Sale of the  Company  on the terms and
conditions  approved by the Initiating Party, and such Stockholders will execute
any merger or sale agreement approved by the Initiating Party in connection with
such Sale of the Company.

                  (b) TAKE-ALONG CONDITIONS. The obligations of the Stockholders
with respect to the Sale of the Company are subject to the  satisfaction  of the
following conditions,  (i) upon the consummation of the Sale of the Company, all
of the holders of a particular  class or series of Securities  shall receive the
same form and amount of consideration  per share or amount of Securities,  or if
any holders of a particular class or series of Securities are given an option as
to the form and amount of  consideration  to be  received,  all  holders of such
class or  series  will be given the same  option  and (ii) all  holders  of then
currently  exercisable  rights  to  acquire  a  particular  class or  series  of
Securities will be given an opportunity to either (A) exercise such rights prior
to the  consummation  of the Sale of the Company and participate in such sale as
holders of such Securities


                                       6


or (B) upon the consummation of the Sale of the Company, receive in exchange for
such rights  consideration equal to the amount determined by multiplying (1) the
same amount of consideration  per share or amount of Securities  received by the
holders of such type and class of Securities in connection  with the Sale of the
Company  less the  exercise  price per share or amount of such rights to acquire
such  Securities  by (2) the number of shares or aggregate  amount of Securities
represented by such rights.

                  (c) PURCHASER  REPRESENTATIVE.  If an Initiating  Party enters
into any  negotiation or transaction for which Rule 506 under the Securities Act
(or any  similar  rule then in effect)  may be  available  with  respect to such
negotiation  or  transaction   (including  a  merger,   consolidation  or  other
reorganization),  each Stockholder that is not an "accredited  investor" (within
the meaning of Rule 501(a) of the  Securities  Act) will,  at the request of the
Initiating Party, appoint a purchaser representative (as such term is defined in
Rule 501 under the  Securities  Act) approved by the Initiating  Party,  and the
Initiating Party will pay the fees of such purchaser representative. If any such
Stockholder  declines to appoint the  purchaser  representative  approved by the
Initiating    Party,   such   Stockholder   will   appoint   another   purchaser
representative,  and such  Stockholder  will be responsible  for the fees of the
purchaser representative so appointed.

                  (d)  EXPENSES.  Each  Stockholder  will bear such Person's PRO
RATA share (based upon the relative amount of Securities sold) of the reasonable
costs of any sale of  Securities  pursuant to a Sale of the Company (but only if
such Sale of the Company is actually  consummated)  to the extent such costs are
incurred for the benefit of all  Stockholders  and are not otherwise paid by the
Initiating  Party, the Company or the acquiring  party.  Costs incurred by or on
behalf of a  Stockholder  for such  Person's sole benefit will not be considered
costs of the transaction  hereunder.  In the event that any transaction  that an
Initiating  Party elects to  consummate or cause to be  consummated  pursuant to
this Section 5.1 is not consummated  for any reason,  the Company will reimburse
Holdings for all actual and reasonable  expenses paid or incurred by Holdings in
connection therewith.

                                   ARTICLE VI
                                 LIQUIDITY EVENT

                  6.1. EXCLUSIVE  NEGOTIATION  PERIOD. At any time subsequent to
the Trigger Date, AIP may deliver notice to BNS that AIP has elected to exercise
its rights under this Article VI. Promptly after delivery of such notice to BNS,
BNS and AIP will  commence  good  faith  negotiations  and use their  reasonable
efforts to enter into a definitive agreement providing for BNS's purchase of all
Securities held by AIP (a "DEFINITIVE  AGREEMENT").  During the period beginning
on the Trigger Date and ending ninety (90) days (or such greater  number of days
as to which  AIP may  consent  in its sole and  absolute  discretion)  after the
Trigger Date (such period, the "EXCLUSIVE  NEGOTIATION  PERIOD"),  AIP shall not
solicit,  initiate, discuss or encourage the submission of any proposal or offer
from any Person  relating the  acquisition  of all or any part of the Securities
held by AIP.

                  6.2 ENGAGEMENT OF GOLDMAN, SACHS;  COOPERATION.  If by the end
of the Exclusive  Negotiation Period, BNS and AIP do not enter into a Definitive
Agreement, then AIP shall have the right, on behalf of Holdings and the Company,
to engage Goldman,  Sachs & Co. to conduct an auction for a Sale of the Company.


                                       7


Such engagement shall include an undertaking by Goldman,  Sachs & Co. to provide
a fairness  opinion to the Board with respect to such Sale of the  Company,  and
shall otherwise be on customary terms and conditions,  including with respect to
the fees payable to Goldman,  Sachs & Co. upon  consummation of such Sale of the
Company and the delivery of such  fairness  opinion.  Holdings,  the Company and
each  of the  Stockholders  shall,  to  the  extent  Goldman,  Sachs  & Co.  may
reasonably  request in connection with such auction for the Sale of the Company,
use its  commercially  reasonable  efforts  to,  and shall  cause the  Company's
Subsidiaries  and the  Company's  and  its  Subsidiaries'  respective  officers,
employees and advisors to use their respective  commercially  reasonable efforts
to:  (A)  cooperate  in the  preparation  of any  offering  memorandum,  private
placement memorandum, prospectus, confidential information memorandum or similar
documents,  (B) make senior management of the Company  reasonably  available for
meetings  and  due  diligence  sessions,  and  (C)  cooperate  with  prospective
purchasers and their respective advisors in performing their due diligence.

                  6.3 SALE OF THE COMPANY.  The Board,  acting in its reasonable
discretion and in consultation with Goldman,  Sachs & Co., shall determine which
prospective  purchaser  participating in the auction for the Sale of the Company
provided in Section 6.2 has offered the largest cash consideration for such Sale
of the Company;  PROVIDED;  HOWEVER;  that if an Affiliate of Steel Partners II,
L.P.,  is among the  group of  prospective  purchasers  whose  offers  are being
considered, AIP shall have the right, acting in its reasonable discretion and in
consultation  with Goldman,  Sachs & Co. to make such  determination.  Upon such
determination, and provided that Goldman, Sachs & Co. has indicated that it will
provide  a  fairness  opinion  to the  Board  with  respect  to such Sale of the
Company,  the  Stockholders  will  consent  to and  raise no  objections  to the
proposed  transaction,  and the Stockholders and the Company will take all other
actions reasonably necessary or desirable to cause the consummation of such Sale
of the Company on the terms proposed by such prospective  purchaser.  The rights
and  obligations  of the  Stockholders  with  respect  to a Sale of the  Company
pursuant to this Section 6.3 shall be the same as the rights and  obligations of
the Stockholders with respect to a Sale of the Company pursuant to Section 5.1.

                                  ARTICLE VII
                                 PUTS AND CALLS

                  7.1.  APPLICATION  OF THIS ARTICLE.  This Article VII shall be
applicable to any  Stockholder  who, as of the date of acquisition of any shares
of Common Stock, is an employee of Holdings or any of its Subsidiaries.

                  7.2. PUT OPTION.

                  (a) If the  Stockholder's  employment  with  Holdings  and its
Subsidiaries is terminated by Holdings or its Subsidiaries without Cause, by the
Stockholder for Good Reason, or by reason of Stockholder's Disability,  death or
Retirement , in each case prior to the earlier of (i) a Public  Offering or (ii)
a Sale of the  Company,  then  each  of the  Stockholder  and the  Stockholder's
Permitted  Transferees  (hereinafter  sometimes  collectively referred to as the
"STOCKHOLDER  GROUP") shall have the right, subject to the provisions of Section
7.5 hereof,  for 180 days following the date of termination due to death and for


                                       8


90 days  for any  other  termination  described  in  this  sentence,  to sell to
Holdings,  and Holdings shall be required to purchase (subject to the provisions
of Section 7.5  hereof),  on one  occasion  from each member of the  Stockholder
Group,  all (but not less than all) of the  shares of Common  Stock then held by
such  member,  at a price  per  share  equal to the  applicable  purchase  price
determined pursuant to Section 7.3(c).

                  (b) If the Stockholder Group desires to exercise its option to
require Holdings to repurchase shares pursuant to Section 7.2(a), the members of
the  Stockholder  Group shall send one written notice to Holdings  setting forth
the  intention to sell all of their  shares of Common Stock  pursuant to Section
7.2(a)  within the  applicable  period  described  therein,  which  notice shall
include the  signature of each member of the  Stockholder  Group (other than the
Stockholder  if deceased or  incompetent,  in which case the  signature  of such
Stockholder's authorized  representative).  Subject to the provisions of Section
7.5, the closing of the  purchase  shall take place at the  principal  office of
Holdings  on a date  specified  by Holdings no later than the 60th day after the
giving of such notice.

                  (c) In the event of a purchase by Holdings pursuant to Section
7.2(a),  the purchase  price shall be a price per share equal to the Fair Market
Value (measured as of the Termination Date).

                  7.3. CALL OPTIONS.

                  (a) If the  Stockholder's  employment  with Holdings or any of
its  Subsidiaries  terminates  for any of the reasons set forth in clauses  (i),
(ii),  (iii) or (iv) below prior to a Sale of the Company,  Holdings  shall have
the right and option to purchase,  for a period of 90 days following the date of
such  termination  of  employment  of the  Stockholder,  and each  member of the
Stockholder  Group  shall be  required  to sell to  Holdings,  any or all of the
shares of Common  Stock then held by such  member of the  Stockholder  Group (it
being  understood  that  Holdings  may elect to  repurchase  only the portion of
Common Stock subject to repurchase  hereunder  which may be repurchased for less
than Fair Market Value,  if any),  at a price per share equal to the  applicable
purchase price determined pursuant to Section 7.3(c):

                           (i)  if  the  Stockholder's  active  employment  with
Holdings or any of its  Subsidiaries is terminated due to the Disability,  death
or Retirement of the Stockholder;

                           (ii)  if the  Stockholder's  active  employment  with
Holdings  or any of its  Subsidiaries  is  terminated  by  Holdings  or any such
Subsidiary without Cause or by the Stockholder for Good Reason or if Holdings or
any such Subsidiary elects not to renew Stockholder's active employment upon the
expiration in accordance with its terms of a written  employment  agreement with
Stockholder;

                           (iii) if the  Stockholder's  active  employment  with
Holdings or any of its  Subsidiaries  is  terminated  by the  Stockholder  after
December 31, 2011 for any reason not set forth in Sections 7.3(a)(i) or (a)(ii);
or

                           (iv)  if the  Stockholder's  active  employment  with
Holdings or any of its  Subsidiaries is terminated (A) by Holdings or any of its
Subsidiaries  for Cause or (B) by the  Stockholder  for any other reason not set
forth in Sections 7.3(a)(i) or (a)(ii) on or prior to December 31, 2011.


                                       9


                  (b) If Holdings desires to exercise its option to purchase any
shares  pursuant to this Section  7.3,  Holdings  shall,  not later than 90 days
after the date of termination of Stockholder's  employment,  send written notice
to each member of the  Stockholder  Group of its  intention to purchase  shares,
specifying the number of shares to be purchased (the "CALL NOTICE").  Subject to
the  provisions of Section 7.5, the closing of the purchase  shall take place at
the principal  office of Holdings on a date  specified by Holdings no later than
the 60th day after the giving of the Call Notice.

                  (c) In the event of a purchase by Holdings pursuant to Section
7.3(a), the purchase price shall be:

                           (i)  in  the  case  of a  termination  of  employment
described in Section 7.3(a)(i), (a)(ii), (a)(iii), the purchase price shall be a
price per share equal to the Fair Market Value  (measured as of the  Termination
Date).

                           (ii)  in the  case  of a  termination  of  employment
described  in Section  7.3(a)(iv),  a price per share equal to the lesser of (A)
Termination Book Value or (B) Cost;

PROVIDED  that  in any  case  the  Board  shall  have  the  right,  in its  sole
discretion, to increase any purchase price set forth above.

                  7.4.  OBLIGATION TO SELL  SEVERAL.  In the event there is more
than one member of the Stockholder  Group, the failure of any one member thereof
to perform its obligations  hereunder shall not excuse or affect the obligations
of any other member  thereof,  and the closing of the purchases  from such other
members by  Holdings  shall not  excuse,  or  constitute  a waiver of its rights
against, the defaulting member.

                  7.5. DEFERRAL OF PURCHASES.  (a)  Notwithstanding  anything to
the contrary  contained herein,  Holdings shall not be obligated or permitted to
purchase  any shares of Common  Stock at any time  pursuant  to  Section  7.2 or
Section 7.3,  respectively,  regardless  of whether it has delivered a notice of
its election to purchase any such shares, (i) to the extent that the purchase of
such shares  (together  with any other  purchases  of Common  Stock  pursuant to
Section  7.2  and/or  Section  7.3 or  pursuant  to  similar  provisions  in the
agreements  with other  management  investors of which Holdings has at such time
been given or has given  notice)  would  result (A) in a  violation  of any law,
statute, rule, regulation,  policy, order, writ, injunction,  decree or judgment
promulgated  or  entered  by any  federal,  state,  local  or  foreign  court or
governmental  authority applicable to Holdings or any of its Subsidiaries or any
of its or their  property or (B) after  giving  effect  thereto,  in a Financing
Default,  or (ii) if immediately prior to such purchase there exists a Financing
Default which prohibits such purchase. Holdings shall within 15 days of learning
of any such fact so notify the members of the  Stockholder  Group that it is not
obligated or permitted to purchase shares hereunder.


                                       10


                  (a)  Notwithstanding  anything to the  contrary  contained  in
Section  7.2 or Section  7.3,  any shares of Common  Stock which a member of the
Stockholder  Group has elected to sell to Holdings or which Holdings has elected
to purchase from members of the Stockholder  Group, but which in accordance with
Section 7.5 are not purchased at the applicable  time provided in Section 7.2 or
Section 7.3 (and have not been purchased by AIP or BNS pursuant to Section 7.7),
shall be  purchased  by  Holdings on or prior to the 15th day after such date or
dates that (after  taking into  account  any  purchases  to be made at such time
pursuant  to  agreements  with  other  management  investors)  it is  no  longer
prohibited  from  purchasing  such shares under Section 7.5, and Holdings  shall
give the members of the Stockholder Group five (5) days prior notice of any such
purchase.

                  7.6.  PAYMENT FOR COMMON STOCK. If at any time Holdings elects
or is required to purchase any shares of Common Stock pursuant to Section 7.2 or
Section  7.3,  Holdings  shall pay the  purchase  price for the shares of Common
Stock it purchases (i) first, by the cancellation of any  indebtedness,  if any,
owing  from  the  Stockholder  to  Holdings  or any of its  Subsidiaries  (which
indebtedness  shall be applied pro rata against the proceeds  receivable by each
member of the Stockholder Group receiving  consideration in such repurchase) and
(ii) then,  by  Holdings'  delivery of a check or wire  transfer of  immediately
available  funds  for the  remainder  of the  purchase  price,  if any,  against
delivery of the certificates or other instruments  representing the Common Stock
so purchased, duly endorsed; PROVIDED that if any of the conditions set forth in
Section 7.5 exists which  prohibits  such cash payment,  the portion of the cash
payment so prohibited may be made, to the extent such payment is not prohibited,
by Holdings' delivery of a junior  subordinated  promissory note (which shall be
subordinated  and  subject in right of payment to the prior  payment of any debt
outstanding  under  the  Credit  Agreement  and  any  modifications,   renewals,
extensions,  replacements  and refunding of all such  indebtedness) of Holdings,
substantially  in the form of Exhibit A (a  "JUNIOR  SUBORDINATED  NOTE"),  in a
principal  amount equal to the balance of the purchase  price,  payable in up to
five  equal  annual  installments  commencing  on the first  anniversary  of the
issuance thereof and bearing interest payable annually at the publicly announced
prime rate of JP Morgan  Chase,  on the date of issuance.  The Company shall use
its  reasonable  efforts to repurchase  Common Stock pursuant to Section 7.2 and
Section 7.3 with cash and/or to prepay any Junior  Subordinated  Notes issued in
connection  with a repurchase of Common Stock pursuant to Section 7.2 or Section
7.3,  and, in any event  shall,  within 10 days  following  the  termination  or
removal of any condition in Section 7.5 that prohibited the repurchase of Common
Stock with cash or the  repayment of any Junior  Subordinated  Note,  repurchase
such Common Stock and/or repay such Junior  Subordinated Note to the extent then
permitted by Section 7.5 (after giving effect to such  repurchase or repayment).
If,  at any  time,  the  Company  can  repay  some  (but not all) of any  Junior
Subordinated  Note as a result of  termination  or removal of any  condition  in
Section 7.5 that prohibited such repayment, the Company shall, within 10 days of
termination or removal of such condition,  repay the maximum amount permitted to
be repaid in accordance with Section 7.5.

                  7.7.  AIP AND BNS  PURCHASE  RIGHTS.  If at any time  Holdings
elects  not  to  purchase,  or is  prevented  (including  as the  result  of the
restrictions  set forth in Section  7.5) from  purchasing,  any shares of Common
Stock  pursuant to Section 7.2 or Section 7.3,  Holdings  shall give AIP and BNS
written  notice of such election or bar not later than 30 days prior to the date
on which Holdings  would  otherwise be obligated to purchase such shares (in the
case of  purchases  pursuant  to Section  7.2) or  entitled  to deliver the Call
Notice (in the case of Section 7.3). AIP shall have the right to purchase any or
all of the shares of Common  Stock  specified  in such notice by giving  written
notice  to  Holdings  and BNS  within  15 days of  receiving  such  notice  from


                                       11


Holdings. BNS shall have the right to purchase any of the shares of Common Stock
that AIP does not elect to purchase pursuant to the preceding sentence by giving
written notice of such election to AIP and Holdings  within 25 days of receiving
the notice from  Holdings  provided in the first  sentence of this  Section 7.7.
Each purchase of shares of Common Stock pursuant to this Section 7.7 shall be on
the same terms and subject to the same conditions as are applicable to purchases
of shares of Common Stock by Holdings pursuant to Section 7.2 or Section 7.3, as
the case may be; PROVIDED; HOWEVER, that the provisions of Section 7.5 shall not
apply to any such purchase.

                                  ARTICLE VIII
                            AMENDMENT AND TERMINATION

                  8.1.  AMENDMENT  AND  WAIVER.  Except  as  otherwise  provided
herein, no modification,  amendment or waiver of any provision of this Agreement
shall  be  effective  against  the  Company  or  the  Stockholders  unless  such
modification,  amendment  or waiver is  approved  in  writing by each of (a) the
holders of a majority of the BNS Securities and (b) the holders of a majority of
the Employee Securities and AIP Securities,  taken together.  The failure of any
party to enforce  any of the  provisions  of this  Agreement  shall in no way be
construed as a waiver of such  provisions and shall not affect the right of such
party  thereafter  to enforce  each and every  provision  of this  Agreement  in
accordance with its terms.

                  8.2.  TERMINATION  OF CERTAIN  PROVISIONS.  The  provisions of
Article II, Article V and Section 4.2 shall  terminate upon the  consummation of
the Company's first Public Offering.

                  8.3.  TERMINATION OF AGREEMENT.  This Agreement will terminate
in respect of all  Stockholders  (a) with the written consent of (i) the holders
of a majority of the BNS  Securities,  and (iv) the holders of a majority of the
Employee   Securities  and  AIP  Securities,   taken  together,   (b)  upon  the
dissolution,   liquidation  or  winding-up  of  the  Company  or  (c)  upon  the
consummation of a Sale of the Company.

                  8.4.  TERMINATION AS TO A PARTY. Any Person who ceases to hold
any Securities  shall cease to be a Stockholder and shall have no further rights
or obligations under this Agreement.

                                   ARTICLE IX
                                  MISCELLANEOUS

                  9.1.  CERTAIN DEFINED TERMS.  As used in this  Agreement,  the
following terms shall have the meanings set forth or as referenced below:


                                       12


                  "AFFILIATE"  of any  particular  Person means any other Person
Controlling,  Controlled by or under common Control with such particular  Person
or, in the case of a natural  Person,  any other member of such Person's  Family
Group.

                  "AGREEMENT" has the meaning set forth in the Preface.

                  "AIP" has the meaning given such term in the Preface.

                 "AIP  CHANGE OF  CONTROL"  means the failure of at least two of
Kim A. Marvin, Dino Cusumano and John Becker to devote the substantial  majority
of their  business  time and  attention  to the  affairs  of AIP IV, LLC and its
Affiliates.

                  "AIP  SECURITIES"  means (a) the Common Stock  acquired by AIP
pursuant to the  Subscription  Agreement dated as of the date of this Agreement,
(b) any  Securities  or Common  Stock  hereafter  acquired  by any holder of AIP
Securities,  and (c) any  securities  of  Holdings  issued  with  respect to the
securities  referred to in clauses (a) or (b) above by way of a payment-in-kind,
stock  dividend or stock split or in connection  with a  combination  of shares,
exchange,   conversion,   recapitalization,   merger,   consolidation  or  other
reorganization.

                  "ARBITRABLE  DISPUTE"  has the  meaning  given to such term in
Section 9.13.

                  "ARBITRATION  EXPENSES"  has the meaning given to such term in
Section 9.13.

                  "ARBITRATORS"  has the  meaning  given to such term in Section
9.13.

                  "BNS SECURITIES" means (a) the Common Stock acquired by BNS on
the  date of  this  Agreement  under  the  Equity  Purchase  Agreement,  (b) any
Securities or Common Stock  hereafter  acquired by any holder of BNS Securities,
and (c) any  securities  of  Holdings  issued  with  respect  to the  securities
referred  to in  clauses  (a) or (b)  above by way of a  payment-in-kind,  stock
dividend or stock split or in connection with a combination of shares, exchange,
conversion, recapitalization, merger, consolidation or other reorganization.

                  "BOARD" has the meaning given to such term in Section 2.1(a).

                  "BOOK  VALUE"  means,  as to each share of Common Stock on any
date of  determination,  an  amount  equal to (i) the sum of stated  capital  in
respect of the Common  Stock PLUS  additional  paid in capital in respect of the
Common Stock PLUS retained earnings of Holdings (net of the value of all accrued
and unpaid dividends on Holdings' preferred stock), each determined according to
GAAP,  divided by (ii) the number of shares of the Common Stock outstanding on a
fully diluted basis.

                  "BUSINESS  PLAN"  shall  mean (A) a  proposed  budget  for the
forthcoming five (5) fiscal years,  including an income statement prepared on an
accrual  basis which shall show in  reasonable  detail the revenues and expenses
projected  for the  business of the Company  and its  Subsidiaries  on an annual
basis for such  period,  a cash flow  statement  which shall show in  reasonable
detail the receipts and disbursements  projected for the business of the Company
and its  Subsidiaries  on an annual  basis for such period and the amount of any


                                       13


corresponding  cash deficiency or surplus,  and the projected  borrowings of the
Company and its Subsidiaries for such period,  and (B) a proposed  business plan
for such period  which shall show in  reasonable  detail the  proposed  business
operations of the Company and its Subsidiaries,  including  staffing levels, and
the operating  strategy of the Company and its  Subsidiaries.  The Business Plan
for each five (5) fiscal year period  shall be  presented to the Board not later
than ninety (90) days prior to the beginning of such period, and the portions of
the Business Plan described in clause (A) of the preceding  sentence  shall,  to
the extent  practicable,  be prepared on a basis  consistent  with the Company's
audited financial statement and GAAP.

                  "CALL  NOTICE"  has the  meaning  given  such term in  Section
7.3(b) hereof.

                  "CAUSE"  as  used  in  connection   with  the  termination  of
employment of any employee who is a Stockholder,  (A) shall have the meaning set
forth  in  such  Stockholder's   employment  agreement  in  effect  as  of  such
termination  of  employment  and (B) shall  have the  following  meaning if such
Stockholder  does  not  have  an  employment  agreement  in  effect  as of  such
termination  of employment:  a termination of employment of such  Stockholder by
Holdings or any of its  Subsidiaries  due to (i) a breach of such  Stockholder's
fiduciary duties to Holdings or any of its  Subsidiaries,  (ii) any act of fraud
with respect to Holdings or any of its  Subsidiaries,  (iii) the  commission  by
such Stockholder of a felony or a crime involving moral turpitude,  (iv) any act
or omission  causing material harm to the standing and reputation of Holdings or
any of its Subsidiaries  (other than any act or omission  relating to a business
decision  made  in  good  faith  by such  Stockholder),  (v)  any  act of  gross
negligence  or  corporate  waste by such  Stockholder  to Holdings or any of its
Subsidiaries,  (vi) the commission of any intentional  tort by such  Stockholder
against  Holdings or any of its  Subsidiaries  causing loss,  damages or harm to
Holdings  or  any  of  its  Subsidiaries  in  excess  of  $150,000,   (vii)  the
misappropriation  of proprietary  information or  confidential  information,  or
(viii) the failure of such  Stockholder to render services to Holdings or any of
its Subsidiaries in accordance with such Stockholder's  employment which failure
amounts to a material neglect of such Stockholder's duties to Holdings or any of
its  Subsidiaries  and such  failure  continues  for a period  of 30 days  after
written notice from Holdings or any of its Subsidiaries specifying such breach.

                  "CLOSING  DATE" has the meaning  given such term in the Merger
Agreement.

                  "COMMON STOCK" means, collectively, Holdings' common stock, no
par value and any other class or series of authorized  capital stock of Holdings
which is not  limited  to a fixed sum or  percentage  of par or stated  value in
respect to the rights of the holders  thereof to  participate in dividends or in
the  distribution of assets upon any  liquidation,  dissolution or winding up of
Holdings.

                  "COMMON STOCK EQUIVALENTS" means (without duplication with any
Common  Stock or other  Common  Stock  Equivalents)  rights,  warrants,  options
(including the Options),  convertible securities,  or exchangeable securities or
indebtedness,  or other rights,  exercisable  for or convertible or exchangeable
into,  directly or  indirectly,  Common Stock or securities  exercisable  for or
convertible or exchangeable  into Common Stock,  whether at the time of issuance
or upon the passage of time or the occurrence of some future event.


                                       14


                  "COMPANY" has the meaning set forth in the preface.

                  "COMPANY   SALE"  means  a   transaction   with  one  or  more
independent  third  parties  pursuant to which such party or parties (i) acquire
(whether by merger,  consolidation  or  transfer  or issuance of capital  stock)
capital  stock  of the  Company  (or any  surviving  or  resulting  corporation)
possessing the voting power to elect a majority of the board of directors of the
Company (or such  surviving  or  resulting  corporation)  or (ii) acquire all or
substantially all of the Company's assets determined on a consolidated basis.

                  "CONTROL"   (including,    with   correlative   meaning,   all
conjugations  thereof) means with respect to any Person,  the ability of another
Person to control  or direct  the  actions  or  policies  of such first  Person,
whether by ownership of voting securities, by contract or otherwise.

                  "COST"  means,  with  respect to shares of Common  Stock,  the
price per share paid by the  Stockholder  (as  proportionately  adjusted for all
subsequent stock splits, stock dividends and other recapitalizations).

                  "COSTS  AND FEES" has the  meaning  given such term in Section
9.13 hereof.

                  "CREDIT  AGREEMENT"  means  the Loan And  Security  Agreement,
dated  as  of  October  31,  2006,  among  CS  Acquisition   Corp.,  a  Missouri
corporation,  Collins  Industries,  Inc.,  a Missouri  corporation,  Collins Bus
Corporation,  a Kansas  corporation,  Wheeled Coach Industries,  Inc., a Florida
corporation,  Capacity of Texas,  Inc., a Texas  corporation,  Mid Bus, Inc., an
Ohio corporation,  Mobile Products,  Inc., a Kansas corporation,  the Guarantors
signatory thereto,  the financial  institution(s)  listed on the signature pages
thereof  and  their  respective  successors  and  Eligible  Assignees  and  GMAC
Commercial  Finance LLC, a Delaware limited liability  company,  for itself as a
Lender  and as Agent,  as  amended,  restated,  extended,  renewed,  refinanced,
replaced, supplemented or otherwise modified from time to time.

                  "DISABILITY"  as  used  in  connection  with  an  employee  of
Holdings or any of its Subsidiaries who is a Stockholder, means the inability of
such Stockholder to perform such essential  functions of such Stockholder's job,
with or without  reasonable  accommodation,  by reason of a  physical  or mental
infirmity, for a continuous period of six months. The period of six months shall
be deemed  continuous  unless such  Stockholder  returns to work for at least 30
consecutive  business days during such period and performs during such period at
the level and  competence  that existed  prior to the beginning of the six-month
period.  The date of such Disability shall be on the first day of such six-month
period.

                  "EMPLOYEE" has the meaning set forth in the preface.

                  "Employee" and  "Employment."  The term  "EMPLOYEE"  means any
employee (as defined in accordance with the regulations and revenue rulings then
applicable  under  Section  3401(c) of the  Internal  Revenue  Code of 1986,  as
amended) of Holdings or any of its Subsidiaries, and the term "EMPLOYMENT" shall
include  service as a part- or  full-time  employee  to  Holdings  or any of its
Subsidiaries.


                                       15


                  "EMPLOYEE  SECURITIES"  means (a) the Common Stock acquired by
the Employees on the date of this Agreement under Subscription  Agreements,  (b)
any Options and any Common  Stock issued upon  exercise of the Options,  (c) any
Securities  or  Common  Stock  hereafter  acquired  by any  holder  of  Employee
Securities,  and (d) any  securities  of  Holdings  issued  with  respect to the
securities  referred  to  in  clauses  (a),  (b)  or  (c)  above  by  way  of  a
payment-in-kind,  stock  dividend  or  stock  split  or  in  connection  with  a
combination  of  shares,   exchange,   conversion,   recapitalization,   merger,
consolidation or other reorganization.

                  "EQUITY PURCHASE  AGREEMENT" means the Subscription  Agreement
of even date herewith by and among Holdings and BNS.

                  "EXEMPT AIP TRANSFER"  means a Transfer of AIP  Securities (a)
pursuant  to a Sale  of the  Company  under  Section  5.1 or  other  transaction
approved under Section 2.2, (b) pursuant to a Public Sale, (c) upon distribution
to AIP's members,  (d) upon the death of such holder  pursuant to the applicable
laws of descent and distribution, (e) to or among such holder's Family Group and
siblings,  descendants of such siblings and any trust established and maintained
for the  benefit of any of the  foregoing  or (f)  incidental  to the  exercise,
conversion or exchange of such  securities in accordance  with their terms,  any
combination   of   shares   (including   any   reverse   stock   split)  or  any
recapitalization,  reorganization  or  reclassification  of,  or any  merger  or
consolidation involving, Holdings.

                  "EXEMPT BNS TRANSFER"  means a Transfer of BNS  Securities (a)
pursuant  to a Sale  of the  Company  under  Section  5.1 or  other  transaction
approved under Section 2.2, (c) pursuant to a Public Sale, (d) upon distribution
to any  BNS's  stockholders,  (e)  incidental  to the  exercise,  conversion  or
exchange of such securities in accordance  with their terms,  any combination of
shares   (including   any  reverse   stock   split)  or  any   recapitalization,
reorganization or reclassification of, or any merger or consolidation involving,
Holdingsor  (f)  pursuant to a pledge of BNS  Securities  to Steel  Partners II,
L.P., or its  Affiliate,  as security for an obligation of BNS to Steel Partners
II, L.P., or its Affiliates.

                  "EXEMPT  EMPLOYEE  TRANSFER"  means  a  Transfer  of  Employee
Securities  (a)  pursuant  to a Sale of the Company  under  Section 5.1 or other
transaction  approved  under  Section 2.2, (b) to Holdings  pursuant to the call
option under  Section  7.3,  (c) to Holdings  pursuant to an exercise of the put
option under  Section 7.2, (d) pursuant to a Public Sale,  (e) upon the death of
the holder pursuant to the applicable laws of descent and  distribution,  (f) to
or among  such  Employee's  Family  Group  or (h)  incidental  to the  exercise,
conversion or exchange of such  securities in accordance  with their terms,  any
combination   of   shares   (including   any   reverse   stock   split)  or  any
recapitalization,  reorganization  or  reclassification  of,  or any  merger  or
consolidation involving, Holdings.

                  "EXEMPT TRANSFER" means an Exempt Employee Transfer, an Exempt
BNS Transfer and Exempt AIP Transfer.

                  "FAIR  MARKET  VALUE" as of any date means (a) with respect to
publicly traded Common Stock, the market trading price of such Common Stock, and
(b) with respect to non-publicly  traded Common Stock,  the fair market value of
such Common Stock  (expressed  on a per-share  basis after giving  effect to the
exercise of any options or warrants then  outstanding if prior to a Company Sale


                                       16


or after giving effect to the exercise of any vested options or vested  warrants
then  outstanding  at the time of a Company  Sale) as of the relevant  date,  as
determined  in good  faith by the Board  based on such  factors as the Board may
deem  appropriate  (PROVIDED  that a  Stockholder  may  request  an  independent
appraisal  of such Common Stock by a nationally  recognized  investment  banking
firm selected  jointly by such  Stockholder  and the Board).  In the event of an
independent appraisal pursuant to the foregoing clause (b), such appraisal shall
not give effect to any minority interest discount or lack of control,  but shall
give  effect to any  illiquidity,  and the cost of such  appraisal  shall be (A)
shared  equally  between the  Stockholder  and the Company if such  appraisal is
within 10% of the appraisal  provided by the Board,  (B) paid by the Stockholder
if such appraisal is less than or equal to 90% of the appraisal  provided by the
Board, and (C) paid by the Company if such appraisal is greater than or equal to
110% of the appraisal provided by the Board.

                  "FAMILY  GROUP" means,  with respect to any  individual,  such
individual's  spouse and descendants  (whether natural or adopted) and any trust
established and maintained for the benefit of such individual, such individual's
spouse or such individual's descendants.

                  "FINANCING  DEFAULT" means an event which would constitute (or
with notice or lapse of time or both would constitute) an event of default under
any of the  following as they may be amended  from time to time:  (i) the Credit
Agreement and any extensions,  renewals,  refinancings or refundings  thereof in
whole or in part; (ii) any other agreement under which an amount of indebtedness
of Holdings or any of its Subsidiaries in excess of $1,000,000 is outstanding as
of  the  time  of  the  aforementioned  event,  and  any  extensions,  renewals,
refinancings or refundings  thereof in whole or in part;  (iii) any provision of
Holdings' or any of its  Subsidiary's  articles of incorporation as in effect on
the Closing Date; (iv) any amendment of, supplement to or other  modification of
any of the instruments  referred to in clauses (i) through (iii) above;  and (v)
any of the  securities  issued  pursuant to or whose  terms are  governed by the
terms of any of the agreements set forth in clauses (i) through (iv) above,  and
any  extensions,  renewals,  refinancings  or refundings  thereof in whole or in
part.

                  "FULLY-DILUTED SHARES" means, as of any date of determination,
the number of shares of such Common Stock outstanding plus (without duplication)
all  shares of such  Common  Stock  issuable,  whether  at such time or upon the
passage  of  time  or the  occurrence  of  future  events,  upon  the  exercise,
conversion or exchange of all then-outstanding Common Stock Equivalents.

                  "GAAP"  means  United  States  generally  accepted  accounting
principles consistently applied with prior periods.

                  "GOOD   REASON"   with   respect  to  an  employee  who  is  a
Stockholder,  means a  material  reduction  of  such  Stockholder's  duties  and
responsibilities or a change in such Stockholder's  duties and  responsibilities
which are materially  inconsistent with the type of duties and  responsibilities
of such Stockholder at such time, or a material  reduction in compensation  paid
to such Stockholder  (excluding any reduction in such Stockholder's  salary that
is part of an overall  plan to reduce  the  aggregate  amount of salary  paid to
management investors).

                  "HOLDINGS" has the meaning given in the Preface.


                                       17


                  "HOLDINGS  REORGANIZATION" means (a) a merger of Holdings into
the Company pursuant to which (i) the Company is the survivor,  (ii) the Company
issues to the  Stockholders a number of shares of Common Stock equal in relative
proportion to the number of Securities held by such  Stockholders  and (iii) all
Securities  then  held  by  such  Stockholders  are  canceled  or (b) a  similar
transaction  or exchange of securities  pursuant to which (i) the Company issues
to the  Stockholders  a number  of  shares of  Common  Stock  equal in  relative
proportion to the number of Securities  held by such  Stockholders  and (ii) all
Securities then held by such Stockholders are canceled.

                  "INDEPENDENT  THIRD PARTY"  means any Person who,  immediately
prior to the  contemplated  transaction,  does not beneficially own five percent
(5%) or more of the  Fully-Diluted  Shares who is not an  Affiliate  of any such
five  percent (5%)  beneficial  owner and is not a member of the Family Group of
any such five percent (5%) beneficial owner.

                  "INITIATING  PARTY" has the meaning given such term in Section
6.1(a).

                  "JUNIOR  SUBORDINATED NOTE" has the meaning given such term in
Section 7.6.

                  "MERGER  AGREEMENT"  means  the  Agreement  and Plan of Merger
dated as of September 26, 2006 among the Company, Steel Partners II, L.P. and CS
Acquisition Corp.

                  "NEW  STOCKHOLDER"  has the  meaning  given  such  term in the
Preface.

                  "NEW STOCKHOLDER  SECURITIES" means (a) Common Stock hereafter
acquired by a New  Stockholder  and (b) any  securities of Holdings  issued with
respect  to  the  securities   referred  to  in  clause  (a)  above  by  way  of
payment-in-kind,  stock  dividend  or  stock  split,  or in  connection  with  a
combination of shares,  exchange,  recapitalization,  merger,  consolidation  or
other reorganization.

                  "OPERATIONS  COMMITTEE"  has the  meaning  given  such term in
Section 3.2(a).

                  "OPTIONS" means any options to purchase shares of Common Stock
granted by Holdings to any Employee on or after the date of this Agreement.

                  "ORIX CREDIT AGREEMENT" means the Loan And Security Agreement,
dated  as  of  October  31,  2006,  among  CS  Acquisition   Corp.,  a  Missouri
corporation,  Collins  Industries,  Inc.,  a Missouri  corporation,  Collins Bus
Corporation,  a Kansas  corporation,  Wheeled Coach Industries,  Inc., a Florida
corporation,  Capacity of Texas,  Inc., a Texas  corporation,  Mid Bus, Inc., an
Ohio corporation,  Mobile Products,  Inc., a Kansas corporation,  the Guarantors
signatory thereto,  the financial  institution(s)  listed on the signature pages
thereof and their respective  successors and Eligible Assignees and ORIX Finance
Corp., a Delaware corporation,  for itself as a Lender and as Agent, as amended,
restated,  extended, renewed,  refinanced,  replaced,  supplemented or otherwise
modified from time to time.

                  "OWNERSHIP  PERCENTAGE"  means,  for  each  Stockholder,   the
percentage  obtained by dividing the number of shares of Securities  (other than
Excluded  Securities)  held by such Stockholder by the total number of shares of
such Securities (other than Excluded Securities) outstanding.


                                       18


                  "PERMITTED STOCKHOLDER  TRANSACTIONS" means (i) the Management
Services Agreement dated as of October 31, 2006, between AIP IV, LLC and Collins
Industries, Inc., (ii) the Management Services Agreement dated as of October 31,
2006,  between BNS Holding,  Inc., and Collins  Industries,  Inc., and (iii) the
advisory fee letter dated October 31, 2006 between Collins Industries,  Inc. and
Steel Partners II, L.P.

                  "PERMITTED  TRANSFEREE"  means the transferees in any Transfer
described in clauses (f) or (g) of the definition of "Exempt Employee Transfer."

                  "PERSON" means an individual, a partnership,  a joint venture,
a  corporation,  an  association,  a joint stock  company,  a limited  liability
company,  a  trust,  an  unincorporated  organization  or a  government  or  any
department or agency or political subdivision thereof.

                  "PUBLIC  OFFERING"  means a sale of Common Stock to the public
in an offering  pursuant to an effective  registration  statement filed with the
SEC pursuant to the  Securities  Act, as then in effect,  provided that a Public
Offering  shall not  include  an  offering  made in  connection  with a business
acquisition or combination or an employee benefit plan.

                  "PUBLIC SALE" means a sale of Securities  pursuant to a Public
Offering or a Rule 144 Sale.

                  "REQUIRED  CONSENT  OF THE  STOCKHOLDERS"  means  the  written
consent of AIP and BNS.

                  "REQUIRED MAJORITY OF THE BOARD" means the affirmative vote of
four (4) members of the Board,  including at least one (1) member  designated by
AIP.

                  "RETIREMENT"  shall mean, with respect to an employee who is a
Stockholder,  such Stockholder's voluntary retirement as an employee of Holdings
or any of its  Subsidiaries  on or after  reaching age 62 or such earlier age as
may be otherwise  determined by the Board after at least three years  employment
with Holdings after the Closing Date.

                  "RULE 144" means Rule 144 adopted under the Securities Act (or
any successor rule or regulation).

                  "RULE 144A" means Rule 144A adopted under the  Securities  Act
(or any successor rule or regulation).

                  "RULE  144  SALE"  means a sale of  Securities  to the  public
through a broker,  dealer or market-maker pursuant to the provisions of Rule 144
adopted under the Securities Act (or any successor rule or regulation).

                  "SALE OF THE COMPANY" means the consummation of a transaction,
whether in a single transaction or in a series of related  transactions that are
consummated   contemporaneously  (or  consummated  pursuant  to  contemporaneous
agreements), (i) with an Independent Third Party or a group of Independent Third
Parties  or (ii)  with any other  Person or  Persons  on an  arm's-length  basis


                                       19


pursuant to which such party or parties (a)  acquire  (whether by merger,  stock
purchase,  recapitalization,  reorganization,  redemption,  issuance  of capital
stock  or  otherwise)  more  than  50% of the  Securities,  (b)  acquire  assets
constituting all or substantially all of the assets of Holdings,  or (c) acquire
assets  constituting all or  substantially  all of the assets of the Company and
its Subsidiaries on a consolidated basis.

                  "SEC" means the Securities and Exchange Commission.

                  "SECURITIES"  means,  collectively,  the BNS  Securities,  the
Employee Securities, the AIP Securities and the New Stockholder Securities.

                  "SECURITIES  ACT" means the Securities Act of 1933, as amended
from time to time.

                  "STOCKHOLDER" has the meaning given such term in the Preface.

                  "STOCKHOLDER  GROUP"  shall  have  the  meaning  set  forth in
Section 7.2(a).

                  "SUBSCRIPTION  AGREEMENTS"  mean the  Subscription  Agreements
between Holdings and the Stockholders party hereto.

                  "SUBSIDIARY"  means  any  corporation  with  respect  to which
another  specified  corporation  has the power to vote or direct  the  voting of
sufficient  securities to elect directors  having a majority of the voting power
of the board of directors of such corporation.

                  "SUSPENSION EVENT" shall mean (i) an AIP Change of Control, or
(ii) an event of default under the Credit Agreement that remains uncured.

                  "TERMINATION  BOOK VALUE" shall mean Book Value as of the last
day of the month during which the  termination  of  employment  giving rise to a
purchase of shares of Common Stock pursuant to this Agreement occurs.

                  "TERMINATION  DATE"  means the date upon  which  Stockholder's
employment with Holdings and its Subsidiaries is terminated.

                  "TRANSFER"  means  (in  either  the  noun  or the  verb  form,
including with respect to the verb form, all  conjugations  thereof within their
correlative meanings) with respect to any Security,  the gift, sale, assignment,
transfer,  pledge,  hypothecation or other  disposition  (whether for or without
consideration,   whether   directly  or  indirectly,   and  whether   voluntary,
involuntary or by operation of law) of such Security or any interest therein.

                  "TRIGGER DATE" means the earlier of (A) the fifth  anniversary
of the Closing Date, and (B) after the occurrence of any of the events described
in clauses (1), (2) and (3) of Section 8.1(f) of the Credit Agreement (each such
event, a "TRIGGER  EVENT"),  the earlier of (1) six (6) months after the date of
the first  Trigger Event to occur  subsequent  to the Closing Date,  and (2) the
third anniversary of the Closing Date.


                                       20


                  9.2. LEGENDS.

                  (a)  STOCKHOLDERS  AGREEMENT.  Each  certificate or instrument
evidencing  Securities and each certificate or instrument issued in exchange for
or upon the Transfer of any such Securities (if such  securities  remain subject
to this Agreement after such Transfer)  shall be stamped or otherwise  imprinted
with  a  legend  (as  appropriately   completed  under  the   circumstances)  in
substantially the following form:

                  "THE   SECURITIES    REPRESENTED   BY   THIS
                  CERTIFICATE       CONSTITUTE      ["EMPLOYEE
                  SECURITIES"]    ["AIP   SECURITIES"]   ["BNS
                  SECURITIES"]  UNDER A  CERTAIN  STOCKHOLDERS
                  AGREEMENT DATED AS OF OCTOBER 31, 2006 AMONG
                  THE   ISSUER   OF   SUCH   SECURITIES   (THE
                  "COMPANY")    AND   CERTAIN   OF   HOLDINGS'
                  STOCKHOLDERS  AND,  AS SUCH,  ARE SUBJECT TO
                  CERTAIN VOTING  PROVISIONS,  PURCHASE RIGHTS
                  AND  RESTRICTIONS  ON TRANSFER  SET FORTH IN
                  THE STOCKHOLDERS  AGREEMENT.  A COPY OF SUCH
                  STOCKHOLDERS  AGREEMENT  WILL  BE  FURNISHED
                  WITHOUT  CHARGE BY  HOLDINGS  TO THE  HOLDER
                  HEREOF UPON WRITTEN REQUEST."

                  (b)  REMOVAL OF  LEGENDS.  Whenever in the opinion of Holdings
and  counsel  reasonably  satisfactory  to  Holdings  (which  opinion  shall  be
delivered to Holdings in writing) the  restrictions  described in any legend set
forth above cease to be applicable to any  Securities,  the holder thereof shall
be entitled  to receive  from  Holdings,  without  expense to the holder,  a new
instrument or certificate not bearing a legend stating such restriction.

                  9.3. BINDING EFFECT. The provisions of this Agreement shall be
binding  upon  the  parties  hereto  after a  Holdings  Reorganization.  After a
Holdings Reorganization,  all references to the Company or Holdings, as the case
may be, shall become references to the company surviving any merger which occurs
as part of a Holdings Reorganization.

                  9.4.  ACKNOWLEDGMENT  AND CONSENT.  Each of the parties hereto
hereby consents and agrees to raise no objection to a Holdings Reorganization.

                  9.5. PURCHASER'S EMPLOYMENT BY THE COMPANY.  Nothing contained
in this Agreement  shall be deemed to obligate  Holdings,  the Company or any of
their  Subsidiaries to employ any  Stockholder in any capacity  whatsoever or to
prohibit or restrict the Company (or any such  subsidiary)  from terminating the
employment of any Stockholder  (if such  Stockholder is an employee) at any time
or for any reason whatsoever, with or without Cause.

                  9.6. SEVERABILITY.  Whenever possible,  each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable  law, but if any  provision of this  Agreement is held to be invalid,
illegal or  unenforceable in any respect under any applicable law or rule in any
jurisdiction,  such invalidity,  illegality or unenforceability shall not affect


                                       21


any other  provision  or any other  jurisdiction,  but this  Agreement  shall be
reformed,  construed  and  enforced  in such  jurisdiction  as if such  invalid,
illegal or unenforceable provision had never been contained herein.

                  9.7.   ENTIRE   AGREEMENT.   Except  as  otherwise   expressly
contemplated   hereby,   this  document  embodies  the  complete  agreement  and
understanding among the parties hereto with respect to the subject matter hereof
and   supersedes   and  preempts  any  prior   understandings,   agreements   or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.

                  9.8.  SUCCESSORS  AND ASSIGNS.  Except as  otherwise  provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Holdings,  the Company and their  respective  successors  and assigns and the
Stockholders  and any  subsequent  holders  of  Securities  and  the  respective
successors and assigns of each of them, so long as they hold Securities.

                  9.9. COUNTERPARTS.  This Agreement may be executed in separate
counterparts  each of which shall be an original and all of which taken together
shall constitute one and the same agreement.

                  9.10.  REMEDIES.  Holdings,  the Company and the  Stockholders
shall be entitled to enforce their rights under this Agreement specifically,  to
recover  damages  by reason of any  breach of any  provision  of this  Agreement
(including  costs of  enforcement)  and to exercise all other rights existing in
their favor. The parties hereto agree and acknowledge that money damages may not
be an adequate  remedy for any breach of the  provisions  of this  Agreement and
that  Holdings,  the  Company  or any  Stockholder  may in  such  Person's  sole
discretion  apply to any court of law or equity of  competent  jurisdiction  for
specific  performance  or  injunctive  relief  (without  posting a bond or other
security) in order to enforce or prevent any violation of the provisions of this
Agreement.

                  9.11. NOTICES. Any notice provided for in this Agreement shall
be in writing and shall be either  personally  delivered,  or mailed first class
mail (postage  prepaid) or sent by reputable  overnight courier service (charges
prepaid) to  Holdings  and the Company at the address set forth below and to any
other recipient at the address indicated on the attached  signature pages hereto
and to any  subsequent  holder of Securities  subject to this  Agreement at such
address  as  indicated  by  Holdings'  records,  or at  such  address  or to the
attention of such other  person as the  recipient  party has  specified by prior
written notice to the sending  party.  Notices will be deemed to have been given
hereunder when sent by facsimile (receipt  confirmed)  delivered  personally,  5
days after  deposit in the U.S.  mail and one business day after  deposit with a
reputable overnight courier service. The Company's address is:

                  Collins Industries, Inc.
                  180 State Street, Suite 240
                  Southlake, Texas  76092
                  Attention: Randall Swift, Chief Operating Officer
                  Fax: (817)-310 0907


                                       22


Holding's address is:

                  Collins I Holding Corp.
                  c/o BNS Holding, Inc.
                  25 Enterprise Center
                  Middletown, RI 02842
                  Attention: Michael Warren, President and
                             Chief Executive Officer
                  Fax: (401) 848-6444

                  9.12.   GOVERNING   LAW.   The   construction,   validity  and
interpretation  of  this  Agreement  shall  be  governed  by  and  construed  in
accordance  with the  domestic  laws of the State of  Delaware,  without  giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.

                  9.13. NON-BINDING MEDIATION; BINDING ARBITRATION. Any dispute,
controversy,  or claim arising under or relating to this Agreement  ("ARBITRABLE
DISPUTE")  shall be resolved by final and binding  arbitration  in New York, New
York pursuant to the American  Arbitration  Association  Commercial  Arbitration
Rules, subject to the following:

                  (a) Any  party  may  demand  that any  Arbitrable  Dispute  be
submitted  to  binding  arbitration.  The  demand  for  arbitration  shall be in
writing,  shall be served on the other party in the manner prescribed herein for
the giving of  notices,  and shall set forth a short  statement  of the  factual
basis for the claim, specifying the matter or matters to be arbitrated.

                  (b) The arbitration  shall be conducted by a single arbitrator
(the  "ARBITRATOR").  All arbitration  proceedings shall take place in New York,
New York.

                  (c) Except as provided herein:

                           (i) each  party  shall bear its own "COSTS AND FEES,"
         which  are  defined  as  all  reasonable   pre-award  expenses  of  the
         arbitration,   including   travel  expenses,   out-of-pocket   expenses
         (including,  but not limited to, copying and  telephone)  witness fees,
         and reasonable attorney's fees and expenses;

                           (ii) the fees and expenses of the  Arbitrator and all
         other costs and expenses  incurred in connection  with the  arbitration
         ("ARBITRATION EXPENSES") shall be borne equally by the parties; and

                           (iii)  notwithstanding the foregoing,  the Arbitrator
         shall be  empowered  to require  any one or more of the parties to bear
         all or any portion of such Costs and Fees and/or the fees and  expenses
         of the Arbitrator in the event that the Arbitrator determine such party
         has acted unreasonably or in bad faith.


                                       23


                  (d) The  Arbitrator  shall  have the  authority  to award  any
remedy or relief  that a Court of the State of  Delaware  could  order or grant,
including,  without limitation,  specific  performance of any obligation created
under the  Agreement,  the  awarding of  punitive  damages,  the  issuance of an
injunction,  or the  imposition  of sanctions  for abuse or  frustration  of the
arbitration process. Such decision and award shall be in writing and counterpart
copies  thereof shall be delivered to each party.  The decision and award of the
Arbitrator  shall be binding on all  parties.  In  rendering  such  decision and
award,  the Arbitrator  shall not add to, subtract from or otherwise  modify the
provisions  of this  Agreement.  Any party to the  arbitration  may seek to have
judgment upon the award rendered by the  Arbitrator  entered in any court having
jurisdiction thereof.

                  9.14.  DESCRIPTIVE HEADINGS.  The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

                  9.15. BNS TAX LOSSES. BNS will use its commercially reasonable
efforts not to impair under Section 382 of the Internal Revenue Code of 1986, as
amended,  (whether by action or omission) its ability to utilize its  historical
net operating losses to offset the Company's taxable income. BNS will provide to
AIP  such  information  as AIP may from  time to time  reasonably  request  with
respect to the status of BNS's historical net operating losses.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
                            [SIGNATURE PAGE FOLLOWS]


                                       24


                  IN WITNESS  WHEREOF,  the parties  hereto have  executed  this
Stockholders Agreement on the day and year first above written.

                                    COLLINS I HOLDING CORP.

                                    By:   /s/ John Becker
                                        ----------------------------------------
                                        Name:   John Becker
                                        Title:  Vice President


                                    COLLINS INDUSTRIES, INC.

                                    By:   /s/ John Becker
                                        ----------------------------------------
                                        Name:   John Becker
                                        Title:  Vice President

                                    BNS HOLDING, INC.

                                    By:  /s/ Michael Warren
                                        ----------------------------------------
                                        Name:  Michael Warren
                                        Title: President
                                        Address: 25 Enterprise Center
                                                 Middletown, RI 02842
                                        Attention: Michael Warren, President and
                                                   Chief Executive Officer
                                        Fax:(401) 848-6444


                                    AIP/CHC HOLDINGS, LLC
                                    By AIP IV, LLC, its sole member

                                    By:  /s/ Dino Cusumano
                                        ----------------------------------------
                                        Name:  Dino Cusumano
                                        Title: Manager
                                        Address: 535 Fifth Avenue
                                                 32 Floor
                                                 New York, NY  10017
                                        Attention: Paul J. Bamatter
                                        Fax:(212) 627-2372

EX-10.02

                                                                     Exibit 10.2


                         *******************************


                           LOAN AND SECURITY AGREEMENT


                          DATED AS OF OCTOBER 30, 2006

                                     BETWEEN

                                BNS HOLDING, INC.
                                 AS THE BORROWER

                                       AND

                            STEEL PARTNERS II, L.P.,
                                  AS THE LENDER


                         *******************************






                                TABLE OF CONTENTS
                                -----------------

Section                                                                     Page
- -------                                                                     ----

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS....................................1
   SECTION 1.1.            Certain Defined Terms...............................1
   SECTION 1.2.            Terms Generally.....................................4
   SECTION 1.3.            Computation of Time Periods.........................4
   SECTION 1.4.            Accounting Terms....................................5
ARTICLE II. AMOUNTS AND TERMS OF THE ADVANCE...................................5
   SECTION 2.1.            Advance.............................................5
   SECTION 2.2.            The Note............................................5
   SECTION 2.3.            Interest............................................5
ARTICLE III. PAYMENTS, PREPAYMENTS, INCREASED  COSTS AND TAXES.................5
   SECTION 3.1.            Payments and Computations...........................5
   SECTION 3.2.            Mandatory Prepayments...............................6
   SECTION 3.3.            Voluntary Prepayments...............................6
   SECTION 3.4.            Taxes...............................................6
ARTICLE IV. SECURITY...........................................................7
   SECTION 4.1.            Grant of Security Interest..........................7
   SECTION 4.2.            Delivery of Additional Documentation Required.......7
ARTICLE V. CONDITIONS OF LENDING...............................................7
   SECTION 5.1.            Conditions Precedent to the Advance.................7
ARTICLE VI. REPRESENTATIONS AND WARRANTIES.....................................8
   SECTION 6.1.            Existence...........................................8
   SECTION 6.2.            Power and Authorization.............................8
   SECTION 6.3.            Binding Obligations.................................8
   SECTION 6.4.            Government Approvals................................8
   SECTION 6.5.            Taxes; Governmental Charges.........................8
   SECTION 6.6.            Compliance with Law.................................9
   SECTION 6.7.            Absence of Financing Statements.....................9
   SECTION 6.8.            Litigation..........................................9
   SECTION 6.9.            No Default or Event of Default......................9
ARTICLE VII. AFFIRMATIVE COVENANTS OF THE BORROWER.............................9
   SECTION 7.1.            Compliance with Laws, Etc...........................9
   SECTION 7.2.            Reporting and Notice Requirements...................9
   SECTION 7.3.            Use of Proceeds....................................10
   SECTION 7.4.            Taxes and Liens....................................10
   SECTION 7.5.            Maintenance of Property............................10
   SECTION 7.6.            Right of Inspection................................10
   SECTION 7.7.            Insurance..........................................11
   SECTION 7.8.            Notice of Litigation...............................11
   SECTION 7.9.            Maintenance of Office..............................11
   SECTION 7.10.           Existence..........................................11
   SECTION 7.11.           Further Assurances.................................11


                                       i


ARTICLE VIII. NEGATIVE COVENANTS..............................................12
   SECTION 8.1.            Impairment of Rights...............................12
   SECTION 8.2.            Restrictions on Debt...............................12
   SECTION 8.3.            Restrictions on Liens..............................13
   SECTION 8.4.            Mergers and Acquisitions...........................13
   SECTION 8.5.            Issuance of Equity Securities......................14
   SECTION 8.6.            Related Party Transactions.........................14
    SECTION 8.7.  Issuance of Equity Securities by Collins Holding............14
ARTICLE IX. EVENTS OF DEFAULT.................................................14
   SECTION 9.1.            Events of Default..................................14
ARTICLE X. MISCELLANEOUS......................................................16
   SECTION 10.1.           Survival of Representations and Warranties.........16
   SECTION 10.2.           Amendments, Etc....................................16
   SECTION 10.3.           Notices, Etc.......................................16
   SECTION 10.4.           No Waiver; Remedies................................16
   SECTION 10.5.           Costs, Expenses and Taxes..........................16
   SECTION 10.6.           Right of Set-off...................................17
   SECTION 10.7.           Binding Effect.....................................17
   SECTION 10.8.           Assignments and Participations.....................17
   SECTION 10.9.           Limitation on Agreements...........................17
   SECTION 10.10.          Severability.......................................18
   SECTION 10.11.          Governing Law......................................18
   SECTION 10.12.          SUBMISSION TO JURISDICTION; WAIVERS................18
   SECTION 10.13.          Execution in Counterparts..........................19

EXHIBITS:
- --------

Exhibit A -       Form of Note
Exhibit B -       Pledge and Security Agreement


                                       ii



                           LOAN AND SECURITY AGREEMENT

                  This Loan and Security Agreement, dated as of October 30, 2006
(this "Agreement"),  is made between BNS Holding,  Inc., a Delaware  corporation
(the  "Borrower"),  and Steel Partners II, L.P., a Delaware limited  partnership
(the "Lender").

                                    RECITALS:

                  WHEREAS,  Lender has agreed to loan money to the  Borrower for
the  purposes of  acquiring  80% of the  outstanding  common  stock of Collins I
Holding  Corp., a Delaware  corporation  ("Collins  Holding"),  on the terms and
subject to the provisions contained herein.

                  NOW THEREFORE, in consideration of the premises and the mutual
promises  contained  herein and for other good and valuable  consideration,  the
receipt and  sufficiency  of which is hereby  acknowledged,  the parties  hereto
agree as follows:

                                   ARTICLE I.

                        DEFINITIONS AND ACCOUNTING TERMS

                  SECTION 1.1. CERTAIN DEFINED TERMS. As used in this Agreement,
the following terms shall have the following meanings:

                           "ADVANCE" means an advance under Section 2.1.

                           "AFFILIATE"  means  any  Person  which,  directly  or
         indirectly,  controls or is  controlled  by or is under common  control
         with  another  Person.  For  purposes  of  this  definition,  "control"
         (including,  with correlative  meanings,  the terms "controlled by" and
         "under common control with"), as used with respect to any Person, means
         the  power to  direct  or cause the  direction  of the  management  and
         policies of such Person,  directly or indirectly,  whether  through the
         ownership of voting securities or by contract or otherwise.

                           "BANKRUPTCY  CODE" means The Bankruptcy Reform Act of
         1978, as amended, and codified as 11 U.S.C. Sections 101 ET SEQ.

                           "BORROWER" has the meaning in the preamble.

                           "BNS  SUBSIDIARIES"   means  any  Subsidiary  of  the
         Borrower other than Collins Holding.

                           "BUSINESS DAY" means a day of the year on which banks
         are not required or authorized to close in New York, New York.

                           "CAPITAL  LEASE" means any  obligation to pay rent or
         other amounts under a lease of (or other agreement  conveying the right
         to use) any property  (whether  real,  personal or mixed,  immovable or
         movable)  that is  required to be  classified  and  accounted  for as a
         capitalized lease obligation under GAAP.




                           "CODE"  means the Internal  Revenue Code of 1986,  as
         amended from time to time, and any successor statute.

                           "COMMITMENT" means $14,000,000.

                           "CONTROL"  when used with respect to any Person means
         the  power to  direct  the  management  and  policies  of such  Person,
         directly  or  indirectly,  whether  through  the  ownership  of  voting
         securities,  by contract or otherwise;  and the terms "CONTROLLING" and
         "CONTROLLED" have meanings correlative to the foregoing.

                           "DEBT" means (without  duplication),  for any Person,
         (a)  indebtedness  of such Person for borrowed  money or arising out of
         any  extension  of  credit  to  or  for  the  account  of  such  Person
         (including,  without  limitation,  extensions  of credit in the form of
         reimbursement or payment obligations of such Person relating to letters
         of credit  issued for the account of such  Person) or for the  deferred
         purchase price of property or services;  (b)  indebtedness  of the kind
         described in clause (a) of this definition  which is secured by (or for
         which the holder of such debt has any  existing  right,  contingent  or
         otherwise,  to be secured by) any Lien upon or in Property  (including,
         without limitation, accounts and contract rights) owned by such Person,
         whether or not such Person has assumed or become liable for the payment
         of such  indebtedness  or  obligations;  (c) all  obligations as lessee
         under any Capital Lease; (d) all contingent liabilities and obligations
         under  direct or indirect  guarantees  in respect  of, and  obligations
         (contingent  or  otherwise)  to  purchase  or  otherwise  acquire,   or
         otherwise to assure a creditor against loss in respect of, indebtedness
         or  obligations  of others  of the kinds  referred  to in  clauses  (a)
         through (c) above; and (e) any monetary obligation of a Person under or
         in connection with a sale-leaseback or similar arrangement.

                           "DEBTOR  LAWS"  means  all  applicable   liquidation,
         conservatorship,  bankruptcy,  moratorium,  arrangement,  receivership,
         insolvency,  reorganization  or similar laws  including the  Bankruptcy
         Code,  or  general  equitable  principles  from  time to time in effect
         affecting the rights of creditors generally.

                           "DEFAULT"  means any event  the  occurrence  of which
         does,  or with the lapse of time or  giving  of  notice or both  would,
         constitute an Event of Default.

                           "EVENTS OF  DEFAULT"  has the  meaning  specified  in
         Section 9.1.

                           "GAAP" means generally accepted accounting principles
         set  forth  in  the  opinions  and  pronouncements  of  the  Accounting
         Principles  Board  and  the  American  Institute  of  Certified  Public
         Accountants,   and  statements  and  pronouncements  of  the  Financial
         Accounting Standards Board.

                           "GOVERNMENTAL   AUTHORITY"  means  any  (domestic  or
         foreign) federal,  state, county,  municipal,  parish,  provincial,  or
         other government, or any department,  commission, board, court, agency,
         or any  other  instrumentality  of any of them or any  other  political
         subdivision thereof, and any entity exercising executive,  legislative,
         judicial, regulatory, or administrative functions of, or pertaining to,
         government,  including,  without limitation, any arbitration panel, any
         court, or any commission.


                                       2


                           "HIGHEST  LAWFUL RATE" means the maximum  nonusurious
         interest  rate,  if any,  that at any time or from  time to time may be
         contracted for, taken,  reserved,  charged, or received with respect to
         any Note or on other  amounts,  if any,  due to the Lender  pursuant to
         this Agreement or any other Loan Document under laws  applicable to the
         Lender which are presently in effect or, to the extent  allowed by law,
         under such applicable laws which may hereafter be in effect.

                           "ISSUE  DATE"  means  the date on  which  any Note is
         issued pursuant to this Agreement.

                           "LEGAL  REQUIREMENT"  means any order,  constitution,
         law, ordinance,  principle of common law, regulation,  rule, statute or
         treaty of any applicable Governmental Authority.

                           "LIEN" means any security interest, mortgage, pledge,
         hypothecation,   charge,  claim,  option,  right  to  acquire,  adverse
         interest,  assignment, deposit arrangement,  encumbrance,  restriction,
         statutory  or  other  lien,  preference,  priority  or  other  security
         agreement or preferential  arrangement of any kind or nature whatsoever
         (including any conditional sale or other title retention agreement, any
         financing lease involving substantially the same economic effect as any
         of the foregoing,  and the filing of any financing  statement under the
         Uniform Commercial Code or comparable law of any jurisdiction).

                           "LOAN DOCUMENTS" means this Agreement,  any Note, the
         Pledge and Security Agreement,  and any document or instrument executed
         in connection with any of the foregoing.

                           "MATERIAL   ADVERSE  EFFECT"  means  (i)  a  material
         adverse effect on the  transactions  contemplated  hereby  (including a
         material  adverse  effect on the ability of any party hereto to perform
         its  obligations  hereunder) or (ii) a material  adverse  effect on the
         business,  assets,  liabilities,  operations,  results  of  operations,
         condition  (financial or  otherwise)  or prospects of the Borrower,  if
         any, that is material to the Borrower,  taken as a whole, other than as
         a result of adverse economic  conditions in the United States generally
         or as a result of any act or omission contemplated by this Agreement.

                           "MATURITY  DATE"  means the  earliest to occur of (a)
         the  fifty-eight  month  anniversary  of the  Issue  Date,  or (b) such
         earlier time to which the Obligations may be accelerated  under Section
         9.1.

                           "NOTE"  means any  promissory  note issued under this
         Agreement pursuant to Section 2.2 or Section 3.1(b).

                           "OBLIGATIONS"  means  all of the  obligations  of the
         Borrower now or hereafter  existing under the Loan  Documents,  whether
         for principal, interest, fees, expenses, indemnification or otherwise.

                           "PERMITTED   LIENS"  has  the  meaning  specified  in
         Section 8.3.


                                       3


                           "PERSON"  means an individual,  partnership,  limited
         liability  company  (including  a  business  trust  or  a  real  estate
         investment   trust),   joint  stock  company,   trust,   unincorporated
         association,   corporation,   joint  venture  or  other  entity,  or  a
         government or any political subdivision or agency thereof.

                           "PLEDGE AND SECURITY  AGREEMENT" means the pledge and
         security  agreement  between the Lender and the  Borrower  executed and
         delivered  simultaneously  with this  Agreement,  in the form  attached
         hereto as Exhibit B.

                           "PROPERTY" means any interest or right in any kind of
         property or asset, whether real,  personal,  or mixed, owned or leased,
         tangible or intangible, and whether now held or hereafter acquired.

                           "RESPONSIBLE   OFFICER"  means  the  chief  financial
         officer or the chief accounting officer of the Borrower,  as designated
         in reports  filed by the  Borrower  with the  Securities  and  Exchange
         Commission.

                           "SUBSIDIARY"  when used with  respect to any  Person,
         shall mean any corporation or other organization,  whether incorporated
         or unincorporated, of which such Person or any other Subsidiary of such
         Person is a general  partner or at least 50% of the securities or other
         interests having by their terms ordinary voting power to elect at least
         50% of the board of directors or others  performing  similar  functions
         with respect to such  corporation or other  organization is directly or
         indirectly  owned or controlled  by such Person,  by any one or more of
         its   Subsidiaries,   or  by  such  Person  and  one  or  more  of  its
         Subsidiaries.

                  SECTION 1.2. TERMS  GENERALLY.  The definitions in Section 1.1
apply  equally  to both the  singular  and  plural  forms of the terms  defined.
Whenever  the context  requires,  any pronoun  shall  include the  corresponding
masculine,  feminine  and neuter  forms.  The words  "include",  "includes"  and
"including" shall be construed as if followed by the words "without limitation".
The words  "herein",  "hereof" and "hereunder" and words of similar import refer
to this Agreement (including the Exhibits hereto) in its entirety and not to any
part hereof,  unless the context  otherwise  requires.  All references herein to
Articles, Sections, and Exhibits are references to Articles and Sections of, and
Exhibits to, this Agreement unless the context  otherwise  requires.  Unless the
context otherwise requires,  any references to any agreement or other instrument
or  statute  or  regulation  are  to  such  agreement,  instrument,  statute  or
regulation as amended and supplemented  from time to time (and, in the case of a
statute or  regulation,  to any  successor  provisions).  Any  reference in this
Agreement to a "day" or number of "days" (without the explicit  qualification of
"business")  shall mean a calendar day or number of calendar days. If any action
or notice is to be taken or given on or by a particular day, and such day is not
a business  day, then such action or notice shall be deferred  until,  or may be
taken or given on, the next Business Day.

                  SECTION 1.3. COMPUTATION OF TIME PERIODS. In this Agreement in
the  computation of periods of time from a specified  date to a later  specified
date,  unless  otherwise  specified  herein  the word  "from"  means  "from  and
including" and the words "to" and "until" each means "to but excluding".


                                       4


                  SECTION  1.4.  ACCOUNTING  TERMS.  All  accounting  terms  not
specifically   defined  herein  shall  be  construed  in  accordance  with  GAAP
consistent  with those applied in the  preparation  of the financial  statements
referred to in Section 7.2.

                                  ARTICLE II.

                        AMOUNTS AND TERMS OF THE ADVANCE

                  SECTION  2.1.  ADVANCE.   Lender  agrees,  on  the  terms  and
conditions  hereinafter  set forth,  to make an advance  ("Advance") on the date
hereof consisting of a term loan in an amount not to exceed the Commitment.  The
amount  outstanding on such Advance shall be payable in accordance  with Section
3.1 hereof and shall mature and all outstanding principal thereof, together with
accrued and unpaid  interest  thereon,  shall be due and payable on the Maturity
Date.

                  SECTION 2.2. THE NOTE.  The Borrower shall execute and deliver
to the Lender to evidence the Advance, a term note (the "Note") in the amount of
the Commitment.  The Note shall be substantially in the form of Exhibit A hereto
with the blanks appropriately  filled, and shall mature on the Maturity Date, at
which time all principal and interest then  outstanding  thereunder shall become
due and payable.

                  SECTION 2.3.  INTEREST.  The Advance  shall bear interest from
and  including  the Issue  Date,  at a rate per annum equal at all times to 15%,
payable quarterly commencing three months from the Issue Date in accordance with
Section3.1.

                  All  computations  of  interest  hereunder  pursuant  to  this
Article II shall be made on the basis of a year of 365 or 366 days,  as the case
may be, in each case for the actual number of days  (including the first day but
excluding  the last day)  occurring  in the period for which  such  interest  is
payable.

                                  ARTICLE III.

                        PAYMENTS, PREPAYMENTS, INCREASED
                                 COSTS AND TAXES

                  SECTION 3.1. PAYMENTS AND COMPUTATIONS

                           (a) The outstanding  principal balance of the Advance
                  shall  be  payable  on the  Maturity  Date,  when  all  unpaid
                  principal of, and accrued and unpaid  interest on, the Advance
                  shall be due and payable.

                           (b) Each quarterly  payment of interest due under the
                  Note  (other  than at the  Maturity  Date) shall be payable in
                  kind  through the  issuance  and delivery to the Lender by the
                  Borrower of an additional Note in the principal  amount of the
                  interest payment then due, bearing interest at the rate of 15%
                  per annum and  payable as to  principal  and all  accrued  but
                  unpaid  interest on the  Maturity  Date,  which Notes shall be
                  substantially  in the form of Exhibit A hereto with the blanks
                  appropriately filled.


                                       5


                           (c)  Whenever  any  payment  under any Note  shall be
                  stated  to be due on a day other  than a  Business  Day,  such
                  payment shall be made on the next succeeding Business Day, and
                  such  extension  of time shall in such case be included in the
                  computation of payment of interest or fee, as the case may be.

                  SECTION 3.2. MANDATORY PREPAYMENTS

                  If,  while any  amount of  principal  or  accrued  but  unpaid
interest  remain  outstanding  on any  Note,  Borrower  conducts  any  sales  of
Borrower's  securities  or any  sale of its  assets  permitted  under  the  Loan
Documents,  the Borrower shall,  immediately upon receipt of the net proceeds of
such sale,  pay to the Lender all of such net  proceeds up to an amount equal to
the aggregate amount of principal of and accrued  interest on all Notes.  Lender
shall apply any such  proceeds,  in its sole  discretion,  to prepay  amounts of
principal of and/or accrued interest on any Note or Notes then outstanding.

                  SECTION 3.3.  VOLUNTARY  PREPAYMENTS.  Following  the two year
anniversary of the Issue Date, the Borrower may, upon at least five (5) Business
Days'  prior  written  notice to the  Lender,  prepay all or any  portion of the
principal  balance of the Obligations.  Such notice shall be irrevocable and the
payment  amount  specified  in  such  notice  shall  be due and  payable  on the
prepayment  date  described in such notice.  Any amount of the Advance  which is
prepaid in accordance with this Section may not be reborrowed.

                  SECTION 3.4. TAXES

                           (a) Any and all  payments by the  Borrower  under any
                  Note shall be made, in  accordance  with Section 3.1, free and
                  clear of and  without  deduction  for any and all  present  or
                  future  taxes,  levies,   imposts,   deductions,   charges  or
                  withholdings,   and  all  liabilities  with  respect  thereto,
                  excluding,  in the case of the  Lender,  taxes  imposed on its
                  income, and franchise taxes imposed on it, by the jurisdiction
                  under  the  laws of  which  the  Lender  is  organized  or any
                  political  subdivision  thereof.  If  the  Borrower  shall  be
                  required by law to deduct any such  amounts from or in respect
                  of any sum payable  under any Note to the Lender,  (i) the sum
                  payable  shall be  increased as may be necessary so that after
                  making   all   required   deductions   (including   deductions
                  applicable to additional  sums payable under this Section 3.4)
                  the Lender  receives an amount  equal to the sum it would have
                  received had no such  deductions  been made, (ii) the Borrower
                  shall make such  deductions  and (iii) the Borrower  shall pay
                  the full amount deducted to the relevant taxation authority or
                  other   authority  in  accordance  with  applicable  law.  The
                  Borrower  further agrees to pay any present or future stamp or
                  documentary  taxes or any  other  excise  or  property  taxes,
                  charges or similar  levies  which arise from any payment  made
                  under any Note or from the execution, delivery or registration
                  of, or otherwise with respect to, this Agreement or any Note.

                           (b) The Borrower  will  indemnify  the Lender for the
                  full amounts  payable  pursuant to Section 3.4(a)  (including,
                  without   limitation,   any  such   amounts   imposed  by  any
                  jurisdiction  on amounts  payable under this Section 3.3) paid
                  by the Lender and any liability (including penalties, interest
                  and  expenses)  arising  therefrom  or with  respect  thereto,
                  whether  or  not  such  amounts  were   correctly  or  legally
                  asserted.


                                       6


Without  prejudice  to the  survival  of any  other  agreement  of the  Borrower
hereunder,  the  agreements and  obligations  of the Borrower  contained in this
Section 3.4 shall  survive the payment in full of principal  and interest  under
all Notes.

                                  ARTICLE IV.

                                    SECURITY

                  SECTION  4.1.  GRANT OF SECURITY  INTEREST.  The  Borrower and
Lender have entered into the Pledge and Security  Agreement in order to grant to
Lender a first priority lien and security interest in and to all Property of the
Borrower  and any other  Collateral  (as  defined  in the  Pledge  and  Security
Agreement) to secure prompt repayment of any and all Obligations and in order to
secure prompt performance by Borrower of its covenants and duties under the Loan
Documents.

                  SECTION 4.2.  DELIVERY OF ADDITIONAL  DOCUMENTATION  REQUIRED.
The Borrower shall execute and deliver to the Lender,  prior to or  concurrently
with the  Borrower's  execution  and delivery of this  Agreement and at any time
thereafter at the request of the Lender, all financing statements,  continuation
financing  statements,   fixture  filings,  security  agreements,   assignments,
endorsements  of  certificates  of title,  applications  for title,  affidavits,
reports,  notices,  schedules of accounts,  letters of authority,  and all other
documents  that the Lender  may  reasonably  request,  in form  satisfactory  to
Lender, to perfect and maintain perfected the Lender's security interests in the
Property and in order to fully consummate all of the  transactions  contemplated
under the Loan Documents.

                                   ARTICLE V.

                              CONDITIONS OF LENDING

                  SECTION  5.1.  CONDITIONS   PRECEDENT  TO  THE  ADVANCE.   The
obligation  of the  Lender  to make the  Advance  is  subject  to the  condition
precedent  that  Lender  shall have  received  on the date  hereof,  in form and
substance satisfactory to the Lender:

                           (a) A Note  representing  the aggregate amount of the
                  Advance,  duly  executed  by the  Borrower  and payable to the
                  order of the Lender.

                           (b) This Agreement, duly executed by the Borrower.

                           (c) A  certificate  of an  officer  of  the  Borrower
                  certifying  the  resolutions  of the board of directors of the
                  Borrower  approving and authorizing  the execution,  delivery,
                  and  performance  by the Borrower of each Loan  Document,  the
                  notices and other  documents  to be  delivered by the Borrower
                  pursuant  to  each  Loan   Document,   and  the   transactions
                  contemplated thereunder.


                                       7


                           (d)  Certificates of appropriate  officials as to the
                  existence   and  good   standing   of  the   Borrower  in  its
                  jurisdiction of incorporation.

                           (e) The duly executed Pledge and Security Agreement.

                           (f) Such other documents and instruments with respect
                  to the  transactions  contemplated  hereby as the  Lender  may
                  reasonably
                  request.

                                  ARTICLE VI.

                         REPRESENTATIONS AND WARRANTIES

                  In order to induce the  Lender to enter  into this  Agreement,
the Borrower represents and warrants to the Lender as of the date hereof that:

                  SECTION  6.1.  EXISTENCE.   The  Borrower,  each  of  the  BNS
Subsidiaries  and Collins Holding is duly organized,  validly  existing,  and in
good standing under the laws of the  jurisdiction in which it is incorporated or
organized and is duly qualified or licensed to do business in all  jurisdictions
where  the  Property  owned  or  the  business   transacted  by  it  makes  such
qualification  necessary  and where the failure to be so qualified  would have a
Material Adverse Effect.

                  SECTION  6.2.  POWER AND  AUTHORIZATION.  The Borrower is duly
authorized and empowered to execute,  deliver, and perform its obligations under
each Loan  Document and all  corporate or other  action on the  Borrower's  part
requisite for the due execution, delivery, and performance of each Loan Document
has been duly and effectively taken.

                  SECTION  6.3.   BINDING   OBLIGATIONS.   Each  Loan   Document
constitutes the legal, valid and binding obligation of the Borrower  enforceable
against it in accordance with its terms,  except as such  enforceability  may be
limited by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium or
similar laws affecting  creditors' rights generally,  or by principles governing
the availability of equitable remedies.

                  SECTION 6.4. GOVERNMENT APPROVALS. The execution, delivery and
performance  by the Borrower of this  Agreement and the other Loan  Documents to
which the Borrower is or is to become a party and the transactions  contemplated
hereby and thereby do not require  the  approval or consent of, or filing  with,
any governmental agency or authority other than those already obtained.

                  SECTION 6.5. TAXES;  GOVERNMENTAL CHARGES. The Borrower,  each
of the BNS  Subsidiaries  and Collins  Holding has timely  filed or caused to be
timely  filed all  federal,  state,  and foreign  income tax  returns  which are
required  to be  filed,  and has paid or caused to be paid all taxes as shown on
such returns or on any  assessment  received by it to the extent that such taxes
have become due, except for such taxes and assessments as are being contested in
good faith in appropriate proceedings and reserved for in accordance with GAAP.


                                       8


                  SECTION 6.6.  COMPLIANCE WITH LAW. The business and operations
of the Borrower, each of the BNS Subsidiaries and Collins Holding, as conducted,
are in compliance in all material respects with all Legal Requirements.

                  SECTION  6.7.  ABSENCE  OF  FINANCING  STATEMENTS.  Except  as
provided herein,  there is no financing statement,  security agreement,  chattel
mortgage,  real estate  mortgage or other  document  filed or recorded  with any
filing records,  registry or other public office, that purports to cover, affect
or give notice of any present or possible  future lien on, or security  interest
in, the Property of the Borrower or any rights relating thereto.

                  SECTION  6.8.  LITIGATION.   There  are  no  actions,   suits,
proceedings  or  investigations  of any kind pending or  threatened  against the
Borrower,  any of the BNS  Subsidiaries  or  Collins  Holding  before any court,
tribunal or administrative agency or board that, if adversely determined, might,
either in any case or in the  aggregate,  reasonably  be expected to  materially
adversely affect the properties,  assets, financial condition or business of the
Borrower or its Subsidiaries or materially impair the right of the Borrower, its
Subsidiaries  and Collins  Holding,  considered as a whole, to carry on business
substantially  as now conducted by them, or result in any substantial  liability
not  adequately  covered by insurance,  or for which  adequate  reserves are not
maintained on the consolidated balance sheet of the Borrower,  or which question
the  validity of this  Agreement  or any of the other Loan  Documents,  or might
impair or prevent any action taken or to be taken pursuant hereto or thereto.

                  SECTION  6.9.  NO  DEFAULT OR EVENT OF  DEFAULT.  No event has
occurred  or is  continuing  which  constitutes  a Default  or Event of  Default
hereunder.

                                  ARTICLE VII.

                      AFFIRMATIVE COVENANTS OF THE BORROWER

                  So long as any Obligation  shall remain  unpaid,  the Borrower
covenants and agrees that, unless the Lender shall otherwise consent in writing:

                  SECTION 7.1.  COMPLIANCE  WITH LAWS,  ETC.  The Borrower  will
comply, in all material respects with all applicable Legal Requirements.

                  SECTION 7.2. REPORTING AND NOTICE  REQUIREMENTS.  The Borrower
will furnish to the Lender:

                           (a)  QUARTERLY  FINANCIAL  STATEMENTS.   As  soon  as
                  available and in any event within  forty-five  (45) days after
                  the end of each fiscal quarter of the Borrower  (excluding the
                  fourth quarter), balance sheets (which are to be consolidated,
                  if  applicable)  of the Borrower as of the end of such quarter
                  and statements of income (or loss),  stockholder's  equity (or
                  deficiency)  and cash flow (which are to be  consolidated,  if
                  applicable)  of the Borrower for the period  commencing at the
                  end of the  previous  fiscal year of the  Borrower  and ending
                  with the end of such fiscal quarter,  all in reasonable detail
                  and  certified by a Responsible  Officer as presenting  fairly
                  the  financial   position  (on  a   consolidated   basis,   if
                  applicable)  of the Borrower as of the date  indicated and the
                  results of their operations and changes in financial  position
                  (on a  consolidated  basis,  if  applicable)  for  the  period
                  indicated  in  conformity  with  GAAP,  consistently  applied,
                  subject to changes resulting from year-end adjustments.


                                       9


                           (b) ANNUAL FINANCIAL STATEMENTS. As soon as available
                  and in any event within ninety (90) days after the end of each
                  fiscal year of the  Borrower,  statements of income (or loss),
                  shareholder's  equity (or deficiency) and cash flow (which are
                  to be  consolidated,  if  applicable) of the Borrower for such
                  fiscal year, and balance sheets (which are to be consolidated,
                  if  applicable)  of the  Borrower as of the end of such fiscal
                  year,  all in  reasonable  detail  and  satisfactory  in form,
                  substance,  and  scope  to  the  Lender  and  certified  by  a
                  Responsible   Officer  as  presenting   fairly  the  financial
                  position  (on a  consolidated  basis,  if  applicable)  of the
                  Borrower  as of the date  indicated  and the  results of their
                  operations   and   changes  in   financial   position   (on  a
                  consolidated basis, if applicable) for the period indicated in
                  conformity  with GAAP,  consistently  applied (except for such
                  inconsistencies  which may be disclosed in such  report).

                           (c) NOTICE OF DEFAULT.  Promptly after any officer of
                  the  Borrower  knows or has reason to know that any Default or
                  Event of Default has  occurred,  a written  statement  of such
                  officer  of the  Borrower  setting  forth the  details of such
                  Default or Event of Default and the action  which the Borrower
                  has taken or proposes to take with respect thereto.

                           (d)  NOTIFICATION  OF  CLAIM  AGAINST  PROPERTY.  The
                  Borrower will, immediately upon becoming aware thereof, notify
                  the  Lender in writing of any  setoff,  withholdings  or other
                  defenses to which any of the Property,  or the Lender's rights
                  with respect to the Property, are subject.

                  SECTION 7.3. USE OF PROCEEDS. The proceeds of the Advance will
be  exclusively  used by the Borrower to acquire 80% of the  outstanding  common
stock of Collins Holding.

                  SECTION  7.4.  TAXES  AND  LIENS.  The  Borrower  will pay and
discharge,  or will  cause  to be  paid  and  discharged,  promptly  all  taxes,
assessments,  and  governmental  charges or levies  imposed upon the Borrower or
upon the income of any  Property  of the  Borrower  as well as all claims of any
kind (including,  without limitation, claims for labor, materials, supplies, and
rent) which,  if unpaid,  might become a Lien upon any Property of the Borrower,
except such taxes, assessments, governmental charges or levies contested in good
faith by the Borrower.

                  SECTION 7.5. MAINTENANCE OF PROPERTY. The Borrower will at all
times  maintain,  preserve,  protect,  and  keep,  or  cause  to be  maintained,
preserved,  protected, and kept, its Property in good repair, working order, and
condition (ordinary wear and tear excepted) and consistent with past practice.


                                       10


                  SECTION  7.6.  RIGHT OF  INSPECTION.  From  time to time  upon
reasonable  notice to the  Borrower,  the  Borrower  will  permit any officer or
employee of, or agent  designated by, the Lender to visit and inspect any of the
Properties of the Borrower,  examine the Borrower's corporate books or financial
records, take copies and extracts therefrom, and discuss the affairs,  finances,
and accounts of the Borrower with the  Borrower's  officers or certified  public
accountants,  all as often as the Lender may  reasonably  desire,  provided that
such visits and  inspections  shall be made only during business hours and so as
not to interfere  unreasonably with the business and operations of the Borrower.
All  confidential  or  proprietary  information  provided  to or obtained by the
Lender under this section or under this Agreement shall be held in confidence by
the Lender in the same  manner  and with the same  degree of  protection  as the
Lender   exercises  with  respect  to  its  own   confidential   or  proprietary
information.  For  purposes of this  section,  all  information  provided to the
Lender  pursuant  hereto  shall be  presumed  to  constitute  "confidential  and
proprietary information" unless (i) the Borrower indicates otherwise in writing,
(ii) the information was or becomes generally available to the public other than
as a result of a  disclosure  in  violation of this section by the Lender or its
representatives, (iii) the information was or becomes available to the Lender or
its  representatives  on a  non-confidential  basis from a source other than the
Borrower, (iv) the information was within the possession of the Lender or any of
its  representatives  prior to being  furnished by or on behalf of the Borrower,
provided  that in each case the  source of such  information  was not bound by a
confidentiality agreement in respect thereof preventing disclosure to the Lender
or its representatives or (v) the information is independently  developed by the
Lender (but only if it does not contain or  reflect,  and is not based upon,  in
whole  or  in  part,  any  information  furnished  hereunder  which  constitutes
"confidential or proprietary information").

                  SECTION 7.7.  INSURANCE.  The Borrower will maintain insurance
of similar types and  coverages as maintained on the date hereof and  consistent
with past practice with financially sound and reputable  insurance companies and
associations  acceptable to the Lender based on the Lender's reasonable judgment
(or as to workers' compensation or similar insurance, in an insurance fund or by
self-insurance  authorized  by the  jurisdiction  in which  its  operations  are
carried on).

                  SECTION 7.8. NOTICE OF LITIGATION.  The Borrower will promptly
notify Lender in writing of any litigation,  legal proceeding or dispute,  other
than  disputes  in the  ordinary  course of business  or,  whether or not in the
ordinary  course of business,  involving  amounts in excess of $25,000,  and any
investigation of Borrower by any Governmental Authority, adversely affecting the
Borrower  or any of the  BNS  Subsidiaries  whether  or  not  fully  covered  by
insurance, and regardless of the subject matter thereof.

                  SECTION 7.9. MAINTENANCE OF OFFICE. The Borrower will maintain
its chief executive office in Middletown,  Rhode Island,  or at such other place
in the United  States of America as the Borrower  shall  designate  upon written
notice to the Lender,  where notices,  presentations  and demands to or upon the
Borrower in respect of the Loan  Documents  to which the Borrower is a party may
be given or made.  The Borrower shall notify the Lender in writing of the intent
of the Borrow to relocate any of its Property at least five  Business Days prior
to the date of such proposed relocation.

                  SECTION  7.10.  EXISTENCE.  The  Borrower  shall  preserve and
maintain  its  legal  existence  and  all of its  material  rights,  privileges,
licenses, contracts and property and assets used or useful to its business.

                  SECTION 7.11. FURTHER ASSURANCES.  The Borrower will cooperate
with the Lender and execute such further instruments and documents as the Lender
shall  reasonably  request  to carry out to its  satisfaction  the  transactions
contemplated by this Agreement and the other Loan Documents.


                                       11


                                 ARTICLE VIII.

                               NEGATIVE COVENANTS

                  So long as any Obligation  shall remain  unpaid,  the Borrower
covenants and agrees that, without the written consent of the Lender:

                  SECTION  8.1.  IMPAIRMENT  OF RIGHTS.  The  Borrower  will not
undertake  any action or engage in any  transaction  or  activity  to impair the
Lender's rights hereunder.

                  SECTION 8.2.  RESTRICTIONS ON DEBT. The Borrower will not, and
will not permit any of the BNS Subsidiaries to, create, incur, assume, guarantee
or be or remain  liable,  contingently  or  otherwise,  with respect to any Debt
other than:

                           (a) Debt to the Lender  arising under any of the Loan
                  Documents;

                           (b)  current  liabilities  of the  Borrower  or  such
                  Subsidiary  incurred in the  ordinary  course of business  not
                  incurred  through  (i) the  borrowing  of  money,  or (ii) the
                  obtaining of credit except for credit on an open account basis
                  customarily  extended and in fact extended in connection  with
                  normal purchases of goods and services;

                           (c)   Debt  in   respect   of   taxes,   assessments,
                  governmental charges or levies and claims for labor, materials
                  and supplies to the extent that payment  therefor shall not at
                  the  time  be  required  to be  made in  accordance  with  the
                  provisions of Section 7.4;

                           (d) Debt in respect of  judgments or awards that have
                  been in force for less than the  applicable  period for taking
                  an appeal so long as execution is not levied  thereunder or in
                  respect of which the Borrower or such BNS Subsidiary  shall at
                  the time in good faith be prosecuting an appeal or proceedings
                  for review and in respect of which a stay of  execution  shall
                  have been obtained pending such appeal or review;

                           (e)   endorsements   for   collection,   deposit   or
                  negotiation  and  warranties of products or services,  in each
                  case incurred in the ordinary course of business; and

                           (f)  Debt  owed  by the  Borrower  or any of the  BNS
                  Subsidiaries  to trade  vendors,  in the amount of the cost to
                  the  Borrower  or such BNS  Subsidiary  of  inventory  held on
                  consignment  from  such  trade  vendors,  including,   without
                  limitation, in connection with and pursuant to agreements with
                  the Borrower's trade vendors.


                                       12


                  SECTION 8.3. RESTRICTIONS ON LIENS. The Borrower will not, and
will not permit any of the BNS Subsidiaries to, (i) create or incur or suffer to
be created or  incurred or to exist any Lien upon any of its  Property,  or upon
the income or profits  therefrom;  (ii)  transfer  any of such  Property  or the
income or  profits  therefrom  for the  purpose  of  subjecting  the same to the
payment of Debt or performance of any other obligation in priority to payment of
its general creditors; (iii) acquire, or agree or have an option to acquire, any
property or assets upon  conditional  sale or other title  retention or purchase
money  security  agreement,  device or  arrangement;  (iv) suffer to exist for a
period of more than thirty (30) days after the same shall have been incurred any
Debt  or  claim  or  demand  against  it  that if  unpaid  might  by law or upon
bankruptcy or insolvency,  or otherwise,  be given any priority  whatsoever over
its general  creditors;  or (v) sell,  assign,  pledge or otherwise transfer any
accounts,  contract rights,  general intangibles,  chattel paper or instruments,
with or without  recourse;  provided that the Borrower and any Subsidiary of the
Borrower  may create or incur or suffer to be created  or  incurred  or to exist
(the "Permitted Liens"):

                           (a)  liens to  secure  taxes,  assessments  and other
                  government  charges in respect of  obligations  not overdue or
                  liens on properties  to secure  claims for labor,  material or
                  supplies in respect of obligations not overdue;

                           (b) deposits or pledges made in  connection  with, or
                  to secure  payment of,  workmen's  compensation,  unemployment
                  insurance,   old  age  pensions  or  other   social   security
                  obligations;

                           (c) liens on  properties  in respect of  judgments or
                  awards, the Debt with respect to which is permitted by Section
                  8.2(d); and

                           (d)   encumbrances  on  real  estate   consisting  of
                  easements, rights of way, zoning restrictions, restrictions on
                  the use of real property and defects and irregularities in the
                  title  thereto,  landlord's or lessor's  liens under leases to
                  which the Borrower or any BNS Subsidiary is a party, and other
                  minor  liens or  encumbrances  none of which in the opinion of
                  the  Borrower  interferes  materially  with  the  use  of  the
                  property  affected in the ordinary  conduct of the business of
                  the  Borrower  or any BNS  Subsidiary,  which  defects  do not
                  individually  or in the  aggregate  have a materially  adverse
                  effect on the business of the Borrower  individually or of the
                  Borrower and the BNS Subsidiaries on a consolidated basis.

                  SECTION 8.4. MERGERS AND ACQUISITIONS.  The Borrower will not,
and will not permit any of the BNS Subsidiaries to, become a party to any merger
or  consolidation,  or  agree  to or  effect  any  asset  acquisition  or  stock
acquisition  (other than the  acquisition  of assets in the  ordinary  course of
business  consistent with past  practices).  The Borrower will not, and will not
permit any of the BNS Subsidiaries to, agree to or effect any asset  acquisition
or stock  acquisition  without  the prior  written  consent of the  Lender.  The
Borrower will not create or form any subsidiaries without the consent of Lender;
PROVIDED,  HOWEVER,  this shall in no way effect or limit the ability of Collins
Holding,  or any of its  Subsidiaries,  to take  any  actions  they  shall  deem
necessary or advisable.


                                       13


                  SECTION 8.5. ISSUANCE OF EQUITY SECURITIES.  The Borrower will
not issue any equity securities,  including, without limitation, any issuance of
warrants,  options or subscription or conversion rights, unless (i) the Borrower
receives  solely cash  proceeds from each such  issuance,  (ii) the net proceeds
from such issuance are applied in  accordance  with Section 3.2 hereof and (iii)
no Default or Event of Default has  occurred and is  continuing  at the time any
such  issuance is  consummated  and none would  exist  (whether or not after the
expiration of time or giving of notice or both) after giving effect thereto.

                  SECTION 8.6. RELATED PARTY TRANSACTIONS. The Borrower will not
undertake  any  action  or  engage  in any  transaction  or  activity  with  any
Affiliate,  other than those  contemplated  by the Loan  Documents,  without the
prior  written  approval of Lender,  which  approval  shall not be  unreasonably
withheld.

                  SECTION 8.7. ISSUANCE OF EQUITY SECURITIES BY COLLINS HOLDING.
The Borrower  will not consent to the issuance by Collins  Holding of any equity
securities  or any  warrants,  options  or  subscription  or  conversion  rights
entitling  the holder  thereof to  purchase or obtain any equity  securities  of
Collins Holding,  without the prior written consent of the Lender, which consent
will not be unreasonably withheld.

                                  ARTICLE IX.

                                EVENTS OF DEFAULT

                  SECTION 9.1. EVENTS OF DEFAULT. If any of the following events
("Events of  Default")  shall occur and,  after  written  notice  thereof by the
Lender to the Borrower,  shall not have been cured within five calendar days (in
the case of monetary  defaults)  or 15  calendar  days (in the case of all other
defaults) unless a shorter period of time is specified below:

                           (a) the  Borrower  shall fail to pay  principal of or
                  interest  on any Note or other  amounts  due under any Note or
                  this  Agreement  or any  other  Loan  Document,  when the same
                  becomes due and payable; or

                           (b) the  Borrower  shall enter into any  agreement or
                  arrangement to sell, dispose,  assign,  exchange, gift, lease,
                  pledge,   hypothecate  or  otherwise  transfer,   directly  or
                  indirectly,  in one  transaction or a series of  transactions,
                  all  or  substantially  all  of the  assets  of the  Borrower,
                  without prior written consent of Lender; or

                           (c)  any  representation  or  warranty  made  by  the
                  Borrower (or any of its officers)  under or in connection with
                  any Loan  Document  shall prove to have been  incorrect in any
                  material respect when made or deemed made; or

                           (d) the Borrower shall fail to perform or observe any
                  term,  covenant or agreement  contained herein or in any other
                  Loan  Document  within  10 days  after  written  notice of the
                  Lender to cure same; or


                                       14


                           (e) the  Borrower  or any of its  Subsidiaries  shall
                  fail to pay any  principal  of, or premium or interest on, any
                  Debt  when  the  same  becomes  due and  payable  (whether  by
                  scheduled maturity, required prepayment,  acceleration, demand
                  or otherwise)  unless being contested in good faith,  and such
                  failure shall continue after the applicable  grace period,  if
                  any, specified in the agreement or instrument relating to such
                  Debt;  or any other  event  constituting  a  default  (however
                  defined)  shall  occur or  condition  shall  exist  under  any
                  agreement  or  instrument  relating to any such Debt and shall
                  continue after the applicable grace period, if any,  specified
                  in such  agreement or  instrument,  which would give rise to a
                  right to accelerate such Debt; or

                           (f) the Borrower  fails to use the proceeds  from the
                  Advance  in  accordance   with  the  stated  use  therefor  as
                  contemplated by Section 7.3; or

                           (g) the Borrower shall generally not pay its debts as
                  such debts become due, or shall admit in writing its inability
                  to pay its debts generally, or shall make a general assignment
                  for the  benefit  of  creditors;  or any  proceeding  shall be
                  instituted by or against the Borrower under the Bankruptcy Law
                  or any other Debtor Law seeking to adjudicate it a bankrupt or
                  insolvent, or seeking liquidation, winding up, reorganization,
                  arrangement, adjustment, protection, relief, or composition of
                  it or its debts under any Debtor Laws, or seeking the entry of
                  an order for relief or the appointment of a receiver, trustee,
                  custodian  or  other  similar  official  for  it  or  for  any
                  substantial  part of its Property and, in the case of any such
                  proceeding  instituted  against it (but not instituted by it),
                  either such  proceeding  shall remain  undismissed or unstayed
                  for a period of 30 days, or any of the actions  sought in such
                  proceeding  (including,  without  limitation,  the entry of an
                  order for relief  against,  or the  appointment of a receiver,
                  trustee,  custodian or other  similar  official for, it or for
                  any  substantial  part of its  Property)  shall occur;  or the
                  Borrower  shall take any corporate  action to authorize any of
                  the actions set forth above in this subsection (g);

                           (h) the Pledge and Security Agreement or any interest
                  of the Lender  thereunder  shall for any reason be terminated,
                  invalidated,  void or unenforceable or the Borrower shall fail
                  to perform any obligation thereunder; or

                           (i) the  Borrower  shall  change  (i) the  number  of
                  authorized or  outstanding  shares of its common stock or (ii)
                  attempt to  liquidate  or dissolve  itself,  without the prior
                  written consent of the Lender;

then, and in any such event,  Lender (after providing the notice and opportunity
to cure set forth in the first  clause of this  Section)  may,  by notice to the
Borrower,  declare the principal  amount of any Notes,  all interest thereon and
all other  Obligations or amounts payable under this Agreement or any other Loan
Document to be forthwith due and payable, whereupon the Notes, all such interest
and all such  amounts  shall become and be  forthwith  due and payable,  without
presentment,  demand,  protest or further  notice of any kind,  all of which are
hereby expressly waived by the Borrower and all interest on and principal of all
other Debt owed by the  Borrower  to the  Lender  shall  likewise  become and be
forthwith due and payable without presentment, demand, protest or further notice
of any kind, all of which are hereby expressly waived by the Borrower;  PROVIDED
HOWEVER,  that in the case of any  Default  pursuant to  Subsection  (g) of this
Section 9.1, all such interest and all such amounts shall  automatically  become
and be due and payable,  without presentment,  demand,  protest or any notice of
any kind, all of which are hereby expressly waived by the Borrower..


                                       15


                                   ARTICLE X.

                                  MISCELLANEOUS

                  SECTION 10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  All
representations  and warranties in each Loan Document shall survive the delivery
of the  Notes and the  making  of the  Advance,  and  shall  continue  after the
repayment  of the  Notes  and  the  Maturity  Date  until  all  Obligations  are
indefeasibly  paid in full,  and any  investigation  at any  time  made by or on
behalf of the Lender shall not diminish the Lender's right to rely thereon.

                  SECTION 10.2.  AMENDMENTS,  ETC. No amendment or waiver of any
provision  of this  Agreement or any Note,  nor consent to any  departure by the
Borrower therefrom,  shall in any event be effective unless the same shall be in
writing  and signed by the  Lender,  and then such  waiver or  consent  shall be
effective only in the specific  instance and for the specific  purpose for which
given.

                  SECTION   10.3.   NOTICES,   ETC.   All   notices   and  other
communications provided for hereunder shall be in writing (including by telex or
telefacsimile  transmission) and shall be effective when actually delivered,  or
in the case of telex notice, when sent,  answerback received,  or in the case of
telefacsimile   transmission,   when  received  and  telephonically   confirmed,
addressed as follows:  if to the  Borrower,  at their  address at 25  Enterprise
Center, Suite 104, Middletown,  Rhode Island 02842,  Attention:  Michael Warren,
facsimile number (401) 848-6444; if to the Lender, at its address at 590 Madison
Avenue,  32nd floor,  New York, NY 10022 , Attention:  John McNamara,  facsimile
number (212) 520-2321; or as to the Borrower or the Lender at such other address
as shall be designated by such party in a written notice to the other parties.

                  SECTION 10.4. NO WAIVER;  REMEDIES.  No failure on the part of
the Lender to  exercise,  and no delay in  exercising,  any right under any Loan
Document  shall  operate  as a waiver  thereof;  nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

                  SECTION 10.5.  COSTS,  EXPENSES AND TAXES. The Borrower agrees
to pay all reasonable fees and out-of-pocket  expenses of the Lender incurred in
connection with the  preparation  and execution of this Agreement.  The Borrower
agrees to pay on  demand  all costs and  expenses,  if any  (including,  without
limitation,  reasonable  counsel  fees and  expenses),  reasonably  incurred  in
connection with the enforcement (whether through negotiations, legal proceedings
or  otherwise)  of the Loan  Documents  and the other  documents to be delivered
under the Loan Documents, including, without limitation, reasonable counsel fees
and expenses in  connection  with the  enforcement  of rights under this Section
10.5. The Borrower shall not be responsible to the Lender for any expenses other
than those set forth in this Agreement.


                                       16


                  SECTION 10.6. RIGHT OF SET-OFF. Upon the occurrence and during
the continuance of any Event of Default,  the Lender is hereby authorized at any
time and from time to time, to the fullest  extent  permitted by law, to set off
and apply any and all deposits (general or special, time or demand,  provisional
or final) at any time held and other  Debt at any time owing by the Lender to or
for  the  credit  or the  account  of the  Borrower  against  any and all of the
obligations  of the Borrower now or hereafter  existing under any Loan Document,
whether or not the Lender shall have made any demand under any Note and although
such obligations may be unmatured. Lender agrees promptly to notify the Borrower
after any such set-off and  application  made by such Lender,  provided that the
failure to give such notice  shall not affect the  validity of such  set-off and
application.  The rights of the Lender  under this  Section  are in  addition to
other  rights and  remedies  (including,  without  limitation,  other  rights of
set-off) which such the Lender may have.

                  SECTION 10.7.  BINDING  EFFECT.  This  Agreement  shall become
effective  when it shall have been  executed by the  Borrower and the Lender and
thereafter  shall be binding upon and inure to the benefit of the Borrower,  the
Lender and their  respective  successors  and  assigns,  except that neither the
Borrower  nor the Lender  (except as  provided  in Section  10.8) shall have the
right to assign its rights  hereunder or any interest  herein  without the prior
written consent of the other.

                  SECTION 10.8.  ASSIGNMENTS AND PARTICIPATIONS.  The Lender may
assign  all or a portion  of its rights  and  obligations  under this  Agreement
(including,  without limitation, all or a portion of any Note held by it) to any
Affiliate of Lender.

                  SECTION 10.9. LIMITATION ON AGREEMENTS. All agreements between
the  Borrower or the  Lender,  whether now  existing  or  hereafter  arising and
whether written or oral, are hereby expressly  limited so that in no contingency
or event  whatsoever,  whether  by reason of demand  being made in respect of an
amount due under any Loan  Document  or  otherwise,  shall the amount  paid,  or
agreed to be paid, to the Lender for the use,  forbearance,  or detention of the
money to be loaned  under the Notes or any other Loan  Document or  otherwise or
for the payment or performance of any covenant or obligation contained herein or
in any other Loan Document  exceed the Highest  Lawful Rate.  If, as a result of
any  circumstance  whatsoever,  fulfillment of or compliance  with any provision
hereof or of any of such  documents at the time  performance  of such  provision
shall be due or at any other time shall involve  exceeding the amount  permitted
to be contracted for, taken,  reserved,  charged or received by the Lender under
applicable  usury law,  then,  ipso facto,  the  obligation  to be  fulfilled or
complied with shall be reduced to the limit  prescribed by such applicable usury
law, and if, from any such circumstance,  the Lender shall ever receive interest
or anything  which might be deemed  interest  under  applicable  law which would
exceed the Highest  Lawful Rate,  such amount which would be excessive  interest
shall be applied to the  reduction of the  principal  amount owing on account of
the Notes or the  amounts  owing on other  obligations  of the  Borrower  to the
Lender under any Loan  Document  and not to the payment of interest,  or if such
excessive  interest  exceeds the unpaid  principal  balance of the Notes and the
amounts owing on other  obligations of the Borrower to the Lender under any Loan
Document, as the case may be, such excess shall be refunded to the Borrower. All
sums  paid or  agreed  to be paid to the  Lender  for the use,  forbearance,  or
detention of the indebtedness of the Borrower to the Lender shall, to the extent
permitted by  applicable  law, be  amortized,  prorated,  allocated,  and spread
throughout  the full  term of such  indebtedness  until  payment  in full of the


                                       17


principal (including the period of any renewal or extension thereof) so that the
interest on account of such  indebtedness  shall not exceed the  Highest  Lawful
Rate.  Notwithstanding  anything to the contrary contained in any Loan Document,
it is  understood  and  agreed  that if at any time the rate of  interest  which
accrues  on the  outstanding  principal  balance of the Notes  shall  exceed the
Highest  Lawful  Rate,  the rate of interest  which  accrues on the  outstanding
principal  balance of the Note shall be limited to the Highest  Lawful Rate, but
any  subsequent  reductions  in  the  rate  of  interest  which  accrues  on the
outstanding  principal balance of any Note shall not reduce the rate of interest
which  accrues  on the  outstanding  principal  balance  of such Note  below the
Highest  Lawful  Rate  until  the  total  amount  of  interest  accrued  on  the
outstanding  principal balance of all Notes, taken in the aggregate,  equals the
amount of interest  which would have  accrued if such  interest  rate had at all
times  been in  effect  and not  been  reduced.  In the  event  that any rate of
interest  under any Note or any Loan  Document  is reduced  due to the effect of
this Section 10.9 and there is a subsequent increase in the Highest Lawful Rate,
such  interest rate shall,  automatically  without any action of the Borrower or
Lender,  be increased to the then applicable  Highest Lawful Rate. The terms and
provisions  of this  Section  10.9  shall  control  and  supersede  every  other
provision of all Loan Documents.

                  SECTION  10.10.  SEVERABILITY.  In case any one or more of the
provisions contained in any Loan Document to which the Borrower is a party or in
any  instrument  contemplated  thereby,  or any  application  thereof,  shall be
invalid,  illegal, or unenforceable in any respect, the validity,  legality, and
enforceability  of the remaining  provisions  contained  therein,  and any other
application thereof, shall not in any way be affected or impaired thereby.

                  SECTION  10.11.  GOVERNING  LAW. This  Agreement and the Notes
shall be governed by, and construed in accordance with, the laws of the State of
New York  applicable to contracts made and to be performed  entirely within such
state.

                  SECTION  10.12.  SUBMISSION  TO  JURISDICTION;   WAIVERS.  THE
BORROWER AND THE LENDER IRREVOCABLY AND UNCONDITIONALLY:

                           (a) SUBMITS FOR ITSELF AND ITS  PROPERTY IN ANY LEGAL
                  ACTION OR PROCEEDING  RELATING TO THIS  AGREEMENT OR ANY OTHER
                  LOAN  DOCUMENT  OR  FOR  RECOGNITION  AND  ENFORCEMENT  OF ANY
                  JUDGMENT  IN RESPECT  THEREOF,  TO THE  NON-EXCLUSIVE  GENERAL
                  JURISDICTION  OF THE  COURTS  OF THE  STATE OF NEW  YORK,  THE
                  COURTS  OF THE  UNITED  STATES  OF  AMERICA  FOR THE  SOUTHERN
                  DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

                           (b) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
                  HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
                  COURT OR THAT SUCH  PROCEEDING WAS BROUGHT IN AN  INCONVENIENT
                  FORUM AND AGREES NOT TO PLEAD OR CLAIM THE SAME;


                                       18


                           (c) AGREES THAT  SERVICE OF PROCESS IN ANY SUCH LEGAL
                  ACTION OR  PROCEEDING  MAY BE  EFFECTED  BY  MAILING OF A COPY
                  THEREOF (BY REGISTERED OR CERTIFIED MAIL OR ANY  SUBSTANTIALLY
                  SIMILAR FORM OF MAIL POSTAGE PREPAID) TO THE ADDRESS SET FORTH
                  IN SECTION  10.3 HEREOF OR AT SUCH OTHER  ADDRESS OF WHICH THE
                  OTHER  PARTIES  HERETO  SHALL  HAVE BEEN  NOTIFIED  IN WRITING
                  PURSUANT TO SECTION 10.3.

                           (d) THE BORROWER AND THE LENDER EACH WAIVES ITS RIGHT
                  TO JURY TRIAL WITH RESPECT TO ANY LEGAL ACTION  ARISING  UNDER
                  THIS AGREEMENT.

                  SECTION 10.13.  EXECUTION IN COUNTERPARTS.  This Agreement may
be executed in any number of counterparts,  each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same agreement.


                                       19


                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.


                                                 BNS HOLDING, INC.


                                                 By: /s/ Michael Warren
                                                     ---------------------------
                                                 Name: Michael Warren
                                                 Title: President and CEO




                                                 STEEL PARTNERS II, L.P.

                                                 By: Steel Partners, L.L.C.
                                                     General Partner


                                                 By: /s/ Warren G. Lichtenstein
                                                     ---------------------------
                                                 Name: Warren G. Lichtenstein
                                                 Title: Managing Member




                                       20


                                    EXHIBIT A
                                    ---------

                                      NOTE
                                      ----


$14,000,000                                                     October __, 2006

                  FOR VALUE RECEIVED,  the undersigned (the "Borrower"),  HEREBY
PROMISES TO PAY to the order of Steel  Partners II, L.P. (the  "Lender"),  on or
before the Maturity  Date (as such term is defined in the Loan  Agreement),  the
principal  sum of  Fourteen  Million  and  No/100  Dollars  ($14,000,000.00)  in
accordance with the terms and provisions of that certain Loan Agreement dated as
of October __, 2006 by and between the  Borrower  and the Lender (as same may be
amended,  modified,  increased,  supplemented and/or restated from time to time,
the "Loan  Agreement";  capitalized  terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Loan Agreement).

                  The outstanding  principal balance of this Note, together with
all  accrued  and  unpaid  interest  thereon,  shall be due and  payable  on the
Maturity  Date.  The Borrower  promises to pay interest on the unpaid  principal
balance of this Note from the Issue Date until the principal  balance thereof is
paid in full. Interest shall accrue on the outstanding principal balance of this
Note from and including the Issue Date to but not including the Maturity Date at
the  rate or  rates,  and  shall be due and  payable  on the  dates  and paid in
accordance with the terms and conditions, set forth in the Loan Agreement.

                  Payments of  principal,  and all  amounts due with  respect to
costs and expenses pursuant to the Loan Agreement, shall be made in lawful money
of the  United  States  of  America  in  immediately  available  funds,  without
deduction,  set-off or counterclaim  to the Lender to the account  maintained by
the Lender not later than 11:59 a.m.  (New York time) on the dates on which such
payments  shall become due pursuant to the terms and provisions set forth in the
Loan Agreement. Payments of interest (other than those due on the Maturity Date,
which shall be paid in accordance  with the terms of the  immediately  preceding
sentence)  shall be payable in kind  through the issuance of  additional  notes,
substantially  in the form hereof,  in the aggregate  principal  amount equal to
such amount of interest that would  otherwise be payable and shall mature on the
Maturity  Date.  The  Obligations  of the  Borrower  under  this  Note  and  any
additional note issued hereunder are secured in accordance with the terms of the
Pledge and Security Agreement.

                  If any  payment of  principal  or  interest on this Note shall
become due on a day that is not a Business  Day,  such payment  shall be made on
the next  succeeding  Business Day and such extension of time shall in such case
be included in computing interest in connection with such payment.


                                     1 of 2


                  This Note is the Note  provided for in, and is entitled to the
benefits  of the Loan  Agreement,  which Loan  Agreement,  among  other  things,
contains  provisions for  acceleration of the maturity hereof upon the happening
of certain stated events,  for prepayments on account of principal  hereof prior
to the maturity hereof upon the terms and conditions and with the effect therein
specified,  and provisions to the effect that no provision of the Loan Agreement
or this Note shall  require the payment or permit the  collection of interest in
excess of the Highest Lawful Rate.

                  The  Borrower  and  any  and  all  endorsers,  guarantors  and
sureties  severally  waive grace,  demand,  presentment  for payment,  notice of
dishonor or default, protest, notice of protest, notice of intent to accelerate,
notice of acceleration  and diligence in collecting and bringing of suit against
any party  hereto,  and agree to all renewals,  extensions  or partial  payments
hereon and to any release or  substitution  of security  hereof,  in whole or in
part, with or without notice, before or after maturity.

                  THIS NOTE SHALL BE GOVERNED BY, AND  CONSTRUED  IN  ACCORDANCE
WITH,  THE LAWS OF THE STATE OF NEW YORK  APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED WHOLLY WITHIN SUCH STATE.

                  IN WITNESS  WHEREOF,  the  Borrower has caused this Note to be
duly executed and delivered effective as of the date first above written.


                                                 BNS HOLDING, INC.

                                                 By:
                                                     ---------------------------
                                                 Name:
                                                 Title:




                                     2 of 2


                                    EXHIBIT B
                                    ---------

                          Pledge and Security Agreement

EX-10.03

                                                                    Exhibit 10.3

                           LOAN AND SECURITY AGREEMENT

                          DATED AS OF OCTOBER 31, 2006

                                      among

                              CS ACQUISITION CORP.
                            COLLINS INDUSTRIES, INC.
                             COLLINS BUS CORPORATION
                         WHEELED COACH INDUSTRIES, INC.
                             CAPACITY OF TEXAS, INC.
                                  MID BUS, INC.

                                       and

                              MOBILE PRODUCTS, INC.

                                  as Borrowers,

                          The GUARANTORS named herein,

                                       and

                          GMAC COMMERCIAL FINANCE LLC,

                          as Agent and as a Lender, and

                       The Financial Institution(s) Listed
                         on the Signature Pages Hereof,

                                   as Lenders




                                TABLE OF CONTENTS

SECTION 1      DEFINITIONS AND ACCOUNTING TERMS                                1
1.1.     Certain Defined Terms.................................................1
1.2.     UCC Defined Terms....................................................23
1.3.     Accounting Terms.....................................................23
1.4.     Other Definitional Provisions........................................24

SECTION 2      LOANS AND COLLATERAL                                           24
2.1.     Loans................................................................24
         (A)      Revolving Loan..............................................24
         (B)      Swingline Loan..............................................25
         (C)      Term Loan...................................................26
         (D)      Borrowing Mechanics.........................................26
         (E)      Notes.......................................................27
         (F)      Letters of Credit...........................................27
                  (1)   Maximum Amount........................................27
                  (2)   Reimbursement.........................................27
                  (3)   Request for Letters of Credit.........................28
         (G)      Other Letter of Credit Provisions...........................28
                  (1)   Obligations Absolute..................................28
                  (2)   Nature of Lender's Duties.............................29
                  (3)   Liability.............................................29
         (H)      Availability of a Lender's Pro Rata Share...................29
                  (1)   Lender's Amounts Available on a Funding Date..........29
                  (2)   Lender's Failure to Fund..............................30
                  (3)   Payments to a Defaulting Lender.......................30
                  (4)   Defaulting Lender's Right to Vote.....................30
2.2.     Interest.............................................................30
         (A)      Rate of Interest............................................30
         (B)      Computation and Payment of Interest.........................31
         (C)      Interest Laws...............................................31
         (D)      Conversion or Continuation..................................32
2.3.     Fees.................................................................32
         (A)      Unused Line Fee.............................................32
         (B)      Letter of Credit Fees.......................................33
         (C)      [Intentionally Omitted].....................................33
         (D)      [Intentionally Omitted].....................................33
         (E)      Audit Fees..................................................33
         (F)      Other Fees and Expenses.....................................33
         (G)      Fee Letter..................................................33
2.4.     Payments and Prepayments.............................................33
         (A)      Manner and Time of Payment..................................33
         (B)      Mandatory Prepayments.......................................34
                  (1)   Over Formula Advance..................................34


                                       i


                  (2)   Prepayments from Proceeds of Asset Dispositions.......34
                  (3)   Prepayments from Excess Cash Flow.....................34
                  (4)   Prepayments from Issuance of Securities...............35
                  (5)   Prepayments from Tax Refunds..........................35
         (C)      Voluntary Prepayments and Repayments........................35
         (D)      Payments on Business Days...................................36
         (E)      Application of Prepayment Proceeds..........................36
2.5.     Term of this Agreement...............................................36
2.6.     Statements...........................................................36
2.7.     Grant of Security Interest...........................................37
         (A)      Grant of Liens in the Collateral............................37
         (B)      Loan Parties Remain Liable..................................37
2.8.     Yield Protection.....................................................37
         (A)      Capital Adequacy and Other Adjustments......................38
         (B)      Increased LIBOR Funding Costs...............................38
2.9.     Taxes................................................................38
         (A)      No Deductions...............................................38
         (B)      Changes in Tax Laws.........................................38
         (C)      Foreign Lenders.............................................39
         (D)      Mitigation.  ...............................................40
2.10.    Required Termination and Prepayment..................................40
2.11.    Optional Prepayment/Replacement of Lenders...........................40
         (A)      Replacement of an Affected Lender...........................40
         (B)      Prepayment of an Affected Lender............................41
2.12.    Compensation.........................................................41
2.13.    Booking of LIBOR Loans...............................................41
2.14.    Assumptions Concerning Funding of LIBOR Loans........................41
2.15.    Endorsement; Insurance Claims........................................41

SECTION 3      CONDITIONS TO LOANS                                            42
         (A)      Closing Deliveries..........................................42
         (B)      Security Interests..........................................42
         (C)      Closing Date Availability...................................42
         (D)      Representations and Warranties..............................42
         (E)      Fees........................................................42
         (F)      No Default..................................................42
         (G)      Performance of Agreements...................................43
         (H)      No Prohibition..............................................43
         (I)      No Litigation...............................................43
         (J)      Delivery of Merger Documents................................43
         (K)      Second Lien Term Loan Debt..................................43
         (L)      Equity Contribution.........................................44
         (M)      Collateral Audit............................................44
         (N)      Management Meetings.........................................44
         (O)      Environmental Audit and Assessment..........................44
         (P)      Insurance...................................................44
         (Q)      Financial Information.......................................44


                                       ii


         (R)      Material Adverse Change.....................................44
         (S)      Federal and Missouri State Law Compliance...................44
         (T)      Solvency....................................................45
         (U)      Management Agreement........................................45
         (V)      Structure of Loan Parties...................................45
         (W)      Federal Compliance..........................................45
         (X)      Intercreditor Agreements....................................45
         (Y)      Repayment of Existing Indebtedness..........................45
         (Z)      Trust Agreement.............................................45
         (AA)     Warranty Plans..............................................45

SECTION 4      REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS              46
4.1.     Organization, Powers, Capitalization.................................46
         (A)      Organization and Powers.....................................47
         (B)      Capitalization..............................................47
4.2.     Authorization of Borrowing, No Conflict..............................47
4.3.     Financial Condition..................................................47
4.4.     Indebtedness and Liabilities.........................................48
4.5.     Collateral Warranties and Covenants..................................48
         (A)      Accounts Warranties and Covenants...........................48
         (B)      Inventory Warranties and Covenants..........................49
         (C)      Equipment Warranties and Covenants..........................49
         (D)      Chattel Paper Warranties and Covenants......................50
         (E)      Instruments Warranties and Covenants........................50
         (F)      Investment Property Warranties and Covenants................50
         (G)      Letters of Credit Warranties and Covenants..................50
         (H)      General Intangibles Warranties and Covenants................51
         (I)      Intellectual Property Warranties and Covenants..............51
         (J)      Commercial Tort Claims Warranties and Covenants.............51
         (K)      Deposit Accounts; Bank Accounts Warranties and Covenants....51
         (L)      Bailees.....................................................52
         (M)      Collateral Description; Use of Collateral...................52
         (N)      Collateral Filing Requirements; Collateral Records..........52
         (O)      Federal Claims..............................................52
         (P)      Agent Authorized............................................52
         (Q)      Invoices....................................................53
4.6.     Names and Locations..................................................53
4.7.     Title to Properties; Liens...........................................53
4.8.     Litigation; Adverse Facts............................................55
4.9.     Payment of Taxes.....................................................55
4.10.    Performance of Agreements............................................55
4.11.    Employee Benefit Plans...............................................56
4.12.    Broker's Fees........................................................57
4.13.    Environmental Compliance.............................................57
4.14.    Solvency.............................................................57
4.15.    Disclosure...........................................................57
4.16.    Insurance............................................................57


                                       iii


4.17.    Compliance with Laws; Government Authorizations; Consents............58
4.18.    Employee Matters.....................................................58
4.19.    Governmental Regulation..............................................59
4.20.    Access to Accountants and Management.................................59
4.21.    Inspection...........................................................59
4.22.    Collection of Accounts and Payments..................................59
4.23.    Payment of Taxes by Agent............................................60
4.24.    Amendment of Schedule................................................60

SECTION 5      REPORTING AND OTHER AFFIRMATIVE COVENANTS                      60
5.1.     Financial Statements and Other Reports...............................60
5.2.     Maintenance of Properties............................................60
5.3.     Further Assurances...................................................60
5.4.     Mortgages; Title Insurance; Surveys..................................60
         (A)      Title Insurance.............................................61
         (B)      Additional Mortgaged Property...............................61
         (C)      Surveys.....................................................61
         (D)      Additional Real Property Deliveries.........................61
5.5.     Use of Proceeds and Margin Security..................................61
5.6.     Maintenance of Properties............................................62
5.7.     GMAC CF Fee Letter...................................................62
5.8.     Additional Collateral................................................62

SECTION 6      FINANCIAL COVENANTS                                            62

SECTION 7      NEGATIVE COVENANTS                                             63
7.1.     Indebtedness and Liabilities.........................................63
7.2.     Guaranties...........................................................63
7.3.     Transfers, Liens and Related Matters.................................63
         (A)      Transfers...................................................63
         (B)      Liens.......................................................64
         (C)      No Negative Pledges.........................................64
         (D)      No Restrictions on Subsidiary Distributions to
                  Loan Parties................................................64
7.4.     Investments and Loans................................................64
7.5.     Restricted Junior Payments...........................................64
7.6.     Restriction on Fundamental Changes...................................65
7.7.     Changes Relating to Second Lien Term Loan Debt.......................65
7.8.     Transactions with Affiliates.........................................65
7.9.     Conduct of Business..................................................66
7.10.    Tax Consolidations...................................................66
7.11.    Subsidiaries.........................................................66
7.12.    Fiscal Year; Tax Designation.........................................66
7.13.    Press Release; Public Offering Materials.............................66
7.14.    Bank Accounts........................................................66
7.15.    IRS Form 8821........................................................66

SECTION 8      DEFAULT, RIGHTS AND REMEDIES                                   66
8.1.     Event of Default.....................................................66
         (A)      Payment.....................................................66


                                       iv


         (B)      Default in Other Agreements.................................66
         (C)      Breach of Certain Provisions................................67
         (D)      Breach of Warranty..........................................67
         (E)      Other Defaults Under Loan Documents.........................67
         (F)      Change in Control...........................................67
         (G)      Involuntary Bankruptcy; Appointment of Receiver, etc........67
         (H)      Voluntary Bankruptcy; Appointment of Receiver, etc..........68
         (I)      Liens.......................................................68
         (J)      Judgment, Attachments and Litigation........................68
         (K)      Dissolution.................................................68
         (L)      Solvency....................................................68
         (M)      Injunction..................................................68
         (N)      Invalidity of Loan Documents................................68
         (O)      Failure of Security.........................................69
         (P)      Damage, Strike, Casualty....................................69
         (Q)      Licenses and Permits........................................69
         (R)      Forfeiture..................................................69
         (S)      Merger......................................................69
         (T)      AIP Management Agreement....................................69
         (U)      Second Lien Term Loan Subordination Agreement...............69
8.2.     Suspension of Commitments............................................69
8.3.     Acceleration.........................................................70
8.4.     Remedies.............................................................70
8.5.     Appointment of Attorney-in-Fact......................................70
8.6.     Limitation on Duty of Agent and Lenders with Respect to Collateral...71
8.7.     Application of Proceeds..............................................71
8.8.     License of Intellectual Property.....................................72
8.9.     Waivers; Non-Exclusive Remedies......................................72

SECTION 9      AGENT                                                          72
9.1.     Agent................................................................72
         (A)      Appointment.................................................72
         (B)      Nature of Duties............................................73
         (C)      Rights, Exculpation, Etc....................................73
         (D)      Reliance....................................................74
         (E)      Indemnification.............................................74
         (F)      GMAC CF Individually........................................74
         (G)      Successor Agent.............................................75
                  (1)   Resignation...........................................75
                  (2)   Appointment of Successor..............................75
                  (3)   Successor Agent.......................................75
         (H)      Collateral Matters..........................................75
                  (1)   Release of Collateral.................................75
                  (2)   Confirmation of Authority; Execution of Releases......75
                  (3)   Absence of Duty.......................................76
         (I)      Agency for Perfection.......................................76
         (J)      Exercise of Remedies........................................77


                                        v


9.2.     Notice of Default....................................................77
9.3.     Action by Agent......................................................77
9.4.     Amendments, Waivers and Consents.....................................77
         (A)      Percentage of Lenders Required..............................77
         (B)      Specific Purpose or Intent..................................78
         (C)      Failure to Give Consent; Replacement of Non-Consenting Lend.78
9.5.     Assignments and Participations in Loans..............................78
         (A)      Assignments.................................................78
         (B)      Participations..............................................79
         (C)      No Relief of Obligations; Cooperation; Ability to Make LIBO.79
         (D)      Security Interests; Assignment to Affiliates................79
         (E)      Recording of Assignments....................................80
9.6.     Set Off and Sharing of Payments......................................80
9.7.     Disbursement of Funds................................................80
9.8.     Settlements, Payments and Information................................81
         (A)      Revolving Advances and Payments; Fee Payments...............81
                  (1)   Fluctuation of Revolving Loan Balance.................81
                  (2)   Settlement Dates......................................81
                  (3)   Settlement Definitions................................81
                  (4)   Settlement Payments...................................82
         (B)      Term Loan Principal Payments................................82
         (C)      Return of Payments..........................................82
                  (1)   Recovery after Non-Receipt of Expected Payment........82
                  (2)   Recovery of Returned Payment..........................83
9.9.     Discretionary Advances...............................................83

SECTION 10     BORROWING AGENCY                                               83
10.1.    Borrowing Agency Provisions..........................................83
         (A)      Designation of Borrowing Agent..............................83
         (B)      Indemnifications............................................83
         (C)      Obligations Absolute........................................84
         (D)      Waivers.....................................................84
10.2.    Waiver of Subrogation................................................85
10.3.    Interdependent Companies.............................................85

SECTION 11     GUARANTY                                                       85
11.1.    Unconditional Guaranty...............................................85
11.2.    Taxes................................................................86
11.3.    Waivers of Notice, Demand, etc.......................................86
11.4.    No Invalidity, Irregularity, etc.....................................86
11.5.    Independent Liability................................................86
11.6.    Indemnity............................................................87
11.7.    Liability Absolute...................................................87
11.8.    Action by Agent Without Notice.......................................88
11.9.    Application of Proceeds..............................................88
11.10.   Continuing Effectiveness.............................................89
         (A)      Reinstatement...............................................89
         (B)      No Marshalling..............................................89


                                       vi

         (C)      Priority of Claims..........................................89
         (D)      Invalidated Payments........................................89
         (E)      Assignment and Waiver.......................................89
         (F)      Payments to Guarantors......................................90
11.11.   Enforcement..........................................................90
11.12.   Statute of Limitations...............................................90
11.13.   Interest.............................................................91
11.14.   Currency Conversion..................................................91
11.15.   Acknowledgement......................................................91
11.16.   Continuing Effectiveness.............................................91
11.17.   Limitation of Guaranty...............................................91

SECTION 12     MISCELLANEOUS                                                  92
12.1.    Expenses and Attorneys' Fees.........................................92
12.2.    Indemnity............................................................92
12.3.    Notices..............................................................93
12.4.    Survival of Representations and Warranties and Certain Agreements....94
12.5.    Indulgence Not Waiver................................................94
12.6.    Marshaling; Payments Set Aside.......................................94
12.7.    Entire Agreement.....................................................94
12.8.    Severability.........................................................95
12.9.    Lenders' Obligations Several; Independent Nature of Lenders' Rights..95
12.10.   Headings.............................................................95
12.11.   APPLICABLE LAW.......................................................95
12.12.   Successors and Assigns...............................................95
12.13.   No Fiduciary Relationship; No Duty; Limitation of Liabilities........95
         (A)      No Fiduciary Relationship...................................95
         (B)      No Duty.....................................................95
         (C)      Limitation of Liabilities...................................96
12.14.   CONSENT TO JURISDICTION..............................................96
12.15.   WAIVER OF JURY TRIAL.................................................96
12.16.   Construction.........................................................97
12.17.   Counterparts; Effectiveness..........................................97
12.18.   Confidentiality......................................................97
12.19.   Publication..........................................................98
12.20.   Special Provisions Relating to Collins and its Subsidiaries..........98


                                       vii


                          LOAN AND SECURITY AGREEMENT

         This LOAN AND  SECURITY  AGREEMENT  is dated as of October 31, 2006 and
entered  into  among  CS  ACQUISITION   CORP.,  a  Missouri   corporation   ("CS
Acquisition"),  COLLINS INDUSTRIES,  INC., a Missouri  corporation  ("Collins"),
COLLINS BUS CORPORATION, a Kansas corporation ("Bus"), WHEELED COACH INDUSTRIES,
INC.,  a  Florida  corporation  ("WCI"),   CAPACITY  OF  TEXAS,  INC.,  a  Texas
corporation ("Capacity"), MID BUS, INC., an Ohio corporation ("Mid Bus"), MOBILE
PRODUCTS,  INC., a Kansas corporation  ("Mobile Products",  and together with CS
Acquisition,  Collins,  Bus, WCI,  Capacity and Mid Bus,  each a "Borrower"  and
collectively  "Borrowers"),  the  Guarantors  signatory  hereto,  the  financial
institution(s)  listed  on the  signature  pages  hereof  and  their  respective
successors and Eligible Assignees (each individually a "Lender" and collectively
"Lenders") and GMAC COMMERCIAL FINANCE LLC, a Delaware limited liability company
(in its individual capacity, "GMAC CF"), for itself as a Lender and as Agent.

         WHEREAS,  Borrowers  desire that  Lenders  extend a credit  facility to
finance a portion of the Merger  Consideration  for the merger of CS Acquisition
with and into  Collins,  with Collins being the  surviving  corporation  of such
merger (the "Merger"),  to refinance  existing  indebtedness of Borrowers and to
provide  working  capital  financing  and to  provide  funds for  other  general
corporate purposes; and

         WHEREAS,  to  secure  each  Loan  Party's  obligations  under  the Loan
Documents,  Loan  Parties are  granting  to Agent,  for the benefit of Agent and
Lenders,  a security  interest  in and lien upon all of Loan  Parties'  real and
personal property; and

         WHEREAS,  each  entity  listed  on  the  signature  pages  hereto  as a
"Guarantor" (each a "Guarantor" and  collectively,  the "Guarantors") is willing
to guaranty all (or part) of the  Obligations  of Borrowers to Agent and Lenders
under the Loan  Documents  and to grant to Agent,  for the  benefit of Agent and
Lenders, a security interest in all real and personal property of such Guarantor
to secure such guaranty;

         NOW,  THEREFORE,  in  consideration of the premises and the agreements,
provisions and covenants  herein  contained,  Borrowers,  Guarantors,  Agent and
Lenders agree as follows:

SECTION 1     DEFINITIONS AND ACCOUNTING TERMS

         1.1. CERTAIN DEFINED TERMS. The capitalized terms not otherwise defined
in this Agreement shall have the meanings set forth below:

         "Additional Mortgaged Property" means all real property owned or leased
by any Loan Party in which, after the Closing Date, Agent requires a mortgage to
secure the Obligations.

         "Advance"  shall mean an advance under the Revolving  Loan or Swingline
Loan.




         "Affected  Lender" has the meaning  assigned to that term in subsection
2.11.

         "Affiliate"  means any Person  (other  than Agent or any  Lender):  (a)
directly or indirectly controlling, controlled by, or under common control with,
any Loan Party;  (b) directly or indirectly  owning or holding five percent (5%)
or more of any Equity Interest in any Loan Party;  (c) five percent (5%) or more
of whose stock or other Equity  Interest  having  ordinary  voting power for the
election  of  directors  or the  power to  direct  or  cause  the  direction  of
management,  is directly or indirectly  owned or held by any Loan Party;  or (d)
which has a senior officer who is also a senior  officer of any Loan Party.  For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling",  "controlled by" and "under common control with") means the
possession  directly or indirectly of the power to direct or cause the direction
of the  management  and policies of a Person,  whether  through the ownership of
Equity Interests, or by contract or otherwise.

         "Agent"  means GMAC CF in its  capacity as agent for the Lenders  under
the Loan  Documents  and any successor in such  capacity  appointed  pursuant to
subsection 9.1(G).

         "Agent's Account" means the following Deposit Account of Agent:

                           JPMorgan Chase Bank, N.A.
                           New York, New York
                           ABA No.          021-000-021
                           Account Name     GMAC Commercial Finance
                                            Structured Finance Division
                           Account No.      3613249-84
                           Attention:       Loan Operations
                           Reference:       Collins Industries, Inc.

         "Agreement"  means  this  Loan  and  Security  Agreement  as it  may be
amended, restated, supplemented or otherwise modified from time to time.

         "AIP" means AIP IV LLC, a Delaware limited liability company.

         "AIP/CHC" means AIP/CHC  Holdings,  LLC, a Delaware  limited  liability
company.

         "AIP  Management  Agreement"  has the meaning  assigned to that term in
subsection 3(U).

         "Applicable  Margin"  for each type of Loan shall  mean the  applicable
percentage specified below:


                                    APPLICABLE MARGIN      APPLICABLE MARGIN FOR
TYPE OF LOAN                       FOR BASE RATE LOANS        LIBOR RATE LOANS
- ------------                       ------------------         ----------------

Revolving Advances                       0.75%                     2.75%

Term Loan                                1.25%                     3.25%

Obligations for which no other           0.75%                  Not Available
interest rate is specified


                                       2


         "Asset  Disposition"  means the  disposition,  whether by sale,  lease,
transfer, loss, damage, destruction, condemnation or otherwise, of any or all of
the assets of any Loan Party other than (i) sales of  Inventory  in the ordinary
course of  business  and  collections  of  Accounts  arising  out of the sale of
Inventory   in  the  ordinary   course  of  business  and  (ii)  the   Insurance
Monetization.

         "Assignment  and  Acceptance  Agreement"  shall mean an Assignment  and
Acceptance Agreement substantially in the form of Exhibit A.

         "Bank  Letter of Credit"  means each Letter of Credit  issued by a bank
acceptable  to and approved by Agent for the account of Borrowers  and supported
by guaranty or risk participation agreement issued by GMAC CF or Agent.

         "Base  Rate" means a variable  rate of interest  per annum equal to the
higher of (a) the rate of interest  from time to time  published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve  Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor  publication of the Federal  Reserve  System  reporting the Bank Prime
Loan rate or its equivalent,  or (b) the Federal Funds Effective Rate plus fifty
(50) basis points.  The  statistical  release  generally sets forth a Bank Prime
Loan rate for each  Business  Day. The  applicable  Bank Prime Loan rate for any
date not set forth shall be the rate set forth for the last  preceding  date. In
the event the Board of Governors of the Federal Reserve System ceases to publish
a Bank Prime Loan rate or its  equivalent,  the term  "Base  Rate"  shall mean a
variable  rate of interest  per annum equal to the highest of the "prime  rate",
"reference rate", "base rate", or other similar rate announced from time to time
by any of the three  largest  banks  (based on  combined  capital  and  surplus)
headquartered in New York, New York (with the  understanding  that any such rate
may merely be a reference rate and may not  necessarily  represent the lowest or
best rate actually charged to any customer by any such bank).

         "Base Rate Loans" means Loans bearing  interest at rates  determined by
reference to the Base Rate.

         "Blocked  Accounts" has the meaning assigned to that term in subsection
4.22.

         "BNS" means BNS Holding, Inc., a Delaware corporation.

         "Borrower" and "Borrowers"  have the meaning  assigned to such terms in
the introductory paragraph of this Agreement, and after the effectiveness of the
Merger shall include Collins as survivor of the Merger.

         "Borrowing Agent" means CS Acquisition,  and after the effectiveness of
the Merger shall mean Collins, as survivor of the Merger.


                                       3


         "Borrowing  Base"  means,  as of any date of  determination,  an amount
equal to the sum of (a) up to 85% of  Eligible  Accounts,  PLUS (b) the least of
(i)  $33,000,000,  and  (ii)  the  sum of (A)  up to 40% of  Eligible  Inventory
consisting of raw materials, PLUS (B) up to 80% of Eligible Inventory consisting
of  work-in-process,  PLUS (C) up to 80% of  Eligible  Inventory  consisting  of
finished  goods,  and  (iii)  85% of the net  orderly  liquidation  value of the
Eligible  Inventory as determined by an appraiser  acceptable to Agent, LESS (c)
the Closing Date Reserve  LESS (d) in each case,  such  reserves as Agent in its
reasonable credit judgment may elect to establish.

         "Borrowing  Base  Certificate"  means a  certificate  and schedule duly
executed  by an  officer  of  Borrowing  Agent  appropriately  completed  and in
substantially the form of Exhibit B.

         "Business  Day" means any day  excluding  Saturday,  Sunday and any day
which is a legal holiday under the laws of the States of New York or Michigan or
is a day on which banking  institutions located in any such state are closed, or
for the purposes of LIBOR Loans only, a London Banking Day.

         "Capital   Expenditures"   means,  with  respect  to  any  Person,  all
expenditures for, or contracts for expenditures with respect to any fixed assets
or improvements, or for replacements,  substitutions or additions thereto, that,
in  accordance  with GAAP,  either  would be required to be  capitalized  on the
balance  sheet of such  Person,  or would be  classified  and  accounted  for as
capital expenditures on a statement of cash flows of such Person.

         "Capital Lease" means any lease of any property (whether real, personal
or mixed) that,  in conformity  with GAAP,  should be accounted for as a capital
lease.

         "Cash Interest Expense" means, without duplication, for any period, for
Loan Parties:  interest  expenses  deducted in the  determination  of net income
(excluding  (a)  the  amortization  of  fees  and  costs  with  respect  to  the
transactions  contemplated  by this  Agreement  which have been  capitalized  as
transaction  costs in accordance  with the provisions of subsection 1.3; and (b)
interest paid in kind).

         "Certificate  of  Exemption"  has the meaning  assigned to that term in
subsection 2.9(C).

         "Charges" shall mean all taxes, charges, fees, imposts, levies or other
assessments,  including, without limitation, all net income, gross income, gross
receipts,  sales, use, ad valorem,  value added, transfer,  franchise,  profits,
inventory,  capital stock, license,  withholding,  payroll,  employment,  social
security, unemployment, excise, severance, stamp, occupation and property taxes,
custom  duties,  fees,  assessments,  liens,  claims  and  charges  of any  kind
whatsoever,  together with any interest and any  penalties,  additions to tax or
additional  amounts,  imposed  by any  taxing or other  Governmental  Authority,
domestic  or  foreign   (including,   without   limitation,   the  PBGC  or  any
environmental agency or superfund), upon the Collateral, the Loan Parties or any
of their Affiliates.

         "Closing Date" means October 31, 2006.

         "Closing  Date  Reserve"  means a reserve  against the  Borrowing  Base
established  by Agent in an amount  equal to product of (x) the number of shares
of  common  stock  of  Collins  that  are  held  by  shareholders   ("Dissenting
Shareholders")  of  Collins  that have  perfected  their  dissenter's  rights in
accordance with Section  351.455 of the General  Business and Corporation Law of
Missouri  by filing a written  objection  to the  Merger and not voting in favor
thereof and (y) $12.50.  So long as no Default or Event of Default has  occurred
and is continuing or would result  therefrom,  the Closing Date Reserve shall be
released  as  and  when   necessary  to  permit  the  Borrowers  to  pay  Merger
Consideration  of up to  $12.50  per  share to the  Dissenting  Shareholders  as
required  by Section  351.455 of the General  Business  and  Corporation  Law of
Missouri.


                                       4


         "Collateral"  has  the  meaning  assigned  to that  term in  subsection
2.7(A).

         "Collecting  Banks" has the meaning assigned to that term in subsection
4.22.

         "Collins"  has the meaning  assigned  to that term in the  introductory
paragraph to this Agreement.

         "Commitment"  or  "Commitments"  means the commitment or commitments of
Lenders to make Loans as set forth in subsections  2.1(A),  2.1(B) and/or 2.1(C)
and to provide Lender Letters of Credit as set forth in subsection 2.1(F).

         "Compliance Certificate" means a certificate duly executed by the chief
executive  officer or chief financial  officer of Borrowing Agent  appropriately
completed and in substantially the form of Exhibit C.

         "Control"  means  "control"  as  defined  in the UCC with  respect to a
particular item of Collateral.

         "Copyright  Security  Agreement" means any Copyright Security Agreement
executed and  delivered by each Loan Party to Agent,  as the same may be amended
and in effect from time to time.

         "Copyrights"  means,  collectively,   all  of  the  following  (a)  all
copyrights,  rights and interests in copyrights, works protectable by copyright,
copyright  registrations and copyright  applications,  including those listed in
the schedules to any Copyright  Security  Agreement;  (b) all renewals of any of
the foregoing; (c) all income, royalties,  damages and payments now or hereafter
due and/or  payable  under any of the  foregoing  or with  respect to any of the
foregoing,   including   damages  or  payments  for  past,   present  or  future
infringements  of any of the foregoing;  (d) the right to sue for past,  present
and  future  infringements  of  any  of  the  foregoing;   and  (e)  all  rights
corresponding to any of the foregoing throughout the world.

         "CS  Acquisition"  has  the  meaning  assigned  to  that  term  in  the
introductory paragraph to this Agreement.

         "Daily  Interest  Amount"  has the  meaning  assigned  to that  term in
subsection 9.8(A)(3).

         "Daily  Interest  Rate"  has  the  meaning  assigned  to  that  term in
subsection 9.8(A)(3).

         "Daily  Loan  Balance"  has  the  meaning  assigned  to  that  term  in
subsection 9.8(A)(3).


                                       5


         "Default" means a condition,  act or event that,  after notice or lapse
of time or both, would constitute an Event of Default if that condition,  act or
event were not cured or removed within any applicable grace or cure period.

         "Default  Rate" has the  meaning  assigned  to that term in  subsection
2.2(A).

         "Defaulted  Amount" means,  with respect to any Lender at any time, any
amount  required to be paid  hereunder or under any other Loan  Document by such
Lender to the Agent or any other Lender which has not been so paid.

         "Defaulting  Lender"  means,  at  any  time,  any  Lender  that  owes a
Defaulted Amount.

         "Disbursing  Agent" means Mellon  Investor  Services  LLC, a New Jersey
limited liability company.

         "Disbursing  Agent  Agreement"  means  that  certain  Disbursing  Agent
Agreement dated as of October 18, 2006 between Collins and the Disbursing Agent.

         "EBITDA" means, for any period,  without duplication,  the total of the
following for Loan Parties on a  consolidated  basis,  each  calculated for such
period:  (a) net income  determined in accordance with GAAP; plus, to the extent
deducted  in the  calculation  of net  income,  (b)  the sum of (i)  income  and
franchise  taxes  paid or  accrued or any  payments  made under the Tax  Sharing
Agreement;  (ii) interest  expenses,  net of interest  income,  paid or accrued;
(iii) amortization and depreciation,  (iv) Pro-Forma Adjustments, (v) Management
Fees and  Expenses,  (vi)  non-cash  stock-based  compensation,  (vii)  non-cash
purchase  accounting  charges,  and (viii)  other  non-cash  charges  (excluding
accruals for cash  expenses made in the ordinary  course of business);  LESS, to
the extent  included in the  calculation  of net income,  (c) the sum of (i) the
income of any  Person  (other  than a Loan  Party) in which a Loan  Party has an
ownership  interest except to the extent such income is received by a Loan Party
in a cash  distribution  during such period;  (ii) gains or losses from sales or
other  dispositions  of assets  (other than  Inventory  in the normal  course of
business);  and (iii) extraordinary or non-recurring gains, net of extraordinary
or non-recurring "cash" losses to the extent such non-recurring "cash" losses do
not exceed the extraordinary or non-recurring gains.

         "Eligible  Accounts"  means,  as at  any  date  of  determination,  the
aggregate of all Accounts that Agent, in its reasonable  credit judgment,  deems
to be eligible for borrowing  purposes.  Without  limiting the generality of the
foregoing, the Agent may determine that the following of Borrowers' Accounts are
not Eligible Accounts:

                  (1) Accounts  which do not consist of accounts  receivable and
contract receivables,  each owed to and owned by a Borrower arising or resulting
from the sale of goods or the rendering of services by a Borrower.

                  (2) Accounts  which, at the date of issuance of the respective
invoice  therefor,  were  payable  more than  sixty  (60) days after the date of
issuance;


                                       6


                  (3) Accounts which remain unpaid for more than sixty (60) days
after the due date specified in the original  invoice,  but in any event no more
than ninety (90) days after invoice date;

                  (4)  Accounts  which are  otherwise  eligible  with respect to
which the Person  obligated on such Account is owed a credit by a Borrower,  but
shall only be treated as ineligible to the extent of such credit;

                  (5)  Accounts  due  from a  Person  whose  principal  place of
business is located outside the United States of America unless (x) such Account
is backed by a Letter of Credit,  in form and substance  acceptable to Agent and
issued or  confirmed  by a bank that is  organized  under the laws of the United
States of America or a State thereof, that is acceptable to Agent; provided that
such Letter of Credit has been  delivered to Agent as  additional  Collateral or
(y) such Person is  disclosed  on Schedule  1.1(A) (as same may be updated  from
time)  and  such  Account  is  otherwise  satisfactory  to  Agent,  in its  sole
discretion, provided that any Account permitted under this sub-clause (y) may be
deemed eligible by Agent (in its sole  discretion)  even if such Accont does not
meet the  requirements  set forth in sub-clauses (2) and (3) of this definition,
so long as any such  Account  does not remain  unpaid for more than one  hundred
twenty (120) days after the invoice date;

                  (6)  Accounts  due  from a Person  which  Agent  has  notified
Borrowing Agent does not have a satisfactory credit standing;

                  (7)  Accounts  in  excess  of  an  aggregate  face  amount  of
$7,500,000 with respect to which the Account Debtor or the Person obligated with
respect thereto is the United States of America,  any state or any municipality,
or any  department,  agency or  instrumentality  thereof,  unless the applicable
Borrower has, with respect to such Account, complied with the Federal Assignment
of  Claims  Act of 1940 as  amended  (31  U.S.C.  Section  3727 et  seq.) or any
applicable statute or municipal ordinance of similar purpose and effect;

                  (8) Accounts with respect to which the Person  obligated is an
Affiliate of any Borrower or a director, officer, agent, stockholder,  member or
employee of any Borrower or any of their respective Affiliates;

                  (9)  Accounts  due from a Person  if more than  fifty  percent
(50%) of the  aggregate  amount  of  Accounts  of such  Person  have at the time
remained unpaid for more than sixty (60) days after due date or ninety (90) days
after the invoice date if no due date was specified;

                  (10)  Accounts  with respect to which there is any  unresolved
dispute  with the  respective  Account  Debtor or the Person  obligated  on such
Account (but such Account  shall only be  ineligible to the extent of the amount
in dispute);

                  (11) Accounts  evidenced by an Instrument or Chattel Paper not
in the possession of Agent, for the benefit of itself and Lenders;

                  (12) Accounts with respect to which Agent, on behalf of itself
and Lenders,  does not have a valid, first priority and fully perfected security
interest;


                                       7


                  (13) Accounts subject to any Lien except those (x) in favor of
Agent,  for the  benefit of itself and  Lenders  and (y) in favor of Second Lien
Term Loan  Agent,  for the  benefit  of  itself  and the  Second  Lien Term Loan
Lenders,  to the extent  permitted  by the Second  Lien Term Loan  Subordination
Agreement;

                  (14) Accounts with respect to which the Account  Debtor or the
Person  obligated  on the  Account  is the  subject of any  bankruptcy  or other
insolvency proceeding;

                  (15)  Accounts  due  from a Person  to the  extent  that  such
Accounts  exceed in the aggregate an amount equal to twenty percent (20%) of the
aggregate of all Accounts of the Loan Parties, taken as a whole, at said date;

                  (16) Accounts  with respect to which the  obligation to pay is
conditional  or subject to a  repurchase  obligation  or right to return or with
respect to which the goods or  services  giving rise to such  Accounts  have not
been delivered (or performed,  as applicable) and accepted by the Account Debtor
or the Person obligated on such Account,  including progress billings,  bill and
hold sales, guarantied sales, sale or return transactions,  sales on approval or
consignments;

                  (17) Accounts with respect to which the Account  Debtor or the
Person  obligated  on the Account is located in New  Jersey,  or any other state
denying out of state  creditors  access to its courts in the absence of a Notice
of Business  Activities  Report or other similar  filing,  unless the applicable
Borrower  has  either  qualified  as a foreign  entity  authorized  to  transact
business  in such state or has filed a Notice of Business  Activities  Report or
similar filing with the applicable state agency for the then current year;

                  (18) Accounts  which arise from the  performance  of services,
unless such services have been fully  rendered and do not relate to any warranty
claim or obligation;

                  (19) Rebate Accounts;

                  (20)  Accounts  with respect to which the Account  Debtor is a
floorplan lender, including, without limitation GE Financial Services; and

                  (21) Accounts with respect to which the Account  Debtor or the
Person obligated on such Account is a creditor of a Borrower; provided, however,
that any such  Account  shall  only be  ineligible  as to that  portion  of such
Account  which is less than or equal to the amount owed by any  Borrower to such
Person.

         "Eligible  Assignee"  shall mean (a) a commercial  bank organized under
the laws of the  United  States,  or any state  thereof,  and  having a combined
capital and surplus of at least  $100,000,000 (or $250,000,000 in the case of an
assignment of a Revolving  Loan  Commitment);  (b) a commercial  bank  organized
under the laws of any other  country which is a member of the  Organization  for
Economic Cooperation and Development (the "OECD"), or a political subdivision of
any such  country,  and  having  a  combined  capital  and  surplus  of at least
$100,000,000  (or  $250,000,000 in the case of an assignment of a Revolving Loan
Commitment),  provided  that  such  bank is  acting  through  a branch or agency
located in the country in which it is organized or another country which is also
a member of the OECD; (c) any nationally recognized financial institution or any
other entity which is an  "accredited  investor"  (as defined in Regulation D of


                                       8


the Securities Act) which extends credit or buys loans as one of its businesses,
including but not limited to, commercial finance companies, insurance companies,
mutual funds and lease financing companies;  (d) a Related Fund; or (e) a Person
that is primarily engaged in the business of lending that is (i) a Subsidiary of
a Lender,  (ii) a Subsidiary of a Person of which a Lender is a  Subsidiary,  or
(iii) a Person of which a Lender is a  Subsidiary;  provided,  however,  that no
Affiliate of a Borrower shall be an Eligible Assignee.

         "Eligible Inventory" means, as at any date of determination,  the value
(determined at the lower of cost or market on a first-in,  first-out  basis, net
of freight,  taxes and similar  costs) of all Inventory  owned by a Borrower and
located in the United  States of America that Agent,  in its  reasonable  credit
judgment,  deems to be eligible for  borrowing  purposes.  Without  limiting the
generality of the  foregoing,  the Agent may determine that the following is not
Eligible  Inventory:  (1) finished goods which do not meet the specifications of
the purchase  order for such goods;  (2) Inventory  which Agent  determines,  is
unacceptable for borrowing purposes due to age, quality,  type,  category and/or
quantity,  including without  limitation,  Inventory which is obsolete,  chassis
that have been owned by a Borrower  for more than twelve  months,  demonstration
inventory,  trade-in  equipment  or  used  inventory;  (3)  packaging,  shipping
materials,  show material or supplies consumed in any Borrower's  business;  (4)
Inventory with respect to which Agent, on behalf of itself and Lenders, does not
have a  valid,  first  priority  and  fully  perfected  security  interest;  (5)
Inventory  with  respect to which  there  exists any Lien in favor of any Person
other  than  Agent,  on behalf of itself and  Lenders  or Second  Lien Term Loan
Agent,  on behalf of Second Lien Term Loan Lenders,  to the extent  permitted by
the Second Lien Term Loan  Subordination  Agreement;  (6) Inventory  produced in
violation  of the Fair Labor  Standards  Act and subject to the  so-called  "hot
goods"  provisions  contained in Title 29 U.S.C.  215 (a)(i) or any  replacement
statute;  (7)  Inventory  located at any  location  other than those  identified
pursuant to subsection 4.6; (8) Inventory located at a vendor's location or with
a consignee;  (9) Inventory  located with a warehouseman,  bailee,  processor or
similar  third  party,  unless  such  Person has  executed a waiver of  interest
reasonably  satisfactory  to Agent;  (10) unless  otherwise  agreed to by Agent,
Inventory in any location leased by Borrower for which Agent has not received an
agreement,  in form and  substance  acceptable to Agent,  acknowledging  Agent's
rights and  waiving  its own  interest  in such  Inventory  from each lessor and
sublessor and each mortgagee of such location; (11) with respect to any chassis,
the  applicable  Borrower has not paid in full in cash for such chassis and (12)
licensed  Inventory,  unless (i) a Loan Party is the owner of such  license,  or
(ii) a consent,  in form and substance  satisfactory to Agent, has been obtained
from the licensor of such license with respect to Agent's  security  interest in
such Inventory.

         "Employee  Benefit  Plan" means any  employee  benefit  plan within the
meaning of Section 3(3) of ERISA (a) which is  maintained  for former or current
employees of any Loan Party or any ERISA Affiliate or has at any time within the
preceding 6 years been  maintained  for former or current  employees of any Loan
Party or any current or former ERISA  Affiliate or (b) with respect to which any
Loan  Party or  ERISA  Affiliate  contributes  or may  have  any  obligation  to
contribute or any other liability.

         "Environmental Claims" means claims, liabilities, monetary obligations,
damages,  punitive damages, fines, penalties,  costs, expenses,  investigations,
litigation,   administrative  proceedings,   judgments  or  orders  relating  to
Hazardous Materials.


                                       9


         "Environmental  Laws"  means any  present or future  federal,  state or
local law, rule,  regulation or order relating to pollution,  waste, disposal or
the  protection  of human health or safety,  plant life or animal life,  natural
resources or the environment.

         "Equity  Contribution"  means,  on or prior to the  Closing  Date,  the
contribution  of new cash  equity to Holdings  and  subsequent  contribution  by
Holdings to CS Acquisition of not less than  $32,500,000  pursuant to the Equity
Documentation,  consisting  of:  (a) not less  than  $29,700,000  from BNS (such
amounts to be provided to BNS by Persons and on terms and conditions  reasonably
satisfactory to Agent),  and (b) not less than $2,800,000 from AIP, in each case
on terms and conditions reasonably satisfactory to Agent.

         "Equity  Documentation"  means the  documentation  governing the Equity
Contribution.

         "Equity Interests" of any Person shall mean any and all shares,  rights
to  purchase,   options,   warrants,   general,  limited  or  limited  liability
partnership interests,  member interests,  participation or other equivalents of
or interest in (regardless  of how  designated)  equity of such Person,  whether
voting or  nonvoting,  including  common  stock,  preferred  stock,  convertible
securities  or any other  "equity  security"  (as such term is  defined  in Rule
3a11-1 of the General  Rules and  Regulations  promulgated  by the SEC under the
Exchange Act).

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended  from  time to  time,  and any  successor  statute  and  all  rules  and
regulations promulgated thereunder.

         "ERISA  Affiliate",  as applied to any Loan Party, means any Person who
is a member of a group which is under common  control  with any Loan Party,  who
together with any Loan Party is treated as a single  employer within the meaning
of Section 414(b) and (c) of the IRC.

         "Event of Default" has the meaning  assigned to that term in subsection
8.1.

         "Excess Cash Flow" means, for any period,  the greater of (a) zero (0);
or (b) without  duplication,  the total of the  following  for Loan Parties on a
consolidated  basis, each calculated for such period: (i) EBITDA;  plus (ii) tax
refunds actually received (other than Fiscal Year 2006 Tax Refunds);  less (iii)
Capital  Expenditures (to the extent actually made in cash and/or due to be made
in cash within such period,  excluding  any Capital  Expenditures  under or with
respect to Capital  Leases,  but in no event more than the amount  permitted  in
subparagraph D of the Financial Covenants Rider); less (iv) income and franchise
taxes paid or accrued,  including any payments under the Tax Sharing  Agreement,
but excluding any provision for deferred taxes included in the  determination of
net income;  less (v) decreases in deferred income taxes resulting from payments
of deferred  taxes accrued in prior  periods;  less (vi) Cash Interest  Expense;
less (vii) scheduled  amortization of Indebtedness  actually paid in cash and/or
due to be paid in cash within such period and permitted  under  subsection  7.5;
less  (viii)  voluntary  prepayments  made under  subsection  2.4(C);  less (ix)
mandatory  prepayments from Proceeds of Asset Dispositions made under subsection
2.4(B)(2),  but only to the extent that the transaction  that  precipitated  the
mandatory  prepayment  increased  net income of Loan  Parties on a  consolidated
basis,  as determined in accordance  with GAAP;  less (x) mandatory  prepayments
made under subsection 2.4(B)(4) and 2.4(B)(5);  less (xi) Pro-Forma Adjustments,
less (xii)  Management  Fees and  Expenses,  less  (xiii)  non-cash  stock-based


                                       10


compensation,  less (xiv) non-cash purchase  accounting  charges.  The Insurance
Monetization  proceeds and  Management  Equity  Contribution  proceeds shall not
constitute Excess Cash Flow.

         "Excess  Interest" has the meaning  assigned to that term in subsection
2.2(C).

         "Fairness  Opinion" means the opinion issued by George K. Baum Advisors
LLC to the  Special  Committee  of the  Board of  Directors  of  Collins,  dated
September 26, 2006.

         "Federal Funds Effective Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve  System  arranged  by  Federal  funds  brokers,   as  published  on  the
immediately  following  Business  Day by the Board of  Governors  of the Federal
Reserve System as the Federal Funds Rate or Federal Reserve  Statistical Release
H.15(519) entitled "Selected Interest Rates" or any successor publication of the
Federal  Reserve  System  reporting  the  Federal  Funds  Effective  Rate or its
equivalent  or, if such rate is not  published for any Business Day, the average
of the quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.

         "Fiscal  Year" means each twelve (12) month  period  ending on the last
day of October in each year.

         "Fiscal  Year 2006 Tax Refunds"  means any tax refunds  received by any
Loan Party that are related to the Fiscal Year of the Loan Parties ended October
31, 2006.

         "Fixed Charge  Coverage"  means,  for any period,  Operating  Cash Flow
divided by Fixed Charges.

         "Fixed  Charges"  means,  for any period,  and each calculated for Loan
Parties on a consolidated basis for such period (without duplication):  (a) Cash
Interest Expense;  plus (b) scheduled  payments of principal with respect to all
Indebtedness; plus (c) any provision for (to the extent it is greater than zero)
income or franchise taxes included in the determination of net income, including
any payments  under the Tax Sharing  Agreement,  but excluding any provision for
deferred taxes;  plus (d) payment of deferred taxes accrued in any prior period;
plus  (e)  Restricted  Junior  Payments  (including,   without  limitation,  any
Management  Fees and  Expenses,  but  excluding  any payments  made  pursuant to
subsection  7.5(h)) made in cash to the extent  included in the  calculation  of
EBITDA.  Notwithstanding  the foregoing,  "Fixed  Charges" shall not include any
payments  of  Merger  Consideration  or any fees and  expenses  relating  to the
closing of the Transaction.

         "Foreign  Lender" has the meaning  assigned to that term in  subsection
2.9(C).

         "Funding  Date" means the date of each funding of a Loan or issuance of
a Lender Letter of Credit.

         "GAAP" means generally accepted accounting  principles set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of


                                       11


the  Financial   Accounting   Standards   Board  that  are   applicable  to  the
circumstances as of the date of determination.

         "GMAC CF" has the  meaning  assigned  to that term in the  introductory
paragraph of this Agreement.

         "Governmental  Authorities" means any federal, state or municipal court
or  other  governmental  department,   commission,   board,  bureau,  agency  or
instrumentality, governmental or quasi-governmental, domestic or foreign.

         "Guarantors"  has the  meaning  assigned  to that term in the  Recitals
section of this Agreement,  and shall include any other Person who may hereafter
guarantee payment or performance of the whole or any part of the Obligations.

         "Hazardous Material" means all or any of the following:  (a) substances
that are  defined  or listed  in,  or  otherwise  classified  pursuant  to,  any
Environmental  Laws  or  regulations  as  "hazardous   substances",   "hazardous
materials",  "hazardous  wastes",  "toxic  substances" or any other  formulation
intended  to  define,  list or  classify  substances  by reason  of  deleterious
properties such as ignitability,  corrosivity,  reactivity,  carcinogenicity, or
toxicity;  (b) oil,  petroleum or  petroleum  derived  substances,  natural gas,
natural gas liquids or synthetic gas and drilling  fluids,  produced  waters and
other wastes associated with the exploration, development or production of crude
oil,  natural gas or  geothermal  resources;  (c) any  flammable  substances  or
explosives  or any  radioactive  materials;  and  (d)  asbestos  in any  form or
electrical  equipment  which  contains any oil or  dielectric  fluid  containing
polychlorinated biphenyls.

         "Holdings" means Collins I Holding Corp., a Delaware corporation.

         "Indebtedness",  as applied to any Person,  means without  duplication:
(a) all indebtedness  for borrowed money; (b) obligations  under leases which in
accordance  with GAAP constitute  Capital  Leases;  (c) notes payable and drafts
accepted   representing   extensions  of  credit  whether  or  not  representing
obligations for borrowed  money;  (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more  than  six (6)  months  from  the date the  obligation  is  incurred  or is
evidenced by a note or similar written instrument;  (e) all indebtedness secured
by any Lien on any property or asset owned or held by that Person  regardless of
whether the indebtedness  secured thereby shall have been assumed by that Person
or is non-recourse  to the credit of that Person;  (f) obligations in respect of
Letters of Credit or similar  instruments;  (g) all  obligations  of such Person
under any foreign  exchange  contract,  currency swap  agreement,  interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from  fluctuations  in currency values
or interest rates;  (h) "earnouts" and similar  payment  obligations and (i) any
advances under any factoring arrangement.

         "Indemnified  Liabilities"  has the  meaning  assigned  to that term in
subsection 12.2.

         "Indemnitees" has the meaning assigned to that term in subsection 12.2.


                                       12


         "Insufficiency" means, at any time with respect to any Employee Benefit
Plan,  the amount,  if any, of such Employee  Benefit  Plan's  unfunded  benefit
liabilities within the meaning of Section 4001(a)(18) of ERISA.

         "Insurance  Monetization"  means the  receipt  by the Loan  Parties  of
approximately  $500,000 as a result of the  surrender of certain life  insurance
policies as to which Collins is the beneficiary.

         "Intangible   Assets"  means  all  intangible  assets   (determined  in
conformity with GAAP)  including,  without  limitation,  goodwill,  Intellectual
Property, Software, licenses,  organizational costs, deferred amounts, covenants
not to compete, unearned income and restricted funds.

         "Intellectual Property" means, collectively,  all: Copyrights,  Patents
and Trademarks.

         "Interest  Period"  means,  in  connection  with each  LIBOR  Loan,  an
interest period which Borrowing Agent shall elect to be applicable to such Loan,
which Interest  Period shall be either a one (1), two (2), three (3), or six (6)
month period; provided that:

                  (1) the  initial  Interest  Period  for any LIBOR  Loan  shall
commence on the Funding Date of such Loan;

                  (2)  in  the  case  of  successive   Interest  Periods,   each
successive  Interest  Period shall commence on the day on which the  immediately
preceding Interest Period expires;

                  (3) if an Interest  Period  expiration  date is not a Business
Day,  such  Interest  Period shall expire on the next  succeeding  Business Day;
provided that if any Interest  Period  expiration date is not a Business Day but
is a day of the month after which no further  Business Day occurs in such month,
such Interest Period shall expire on the immediately preceding Business Day;

                  (4) any Interest  Period that begins on the last  Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,  subject to
part (5) below, end on the last Business Day of a calendar month;

                  (5) no Interest  Period  shall extend  beyond the  Termination
Date;

                  (6) no Interest  Period for any portion of the Term Loan shall
extend beyond the date of the final Scheduled Installment thereof;

                  (7) no Interest Period may extend beyond a scheduled principal
payment date of any Loan,  unless the  aggregate  principal  amount of such Loan
that is a Base Rate Loan or that has Interest Periods expiring on or before such
scheduled principal payment date equals or exceeds the principal amount required
to be paid on such Loan on such scheduled principal payment date; and

                  (8) there shall be no more than 5 Interest Periods relating to
LIBOR Loans outstanding at any time.


                                       13


         "Interest  Rate" has the meaning  assigned  to that term in  subsection
2.2(A).

         "Interest  Ratio" has the meaning  assigned to that term in  subsection
9.8(A)(3).

         "Interest  Settlement  Date" has the  meaning  assigned to that term in
subsection 9.8(A)(4).

         "IRC" means the Internal  Revenue Code of 1986, as amended from time to
time,  and any  successor  statute  and all  rules and  regulations  promulgated
thereunder.

         "IRS" means the United States of America Internal Revenue Service.

         "Issuing  Lender" has the meaning  assigned to that term in  subsection
2.1(G)(2)

         "Lender"  or  "Lenders"  has the  meaning  assigned to that term in the
Recitals section of this Agreement.

         "Lender  Letter of Credit"  has the  meaning  assigned  to that term in
subsection 2.1(F).

         "Letter  of  Credit  Liability"  means,  all  reimbursement  and  other
liabilities  of any  Borrower or any of its  Subsidiaries  with  respect to each
Lender Letter of Credit,  whether  contingent or otherwise,  including:  (a) the
amount  available to be drawn or which may become available to be drawn; (b) all
amounts  which have been paid or made  available by any Lender  issuing a Lender
Letter of Credit or any bank  issuing a Bank  Letter of Credit to the extent not
reimbursed; and (c) all unpaid interest, fees and expenses related thereto.

         "Letter of Credit  Reserve"  means, at any time, an amount equal to (a)
the aggregate  amount of Letter of Credit  Liability  with respect to all Lender
Letters of Credit  outstanding at such time PLUS, without  duplication,  (b) the
aggregate amount theretofore paid by Agent or any Lender under Lender Letters of
Credit and not debited to the Revolving Loan pursuant to subsection 2.1(F)(2) or
otherwise reimbursed by Borrowers.

         "Letter of  Non-Exemption"  has the  meaning  assigned  to that term in
subsection 2.9(C).

         "Liabilities" shall have the meaning given that term in accordance with
GAAP and shall include, without limitation, Indebtedness.

         "LIBOR" means, for each Interest Period, a rate per annum equal to:

                  (1) the offered rate for deposits in U.S. dollars in an amount
comparable to the amount of the applicable Loan in the London  interbank  market
for the relevant  Interest  Period  which is  published by the British  Bankers'
Association  and  currently  appears on the Telerate  Page 3750 as of 11:00 a.m.
(London  time) on the day which is two (2) Business  Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however,  that if such a rate  ceases  to be  available  to Agent on that or any
other source from the British  Bankers'  Association,  LIBOR shall be equal to a
rate per annum equal to the average rate (rounded upwards, if necessary,  to the
nearest 1/100 of 1%) at which Agent  determines  that U.S.  dollars in an amount
comparable  to the  amount of the  applicable  Loans are being  offered to prime
banks at  approximately  11:00  a.m.  (London  time) on the day which is two (2)
Business  Days  prior  to the  first  day of  such  Interest  Period  for a term


                                       14


comparable to such Interest Period for settlement in immediately available funds
by leading banks in the London interbank market selected by Agent; divided by

                  (2) a number  equal to one  (1.0)  minus the  maximum  reserve
percentages  (expressed as a decimal fraction)  (including,  without limitation,
basic,  supplemental,  marginal and emergency  reserves under any regulations of
the Board of  Governors  of the  Federal  Reserve  System or other  Governmental
Authority having jurisdiction with respect thereto, as now and from time to time
in effect) for  Eurocurrency  funding  (currently  referred to as  "Eurocurrency
Liabilities"  in Regulation D of such Board) which are required to be maintained
by any Lender by the Board of Governors of the Federal Reserve System; such rate
to be rounded upward to the next whole multiple of  one-sixteenth of one percent
(.0625%).  LIBOR shall be adjusted automatically on and as of the effective date
of any change in any such reserve percentage.

         "LIBOR  Loans"  means at any time that  portion  of the  Loans  bearing
interest at rates determined by reference to LIBOR.

         "Lien"  means any lien  (statutory  or  otherwise),  mortgage,  deed of
trust,  pledge,  security  interest,  charge or encumbrance of any kind, whether
voluntary  or  involuntary  (including  any  conditional  sale  or  other  title
retention agreement,  any lease in the nature thereof, and any agreement to give
any security interest).

         "Loan" or  "Loans"  means an advance  or  advances  under the Term Loan
Commitment, the Swingline Loan or the Revolving Loan Commitment.

         "Loan  Documents"  means this  Agreement,  the Pledge  Agreements,  the
Mortgages,   the  Notes,  the  Trust  Agreement,   the  Second  Lien  Term  Loan
Subordination  Agreement and all other  documents,  instruments  and  agreements
executed by or on behalf of any Loan Party and delivered  concurrently  herewith
or at any time  hereafter to or for Agent or any Lender in  connection  with the
Loans, any Lender Letter of Credit, and any other  transactions  contemplated by
this Agreement, all as amended, restated,  supplemented or modified from time to
time.

         "Loan Party" means each of the  Borrowers,  each of the  Guarantors and
each  Subsidiary  of any  Loan  Party  which is or  becomes  a party to any Loan
Document.

         "Loan  Parties'  Accountants"  means  McGladrey and Pullen,  LLP, which
selection  shall  not be  modified  during  the term of this  Agreement  without
Agent's prior written consent.

         "Loan  Year"  means  each  period of  twelve  (12)  consecutive  months
commencing on the Closing Date and on each anniversary thereof.

         "London  Banking  Day" means any day on which  dealings  in deposits in
U.S. dollars are transacted in the London Interbank market.

         "Management Equity  Contribution" means the contribution  following the
Closing  Date of up to  $500,000  to the  capital of  Holdings  (and  subsequent
contribution  by  Holdings  to  Collins)  by members of  management  of the Loan
Parties.


                                       15


         "Management  Fees and Expenses"  means the management fees and expenses
permitted to be paid to AIP and BNS pursuant to subsection 7.5(b) and (c).

         "Material  Adverse Effect" means a material adverse effect upon (a) the
business, operations,  prospects,  properties, assets or condition (financial or
otherwise)  of any  Borrower,  or the Loan  Parties  taken  as a whole,  (b) the
ability of any Loan Party to perform its obligations  under any Loan Document to
which it is a party or of Agent or any Lender to  enforce or collect  any of the
Obligations or (c) a material  impairment of the  enforceability  or priority of
the Agent's Liens with respect to the Collateral.

         "Maximum  Rate" has the  meaning  assigned  to that term in  subsection
2.2(C).

         "Maximum Revolving Loan Amount" means, as of any date of determination,
the lesser of (a) the aggregate of the Revolving Loan Commitments of all Lenders
less the sum of the Letter of Credit  Reserve and the Swingline Loan and (b) the
Borrowing  Base less the sum of the Letter of Credit  Reserve and the  Swingline
Loan.

         "Maximum  Swingline  Loan  Amount"  means at any time the lesser of (a)
$10,000,000 and (b) the amount that would cause the Revolving Loan to exceed the
Maximum Revolving Loan Amount.

         "Merger"  shall  have the  meaning  set forth in the  recitals  to this
Agreement.

         "Merger  Consideration"  shall mean cash paid by CS  Acquisition to the
shareholders  of Collins as  consideration  for the Merger in an amount equal to
$12.50 per common share of Collins.

         "Merger Documents" means,  collectively,  the (i) Agreement and Plan of
Merger dated as of September 26, 2006 among Collins,  CS  Acquisition  and Steel
Partners  II,  L.P.,  (ii) the  Fairness  Opinion,  (iii) the  Disbursing  Agent
Agreement and (iii) all articles of merger and certificates, related thereto.

          "Mortgage"  means  each of the  mortgages,  deeds of trust,  leasehold
mortgages,  leasehold deeds of trust,  collateral assignments of leases or other
real estate security  documents  delivered by any Loan Party to Agent, on behalf
of Agent and Lenders, with respect to Mortgaged Property or Additional Mortgaged
Property, all in form and substance reasonably satisfactory to Agent.

         "Mortgage Policies" has the meaning assigned to that term in subsection
5.4(A).

         "Mortgaged Property" means the real property owned by any Loan Party as
described on Schedule 5.4.

         "Multiemployer  Plan" means any plan that is a "multiemployer plan" (as
such term is defined in Section  4001(a)(3) of ERISA) to which any Loan Party or
any ERISA  Affiliate  contributes or accrues an obligation to contribute or with
respect  to which any of them have any  liability,  or has  within  the past six
years had any obligation or liability to make contributions.


                                       16


         "Multiple  Employer Plan" shall mean an Employee Benefit Plan which has
two or more  contributing  sponsors  (including  any  Loan  Party  or any  ERISA
Affiliate) at least two of whom are not under common control,  as such a plan is
described in Section 4064 of ERISA.

         "Note" or "Notes"  means the  Revolving  Notes,  the Term Notes and the
Swingline Notes.

         "Notice of  Borrowing"  means a notice duly  executed by an  authorized
representative  of Borrowing  Agent  appropriately  completed and in the form of
Exhibit D.

         "Obligations"  means all  obligations,  liabilities and indebtedness of
every nature of each Loan Party from time to time owed to Agent or to any Lender
under the Loan Documents (whether incurred before or after the Termination Date)
including,  without  limitation,  the principal amount of all debts,  claims and
indebtedness,  accrued and unpaid  interest  and all fees,  costs and  expenses,
whether primary, secondary, direct, contingent, fixed or otherwise,  heretofore,
now and/or from time to time hereafter owing, due or payable including,  without
limitation,  all interest, fees, cost and expenses accrued or incurred after the
filing of any petition  under any  bankruptcy or insolvency  law  (regardless of
whether allowed or allowable in whole or in part as a claim therein).

         "OECD"  has  the  meaning  provided  in  the  definition  of  "Eligible
Assignee".

         "Operating  Cash Flow"  means,  for any period,  (a)  EBITDA;  less (b)
Capital Expenditures net of amounts financed by third parties, including Capital
Leases.

         "Patent  Security   Agreement"  means  any  Patent  Security  Agreement
executed and  delivered by each Loan Party to Agent,  as the same may be amended
and in effect from time to time.

         "Patents" means collectively all of the following:  (a) all patents and
patent applications including,  without limitation, those listed on any schedule
to any Patent Security  Agreement and the inventions and improvements  described
and claimed therein,  and patentable  inventions;  (b) the reissues,  divisions,
continuations,  renewals,  extensions  and  continuations-in-part  of any of the
foregoing; (c) all income, royalties,  damages and payments now or hereafter due
and/or  payable  under  any of  the  foregoing  or  with  respect  to any of the
foregoing, including, without limitation, damages and payments for past, present
and future infringements of any of the foregoing; (d) the right to sue for past,
present and future  infringements  of any of the  foregoing;  and (e) all rights
corresponding to any of the foregoing throughout the world.

         "PBGC" shall mean the Pension Benefits Guaranty Corporation established
pursuant to Title IV of ERISA,  or any  successor  agency or other  Governmental
Authority succeeding to the functions thereof.

         "Pension Benefit Plan" shall mean at any time any employee benefit plan
(including a Multiple  Employer  Plan,  but not a  Multiemployer  Plan) which is
covered  by Title IV of ERISA or is  subject to the  minimum  funding  standards
under Section 412 of the IRC and either (i) is maintained by a Loan Party or any
current or former ERISA Affiliate;  or (ii) has at any time within the preceding
five years been  maintained by a Loan Party or any entity which was at such time


                                       17


an ERISA  Affiliate or former ERISA Affiliate for employees of any Loan Party or
of any  entity  which  was at such  time an  ERISA  Affiliate  or  former  ERISA
Affiliate.

         "Permitted  Encumbrances" means the following types of Liens: (a) Liens
(other  than  Liens  relating  to  Environmental  Claims  or ERISA)  for  taxes,
assessments or other governmental charges or levies not yet due and payable; (b)
statutory  Liens  of  landlords,  carriers,  warehousemen,  mechanics,  vendors,
materialmen  and other similar  liens imposed by law,  which are incurred in the
ordinary course of business for sums not more than thirty (30) days  delinquent;
(c) Liens  (other than any Lien imposed by ERISA)  incurred or deposits  made in
the  ordinary  course of  business in  connection  with  workers'  compensation,
unemployment   insurance   and  other  types  of  social   security,   statutory
obligations,  surety and appeal bonds, bids, leases, government contracts, trade
contracts,  performance and return-of-money  bonds and other similar obligations
(exclusive  of  obligations  for the  payment  of  borrowed  money);  (d) zoning
restrictions, easements, licenses, reservations, provisions, covenants, waivers,
rights-of-way,  restrictions, minor irregularities of title (and with respect to
leasehold  interests,  mortgages,  obligations,  Liens  and  other  encumbrances
incurred,  created,  assumed or  permitted  to exist and arising by,  through or
under a landlord, ground lessor or owner of the leased property, with or without
consent of the lessee) and other similar charges or encumbrances with respect to
real property not interfering in any material  respect with the ordinary conduct
of the  business  of any Loan  Party and  which do not  secure  obligations  for
payment of money;  (e) Liens for purchase money  obligations,  provided that (i)
the  purchase  of the  asset  subject  to  any  such  Lien  is  permitted  under
subparagraph D of the Financial Covenant Rider, (ii) the Indebtedness secured by
any such Lien is permitted  under  subsection 7.1, and (iii) such Lien encumbers
only the asset so  purchased;  (f) Liens in favor of Agent,  on behalf of itself
and Lenders, (g) Liens set forth on Schedule 7.3(B); (h) precautionary financing
statements  filed in connection  with  operating  leases;  (i) Liens in favor of
Second  Lien Term Loan  Agent,  on behalf of itself  and  Second  Lien Term Loan
Lenders,  so long as such Liens are subordinated to the Liens in favor of Agent,
on behalf of itself and Lenders,  in a manner  satisfactory to Agent pursuant to
the  Second  Lien  Term  Loan  Subordination  Agreement;  and (j) the  Liens and
encumbrances listed on Schedule B of the loan policies issued for the benefit of
Agent  and  delivered  in   connection   with  this   Transaction   (the  "Title
Encumbrances").

         "Person"  means and includes  natural  persons,  corporations,  limited
partnerships,   general  partnerships,   limited  liability  companies,  limited
liability  partnerships,  joint stock companies,  joint ventures,  associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations,  whether or not legal entities,  and governments and agencies and
political subdivisions thereof.

         "Pledge  Agreement"  shall  mean the Pledge  Agreement  dated as of the
Closing Date by and among each Loan Party party  thereto and Agent,  as amended,
restated, supplemented or otherwise modified from time to time.

         "Pro  Forma"  means the  unedited  balance  sheet of Loan  Parties on a
consolidated   basis  as  of  the  Closing  Date  after  giving  effect  to  the
Transaction. The Pro Forma is attached hereto as Schedule 4.4.


                                       18


         "Pro Forma Adjustments" means: (i) $479,000 for the quarter ended April
30, 2006, (ii) $507,000 for the quarter ended July 31, 2006, (iii) $472,000,  as
well as all  severance  and  transaction  expenses  relating to the merger of CS
Acquisition into Collins which are included in the calculation of net income for
the quarter  ended October 31, 2006 and (iv) for future  periods,  to the extent
included  in the  calculation  of net  income,  the  sum  of (1)  severance  and
transaction  expenses  relating to the merger of CS Acquisition into Collins and
(2) expenditures (including but not limited to retention, severance, relocation,
moving and other project  costs)  incurred by Borrower prior to October 31, 2008
associated with the consolidation of Borrower's facilities and implementation of
Borrower's  operating plan, in an aggregate  amount not in excess of $3,000,000,
provided that (x) the Borrower has determined the need for such  expenditures in
its  reasonable  judgment,   and  (y)  such  expenditures  shall  be  reasonably
acceptable to the Agent.

         "Pro Rata  Share"  means (a) with  respect  to  matters  relating  to a
particular  Commitment of a Lender, the percentage obtained by dividing (i) such
Commitment  of that Lender by (ii) all such  Commitments  of all Lenders and (b)
with respect to all other matters,  the percentage  obtained by dividing (i) the
Total  Loan  Commitment  of a Lender by (ii) the Total Loan  Commitments  of all
Lenders, in either (a) or (b), as such percentage may be adjusted by assignments
permitted  pursuant to subsection 9.5; provided,  however,  if any Commitment is
terminated  pursuant  to the  terms  hereof,  then "Pro  Rata  Share"  means the
percentage  obtained  by  dividing  (x) the  aggregate  amount of such  Lender's
outstanding  Loans related to such Commitment by (y) the aggregate amount of all
outstanding Loans related to such Commitment.

         "Projections"  means  the Loan  Parties'  forecasted  consolidated  and
consolidating: (a) balance sheets, (b) profit and loss statements, (c) cash flow
statements,  (d) capitalization  statements and (e) Revolving Loan availability,
all  prepared on a division by  division  and  Subsidiary  by  Subsidiary  basis
consistent  with Loan Parties'  historical  financial  statements and based upon
good faith estimates and  assumptions by Loan Parties  believed to be reasonable
at the time made,  together with appropriate  supporting details and a statement
of underlying assumptions.

         "Rebate  Accounts"  means  Accounts  owing to a Borrower  from a dealer
representing  such  Borrower's  proportionate  share of rebates  payable to such
dealer by the  manufacturer  of a chassis by reason of the sale of motor vehicle
chassis to such Borrower.

         "Register" has the meaning assigned to that term in subsection 9.5(E).

         "Related  Fund" has the  meaning  assigned  to that term in  subsection
9.5(D).

         "Replacement   Lender"  has  the  meaning  assigned  to  that  term  in
subsection 2.11(A).

         "Reportable  Event" shall mean a reportable  event described in Section
4043(c) of ERISA or the regulations  promulgated  thereunder other than an event
for which the requirement to provide notice to the PBGC has been waived.

         "Requisite  Lenders" means Lenders,  (other than a Defaulting  Lender),
holding or being responsible for more than fifty percent (50%) of the sum of the
(a)  outstanding  Loans,  (b)  Letter  of  Credit  Reserve  and  (c)  unutilized
Commitments of all Lenders which are not Defaulting Lenders.


                                       19


         "Responsible  Officer" means any senior vice president,  executive vice
president, president, chief financial officer or chief accounting officer of any
Loan Party.

         "Restricted   Junior  Payment"   means:   (a)  any  dividend  or  other
distribution, direct or indirect, on account of any Equity Interests of any Loan
Party now or hereafter outstanding, except a dividend payable solely with shares
of the class of stock on which such  dividend  is  declared;  (b) any payment of
Merger  Consideration  after the Closing Date or payment in  connection  with or
relating  to the  extinguishment,  cancellation  or  repurchase  of  any  Equity
Interests  of Collins  that  existed  prior to the  Merger;  (c) any  payment or
prepayment of principal of, premium,  if any, or interest on, or any redemption,
conversion,  exchange, retirement,  defeasance, sinking fund or similar payment,
purchase  or other  acquisition  for value,  direct or  indirect,  of any Equity
Interests of any Loan Party now or hereafter  outstanding,  or the issuance of a
notice of an  intention  to do any of the  foregoing;  (d) any  payment  made to
retire,  or to obtain the surrender  of, any  outstanding  warrants,  options or
other rights to acquire shares of any Equity  Interests of any Loan Party now or
hereafter  outstanding;  (e) any director fee paid to any member of the board of
directors  of any Loan Party who is also an employee of any Loan Party;  (f) any
payment by any Loan Party of any  management,  consulting or similar fees to any
Affiliate,  whether  pursuant to a management  agreement or  otherwise;  (g) any
payment with respect to principal, interest, fees or other amounts of the Second
Lien Term Loan  Debt,  other  than  expressly  permitted  under the terms of the
Second  Lien Term Loan  Agreement  (as in  effect on the  Closing  Date) and the
Second Lien Term Loan  Subordination  Agreement;  and (h) any  prepayment of any
other Indebtedness not otherwise expressly permitted above.

         "Revolving  Advance"  means each advance  made by  Lender(s)  under the
Revolving Loan Commitment pursuant to subsection 2.1(A) and/or subsection 9.9.

         "Revolving  Loan"  means  the  outstanding  balance  of  all  Revolving
Advances and any amounts  added to the principal  balance of the Revolving  Loan
pursuant to this Agreement.

         "Revolving Loan Commitment" means (a) as to any Lender,  the commitment
of such Lender to make Revolving  Advances pursuant to subsection 2.1(A), and to
purchase  participations  in Lender  Letters of Credit  pursuant  to  subsection
2.1(F) and without duplication to purchase a participation in the Swingline Loan
pursuant to subsection 2.1(B) in the aggregate amount set forth on the signature
page of this  Agreement  opposite such Lender's  signature or in the most recent
Assignment and Acceptance Agreement,  if any, executed by such Lender and (b) as
to all  Lenders,  the  aggregate  commitment  of all  Lenders to make  Revolving
Advances and to purchase  participations in Lender Letters of Credit and without
duplication  to  purchase  participations  in the  Swingline  Loan  pursuant  to
subsection 2.1(B).

         "Revolving  Note"  means each  promissory  note of Borrower in form and
substance   reasonably   acceptable  to  Agent,  issued  to  evidence  the  Loan
Commitments.

         "Scheduled  Installment"  has the  meaning  assigned  to  that  term in
subsection 2.1(C).

         "Second  Lien Term Loan Agent"  means Orix  Finance  Corp.,  a Delaware
corporation and its permitted successors and assigns.


                                       20


         "Second Lien Term Loan Debt" means all  Indebtedness of Borrowers under
the Second Lien Term Loan Documents.

         "Second  Lien Term Loan  Documents"  means  the  Second  Lien Term Loan
Agreement and all related documents, instruments, certificates and agreements.

         "Second  Lien  Term  Loan  Lenders"  has the  meaning  provided  in the
definition of "Second Lien Term Loan Agreement".

         "Second Lien Term Loan Agreement"  means that certain Loan and Security
Agreement  dated as of the date  hereof by and among Loan  Parties,  Second Lien
Term Loan Agent and the other  lenders a party  thereto  (the  "Second Lien Term
Loan Lenders"),  as amended,  restated,  supplemented or otherwise modified from
time  to  time  to  the  extent  permitted  under  the  Second  Lien  Term  Loan
Subordination Agreement.

         "Second  Lien Term Loan  Subordination  Agreement"  means that  certain
Subordination and  Intercreditor  Agreement dated as of the Closing Date between
Agent and Second Lien Term Loan Agent.

         "Securities Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

         "Settlement  Date" has the meaning  assigned to that term in subsection
9.8(A)(2).

         "Shareholder's  Agreement" means that certain  Shareholder's  Agreement
dated as of October  31,  2006 by and among  Holdings,  AIP/CH,  BNS and certain
other shareholders of Holdings.

         "Subsidiary"  means,  with  respect  to any  Person,  any  corporation,
association or other  business  entity of which more than fifty percent (50%) of
the  total  voting  power  of  Equity  Interest  (or  equivalent   ownership  or
controlling  interest)  entitled  (without  regard  to  the  occurrence  of  any
contingency) to vote in the election of directors,  managers or trustees thereof
is at the time owned or controlled,  directly or  indirectly,  by that Person or
one or more of the other subsidiaries of that Person or a combination thereof.

         "Swingline  Advance"  means each Revolving  Advance  converted by Agent
into an advance under the Swingline Loan pursuant to subsection 2.1(B).

         "Swingline  Lender"  means  GMAC  CF,  or if GMAC CF  shall  resign  as
Swingline Lender,  another Lender selected by Agent and reasonably acceptable to
Borrowing Agent.

         "Swingline  Loan"  means  the  outstanding  balance  of  all  Swingline
Advances and any amounts  added to the principal  balance of the Swingline  Loan
pursuant to this Agreement.

         "Swingline  Note" means the  promissory  note of  Borrowers in form and
substance acceptable to Agent, issued to evidence the Swingline Loan.

         "Tax  Liabilities"  has the meaning assigned to that term in subsection
2.9(A).


                                       21


         "Tax Sharing  Agreement" means that certain Tax Sharing Agreement dated
as of  October  31,  2006  among  BNS,  Holdings  and the  direct  and  indirect
Subsidiaries of Holdings (without giving effect to any amendment or modification
thereto without the prior written consent of Agent).

         "Term Loan" means the unpaid  balance of the term loan made pursuant to
subsection 2.1(C).

         "Term Loan  Commitment"  means (a) as to any Lender,  the commitment of
such Lender to make its Pro Rata share of the Term Loan in the maximum aggregate
amount set forth on the signature page of this Agreement  opposite such Lender's
signature or in the most recent  Assignment and Acceptance  Agreements,  if any,
executed by such Lender and (b) as to all Lenders,  the aggregate  commitment of
all Lenders to make the Term Loan.

         "Term  Note"  means  each  promissory  note of  Borrowers  in form  and
substance acceptable to Agent, issued to evidence the Term Loan Commitment.

         "Termination  Date" has the meaning assigned to that term in subsection
2.5.

         "Termination  Event" shall mean (i) a Reportable  Event with respect to
any Employee Benefit Plan (other than a Multiemployer Plan); (ii) the withdrawal
of any Loan Party or ERISA Affiliate from any Employee  Benefit Plan (other than
a Multiemployer Plan) during a plan year in which such entity was a "substantial
employer"  as defined in Section  4001(a)(2)  of ERISA;  (iii) the  providing of
notice  of  intent  to  terminate  any  Employee  Benefit  Plan  (other  than  a
Multiemployer  Plan) in a distress  termination  described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate any Employee
Benefit  Plan or  Multiemployer  Plan;  (v) any event or  condition  which would
reasonably be expected to (a) constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer,  any Employee
Benefit Plan (other than a Multiemployer Plan), (b) result in the termination of
a  Multiemployer  Plan  pursuant to Section  4041A of ERISA or (c) result in the
imposition  of any  Lien on the  assets  of any Loan  Party or ERISA  Affiliate,
including by  operation  of Section 4069 of ERISA;  (vi) the partial or complete
withdrawal  within the  meaning of  Sections  4203 and 4205 of ERISA of any Loan
Party or any ERISA Affiliate from a Multiemployer  Plan; or (vii) the payment by
any  Loan  Party  or  ERISA   Affiliate  of  any   withdrawal   liability  to  a
Multi-Employer Plan which would have a Material Adverse Effect.

         "Title   Encumbrances"  has  the  meaning  assigned  to  that  term  in
sub-clause (j) of the definition of "Permitted Encumbrances".

         "Total  Loan   Commitment"   means  as  to  any  Lender  the  aggregate
commitments  of such Lender with respect to its Revolving  Loan  Commitment  and
Term Loan Commitment.

         "Trademark  Security  Agreement" means any Trademark Security Agreement
executed and  delivered by each Loan Party to Agent,  as the same may be amended
and in effect from time to time.

         "Trademarks"  means   collectively  all  of  the  following:   (a)  all
trademarks,  trade  names,  corporate  names,  company  names,  business  names,
fictitious  business names, trade styles,  service marks,  logos, other business


                                       22


identifiers,  prints and labels on which any of the  foregoing  have appeared or
appear,  all  registrations  and recordings  thereof,  and all  applications  in
connection therewith including, without limitation, those listed on any schedule
to any Trademark Security Agreement;  (b) all renewals thereof;  (c) all income,
royalties, damages and payments now or hereafter due and/or payable under any of
the  foregoing or with  respect to any of the  foregoing  including  damages and
payments for past, present and future infringements of any of the foregoing; (d)
the  right to sue for  past,  present  and  future  infringements  of any of the
foregoing;  (e) all rights  corresponding to any of the foregoing throughout the
world;  and  (f) all  goodwill  associated  with  and  symbolized  by any of the
foregoing.

         "Transaction"  means  the  transactions   contemplated  by  the  Equity
Documents,  the Merger Documents,  the Loan Documents, the Second Lien Term Loan
Documents and the financial accommodations and Loans contemplated herein.

         "Trust Agreement" means, collectively, the Trust Agreement, dated on or
about the Closing Date,  among Borrowers,  Agent and the named Trustee,  in form
and substance  satisfactory to Agent,  providing for the holding by such trustee
on behalf of the Lenders of title  documents  relating  to chassis  constituting
Collateral and periodic reporting relating thereto.

         "UCC" means the Uniform  Commercial Code as in effect from time to time
in the State of New York; provided,  however, to the extent the law of any other
state or other jurisdiction applies to the attachment,  perfection,  priority or
enforcement of any Lien granted to Agent in any of the  Collateral,  "UCC" means
the Uniform Commercial Code as in effect in such other state or jurisdiction for
purposes  of the  provisions  hereof  relating to such  attachment,  perfection,
priority  or  enforcement  of a Lien  in such  Collateral.  To the  extent  this
Agreement  defines the term  "Collateral" by reference to terms used in the UCC,
each of such terms shall have the broadest meaning given to such terms under the
UCC as in effect in any state or other jurisdiction.

         "Undrawn  Availability"  means an amount equal to the Maximum Revolving
Loan Amount less the Revolving Loan.

         1.2. UCC DEFINED  TERMS.  The  following  terms used in this  Agreement
shall have the respective meanings provided for in the UCC: "Accounts", "Account
Debtor",  "Buyer in Ordinary Course of Business",  "Chattel Paper",  "Commercial
Tort  Claim",  "Deposit  Account",  "Documents",   "Electronic  Chattel  Paper",
"Equipment",  "Farm  Products",  "Fixtures",  "General  Intangibles",   "Goods",
"Instruments",   "Inventory",   "Investment   Property",   "Letter  of  Credit",
"Letter-of-Credit Rights",  "Licensee in Ordinary Course of Business",  "Payment
Intangibles",  "Proceeds",  "Record",  "Software",  "Supporting Obligations" and
"Tangible Chattel Paper".

         1.3.  ACCOUNTING TERMS. For purposes of this Agreement,  all accounting
terms not  otherwise  defined  herein shall have the  meanings  assigned to such
terms in  conformity  with  GAAP.  Financial  statements  and other  information
furnished to Agent or any Lender pursuant to subsection 5.1 shall be prepared in
accordance  with  GAAP  (as in  effect  at the  time of such  preparation)  on a
consistent basis. In the event any "Accounting Changes" (as defined below) shall
occur and such changes affect  financial  covenants,  standards or terms in this
Agreement, then Loan Parties and Agent agree to enter into negotiations in order
to amend such  provisions  of this  Agreement  so as to  equitably  reflect such
Accounting  Changes with the desired result that the criteria for evaluating the


                                       23


financial  condition  of Loan  Parties  shall be the same after such  Accounting
Changes as if such Accounting  Changes had not been made, and until such time as
such an amendment  shall have been  executed  and  delivered by Loan Parties and
Requisite  Lenders,  (A) all  financial  covenants,  standards and terms in this
Agreement shall be calculated and/or construed as if such Accounting Changes had
not been made, and (B) Loan Parties shall prepare  footnotes to each  Compliance
Certificate and the financial statements required to be delivered hereunder that
show the differences between the financial  statements  delivered (which reflect
such  Accounting  Changes)  and the basis  for  calculating  financial  covenant
compliance (without reflecting such Accounting  Changes).  "Accounting  Changes"
means: (a) changes in accounting  principles required by GAAP and implemented by
Loan Parties; (b) changes in accounting principles  recommended by Loan Parties'
Accountants;  and  (c)  changes  in  carrying  value  of Loan  Parties'  assets,
liabilities or equity  accounts  resulting from (i) the  application of purchase
accounting  principles  (A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the
Transaction,  PROVIDED that the  application of purchase  accounting  principles
shall not constitute an Accounting Change to the extent such application and the
changes in the carrying  value of Loan Parties'  assets,  liabilities  or equity
accounts  cause  thereby are  reflected in the Pro Forma and/or the  Projections
delivered on or before the Closing Date or (ii) any other  adjustments  that, in
each case,  were  applicable  to, but not included  in, the Pro Forma.  All such
adjustments  resulting  from  expenditures  made  subsequent to the Closing Date
(including,  but not limited to, capitalization of costs and expenses or payment
of pre-Closing Date liabilities)  shall be treated as expenses in the period the
expenditures  are made and deducted as part of the calculation of EBITDA in such
period.

         1.4.   OTHER   DEFINITIONAL   PROVISIONS.   References  to  "Sections",
"subsections",  "Riders",  "Exhibits",  "Schedules"  and  "Addenda"  shall be to
Sections, subsections, Riders, Exhibits, Schedules and Addenda, respectively, of
this Agreement unless otherwise  specifically provided. Any of the terms defined
in  subsection  1.1 or  otherwise  in this  Agreement  may,  unless the  context
otherwise  requires,  be used in the  singular  or the plural  depending  on the
reference.  In this  Agreement,  words  importing  any gender  include the other
genders;  the words "including,"  "includes" and "include" shall be deemed to be
followed by the words  "without  limitation";  the term "or" has,  except  where
otherwise  indicated,  the inclusive meaning represented by the phrase "and/or";
references to agreements and other  contractual  instruments  shall be deemed to
include subsequent amendments, assignments, and other modifications thereto, but
only to the extent such amendments,  assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document; references
to Persons include their respective  permitted successors and assigns or, in the
case of governmental  Persons,  Persons  succeeding to the relevant functions of
such  Persons;  and all  references  to statutes and related  regulations  shall
include any amendments of same and any successor statutes and regulations.

SECTION 2     LOANS AND COLLATERAL

         2.1. LOANS.

                  (A) REVOLVING LOAN. Each Lender, severally,  agrees to lend to
Borrowers  from  time to time  its Pro  Rata  Share of each  advance  under  the
Revolving  Loan  Commitment,  PROVIDED that all  Revolving  Advances made on the
Closing Date shall be advanced to CS  Acquisition.  The aggregate  amount of the
Revolving  Loan  Commitment  shall not exceed at any time  $40,000,000.  Amounts


                                       24


borrowed under this  subsection  2.1(A) may be repaid and reborrowed at any time
prior to the earlier of (1) the  termination  of the Revolving  Loan  Commitment
pursuant to  subsection  8.3 or (2) the  Termination  Date.  Except as otherwise
provided herein, no Lender shall have any obligation to make a Revolving Advance
to the extent  such  Revolving  Advance  would cause the  Revolving  Loan (after
giving effect to any immediate  application  of the proceeds  thereof) to exceed
the Maximum Revolving Loan Amount.

                  (B) SWINGLINE LOAN. Agent may convert any request by Borrowing
Agent for a Base Rate Revolving  Advance into a request for an advance under the
Swingline  Loan.  The  Swingline  Loan  shall be a Base  Rate Loan and shall not
exceed in the  aggregate  at any time  outstanding  the Maximum  Swingline  Loan
Amount.  In the event that on any Business Day Swingline Lender desires that all
or any  portion  of the  Swingline  Loan  should be reduced in whole or in part,
Swingline  Lender  shall  promptly  notify Agent to that effect and indicate the
portion of the Swingline Loan to be reduced. Swingline Lender hereby agrees that
it shall notify Agent to reduce the  Swingline  Loan to  $10,000,000  or less at
least once every  month.  Agent  agrees to transmit  to Lenders the  information
contained  in each  notice  received  by Agent from  Swingline  Lender and shall
concurrently notify Lenders of each Lender's Pro Rata Share of the obligation to
make a Revolving Advance to repay the Swingline Loan (or portion thereof).

         Each of the Lenders hereby  unconditionally  and irrevocably  agrees to
fund to Agent for the benefit of Swingline Lender, in lawful money of the United
States  and in same day  funds,  not later  than 1:00 p.m.  New York time on the
Business Day immediately  following the Business Day of such Lender's receipt of
such notice from Agent (provided that if any Lender shall receive such notice at
or prior to 1:00 p.m. New York time on a Business  Day,  such  funding  shall be
made by such Lender on such  Business  Day),  such  Lender's Pro Rata Share of a
Revolving  Advance (which Revolving  Advance shall be a Base Rate Loan and shall
be deemed to be requested by Borrower) in the  principal  amount of such portion
of the  Swingline  Loan which is required to be paid to  Swingline  Lender under
this subsection 2.1(B)  (regardless of whether the conditions  precedent thereto
set forth in  Section 3 are then  satisfied  and  whether  or not  Borrower  has
provided a notice of borrowing  under  subsection  2.1(D) and whether or not any
Default  or  Event  of  Default  exists  or all or any of the  Loans  have  been
accelerated, but subject to the other provisions of this subsection 2.1(B)). The
proceeds of any such Revolving  Advance shall be immediately  paid over to Agent
for the benefit of Swingline Lender for application to the Swingline Loan.

         In the event that an Event of Default  shall  occur and either (1) such
Event of Default is of the type described in subsection  8.1(G) or (H) hereof or
(2) no further Revolving  Advances are being made under this Agreement,  so long
as any such Event of Default is  continuing,  then,  each of the Lenders  (other
than Swingline Lender) shall be deemed to have irrevocably,  unconditionally and
immediately  purchased a  participation  in the  Swingline  Loan from  Swingline
Lender in an amount equal to such Lender's Pro Rata Share of the Revolving  Loan
Commitment  multiplied  by the total amount of the Swingline  Loan  outstanding.
Each Lender shall effect such  purchase by making  available  the amount of such
Lender's  participation  in the Swingline  Loan in U.S.  Dollars in  immediately
available funds to Agent's Account for the benefit of Swingline  Lender.  In the
event any Lender fails to make available to Swingline Lender when due the amount
of such Lender's  participation in the Swingline Loan, Swingline Lender shall be
entitled  to  recover  such  amount on demand  from such  Lender  together  with


                                       25


interest at the Federal  Funds  Effective  Rate.  Each such purchase by a Lender
shall be made without recourse to Swingline  Lender,  without  representation or
warranty of any kind, and shall be effected and evidenced  pursuant to documents
reasonably  acceptable to Swingline Lender. The obligations of the Lenders under
this subsection 2.1(B) shall be absolute,  irrevocable and unconditional,  shall
be made under all circumstances  and shall not be affected,  reduced or impaired
for any reason whatsoever.

                  (C) TERM LOAN.  Each Lender,  severally,  agrees to lend to CS
Acquisition, on the Closing Date, its Pro Rata Share of the Term Loan Commitment
which is in the aggregate  amount of $16,000,000.  The Term Loan shall be funded
in one drawing. Amounts borrowed under this subsection 2.1(C) and repaid may not
be  reborrowed.  Borrowers  shall make  principal  payments in the amount of the
applicable  Scheduled  Installment  of the Term Loan (or such  lesser  principal
amount as shall then be outstanding) on the dates set forth below.

                           "Scheduled  Installment" of the Term Loan means,  for
each date set forth below, the amount set forth opposite such date.

                  Date                                Scheduled Installment

                  October 31, 2007,  and on the            $ 572,000
                  last   day  of  each   fiscal
                  quarter   thereafter  through
                  and including July 31, 2011

                  Termination Date                        $6,848,000

                  (D) BORROWING  MECHANICS.  (1) LIBOR Loans made on any Funding
Date shall be in an aggregate minimum amount of $250,000 and integral  multiples
of $50,000 in excess of such amount.  (2) On any day when any Borrower desires a
Revolving  Advance under this subsection  2.1,  Borrowing Agent shall give Agent
written or  telephonic  notice of the  proposed  borrowing by 1:00 p.m. New York
City time on the Funding Date of a Base Rate Loan and three (3) Business Days in
advance of the Funding  Date of a LIBOR Loan,  which  notice  shall  specify the
proposed Funding Date (which shall be a Business Day),  whether such Loans shall
consist of Base Rate Loans or LIBOR Loans,  and,  for LIBOR Loans,  the Interest
Period applicable thereto.  Any such telephonic notice shall be confirmed with a
Notice  of  Borrowing  on the same day as such  request.  Neither  Agent nor any
Lender  shall  incur  any  liability  to any  Loan  Party  for  acting  upon any
telephonic notice or a Notice of Borrowing which Agent believes in good faith to
have been given by a duly  authorized  officer  or other  person  authorized  to
borrow on behalf of any  Borrower  or for  otherwise  acting in good faith under
this  subsection  2.1(D).  Neither Agent nor any Lender will be required to make
any  advance  pursuant  to any  telephonic  or  written  notice  or a Notice  of
Borrowing,  unless all of the terms and  conditions  set forth in Section 3 have
been  satisfied  and Agent has also  received  the most  recent  Borrowing  Base
Certificate and all other  documents  required under Section 5 and the Reporting
Rider by 1:00 p.m. New York City time on the date of such funding request.  Each
Advance shall be deposited by wire transfer in  immediately  available  funds in
such  account as  Borrowing  Agent may from time to time  designate  to Agent in
writing. The becoming due of any amount required to be paid under this Agreement
or any of the  other  Loan  Documents  as  principal,  Lender  Letter  of Credit


                                       26


reimbursement  obligation,  accrued  interest,  fees,  compensation or any other
amounts  shall be deemed  irrevocably  to be an  automatic  request by Borrowing
Agent on behalf of Borrowers for a Revolving Advance, which shall be a Base Rate
Loan on the due date of,  and in the  amount  required  to pay (as set  forth on
Agent's  books  and   records),   such   principal,   Lender  Letter  of  Credit
reimbursement  obligation,  accrued  interest,  fees,  compensation or any other
amounts.

                  (E) NOTES.  Borrowers shall execute and deliver to each Lender
with appropriate insertions Notes to evidence such Lender's Commitments.  In the
event of an assignment under subsection 9.5,  Borrowers shall, upon surrender of
the assigning  Lender's  Notes,  issue new Notes to reflect the interest held by
the assigning Lender and its Eligible Assignee.

                  (F) LETTERS OF CREDIT.  The Revolving Loan Commitments may, in
addition to  Revolving  Advances,  be  utilized,  upon the request of  Borrowing
Agent,  for (1) the  issuance  of  letters of credit by Agent;  or with  Agent's
consent any Lender,  or (2) the  issuance by GMAC CF or Agent of  guaranties  or
risk  participations  to banks to induce  such  banks to issue  Bank  Letters of
Credit  for the  account  of any  Borrower  (each of (1) and (2) above a "Lender
Letter  of  Credit").   Each  Lender  shall  be  deemed  to  have   purchased  a
participation  in each Lender  Letter of Credit issued on behalf of any Borrower
in an amount equal to its Pro Rata Share  thereof.  In no event shall any Lender
Letter of Credit be issued to the extent that the issuance of such Lender Letter
of Credit  would  cause the sum of the Letter of Credit  Reserve  (after  giving
effect to such  issuance),  plus the Revolving  Loan plus the Swingline  Loan to
exceed  the  lesser  of (1)  the  Borrowing  Base  and (2)  the  Revolving  Loan
Commitments.

                           (1) MAXIMUM AMOUNT. The aggregate amount of Letter of
Credit Liability with respect to all Lender Letters of Credit outstanding at any
time shall not exceed $10,000,000.

                           (2) REIMBURSEMENT. Each Borrower shall be irrevocably
and unconditionally obligated forthwith without presentment,  demand, protest or
other  formalities of any kind, to reimburse Agent or the issuer for any amounts
paid with respect to a Lender  Letter of Credit  including  all fees,  costs and
expenses  paid to any bank that  issues a Bank Letter of Credit.  Each  Borrower
hereby  authorizes and directs Agent,  at Agent's  option,  to debit  Borrowers'
account (by  increasing  the  Revolving  Loan) in the amount of any payment made
with respect to any Lender Letter of Credit.  In the event that Agent elects not
to debit Borrowers' account and Borrowers fail to reimburse Agent in full on the
date of any payment under a Lender Letter of Credit, Agent shall promptly notify
each Lender of the  unreimbursed  amount of such payment  together  with accrued
interest  thereon and each Lender,  on the next Business  Day,  shall deliver to
Agent an amount equal to its  respective  participation  in same day funds.  The
obligation of each Lender to deliver to Agent an amount equal to its  respective
participation   pursuant  to  the  foregoing  sentence  shall  be  absolute  and
unconditional and such remittance shall be made  notwithstanding  the occurrence
or  continuation of an Event of Default or Default or the failure to satisfy any
condition  set  forth  in  Section  3. In the  event  any  Lender  fails to make
available  to Agent the amount of such  Lender's  participation  in such  Lender
Letter of Credit,  Agent shall be entitled to recover such amount on demand from
such Lender  together  with  interest on such amount  calculated  at the Federal
Funds Effective Rate.


                                       27


                           (3) REQUEST FOR  LETTERS OF CREDIT.  Borrowing  Agent
shall give Agent at least
three (3) Business  Days prior  notice  specifying  the date a Lender  Letter of
Credit is to be issued, identifying the beneficiary and describing the nature of
the  transactions  proposed  to  be  supported  thereby.  The  notice  shall  be
accompanied by the form of the Letter of Credit being  requested.  Any Letter of
Credit which  Borrowing Agent requests must be in such form, be for such amount,
contain such terms and support such transactions as are reasonably  satisfactory
to Agent. The expiration date of each Lender Letter of Credit shall be on a date
which  is at least  thirty  (30)  days  prior to the  Termination  Date,  unless
otherwise agreed to by Agent.

                  (G) OTHER LETTER OF CREDIT PROVISIONS.

                           (1)  Obligations  Absolute.  The  obligation  of each
Borrower to reimburse Agent or
any Lender for payments  made under,  and other  amounts  payable in  connection
with, any Lender Letter of Credit shall be  unconditional  and  irrevocable  and
shall be paid under all  circumstances  strictly in accordance with the terms of
this Agreement including, without limitation, the following circumstances:

                                    (a) any lack of validity  or  enforceability
of any Lender Letter of
Credit, or any other agreement;

                                    (b) the  existence  of any  claim,  set-off,
defense or other right which any
Loan Party or any  Affiliate of a Loan Party or any other Person may at any time
have against any  beneficiary  or  transferee of any Lender Letter of Credit (or
any Persons for whom any such transferee may be acting),  Agent, any Lender, any
bank issuing a Bank Letter of Credit, or any other Person, whether in connection
with this Agreement,  any other Loan Document, or any other related or unrelated
agreements or transactions;

                                    (c) any draft,  demand,  certificate  or any
other document presented under
any  Lender  Letter of Credit  proving  to be  forged,  fraudulent,  invalid  or
insufficient in any respect or any statement  therein being untrue or inaccurate
in any respect;

                                    (d)  any  adverse  change  in the  business,
operations,  properties, assets, condition (financial or otherwise) or prospects
of Loan Parties or any of their Subsidiaries;

                                    (e)  any  breach  of this  Agreement  or any
other Loan Document by any party
thereto;

                                    (f)  any  other  circumstance  or  happening
whatsoever, whether or not
similar to any of the foregoing;

                                    (g) the fact that a  Default  or an Event of
Default shall have occurred
and be continuing; or

                                    (h)  payment  under  any  Lender  Letter  of
Credit against  presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Lender  Letter of Credit;  provided
that, in the case of any payment by Agent or a Lender under any Lender Letter of
Credit,  Agent or such  Lender has not acted with  gross  negligence  or willful


                                       28


misconduct  (as  determined  by a  final  non-appealable  order  by a  court  of
competent  jurisdiction)  in determining  that the demand for payment under such
Lender Letter of Credit  complies on its face with any  applicable  requirements
for a demand for payment under such Lender Letter of Credit.

                           (2) NATURE OF LENDER'S DUTIES.  As between any Lender
that issues a Lender Letter
of Credit (an "Issuing  Lender"),  on the one hand, and all Lenders on the other
hand,  all Lenders  assume all risks of the acts and  omissions of, or misuse of
any Lender Letter of Credit by the beneficiary  thereof.  In furtherance and not
in limitation of the  foregoing,  neither Agent nor any Issuing  Lender shall be
responsible: (a) for the form, validity,  sufficiency,  accuracy, genuineness or
legal effect of any document by any party in connection with the application for
and issuance of any Lender Letter of Credit,  even if it should in fact prove to
be in any or all  respects  invalid,  insufficient,  inaccurate,  fraudulent  or
forged;  (b) for the validity or sufficiency of any instrument  transferring  or
assigning or purporting to transfer or assign any Lender Letter of Credit or the
rights or benefits  thereunder or proceeds  thereof,  in whole or in part, which
may prove to be invalid or  ineffective  for any reason;  (c) for failure of the
beneficiary  of any  Lender  Letter of Credit to comply  fully  with  conditions
required in order to demand  payment  thereunder;  provided that, in the case of
any payment under any such Lender Letter of Credit,  any Issuing  Lender has not
acted with gross  negligence  or willful  misconduct  (as  determined by a final
non-appealable  order by a court of competent  jurisdiction) in determining that
the demand for payment  under any such Lender  Letter of Credit  complies on its
face with any applicable  requirements for a demand for payment thereunder;  (d)
for errors,  omissions,  interruptions  or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not they
be in cipher;  (e) for errors in  interpretation of technical terms; (f) for any
loss or delay in the transmission or otherwise of any document required in order
to make a payment under any such Lender Letter of Credit;  (g) for the credit of
the proceeds of any drawing under any such Lender Letter of Credit;  and (h) for
any  consequences  arising from causes beyond the control of Agent or any Lender
as the case may be.

                           (3) LIABILITY.  In  furtherance  and extension of and
not in limitation of, the
specific provisions herein above set forth, any action taken or omitted by Agent
or any Lender under or in connection with any Lender Letter of Credit,  if taken
or omitted in good faith,  shall not put Agent or any Lender under any resulting
liability to any Loan Party or any other Lender.

                  (H) AVAILABILITY OF A LENDER'S PRO RATA SHARE.

                           (1) Lender's  Amounts  Available  on a Funding  Date.
Unless Agent receives written
notice from a Lender on or prior to any  Funding  Date that such Lender will not
make available to Agent as and when required such Lender's Pro Rata Share of any
requested  Loan or  Advance,  Agent may assume  that each  Lender will make such
amount available to Agent in immediately available funds on the Funding Date and
Agent may (but shall not be so required), in reliance upon such assumption, make
available to the applicable Borrower on such date a corresponding amount.

                           (2) LENDER'S  FAILURE TO FUND.  A  Defaulting  Lender
shall pay interest to Agent at the Federal Funds Effective Rate on the Defaulted
Amount from the  Business  Day  following  the  applicable  Funding Date of such


                                       29


Defaulted Amount until the date such Defaulted Amount is paid to Agent. A notice
of Agent  submitted  to any Lender  with  respect to  amounts  owing  under this
subsection  shall be conclusive,  absent  manifest  error. If such amount is not
paid when due to Agent, Agent, at its option, may notify Borrowing Agent of such
failure to fund and, upon demand by Agent, Borrowers shall pay the unpaid amount
to Agent for  Agent's  account,  together  with  interest  thereon  for each day
elapsed  since  the date of such  borrowing,  at a rate per  annum  equal to the
interest  rate  applicable  at the time to the Loan made by the other Lenders on
such Funding  Date.  The failure of any Lender to make  available any portion of
its  Commitment  on any Funding  Date or to fund its  participation  in a Lender
Letter of Credit or  Swingline  Loan shall not relieve  any other  Lender of any
obligation hereunder to fund such Lender's Commitment on such Funding Date or to
fund any such participation,  but no Lender shall be responsible for the failure
of any other Lender to honor its  Commitment  on any Funding Date or to fund any
participation to be funded by any other Lender.

                           (3) PAYMENTS TO A DEFAULTING LENDER.  Notwithstanding
any  provision  to the contrary  contained  in this  Agreement or the other Loan
Documents,  Agent shall not be obligated to transfer to a Defaulting  Lender any
payment made by Borrowers to Agent or any amount otherwise received by Agent for
application to the Obligations nor shall a Defaulting  Lender be entitled to the
sharing of any interest, fees or payments hereunder.

                           (4)    DEFAULTING    LENDER'S    RIGHT    TO    VOTE.
Notwithstanding any provision to the contrary contained in this Agreement or the
other Loan  Documents  for  purposes  of voting or  consenting  to matters  with
respect to (a) the Loan Documents or (b) any other matter  concerning the Loans,
a  Defaulting  Lender  shall be deemed  not to be a "Lender"  and such  Lender's
Commitments and outstanding Loans and Advances shall be deemed to be zero.

         2.2. INTEREST.

                  (A) RATE OF  INTEREST.  The Loans  and all  other  Obligations
shall bear interest from the date such Loans are made or such other  Obligations
become due to the date paid at a rate per annum equal to (1) in the case of Base
Rate Loans and  Obligations  for which no interest rate basis is specified,  the
Base Rate PLUS the Applicable  Margin and (2) in the case of LIBOR Loans,  LIBOR
PLUS the Applicable Margin  (collectively the "Interest Rate"). Such designation
by  Borrowing  Agent may be changed  from time to time  pursuant  to  subsection
2.2(D).  If on any day a Loan or a  portion  of any  Loan  is  outstanding  with
respect to which notice has not been  delivered to Agent in accordance  with the
terms  of this  Agreement  specifying  the  basis  for  determining  the rate of
interest or if LIBOR has been  specified and no LIBOR quote is  available,  then
for that day that Loan or portion  thereof  shall bear  interest  determined  by
reference to the Base Rate.

                  After the occurrence and during the continuance of an Event of
Default (1) the Loans and all other Obligations  shall, at the election of Agent
or  Requisite  Lenders,  bear  interest at a rate per annum equal to two percent
(2%) PLUS the applicable Interest Rate (the "Default Rate"), (2) each LIBOR Loan
shall  automatically  convert  to a Base Rate Loan at the end of any  applicable
Interest Period and (3) no Loans may be converted to LIBOR Loans.


                                       30


                  (B) COMPUTATION AND PAYMENT OF INTEREST. Interest on the Loans
and all other  Obligations  shall be computed on the daily principal  balance on
the basis of a three  hundred sixty (360) day year for the actual number of days
elapsed.  In computing  interest on any Loan, the date of funding of the Loan or
the first day of an Interest Period  applicable to such Loan or, with respect to
a Base Rate Loan being  converted  from a LIBOR Loan,  the date of conversion of
such  LIBOR  Loan to such Base Rate  Loan,  shall be  included;  and the date of
payment of such Loan or the expiration date of an Interest Period  applicable to
such Loan, or with respect to a Base Rate Loan being  converted to a LIBOR Loan,
the date of  conversion  of such  Base Rate Loan to such  LIBOR  Loan,  shall be
excluded; provided that if a Loan is repaid on the same day on which it is made,
one (1) day's interest  shall be paid on that Loan.  Interest on Base Rate Loans
and all other  Obligations  other than LIBOR Loans shall be payable to Agent for
the benefit of Lenders monthly in arrears on the first day of each month, on the
date of any prepayment of Loans,  and at maturity,  whether by  acceleration  or
otherwise.  Interest on LIBOR Loans shall be payable to Agent for the benefit of
Lenders on the last day of the applicable  Interest Period for such Loan, on the
date of any prepayment of the Loans, and at maturity, whether by acceleration or
otherwise.  In addition,  for each LIBOR Loan having an Interest  Period  longer
than three (3)  months,  interest  accrued on such Loan shall also be payable on
the last day of each three (3) month interval during such Interest Period.

                  (C)  INTEREST  LAWS.  Notwithstanding  any  provision  to  the
contrary  contained in this  Agreement or any other Loan  Document,  no Borrower
shall be required to pay, and neither Agent nor any Lender shall be permitted to
collect,  any amount of  interest  in excess of the  maximum  amount of interest
permitted by  applicable  law  ("Excess  Interest").  If any Excess  Interest is
provided for or  determined  by a court of competent  jurisdiction  to have been
provided  for in this  Agreement  or in any other  Loan  Document,  then in such
event:  (1) the  provisions  of this  subsection  shall govern and control;  (2)
neither  any  Borrower  nor any other Loan Party shall be  obligated  to pay any
Excess  Interest;  (3) any  Excess  Interest  that  Agent or any Lender may have
received  hereunder shall be, at such Lender's  option,  (a) applied as a credit
against the  outstanding  principal  balance of the  Obligations  or accrued and
unpaid  interest  (not to exceed  the  maximum  amount  permitted  by law),  (b)
refunded to the payor thereof, or (c) any combination of the foregoing;  (4) the
interest  rate(s)  provided  for herein  shall be  automatically  reduced to the
maximum lawful rate allowed from time to time under applicable law (the "Maximum
Rate"),  and this Agreement and the other Loan Documents shall be deemed to have
been and shall be,  reformed  and modified to reflect  such  reduction;  and (5)
neither  any  Borrower  nor any other Loan Party  shall have any action  against
Agent or any Lender for any damages  arising out of the payment or collection of
any Excess Interest.  Notwithstanding  the foregoing,  if for any period of time
interest on any  Obligations  is  calculated at the Maximum Rate rather than the
applicable  rate under this  Agreement,  and  thereafter  such  applicable  rate
becomes  less  than the  Maximum  Rate,  the rate of  interest  payable  on such
Obligations  shall  remain at the  Maximum  Rate  until each  Lender  shall have
received  the amount of interest  which such Lender would have  received  during
such period on such Obligations had the rate of interest not been limited to the
Maximum Rate during such period.

                  (D)   CONVERSION  OR   CONTINUATION.   Subject  to  the  other
provisions of this  Agreement,  including,  without  limitation,  satisfying the
conditions set forth in Section 3, Borrowing  Agent shall have the option to (1)
convert at any time all or any part of  outstanding  Loans equal to $250,000 and
integral  multiples  of $50,000 in excess of that amount from Base Rate Loans to


                                       31


LIBOR Loans or (2) upon the  expiration of any Interest  Period  applicable to a
LIBOR  Loan,  to (a)  continue  all or any  portion  of such LIBOR Loan equal to
$250,000 and  integral  multiples of $50,000 in excess of that amount as a LIBOR
Loan or (b)  convert  all or any portion of such LIBOR Loan to a Base Rate Loan.
The succeeding  Interest  Period(s) of such continued or converted Loan commence
on the last day of the Interest Period of the Loan to be continued or converted;
provided that no outstanding  Loan may be continued as, or be converted  into, a
LIBOR Loan, when any Event of Default or Default has occurred and is continuing.

                  Borrowing  Agent  shall  deliver  a Notice of  Borrowing  with
respect  to any such  conversion/continuation  to Agent no later  than 1:00 p.m.
(New York City time) at least three (3) Business Days in advance of the proposed
conversion/continuation  date.  The  Notice of  Borrowing  with  respect to such
conversion/continuation shall certify: (1) the proposed  conversion/continuation
date  (which  shall  be a  Business  Day);  (2)  the  amount  of the  Loan to be
converted/continued; (3) the nature of the proposed conversion/continuation; (4)
in the case of conversion to, or a continuation  of, a LIBOR Loan, the requested
Interest  Period;  (5) that no Default or Event of Default has  occurred  and is
continuing  or would result from the proposed  conversion/continuation;  and (6)
that all conditions to make Loans as set forth in Section 3 have been satisfied.

                  In lieu of  delivering a Notice of  Borrowing  with respect to
any such  conversion/continuation,  Borrowing  Agent may give  Agent  telephonic
notice by the required time of any proposed  conversion/continuation  under this
subsection  2.2(D) (in such telephonic  notice  Borrowing Agent shall certify to
the items set forth  above with  respect to the Notice of  Borrowing);  provided
that such telephonic  notice shall be promptly  confirmed in writing by delivery
of a Notice of Borrowing (in form and substance  described  herein) with respect
to  such   conversion/continuation   to  Agent  on  or   before   the   proposed
conversion/continuation  date.  Once  given,  Borrowers  shall  be bound by such
telephonic  notice.  Upon the expiration of an Interest Period for a LIBOR Loan,
in the absence of a new Notice of Borrowing or a telephonic  notice submitted to
Agent not less than three (3)  Business  Days prior to the end of such  Interest
Period, the LIBOR Loan then maturing shall be automatically  converted to a Base
Rate Loan.

                  Neither  Agent nor any Lender shall incur any liability to any
Borrower  or any other  Loan  Party in acting  upon any  telephonic  notice or a
Notice of Borrowing  referred to above that Agent believes in good faith to have
been  given by an  officer  or  other  person  authorized  to act on  behalf  of
Borrowers or for otherwise acting in good faith under this subsection 2.2(D).

         2.3. FEES.

                  (A) UNUSED  LINE FEE.  Borrowers  shall pay to Agent,  for the
benefit of Lenders,  a fee in an amount equal to the Revolving  Loan  Commitment
less the sum of (1) the average daily balance of each of the Revolving  Loan and
Swingline  Loan plus,  (2) the average daily face amount of the Letter of Credit
Reserve  during the preceding  month,  multiplied by (3) one-half of one percent
(0.50%) per annum.  Such fee to be  calculated  on the basis of a three  hundred
sixty  (360) day year for the actual  number of days  elapsed  and to be payable
monthly in arrears on the first day of each month following the Closing Date.


                                       32


                  (B) LETTER OF CREDIT FEES.  Borrowers shall pay to Agent a fee
with respect to the Lender  Letters of Credit (1) for the benefit of all Lenders
with a Revolving Loan Commitment  (based on their  respective Pro Rata Share) in
the amount of the average daily amount of Letter of Credit Liability outstanding
during such month multiplied by 2.75% per annum and (2) for the account of Agent
a fronting fee for each Lender Letter of Credit issued or obtained by Agent from
the date of  issuance  to the date of  termination  equal to the  average  daily
amount of Letter of Credit  Liability  with  respect to such  Lender  Letters of
Credit outstanding during such month multiplied by twenty-five one hundredths of
one percent  (0.25%) per annum.  Such fees will be  calculated on the basis of a
three  hundred  sixty (360) day year for the actual  number of days  elapsed and
will be payable  monthly in  arrears on the first day of each  month.  Borrowers
shall also  reimburse  Agent for any and all fees and expenses,  if any, paid by
Agent or any Lender to the issuer of any Bank Letter of Credit.

                  (C) [INTENTIONALLY OMITTED].

                  (D) [INTENTIONALLY OMITTED].

                  (E) AUDIT FEES.  Borrowers  agree to pay all fees and expenses
of the firm or individual(s) engaged by Agent to perform audits or appraisals of
Loan Parties' assets and/or operations.  Notwithstanding the foregoing, if Agent
uses its internal auditors to perform any such audit,  Borrowers agree to pay to
Agent,  for its own account,  an audit fee with respect to each such audit equal
to $1,000 per internal  auditor per day or any portion thereof together with all
out of pocket expenses.  Provided,  however, prior to a Default,  Borrowers will
not have to pay for more than three (3) audits and one (1) appraisal per year.

                  (F) OTHER FEES AND EXPENSES. Borrowers shall pay to Agent, for
its own  account,  all charges  for  returned  items and all other bank  charges
incurred by Agent,  as well as Agent's  standard wire transfer  charges for each
wire transfer made under this Agreement.

                  (G) FEE LETTER.  Borrowers shall pay to GMAC CF, individually,
the fees specified in that certain letter  agreement dated as of the date hereof
among Borrowers and GMAC CF.

         2.4. PAYMENTS AND PREPAYMENTS.

                  (A) MANNER AND TIME OF PAYMENT. In its sole discretion,  Agent
may elect to honor the  automatic  requests  by  Borrowing  Agent for  Revolving
Advances, for all principal,  Lender Letter of Credit reimbursement obligations,
interest, fees, compensation and any other amounts due hereunder or under any of
the other Loan Documents on their applicable due dates, and the proceeds of each
such  Revolving  Advance,  if made,  shall be applied as a direct payment of the
relevant  Obligation.  To the extent  such  amounts  exceed the  Revolving  Loan
Commitment of all Revolving  Loan Lenders,  or if Agent elects to bill Borrowers
for any amount due  hereunder  or under any of the other  Loan  Documents,  such
amount shall be immediately due and payable with interest  thereon accruing from
the  applicable  due date.  All payments  made by Borrowers  with respect to the
Obligations shall be made without  deduction,  defense,  setoff or counterclaim.
All payments to Agent hereunder shall,  unless  otherwise  directed by Agent, be
made to Agent's  Account or in accordance  with  subsection  4.22.  All payments
remitted to Agent's  Account  shall be credited to the  Obligations  on the same


                                       33


Business Day as such  payments are  received by Agent in  immediately  available
funds;  provided,  however,  payments  received by Agent after 2:00 P.M..  (EST)
shall be deemed received on the next Business Day.  Borrowing Agent shall notify
Agent by Noon  (EST)  if  Borrowers  intend  to make any  voluntary  payment  or
repayment of the Obligations to the Agent's Account.

                  (B) MANDATORY PREPAYMENTS.

                           (1)  OVER  FORMULA  ADVANCE.  At any  time  that  the
Revolving  Loan  exceeds the  Maximum  Revolving  Loan Amount (an "Over  Formula
Advance"),   Borrowers  shall,  immediately  repay  the  Revolving  Loan  and/or
Swingline Loan to the extent necessary to eliminate the Over Formula Advance.

                           (2) PREPAYMENTS FROM PROCEEDS OF ASSET  DISPOSITIONS.
Promptly,  but in no event later than seven (7) Business  Days after  receipt by
any  Loan  Party of  proceeds  of any  Asset  Dispositions  (including,  without
limitation,  any insurance  proceeds),  which  proceeds  exceed  $250,000 in the
aggregate (it being understood that if the proceeds exceed $250,000,  the entire
amount  and not  just the  portion  above  $250,000  shall  be  subject  to this
subsection 2.4(B)(2)), Borrowers shall prepay the Obligations in an amount equal
to the net proceeds  (I.E.,  gross  proceeds less the  reasonable  costs of such
sales or other dispositions and less any Indebtedness for borrowed money secured
by a Lien described in clause (e) of the  definition of Permitted  Encumbrances)
from such Asset Dispositions. All such prepayments shall be applied to the Loans
in accordance with subsection 2.4(E); PROVIDED, HOWEVER, if Borrowers reasonably
expect the proceeds of any Asset Disposition to be reinvested within one hundred
eighty  (180) days to repair or replace  such  assets  with  assets of a similar
class,  Borrowers  shall  deliver  the  proceeds  to Agent to be  applied to the
Revolving Loan and Agent shall establish a reserve  against  available funds for
borrowing purposes under the Revolving Loan for such amount,  until such time as
such proceeds have been re-borrowed or applied to other Obligations as set forth
herein. If Borrowers so elect to deliver such proceeds to Agent,  Borrowers may,
so long as no Default or Event of Default shall have occurred and be continuing,
reborrow such proceeds only for such repair or replacement. If Borrowers fail to
reinvest such proceeds  within one hundred eighty (180) days,  Borrowers  hereby
authorize  Agent and  Lenders to make a  Revolving  Advance in the amount of the
remaining  reserve  to repay the  Loans in the  manner  set forth in  subsection
2.4(E).

                           (3)  PREPAYMENTS  FROM EXCESS  CASH FLOW.  Within ten
(10) days after the date that the annual financial statements of Loan Parties on
a  consolidated  basis are required to be delivered  to Agent,  Borrowers  shall
prepay the  Obligations in an amount equal to fifty percent (50%) of Excess Cash
Flow for such prior Fiscal Year calculated on the basis of the audited financial
statements for such Fiscal Year  delivered to Agent and Lenders  pursuant to the
Reporting  Rider. All such prepayments from Excess Cash Flow shall be applied to
the Loans in accordance with subsection 2.4(E).  Concurrently with the making of
any such  payment,  Borrowing  Agent  shall  deliver  to  Agent  and  Lenders  a
certificate  of Borrowing  Agent's chief  executive  officer or chief  financial
officer demonstrating its calculation of the amount required to be paid.


                                       34


                           (4)   PREPAYMENTS   FROM   ISSUANCE  OF   SECURITIES.
Promptly,  but in no event later than seven (7) Business  Days after  receipt by
any Loan Party of the proceeds of the issuance of equity  securities (other than
proceeds of the issuance of equity securities  received on or before the Closing
Date), Borrowers shall prepay the Loans in an amount equal to such proceeds, net
of underwriting  discounts and commissions and other reasonable costs associated
therewith. All such prepayments shall be applied to the Loans in accordance with
subsection 2.4(E).

                           (5) PREPAYMENTS  FROM TAX REFUNDS.  Immediately  upon
the receipt by any Loan Party
of the  proceeds  of any tax  refunds,  Borrowers  shall  prepay the Loans in an
amount  equal to such  proceeds.  All such  prepayments  shall be applied to the
Loans in accordance with subsection 2.4(E).

                           (6)  PREPAYMENTS  FROM  PAYMENTS  RECEIVED  FROM  THE
DISBURSING  AGENT.  Immediately  upon the  receipt by any Loan Party of any cash
proceeds   received  from  the  Disbursing  Agent  under  the  Disbursing  Agent
Agreement, Borrowers shall prepay the Loans in an amount equal to such proceeds.
All such prepayments shall be applied to the Loans in accordance with subsection
2.4(E); PROVIDED,  HOWEVER, when Borrowers deliver any such proceeds to Agent to
be applied to the  Revolving  Loan,  Agent  shall  establish  a reserve  against
available funds for borrowing purposes under the Revolving Loan for such amount,
until  such time as such  proceeds  have been  re-borrowed  or  applied to other
Obligations  as set forth herein.  Borrowers may, so long as no Default or Event
of Default shall have occurred and be continuing or would result therefrom, have
such  reserve  released  and  reborrow  such  proceeds for payment of the Merger
Consideration.  If Borrowers have not utilized such proceeds within one (1) year
of receipt by Agent,  Agent shall  release the then  remaining  reserve and such
amounts may be re-borrowed by the Borrowers, subject to the terms and conditions
contained in this Agreement.

                  (C) VOLUNTARY  PREPAYMENTS AND  REPAYMENTS.  Borrowers may, at
any time  upon not less than  three (3)  Business  Days  prior  notice to Agent,
prepay the Term Loan or  terminate  the  Revolving  Loan  Commitment;  provided,
however,  the Revolving Loan Commitment may not be terminated by Borrowers until
all Obligations are paid in full. Any prepayment of the Obligations permitted in
this subsection  2.4(C) shall be subject to the payment of all fees set forth in
subsection  2.3 and the Fee Letter and the payment of any amounts owing pursuant
to  subsection  2.12  resulting  from such  prepayment.  In the event any Lender
Letters  of  Credit  are  outstanding  at the time  that  Borrowers  prepay  the
Obligations  and desire to terminate the Revolving  Loan  Commitment,  Borrowers
shall cause Agent and each Lender to be released  from all  liability  under any
Lender Letters of Credit or, at Agent's option, Borrowers shall (1) deposit with
Agent for the benefit of all Lenders with a Revolving Loan Commitment cash in an
amount equal to one hundred and five percent (105%) of the aggregate outstanding
Letter of Credit  Reserve to be  available  to Agent to  reimburse  payments  of
drafts  drawn under such Lender  Letters of Credit and pay any fees and expenses
related  thereto and (2) prepay the fees payable  under  subsection  2.3(B) with
respect to such Lender  Letters of Credit for the full  remaining  terms of such
Lender Letters of Credit.  Upon termination of any such Lender Letter of Credit,
the unearned  portion of such prepaid fee  attributable to such Lender Letter of
Credit shall be refunded to Borrowers.


                                       35


                  (D) PAYMENTS ON BUSINESS DAYS. Whenever any payment to be made
hereunder  shall be stated to be due on a day that is not a  Business  Day,  the
payment may be made on the next  succeeding  Business Day and such  extension of
time shall be included in the  computation of the amount of interest or fees due
hereunder.

                  (E) APPLICATION OF PREPAYMENT PROCEEDS.

                           (1)  Prepayments  described in subsections  2.4(B)(2)
consisting  of proceeds of Accounts or Inventory  shall be applied to reduce the
outstanding  principal  balance of the  Revolving  Loans but not as a  permanent
reduction of the Revolving Loan Commitment.

                           (2)  All   prepayments   in  respect  of   subsection
2.4(B)(2)  (other than those described in (1) above),  2.4(B)(3),  2.4(B)(4) and
2.4(B)(5) shall be applied in the following order of priority:

                           FIRST,  in payment of Scheduled  Installments  of the
                  Term Loan, in inverse order of maturity;

                           SECOND,  to reduce the outstanding  principal balance
                  of the  Revolving  Loans (but not as a permanent  reduction of
                  the Revolving Loan  Commitment) to an amount so that Borrowers
                  will have  $7,500,000  of Undrawn  Availability  after  giving
                  effect to such payment; and

                           THIRD,  to prepay the  outstanding  principal  of the
                  Second Lien Term Loan Debt in accordance  with the Second Lien
                  Term Loan Loan Agreement,  PROVIDED if at the time of any such
                  prepayment  an Event of  Default  shall have  occurred  and be
                  continuing or would occur as a result thereof,  the amounts to
                  be  applied  in  accordance  with  sub-clause  "third" of this
                  subsection  2.4(E)  shall  instead  be  applied  to reduce the
                  outstanding  principal  balance of the Revolving  Loans with a
                  concurrent and equivalent permament reduction of the Revolving
                  Loan Commitment.

                           (3) With  respect  to the  prepayments  described  in
subsection   2.4(B)(6),   such  prepayments  shall  be  applied  to  reduce  the
outstanding  principal  balance of the  Revolving  Loans but not as a  permanent
reduction of the Revolving Loan Commitment.

                           (4)  Considering  each  type  of Loan  being  prepaid
separately,  any prepayment under this subsection  2.4(E) shall be applied first
to Base Rate Loans of the type  required  to be prepaid  before  application  to
LIBOR Loans of the type required to be prepaid.

                           (5)  Notwithstanding  the foregoing,  the proceeds of
the  Management  Equity  Contribution,  the Fiscal  Year 2006 Tax Refund and the
Insurance  Monetization  shall be applied to reduce  the  outstanding  principal
balance of the Revolving Loans but not as a permanent reduction of the Revolving
Loan Commitment.

           2.5. TERM OF THIS AGREEMENT.  This Agreement shall be effective until
the earlier of (a) October 31, 2011,  (b) ninety (90) days prior to the date set
forth in sub-clause (a) of subsection 2.5 of the Second Lien Term Loan Agreement
and (c) the  acceleration  of all  Obligations  pursuant to subsection  8.3 (the


                                       36


"Termination  Date"). The Commitments shall terminate (unless earlier terminated
pursuant to the terms  hereunder) upon the Termination  Date and all Obligations
shall   become   immediately   due  and  payable   without   notice  or  demand.
Notwithstanding any termination,  until all Obligations have been fully paid and
satisfied,  Agent, on behalf of itself and Lenders,  shall be entitled to retain
security  interests in and liens upon all Collateral,  and even after payment of
all Obligations  hereunder,  each  Borrower's  obligation to indemnify Agent and
each Lender in accordance with the terms hereof shall continue.

         2.6.  STATEMENTS.  Agent shall render a monthly statement of account to
Borrowing  Agent  within  twenty  (20) days  after the end of each  month.  Such
statement of account shall  constitute an account stated unless  Borrowing Agent
makes  written  objection  thereto  within  thirty  (30) days from the date such
statement  is mailed to  Borrowing  Agent.  Agent shall  record in its books and
records,  including  computer  records,  (a) all  Loans,  interest  charges  and
payments  thereof,  (b) all Letter of Credit  Liability,  (c) the  charging  and
payment of all fees,  costs and  expenses  and (d) all other  debits and credits
pursuant to this  Agreement.  The balance in the loan accounts shall  constitute
presumptive evidence,  absent manifest error, of the accuracy of the information
contained  therein;  provided,  however,  that any failure by Agent to so record
shall not limit or affect any Loan Party's obligation to pay.

         2.7. GRANT OF SECURITY INTEREST.

                  (A) GRANT OF LIENS IN THE  COLLATERAL.  To secure the  payment
and  performance  of  the  Obligations,   including  all  renewals,  extensions,
restructurings  and  refinancings  of any or all of the  Obligations,  each Loan
Party hereby grants to Agent, for the benefit of Agent and Lenders, a continuing
security  interest in, lien and mortgage in and to, right of setoff  against and
collateral  assignment of all of such Loan  Parties'  personal and real property
and all rights to such  personal and real  property,  in each case,  whether now
owned or existing or  hereafter  acquired  or arising  and  regardless  of where
located  (all being  collectively  referred to as the  "Collateral")  including,
without  limitation,  all: (1) Accounts;  (2) Chattel Paper; (3) Commercial Tort
Claims,  including those specified on Schedule 2.7(A);  (4) Deposit Accounts and
cash and other monies and property of any Loan Party in the  possession or under
the control of Agent,  any Lender or any participant of any Lender in the Loans;
(5) Documents (including, without limitation, all manufacturers' certificates or
statements of origin);  (6)  Equipment;  (7) Fixtures;  (8) General  Intangibles
(including Intellectual Property); (9) Goods; (10) Instruments;  (11) Inventory;
(12)  Investment   Property;   (13)   Letter-of-Credit   Rights  and  Supporting
Obligations; (14) other personal property whether or not subject to the UCC; and
(15) Mortgaged Property;  together with all books, records, ledger cards, files,
correspondence,  computer  programs,  tapes,  disks and related data  processing
software that at any time evidence or contain information relating to any of the
property described above or are otherwise necessary or helpful in the collection
thereof or realization  thereon;  and Proceeds and products of all or any of the
property described above.

                  (B)  LOAN  PARTIES  REMAIN  LIABLE.  Anything  herein  to  the
contrary  notwithstanding:  (a) each Loan Party shall  remain  liable  under the
contracts  and  agreements  included in the  Collateral  to the extent set forth
therein to perform  all of its duties  and  obligations  thereunder  to the same
extent as if this  Agreement or the other Loan  Documents had not been executed;
(b) the exercise by Agent of any of the rights under this Agreement or the other
Loan  Documents  shall not release  any Loan Party from any of their  respective
duties or obligations to the parties under the contracts and agreements included


                                       37


in the Collateral; (c) neither Agent nor any Lender shall have any obligation or
liability  under the  contracts  and  agreements  included in the  Collateral by
reason of this  Agreement or the other Loan  Documents,  nor shall Agent nor any
Lender be  obligated  to perform  any of the  obligations  or duties of any Loan
Party  thereunder  or to take any action to  collect  or  enforce  any claim for
payment  assigned  under this  Agreement  or the other Loan  Documents;  and (d)
neither  Agent nor any Lender  shall have any  liability in contract or tort for
any Loan Party's acts or omissions.

         2.8. YIELD PROTECTION.

                  (A) CAPITAL ADEQUACY AND OTHER  ADJUSTMENTS.  In the event any
Lender shall have determined that the adoption after the date hereof of any law,
treaty,  governmental (or  quasi-governmental)  rule,  regulation,  guideline or
order regarding capital adequacy,  reserve  requirements or similar requirements
or compliance by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements  (whether or not having the force of law and whether or not failure
to comply  therewith  would be unlawful)  from any central bank or  governmental
agency or body having  jurisdiction  does or shall have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender or any corporation  controlling such Lender and thereby reducing the rate
of return on such Lender's or such corporation's capital as a consequence of its
obligations  hereunder,  then  Borrowers  shall  within  fifteen (15) days after
notice and demand from such Lender (together with the certificate referred to in
the next  sentence  and with a copy to Agent) pay to Agent,  for the  account of
such Lender,  additional  amounts  sufficient to compensate such Lender for such
reduction.  A certificate as to the amount of such cost and showing the basis of
the  computation of such cost submitted by such Lender to Borrowing Agent shall,
absent manifest error, be final, conclusive and binding for all purposes.

                  (B) INCREASED LIBOR FUNDING COSTS.  If, after the date hereof,
the introduction of, change in or interpretation  of any law, rule,  regulation,
treaty or directive would impose or increase reserve requirements (other than as
taken into account in the definition of LIBOR) or otherwise increase the cost to
any Lender of making or maintaining a LIBOR Loan, then Borrowers shall from time
to time within  fifteen  (15) days after  notice and demand  from such  affected
Lenders (together with the certificate referred to in the next sentence and with
a copy to  Agent)  pay to  Agent,  for the  account  of such  affected  Lenders,
additional  amounts  sufficient  to compensate  such Lenders for such  increased
cost. A  certificate  as to the amount of such cost and showing the basis of the
computation of such cost submitted by such affected  Lenders to Borrowing  Agent
and Agent shall, absent manifest error, be final, conclusive and binding for all
purposes.

         2.9. TAXES.

                  (A) NO DEDUCTIONS. Any and all payments or reimbursements made
hereunder shall be made free and clear of and without  deduction for any and all
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto (all such taxes, levies,  imposts,  deductions,  charges or
withholdings and all liabilities with respect thereto referred to herein as "Tax
Liabilities";  excluding, however, taxes imposed on the net income of any Lender
or Agent by the  jurisdiction  under the laws of which  Agent or such  Lender is
organized  or doing  business  or any  political  subdivision  thereof and taxes


                                       38


imposed  on its net  income by the  jurisdiction  of  Agent's  or such  Lender's
applicable lending office or any political subdivision). If any Loan Party shall
be required by law to deduct any such Tax Liabilities  from or in respect of any
sum payable  hereunder  to Agent or any Lender,  then the sum payable  hereunder
shall be  increased  as may be  necessary  so that,  after  making all  required
deductions,  Agent or such Lender  receives an amount  equal to the sum it would
have received had no such deductions been made.

                  (B) CHANGES IN TAX LAWS. In the event that,  subsequent to the
Closing  Date,  (1) any  changes  in any  existing  law,  regulation,  treaty or
directive or in the  interpretation  or  application  thereof,  (2) any new law,
regulation,  treaty or directive  enacted or any  interpretation  or application
thereof, or (3) compliance by a Lender with any request or directive (whether or
not  having  the  force  of law)  from any  Governmental  Authority,  agency  or
instrumentality:

                                    (a)  does  or  shall  subject  Agent  or any
Lender to any tax of any kind  whatsoever  with respect to this  Agreement,  the
other  Loan  Documents  or any Loans  made or Lender  Letters  of Credit  issued
hereunder,  or change the basis of  taxation of payments to Agent or such Lender
of principal,  fees,  interest or any other amount payable hereunder (except for
net income  taxes,  or  franchise  taxes  imposed  in lieu of net income  taxes,
imposed generally by federal,  state or local taxing authorities with respect to
interest or commitment or other fees payable hereunder or changes in the rate of
tax on the overall net income of Agent or such Lender); or

                                    (b)  does or  shall  impose  on Agent or any
Lender any other condition or increased cost in connection with the transactions
contemplated  hereby  or  participations  herein;  and the  result of any of the
foregoing  is to increase the cost to Agent or such Lender of issuing any Lender
Letter of Credit or making or continuing any Loan hereunder, as the case may be,
or to reduce any amount receivable hereunder;

then, in any such case,  Borrowers  shall  promptly pay to Agent or such Lender,
upon its notice and demand, any additional amounts necessary to compensate Agent
or such  Lender,  on an after-tax  basis,  for such  additional  cost or reduced
amount  receivable,  as  determined by Agent or such Lender with respect to this
Agreement or the other Loan Documents.  If Agent or any Lender becomes  entitled
to claim any additional  amounts pursuant to this subsection,  it shall promptly
notify  Borrowing Agent of the event by reason of which Agent or such Lender has
become so  entitled  (with any such  Lender  concurrently  notifying  Agent).  A
certificate  as to any  additional  amounts  payable  pursuant to the  foregoing
sentence  submitted  by Agent or any Lender to  Borrowing  Agent  shall,  absent
manifest error, be final, conclusive and binding for all purposes.

                  (C) FOREIGN LENDERS. Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement are exempt from United States withholding tax or
are  subject  to  United  States  withholding  tax at a  reduced  rate  under an
applicable  statute or tax treaty shall provide to Borrowing Agent and Agent (1)
a properly  completed and executed  Internal Revenue Service Form W-8BEN or Form
W-8ECI or other  applicable  form,  certificate  or document  prescribed  by the
Internal  Revenue Service of the United States of America  certifying as to such
Foreign  Lender's  entitlement  to such exemption or reduced rate of withholding
with respect to payments to be made to such Foreign Lender under this Agreement,


                                       39


(a  "Certificate  of  Exemption"),  or (2) a letter from any such Foreign Lender
stating  that it is not  entitled  to any  such  exemption  or  reduced  rate of
withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender under this
Agreement  and within  fifteen (15) days after a reasonable  written  request of
Borrowing Agent or Agent from time to time thereafter,  each Foreign Lender that
becomes a Lender under this  Agreement  shall provide a Certificate of Exemption
or a Letter of Non-Exemption to Borrowing Agent and Agent.

                           If a Foreign  Lender is entitled to an exemption with
respect to payments to be made to such Foreign  Lender under this  Agreement (or
to a  reduced  rate of  withholding)  and  does not  provide  a  Certificate  of
Exemption to Borrowing  Agent and Agent within the time periods set forth in the
preceding  paragraph,  Loan Parties shall  withhold  taxes from payments to such
Foreign  Lender at the  applicable  statutory  rates and no Loan Party  shall be
required  to pay  any  additional  amounts  as a  result  of  such  withholding;
provided,  however,  that all such withholding shall cease upon delivery by such
Foreign Lender of a Certificate of Exemption to Borrowing Agent and Agent.

                  (D) MITIGATION.  If any Borrower is required to pay additional
amounts to any Lender or the Agent  pursuant  to  SUBSECTION  (A) OR (B) of this
Section,  then such Lender shall use reasonable  efforts  (consistent with legal
and regulatory restrictions) to change the jurisdiction of its lending office so
as to  eliminate  any  such  additional  payment  by  such  Borrower  which  may
thereafter  accrue,  if  such  change  in the  judgment  of such  Lender  is not
otherwise materially disadvantageous to such Lender.

         2.10.  REQUIRED  TERMINATION AND PREPAYMENT.  If on any date any Lender
shall  have  reasonably  determined  (which  determination  shall be  final  and
conclusive and binding upon all parties) that the making or  continuation of its
LIBOR Loans has become  unlawful or  impossible  by compliance by such Lender in
good faith with any law,  governmental rule, regulation or order (whether or not
having the force of law and whether or not failure to comply  therewith would be
unlawful),  then, and in any such event,  that Lender shall promptly give notice
(by  telephone  confirmed  in  writing)  to  Borrowing  Agent  and Agent of that
determination.  Subject  to  prior  withdrawal  of  a  Notice  of  Borrowing  or
prepayment of LIBOR Loans as contemplated by subsection  2.12, the obligation of
such Lender to make or maintain  its LIBOR Loans during any such period shall be
terminated  at the earlier of the  termination  of the  Interest  Period then in
effect or when required by law and Borrowers shall no later than the termination
of the Interest Period in effect at the time any such determination  pursuant to
this  subsection  2.10 is made or, earlier when required by law, repay or prepay
LIBOR Loans together with all interest accrued thereon or convert LIBOR Loans to
Base Rate Loans.

         2.11. OPTIONAL  PREPAYMENT/REPLACEMENT  OF LENDERS. Within fifteen (15)
days after receipt by Borrowing Agent of: (a) written notice and demand from any
Lender  for  payment  of  additional  costs as  provided  in  subsection  2.8 or
subsection  2.9, or (b) written  notice of any Lender's  inability to make LIBOR
Loans as provided in subsection 2.10, (any such Lender demanding such payment or
having  such  inability  being  referred  to  herein as an  "Affected  Lender"),
Borrowing  Agent may, at its option notify Agent and such Affected Lender of its
intention  to take one of the actions set forth herein in  subparagraphs  (A) or
(B) below.


                                       40


                  (A) REPLACEMENT OF AN AFFECTED  LENDER.  Borrowers may obtain,
at  Borrowers'  expense,  a  replacement  Lender  ("Replacement  Lender") for an
Affected Lender,  which Replacement  Lender shall be reasonably  satisfactory to
Agent. In the event Borrowers obtain a Replacement Lender that will purchase all
outstanding  Obligations owed to such Affected Lender and assume its Commitments
hereunder within ninety (90) days following notice of Borrowers' intention to do
so, the Affected  Lender shall sell and assign its Loans and Commitments to such
Replacement  Lender  in  accordance  with  the  provisions  of  subsection  9.5;
provided,  however,  Borrowers have (1) reimbursed  such Affected Lender for any
administrative  fee  payable  by such  Affected  Lender  to  Agent  pursuant  to
subsection 9.5 and, (2) in any case where such replacement  occurs as the result
of a  demand  for  payment  of  certain  costs  pursuant  to  subsection  2.8 or
subsection  2.9,  paid all  increased  costs for which such  Affected  Lender is
entitled to under subsection 2.8 or subsection 2.9 through the date of such sale
and assignment; or

                  (B) PREPAYMENT OF AN AFFECTED LENDER.  Borrowers may prepay in
full all outstanding  Obligations  owed to an Affected Lender and terminate such
Affected  Lender's  Commitments.   Borrowers  shall,  within  ninety  (90)  days
following  notice of their  intention to do so,  prepay in full all  outstanding
Obligations  owed to such Affected  Lender,  including  such  Affected  Lender's
increased costs for which it is entitled to  reimbursement  under this Agreement
through  the  date of such  prepayment  and  terminate  such  Affected  Lender's
Commitments.

         2.12.  COMPENSATION.  Borrowers shall promptly compensate Agent for the
benefit of Lenders (Agent's  calculation of such amounts shall,  absent manifest
error,  be  conclusive  and binding  upon all parties  hereto),  for any losses,
expenses and  liabilities  including,  without  limitation,  any loss (including
interest paid) sustained by such Lender in connection with the  re-employment of
funds: (a) if for any reason (other than a default by any Lender) a borrowing of
any  LIBOR  Loan  does not  occur on a date  specified  therefor  in a Notice of
Borrowing or a telephonic  request of borrowing by Borrowing  Agent;  (b) if any
prepayment  of any of its LIBOR Loans  occurs on a date that is not the last day
of an Interest Period  applicable to that Loan (regardless of the source of such
prepayment and whether  voluntary,  by  acceleration  or otherwise);  (c) if any
prepayment  of any of its  LIBOR  Loans is not made on any date  specified  in a
notice of prepayment  given by Borrowers;  or (d) as a consequence  of any other
default by  Borrowers  to repay their LIBOR Loans when  required by the terms of
this Agreement; provided, however, during the period while any such amounts have
not been  paid,  Agent  may,  in its sole  discretion,  (i) in  accordance  with
subsection 2.4(A), elect to honor the automatic request by Borrowing Agent for a
Revolving  Advance for such amount pursuant to subsection 2.1(C) or (ii) reserve
an equal  amount from  amounts  otherwise  available  to be  borrowed  under the
Revolving Loan.

         2.13.  BOOKING OF LIBOR LOANS.  Each Lender may make, carry or transfer
LIBOR  Loans at, to, or for the  account  of,  any of its branch  offices or the
office of an affiliate of such Lender.

         2.14. ASSUMPTIONS CONCERNING FUNDING OF LIBOR LOANS. Calculation of all
amounts  payable to each Lender  under  subsection  2.12 shall be made as though
each Lender had actually  funded its relevant LIBOR Loan through the purchase of
a LIBOR  deposit  bearing  interest at LIBOR in an amount equal to the amount of
that LIBOR Loan and having maturity  comparable to the relevant  Interest Period


                                       41


and through  the  transfer of such LIBOR  deposit  from an offshore  office to a
domestic office in the United States of America; provided,  however, each Lender
may fund each of its  LIBOR  Loans in any  manner it sees fit and the  foregoing
assumption  shall be utilized only for the  calculation of amounts payable under
subsection 2.12.

         2.15.  ENDORSEMENT;  INSURANCE CLAIMS. Each Borrower hereby constitutes
and appoints Agent and all Persons  designated by Agent for that purpose as such
Borrower's true and lawful  attorney-in-fact,  with power in the place and stead
of such Borrower and in the name of such Borrower (a) to endorse such Borrower's
name to any of the items of payment or proceeds  described  in  subsection  4.22
below and all proceeds of Collateral that come into Agent's  possession or under
Agent's  control,  including  without  limitation,  with  respect to any drafts,
Instruments,  Documents  and Chattel  Paper,  and (b) after the  occurrence  and
during the  continuance  of an Event of  Default  to  obtain,  adjust and settle
insurance  claims,  which are required to be paid to Agent. Each Borrower hereby
ratifies  and  approves  all  acts of  Agent  made  or  taken  pursuant  to this
subsection  2.15. Both the appointment of Agent as each Borrower's  attorney and
Agent's rights and powers are coupled with an interest and are  irrevocable,  so
long  as  any  of  the  Commitments  hereunder  shall  be in  effect  and  until
indefeasible payment in full, in cash, of all Obligations and termination of all
Lender Letters of Credit.

SECTION 3     CONDITIONS TO LOANS

         3.1. CLOSING DATE.3.2. The obligations of Agent and each Lender to make
Loans and the  obligation  of Agent or any  Lender to issue  Lender  Letters  of
Credit or cause the issuance of Lender Letters of Credit on the Closing Date are
subject to  satisfaction  of all of the terms and conditions set forth below and
the accuracy of all the  representations  and  warranties  of Borrowers  and the
other Loan Parties set forth herein and in the other Loan Documents:

                  (A) CLOSING DELIVERIES. Agent shall have received, in form and
substance  reasonably  satisfactory  to Agent,  all documents,  instruments  and
information  identified on the transaction checklist attached hereto as Schedule
3.1(A) and all other agreements,  notes, certificates,  orders,  authorizations,
financing statements,  mortgages and other documents which Agent may at any time
reasonably request.

                  (B) SECURITY INTERESTS. Agent shall have received satisfactory
evidence that all security  interests and liens granted to Agent for the benefit
of Agent and Lenders pursuant to this Agreement or the other Loan Documents have
been duly  perfected and  constitute  first  priority  liens on the  Collateral,
subject only to Permitted Encumbrances.

                  (C) CLOSING  DATE  AVAILABILITY.  After  giving  effect to the
consummation of the transactions  contemplated hereunder on the Closing Date and
the payment by  Borrowers  of all costs,  fees and  expenses  relating  thereto,
Undrawn  Availability  PLUS the Borrowers  cash on hand,  shall not be less than
$10,000,000.

                  (D)  REPRESENTATIONS  AND WARRANTIES.  The representations and
warranties contained herein and in the Loan Documents shall be true, correct and
complete in all  material  respects on and as of that  Funding  Date to the same
extent as though made on and as of that date,  except for any  representation or
warranty  limited by its terms to a specific  date and taking  into  account any


                                       42


amendments to the Schedules or Exhibits as a result of any  disclosures  made by
Loan Parties to Agent after the Closing Date and approved by Agent.

                  (E) FEES. With respect to Loans or Lender Letters of Credit to
be made or issued on the Closing Date, Borrowers shall have paid all fees due to
Agent or any Lender and payable on the Closing Date.

                  (F) NO DEFAULT. No event shall have occurred and be continuing
or would  result  from  funding  a Loan or  issuing  a Lender  Letter  of Credit
requested  by  Borrowing  Agent that would  constitute  an Event of Default or a
Default.

                  (G)  PERFORMANCE  OF  AGREEMENTS.  Each Loan Party  shall have
performed in all material  respects all  agreements and satisfied all conditions
which any Loan  Document  provides  shall be  performed  by it on or before that
Funding Date.

                  (H) NO PROHIBITION. No order, judgment or decree of any court,
arbitrator or  Governmental  Authority shall purport to enjoin or restrain Agent
or any Lender from making any Loans or issuing any Lender Letters of Credit.

                  (I) NO  LITIGATION.  There  shall  not be  pending  or, to the
knowledge of any Loan Party,  threatened,  any action,  charge,  claim,  demand,
suit,  proceeding,  petition,  governmental  investigation  or  arbitration  by,
against or affecting any Loan Party or any of its  Subsidiaries  or any property
of any Loan  Party or any of its  Subsidiaries  that has not been  disclosed  to
Agent by Loan Parties in writing,  and there shall have occurred no  development
in  any  such  action,  charge,  claim,  demand,  suit,  proceeding,   petition,
governmental  investigation  or arbitration  that, in the reasonable  opinion of
Agent, would reasonably be expected to have a Material Adverse Effect.

                  (J) DELIVERY OF MERGER  DOCUMENTS.  Agent has received or will
receive on the Closing Date, complete copies of all Merger Documents  (including
all exhibits,  schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any) and all amendments  thereto,  waivers relating thereto
and other side letters or agreements  affecting the terms  thereof.  Each of the
foregoing  shall be in form and substance  reasonably  satisfactory to Agent and
none of such documents and agreements  shall have been amended or  supplemented,
nor shall have any of the provisions  thereof have been waived,  except pursuant
to a written agreement or instrument which has heretofore been delivered to, and
approved  in  writing  by,  Agent.  Each  of  the  conditions  precedent  to the
consummation  of the  Merger as set  forth in the  Merger  Documents  (excluding
receipt of the Merger  Consideration)  shall have been satisfied in all material
respects to the reasonable  satisfaction  of the Agent,  and not waived,  except
with the consent of the Agent,  and the  Certificate  of Merger  shall have been
filed with, and pre-cleared by, the Secretary of State of Missouri. Shareholders
holding at least 66-2/3% of the Equity  Interests of Collins (on a fully diluted
basis)  shall have voted in favor of the Merger and not elected to exercise  any
appraisal or similar rights.

                  (K) SECOND  LIEN TERM LOAN DEBT.  Agent has  received  or will
receive  on the  Closing  Date  complete  copies  of the  Second  Lien Term Loan
Documents (including all exhibits,  schedules and disclosure letters referred to
therein or  delivered  pursuant  thereto,  if any) and all  amendments  thereto,


                                       43


waivers  relating  thereto and other side letters or  agreements  affecting  the
terms thereof.  All of the foregoing  shall be in form and substance  reasonably
satisfactory to Agent and none of such documents and agreements  shall have been
amended or  supplemented,  nor shall  have any of the  provisions  thereof  been
waived, except pursuant to a written agreement or instrument which as heretofore
been  delivered  to,  and  approved  in  writing  by,  Agent.  The  transactions
contemplated by the Second Lien Term Loan Documents shall have been  consummated
in accordance with the terms thereof including,  without limitation, the receipt
by CS  Acquisition  from Second Lien Term Loan Lenders of gross cash proceeds of
not less than $45,000,000 and CS Acquisition shall have utilized the full amount
of such  gross cash  proceeds  to make  payments  owing in  connection  with the
Transaction  prior to the utilization by CS Acquisition of any proceeds of Loans
for such purpose. Second Lien Term Loan Agent shall have entered into the Second
Lien Term Loan Subordination Agreement with Agent.

                  (L) EQUITY CONTRIBUTION. Agent has received or will receive on
the  Closing  Date  complete  copies  of the  Equity  Documents  (including  all
exhibits,  schedules  and  disclosure  letters  referred to therein or delivered
pursuant thereto, if any) and all amendments  thereto,  waivers relating thereto
and other side letters or  agreements  affecting the terms  thereof.  All of the
foregoing  shall be in form and substance  reasonably  satisfactory to Agent and
none of such documents and agreements  shall have been amended or  supplemented,
nor shall have any of the provisions  thereof been waived,  except pursuant to a
written  agreement or  instrument  which as  heretofore  been  delivered to, and
approved in writing  by,  Agent.  The  transactions  contemplated  by the Equity
Documents  shall have been  consummated  in  accordance  with the terms  thereof
including,  without  limitation,  the  receipt by CS  Acquisition  of gross cash
proceeds of not less than $32,500,000 and CS Acquisition shall have utilized the
full amount of such gross cash  proceeds to make  payments  owing in  connection
with the Transaction  prior to the utilization by CS Acquisition of any proceeds
of Loans for such purpose.

                  (M) COLLATERAL  AUDIT.  Agent shall have received a collateral
audit  conducted  by  it or  its  representatives  of  Loan  Parties'  business,
operations, financial condition, assets and systems with results satisfactory to
Agent.

                  (N) MANAGEMENT  MEETINGS.  Agent or its representatives  shall
have had the opportunity to meet with Loan Parties'  management to discuss their
business,  its  business  plan,  any issues  raised by the  collateral  audit or
appraisals,  or other  matters  that may arise in  connection  with  Agent's due
diligence efforts.

                  (O)  ENVIRONMENTAL  AUDIT AND  ASSESSMENT.  Agent  shall  have
received an  environmental  audit report in scope and substance  satisfactory to
Agent prepared by an environmental  engineering firm acceptable to Agent. Agent,
in  its  sole  discretion,  shall  be  satisfied  that  there  are  no  existing
environmental  liabilities  that  may  have a  Material  Adverse  Effect  on the
prospects of any Loan Party.

                  (P)  INSURANCE.  Agent  shall have  received  certificates  of
insurance, insurance policies or binders for insurance with respect to each Loan
Party in types and amounts,  under terms and  conditions  satisfactory  to Agent
with  appropriate  endorsements  naming  Agent as loss payee  and/or  additional
insured, as appropriate.


                                       44


                  (Q)  FINANCIAL  INFORMATION.  Agent and each Lender shall have
received an updated  business plan and financial  and other  information,  as it
shall reasonably require with respect to each Loan Party, the foregoing to be in
form and substance satisfactory to Agent.

                  (R) MATERIAL  ADVERSE  CHANGE.  Since October 31, 2005,  there
shall have been no material adverse change in the business,  operations, assets,
properties,  liabilities,  profits,  prospects or financial position of the Loan
Parties taken as a whole as determined by the Agent in its sole discretion.

                  (S)  FEDERAL AND  MISSOURI  STATE LAW  COMPLIANCE.  The Merger
Documents  and the  transactions  contemplated  thereby  shall  comply  with all
applicable contract and securities laws (including,  without limitation, federal
and Missouri state securities and corporate laws and regulations).

                  (T) SOLVENCY. Each Loan Party shall have demonstrated to Agent
that after giving effect to the Transactions,  such Loan Party is solvent,  able
to meet its  obligations as they mature and has sufficient  capital to enable it
to operate its business.

                  (U)  MANAGEMENT  AGREEMENT.  Collins  shall have  entered into
management services agreements with (x) AIP (the "AIP Management Agreement") and
(y) BNS, which agreements  shall be in form and substance  satisfactory to Agent
in its sole discretion.

                  (V)  STRUCTURE  OF  LOAN   PARTIES.   Each  Loan  Party's  tax
assumptions,  capital,  organization,  ownership  and legal  structure  shall be
satisfactory  to Agent and not impair the  ability of Agent to enforce its claim
against  the  Collateral  and all  Collateral,  except  as  otherwise  expressly
provided  in this  Agreement,  must be freely  pledgeable  as  security  for the
Obligations.

                  (W) FEDERAL  COMPLIANCE.  No Loan Party is  sanctioned  or has
received  notice that it is under  investigation  under any  Federal  regulation
governing foreign asset control, or any other comparable statute or regulation.

                  (X) INTERCREDITOR AGREEMENTS. Agent shall have entered into an
intercreditor  agreement  with  any  holder  of a Lien  in any  chassis  that is
Collateral,  establishing  the  priority of the Lien in such  Collateral  to the
satisfaction of Agent and Lenders.

                  (Y) REPAYMENT OF EXISTING  INDEBTEDNESS.  All  Indebtedness of
any Loan Party not expressly  permitted  hereunder shall have been terminated or
contemporaneously  paid in full  (other  than  the  Indebtedness  set  forth  on
Schedule 3.1(Y),  which shall be defeased in a manner satisfactory to Agent) and
any Liens on the assets of any Loan Party securing such Indebtedness  shall have
been  terminated.  Agent shall have  received  evidence,  in form and  substance
reasonably  satisfactory  thereto, with respect to all Indebtedness set forth on
Schedule  3.1(Y) that the Loan Parties  have (i) directed the trustee  under the
relevant  Indebtedness to deliver an "irrevocable  notice of redemption" to each
holder  of such  Indebtedness  in  accordance  with the  terms of the  documents
governing such Indebtedness,  stating that such Indebtedness will be redeemed no
later than the 30th day  following  the Closing  Date,  (y)  effected a covenant
defeasance  and (z)  irrevocably  deposited  cash with the  trustee  under  such
Indebtedness  sufficient  to  effect  the  redemption  of all such  Indebtedness
(including any accrued and unpaid  interest  through the  applicable  redemption
date) in accordance with the terms thereof.


                                       45


                  (Z) TRUST  AGREEMENT.  Agent  shall  have  received  the Trust
Agreement, duly executed and delivered by the parties thereto.

                  (AA)  WARRANTY  PLANS.  Collins  shall have  provided  Agent a
copies  of its  standard  warranty  plans,  which  plans  shall  be in form  and
substance reasonably satisfactory to Agent.

         3.2. EACH FUNDING  DATE.  The  obligations  of Agent and each Lender to
make  Loans  and the  obligation  of Agent or any  Lender  to issue or cause the
issuance  of any  Lender  Letters  of Credit on each  Funding  Date  (including,
without  limitation,  the Closing Date) are subject to  satisfaction  as of such
Funding Date of all of the terms and conditions set forth below and the accuracy
of all the  representations  and  warranties  of  Borrowers  and the other  Loan
Parties set forth herein and in the other Loan Documents:

                  (A) REPRESENTATIONS AND WARRANTIES.(B) The representations and
warranties contained herein and in the Loan Documents shall be true, correct and
complete in all  material  respects on and as of that  Funding  Date to the same
extent as though made on and as of that date,  except for any  representation or
warranty  limited by its terms to a specific  date and taking  into  account any
amendments to the Schedules or Exhibits as a result of any  disclosures  made by
Loan Parties to Agent after the Closing Date and approved by Agent.

                  (B) NO DEFAULT. No event shall have occurred and be continuing
or would  result  from  funding  a Loan or  issuing  a Lender  Letter  of Credit
requested  by  Borrowing  Agent that would  constitute  an Event of Default or a
Default;  PROVIDED, HOWEVER that Lenders, in their sole discretion, may continue
to make Advances notwithstanding the existence of an Event of Default or Default
and that any  Advances so made shall not be deemed a waiver of any such Event of
Default or Default.

                  (C) MAXIMUM REVOLVING  ADVANCES.  In the case of any Revolving
Advances  requested  to be made,  after giving  effect  thereto,  the  aggregate
Revolving Advances shall not exceed the Maximum Revolving Loan Amount

                  (D)  MAXIMUM  LETTERS  OF  CREDIT.  In the case of any  Lender
Letters of Credit  requested to be issued,  after  giving  effect  thereto,  the
aggregate  Letter of  Credit  Liability  shall not  exceed  the  maximum  amount
permitted under subsection 2.1(F).

                  (E)  MAXIMUM  SWINGLINE  LOANS.  In the case of any  Swingline
Loans requested to be made, after giving effect thereto, the aggregate Swingline
Loans shall not exceed the Maximum Swingline Loan Amount.

         Each  request for an Advance by the  Borrowing  Agent  hereunder  shall
constitute a representation and warranty by the Borrowers as of the date of such
Advance  that the  conditions  contained  in this  subsection  shall  have  been
satisfied.

SECTION 4     REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS

         To induce  Agent and each Lender to enter into the Loan  Documents,  to
make and to continue to make Loans and to issue and to continue to issue  Lender
Letters of Credit or risk participations to the banks that issue Bank Letters of


                                       46


Credit,  each Loan Party  represents,  warrants and  covenants to Agent and each
Lender that the following  statements are and will be true, correct and complete
on the Closing Date after giving effect to Transaction and, unless  specifically
limited,  shall remain so for so long as any of the Commitments  hereunder shall
be in effect and until indefeasible payment in full, in cash, of all Obligations
and termination of all Lender Letters of Credit:

         4.1. ORGANIZATION, POWERS, CAPITALIZATION.

                  (A)  ORGANIZATION  AND POWERS.  Each of the Loan Parties is an
entity duly organized,  validly  existing and in good standing under the laws of
its  jurisdiction of organization and qualified to do business in all states and
other jurisdictions where such qualification is required except where failure to
be so  qualified  could not  reasonably  be expected to have a Material  Adverse
Effect.  Each of the Loan Parties has all  requisite  power and authority to own
and operate  its  properties,  to carry on its  business  as now  conducted  and
proposed  to be  conducted  and to enter  into each Loan  Document.  The name of
(within  the  meaning  of  Section  9-503  of  the  UCC)  and   jurisdiction  of
organization  of each Loan  Party is set  forth on  Schedule  4.1(A).  The chief
executive  office of each Loan  Party is  located at the  address  indicated  on
Schedule 4.1(A).  Each Loan Party's  organizational  identification  numbers, if
any, are identified on Schedule 4.1(A).

                  (B)  CAPITALIZATION.  The authorized  capital stock of each of
the Loan  Parties and its  respective  Subsidiaries  is as set forth on Schedule
4.1(B), including all preemptive or other outstanding rights, options, warrants,
conversion rights or similar  agreements or  understandings  for the purchase or
acquisition  from  any  Loan  Party  of any  shares  of  capital  stock or other
securities or equity  interests of any such entity.  All issued and  outstanding
shares of capital  stock or other  equity  interests of each of the Loan Parties
are duly  authorized and validly  issued,  fully paid,  nonassessable,  free and
clear of all Liens  other  than  those (x) in favor of Agent for the  benefit of
Agent and  Lenders  and (y) in favor of Second  Lien  Term Loan  Agent,  for the
benefit of Second Lien Term Loan Agent and the Second Lien Term Loan Lenders, so
long as such Liens are  subordinated in a manner  satisfactory to Agent pursuant
to the Second  Lien Term Loan  Subordination  Agreement,  and such  shares  were
issued in compliance  with all applicable  state and federal laws concerning the
issuance of securities. Each Loan Party will promptly notify Agent of any change
in its ownership or organizational structure.

         4.2. AUTHORIZATION OF BORROWING,  NO CONFLICT.  Each Loan Party has the
power and authority to incur the Obligations and to grant security  interests in
the Collateral. On the Closing Date, the execution,  delivery and performance of
the Loan  Documents  by each Loan Party  signatory  thereto  will have been duly
authorized by all necessary  corporate and  shareholder  action.  The execution,
delivery and performance by each Loan Party of each Loan Document to which it is
a party  and the  consummation  of the  transactions  contemplated  by the  Loan
Documents by each Loan Party do not contravene any applicable law, the corporate
charter  or bylaws or other  organizational  documents  of any Loan Party or any
material agreement or order by which any Loan Party or any Loan Party's property
is bound and will not (x) result in or require the creation or imposition of any
Lien of any nature  whatsoever  upon any properties or assets of any Loan Party,
other than Permitted  Encumbrances,  or (y) require any approval of the interest
holders of any Loan  Party or any  approval  or consent of any Person  under any
material  contractual  obligation  of any Loan  Party,  other than  consents  or


                                       47


approvals  that have been  obtained and that are still in force and effect.  The
Loan  Documents are the legally valid and binding  obligations of the applicable
Loan  Parties  respectively,  each  enforceable  against  the Loan  Parties,  as
applicable, in accordance with their respective terms.

         4.3.  FINANCIAL  CONDITION.  All financial  statements  concerning Loan
Parties  furnished  by or on  behalf  of Loan  Parties  to Agent  or any  Lender
pursuant  to  this  Agreement  have  been  prepared  in  accordance   with  GAAP
consistently  applied  throughout  the  periods  involved  (except as  disclosed
therein) and present fairly the financial  condition of the Loan Parties covered
thereby as at the dates  thereof  and the  results of their  operations  for the
periods  then ended.  The Pro Forma was  prepared by Loan  Parties  based on the
unaudited  balance  sheet  of  Collins  dated  September  30,  2006  as  if  the
Transaction had been consummated. The Projections delivered by Loan Parties will
be prepared in light of the past operations of the business of Loan Parties, and
such  Projections  will  represent  the good faith  estimate of Loan Parties and
their  senior  management,  as  of  the  date  such  Projections  are  delivered
concerning  the most  probable  course  of their  business  as of the date  such
Projections are delivered.  The Loan Parties shall not be required to update the
Projections  following their  delivery,  other than any requirement set forth in
the Reporting Rider to deliver Projections for a subsequent period.

         4.4.  INDEBTEDNESS  AND  LIABILITIES.  As of the Closing  Date, no Loan
Party has (a) any Indebtedness  except as reflected on the Pro Forma; or (b) any
Liabilities  other  than as  reflected  on the Pro Forma or as  incurred  in the
ordinary course of business following the date of the Pro Forma. Borrowing Agent
shall promptly deliver copies of all notices given or received by any Loan Party
or any of  their  Affiliates  with  respect  to  noncompliance  with any term or
condition related to the Second Lien Term Loan Debt or other  Indebtedness,  and
shall  promptly  notify  Agent of any  potential or actual Event of Default with
respect to the Second Lien Term Loan Debt or other Indebtedness.

         4.5. COLLATERAL WARRANTIES AND COVENANTS.

                  (A) ACCOUNTS  WARRANTIES  AND  COVENANTS.  Except as otherwise
disclosed to Agent in writing,  as to each of Loan Party's existing Accounts and
each of its hereafter  arising Accounts that: at the time of its creation,  such
Account  is  a  valid,   bona  fide   obligation,   representing  an  undisputed
indebtedness  incurred by the Account Debtor (and any other Person  obligated on
such  Account)  for  property  actually  sold  and  delivered  or  for  services
completely  rendered;  there  are no  defenses,  setoffs,  offsets,  claims,  or
counterclaims,  genuine or otherwise,  against such Account  except as otherwise
included in a Loan  Party's  reserves  and  disclosed in writing to Agent on the
accounts  receivable  schedules delivered by Loan Parties to Agent; such Account
does not  represent a sale to a Subsidiary or an  Affiliate,  or a  consignment,
sale or return or a bill and hold  transaction;  the amount  represented by Loan
Parties  to  Agent as owing by each  Account  Debtor  (and by each of the  other
Persons  obligated on such Account) is, or will be, the correct amount  actually
and  unconditionally  owing,  to the  knowledge  of any Loan Party no  agreement
exists  permitting  any other  deduction or discount  other than  agreements set
forth on Schedule 4.5(A);  the applicable Loan Party is the lawful owner of such
Account and has the right to assign the same to Agent,  for the benefit of Agent
and Lenders (other than to the extent  assignment of such Account may be limited
by the Federal  Assignment  of Claims Act of 1940 as amended (31 U.S.C.  Section
3727 et seq.) or any  applicable  statute  or  municipal  ordinance  of  similar


                                       48


purpose  and  effect);  such  Account is free of all Liens,  other than those in
favor of (x) Agent,  on behalf of itself and  Lenders  and (y) Second  Lien Term
Loan Agent,  on behalf of itself and the Second Lien Term Loan Lenders,  so long
as such Liens are subordinated in a manner satisfactory to Agent pursuant to the
Second Lien Term Loan Subordination Agreement, and such Account constitutes, the
legally valid and binding  obligation of the applicable  Account Debtor (and any
other  Person  obligated on such  Account) and is due and payable in  accordance
with its terms.

                           Each Loan Party shall, at its own expense:  (i) cause
all invoices  evidencing  such Loan Party's  Accounts and all copies  thereof to
bear a notice that such  invoices are payable to the  lockboxes  established  in
accordance  with  subsection 4.22 and (ii) use its best efforts to assure prompt
payment  of all  amounts  due or to become  due under  Accounts.  No  discounts,
credits or  allowances  will be issued,  granted or allowed by any Loan Party to
customers and no returns will be accepted without Agent's prior written consent;
provided, however, so long as such discounts, credits, allowances or returns are
customarily  issued or accepted in the  ordinary  course of business  and are in
amounts  which are not  material  to any Loan  Party,  or until  Agent  notifies
Borrowing Agent to the contrary, each Loan Party may presume consent.  Borrowing
Agent will immediately notify Agent in the event that any Account Debtor (or any
other  Person  obligated  on such  Account)  alleges  any  dispute or claim with
respect to such  Account or of any other  circumstances  known to any Loan Party
that may impair the validity or  collectibility  of any such Account.  Agent, or
its designee,  shall have the right, at any time or times  hereafter,  to verify
the  validity,  amount or any other  matter  relating to any  Account,  by mail,
telephone or in person.  After the  occurrence  and during the  continuance of a
Default or an Event of  Default:  (i) no Loan  Party  shall,  without  the prior
consent  of Agent,  adjust,  settle or  compromise  the amount or payment of any
Account,  or release  wholly or partly any Account  Debtor (or any other  Person
obligated on such Account),  or allow any credit or discount  thereon,  and (ii)
Agent  shall have the right at any time (A) to  exercise  the rights of any Loan
Party, with respect to the obligation of the Account Debtor (or any other Person
obligated on such Account) to make payment or otherwise  render  performance  to
the  applicable  Loan Party,  and with respect to any property  that secures the
obligations of the Account Debtor or of any such other Person  obligated on such
Account;  and (B) to adjust,  settle or compromise  the amount or payment of any
such  Account  or  release  wholly  or partly  any  Account  Debtor  or  obligor
thereunder or allow any credit or discount thereon.

                  (B) INVENTORY  WARRANTIES AND  COVENANTS.  Except as otherwise
disclosed to Agent in writing, all of each Loan Party's Inventory is of good and
merchantable quality, free from any defects that would reasonably be expected to
have a Material Adverse Effect,  such Inventory is not subject to any licensing,
patent,  trademark,  trade name or  copyright  agreement  with any  Person  that
restricts such Loan Party's  ability to  manufacture  and/or sell the Inventory.
The  completion  and  manufacturing  process of such Inventory by a Person other
than a Loan Party would be permitted under any contract to which a Loan Party is
a party or to which the Inventory is subject. None of any Loan Party's Inventory
has been or will be produced in  violation of the Fair Labor  Standards  Act and
subject to the so-called "hot goods" provisions contained in Title 29 U.S.C. 215
or in violation of any other law. All  inventory  and products  owned by Persons
other than a Loan Party and located on any premises owned,  leased or controlled
by a Loan Party,  shall be separately and  conspicuously  identified as such and
shall be  segregated  from such  Loan  Party's  own  Inventory  located  at such
premises.


                                       49


                  (C) EQUIPMENT  WARRANTIES AND  COVENANTS.  Each Loan Party has
maintained  and shall cause all of its Equipment to be maintained  and preserved
in good  working  order,  ordinary  wear and tear  excepted,  and all  necessary
replacements  of and  repairs  thereto  shall  be  made so that  the  value  and
operating efficiency of the Equipment shall be maintained and preserved. None of
any Loan  Party's  Equipment  is  covered  by any  certificate  of title and the
applicable  Loan Party shall promptly notify Agent to the extent such Loan Party
obtains any  Equipment  covered by any  certificate  of title.  Upon  request of
Agent,  each Loan Party shall promptly deliver to Agent any and all certificates
of title,  applications for title or similar evidence of ownership of all of its
Equipment  and  shall  cause  Agent  to be  named  as  lienholder  on  any  such
certificate  of title or other  evidence  of  ownership.  Each Loan Party  shall
promptly inform Agent of any additions to or deletions from the Equipment and no
Loan Party shall  permit any such items to become  Fixtures to real estate other
than real estate  subject to mortgages or deeds of trust in favor of Agent,  for
the benefit of itself and Lenders.

                  (D) CHATTEL PAPER WARRANTIES AND COVENANTS.  As of the Closing
Date, no Loan Party holds any Chattel Paper and does not anticipate  holding any
Chattel Paper in the ordinary course of their  business.  To the extent any Loan
Party  holds or  obtains  any  Chattel  Paper,  the  applicable  Loan Party will
promptly  (i) deliver to Agent all  Tangible  Chattel  Paper duly  endorsed  and
accompanied by duly executed instruments of transfer or assignment,  all in form
and  substance  reasonably  satisfactory  to Agent and (ii)  provide  Agent with
Control of all  Electronic  Chattel  Paper,  by having Agent  identified  as the
assignee of the Records(s)  pertaining to the single  authoritative copy thereof
and otherwise complying with the applicable elements of Control set forth in the
UCC. Borrowing Agent will also deliver to Agent all security agreements securing
any Chattel Paper and execute UCC financing  statement  amendments  assigning to
Agent any UCC financing  statements  filed by any Loan Party in connection  with
such security  agreements.  Each Loan Party will mark  conspicuously all Chattel
Paper with a legend,  in form and substance  reasonably  satisfactory  to Agent,
indicating that such Chattel Paper is subject to the Lien of Agent.

                  (E) INSTRUMENTS WARRANTIES AND COVENANTS. Each Loan Party will
deliver  to Agent  all  Instruments  it  holds  or  obtains  duly  endorsed  and
accompanied by duly executed instruments of transfer or assignment,  all in form
and  substance  reasonably  satisfactory  to Agent.  Each Loan  Party  will also
deliver to Agent all security  agreements  securing any  Instruments and execute
UCC  financing  statement  amendments  assigning  to  Agent  any  UCC  financing
statements filed by each Loan Party in connection with such security agreements.

                  (F) INVESTMENT  PROPERTY  WARRANTIES AND COVENANTS.  Each Loan
Party will take any and all  actions  necessary  (or  required or  requested  by
Agent), from time to time, to (i) cause Agent to obtain exclusive Control of any
Investment  Property owned by each Loan Party in a manner reasonably  acceptable
to Agent and (ii) obtain from any issuers of such  Investment  Property and such
other Persons, for the benefit of Agent, written confirmation of Agent's Control
over such Investment Property upon terms and conditions reasonably acceptable to
Agent

                  (G) LETTERS OF CREDIT  WARRANTIES AND COVENANTS.  If requested
by Agent,  each Loan Party will  deliver  to Agent all  Letters of Credit  under
which a Loan  Party is the  beneficiary  or is  otherwise  entitled  to  receive
proceeds duly endorsed and accompanied by duly executed  instruments of transfer


                                       50


or assignment,  all in form and substance reasonably satisfactory to Agent. Each
Loan Party will also deliver to Agent all security  agreements securing any such
Letters of Credit and execute UCC financing  statement  amendments  assigning to
Agent any UCC financing  statements  filed by any Loan Party in connection  with
such  security  agreements.  Each  Loan  Party  will  take  any and all  actions
necessary (or required or requested by Agent), from time to time, to cause Agent
to obtain  exclusive  Control of any  Letter-of-Credit  Rights owned by any Loan
Party in a manner acceptable to Agent.

                  (H) GENERAL  INTANGIBLES  WARRANTIES AND COVENANTS.  Each Loan
Party shall use its best efforts to obtain any  consents,  waivers or agreements
necessary to enable  Agent to exercise  remedies  hereunder  and under the other
Loan  Documents with respect to any of any Loan Party's rights under any General
Intangibles, including each Loan Party's rights as a licensee of custom designed
computer software.

                  (I) INTELLECTUAL PROPERTY WARRANTIES AND COVENANTS.  Each Loan
Party  owns,  is  licensed  to use or  otherwise  has  the  right  to  use,  all
Intellectual  Property  used in or necessary  for the conduct of its business as
currently  conducted,  and all  such  Intellectual  Property  is  identified  on
Schedule  4.5(I).  Except  as  set  forth  on  Schedule  4.5(I),  there  are  no
restrictions  on any Loan  Party's  right to create a Lien in such  Intellectual
Property nor in Agent's right to perfect and enforce such Lien.  Each Loan Party
shall concurrently  herewith deliver to Agent each Copyright Security Agreement,
Patent  Security  Agreement  and  Trademark  Security  Agreement  and all  other
documents,  instruments  and other items as may be  necessary  for Agent to file
such agreements with the U.S. Copyright Office and the U.S. Patent and Trademark
Office.  The  Copyrights,  Patents  and  Trademarks  listed  on  the  respective
schedules to each of the Copyright Security Agreement, Patent Security Agreement
and Trademark Security Agreement  constitute all of the Patents,  Trademarks and
government  registered  Copyrights  owned  by any Loan  Party.  If,  before  the
Obligations are  indefeasibly  paid in full, in cash, any Loan Party acquires or
becomes  entitled to any new or  additional  Patents,  Trademarks  or  federally
registered  Copyrights,  or rights thereto,  such Loan Party shall give to Agent
prompt written notice  thereof,  and shall amend the schedules to the respective
security  agreements  or enter into new or  additional  security  agreements  to
include any such new Patents,  Trademarks or government  registered  Copyrights.
Each Loan  Party  shall:  (a)  prosecute  diligently  any  copyright,  patent or
trademark application at any time pending; (b) make application for registration
or issuance of all new copyrights,  patents and trademarks as reasonably  deemed
appropriate  by such Loan Party;  (c)  preserve  and  maintain all rights in the
Intellectual  Property  material to the  operation  of the  business of the Loan
Parties;  and (d) use its best  efforts  to  obtain  any  consents,  waivers  or
agreements  necessary to enable  Agent to exercise its remedies  with respect to
the  Intellectual  Property.  No Loan Party shall abandon any material  right to
file a  copyright,  patent or  trademark  application  nor shall any Loan  Party
abandon any material  pending  copyright,  patent or trademark  application,  or
Copyright,  Patent or Trademark  without the prior written consent of Agent. All
government  registered  Intellectual  Property owned by any Loan Party is valid,
subsisting  and   enforceable   and  all  filings   necessary  to  maintain  the
effectiveness of such registrations have been made. The execution,  delivery and
performance  of this  Agreement  by any Loan Parties will not violate or cause a
default  under any of the  Intellectual  Property or any agreement in connection
therewith.


                                       51


                  (J) COMMERCIAL  TORT CLAIMS  WARRANTIES AND COVENANTS.  Except
for matters disclosed on Schedule 2.7(A), no Loan Party owns any Commercial Tort
Claims.  Each Loan  Party  shall  advise  Agent  promptly  upon such Loan  Party
becoming aware that it owns any additional  Commercial Tort Claims. With respect
to any new Commercial  Tort Claim,  the  applicable  Loan Party will execute and
deliver such documents as Agent deems  necessary to create,  perfect and protect
Agent's security interest in such Commercial Tort Claim.

                  (K) DEPOSIT ACCOUNTS;  BANK ACCOUNTS WARRANTIES AND COVENANTS.
Schedule  4.5(K) sets forth the account  numbers  and  locations  of all Deposit
Accounts  or other  bank  accounts  of each  Loan  Party.  No Loan  Party  shall
establish any new Deposit Account or other bank accounts,  or amend or terminate
any Blocked Account or lockbox agreement without Agent's prior written consent.

                  (L) BAILEES.  Except as disclosed on Schedule 4.5(L),  none of
the  Collateral is in the  possession of any  consignee,  bailee,  warehouseman,
agent or  processor.  No  Collateral  shall at any time be in the  possession or
control of any  warehouse,  bailee or any of Loan Parties'  agents or processors
without  Agent's  prior  written  consent  and  unless  Agent,  if Agent  has so
requested,  has received  warehouse  receipts or bailee lien waivers  reasonably
satisfactory  to Agent prior to the  commencement of such possession or control.
If any  Collateral is at any time in the possession or control of any warehouse,
bailee or any of Loan Parties' agents or processors, such Loan Party shall, upon
the request of Agent, notify such warehouse,  bailee,  agent or processor of the
Liens in favor of Agent,  for the benefit of Agent and Lenders,  created hereby,
shall  instruct  such Person to hold all such  Collateral  for  Agent's  account
subject to Agent's instructions,  and shall obtain such Person's acknowledgement
that it is holding the Collateral for Agent's benefit.

                  (M) COLLATERAL DESCRIPTION; USE OF COLLATERAL. Each Loan Party
will furnish to Agent, from time to time upon request,  statements and schedules
further  identifying,  updating,  and  describing  the Collateral and such other
information,  reports  and  evidence  concerning  the  Collateral,  as Agent may
reasonably  request,  all in reasonable detail. No Loan Party will use or permit
any  Collateral  to be used  unlawfully  or in  violation  of any  provision  of
applicable law, or any policy of insurance covering any of the Collateral.

                  (N) COLLATERAL FILING REQUIREMENTS;  COLLATERAL RECORDS.  None
of the  Collateral  is of a type in which Liens may be  registered,  recorded or
filed under,  or notice thereof given under,  any federal  statute or regulation
except for  Collateral  described  on the  schedules to the  Copyright  Security
Agreement,  the Patent Security Agreement and the Trademark Security  Agreement.
Each Loan Party  shall  promptly  notify  Agent in writing  upon  acquiring  any
interest  hereafter  in  Collateral  that  is of a  type  where  a  Lien  may be
registered,  recorded of filed under, or notice thereof given under, any federal
statute or  regulation.  Each Loan Party shall keep full and accurate  books and
records  relating to the Collateral and shall stamp or otherwise mark such books
and records in such manner as Agent may reasonably  request to indicate  Agent's
Liens in the Collateral, for the benefit of Agent and Lenders.

                  (O) FEDERAL  CLAIMS.  Together  with the  reports  required by
subparagraph (5) of the Reporting  Rider,  each Loan Party shall notify Agent of
any Collateral  which  constitutes a claim against the United States of America,
or any State or  municipal  government  or any  department,  instrumentality  or
agency  thereof,  the  assignment  of which claim is  restricted  by law. If the
aggregate  amount of  Collateral  which  constitutes  a claim against the United
States of  America,  or any State or  municipal  government  or any  department,
instrumentality  or agency thereof,  the assignment of which claim is restricted
by law,  exceeds  $7,500,000,  then upon the  request of Agent,  each Loan Party
shall take such steps as may be necessary to comply with any applicable  federal
assignment of claims laws and other comparable laws.


                                       52


                  (P) AGENT  AUTHORIZED.  Each Loan Party hereby authorizes and,
until such time as the Obligations are indefeasibly paid in full, in cash, shall
continue  to  authorize  Agent to file  one or more  financing  or  continuation
statements, and amendments thereto (or similar documents required by any laws of
any  applicable  jurisdiction),  relating  to all or any part of the  Collateral
without the  signature of such Loan Party and hereby  specifically  ratifies all
such actions previously taken by Agent.

                  (Q)  Invoices.  No Borrower  will use any invoices  other than
invoices in the form delivered to Agent prior to the Closing Date without giving
Agent 30 days' prior notice of the  intended use of a different  form of invoice
together with a copy of such  different  form.  Upon the request of Agent,  each
Borrower  shall  deliver  to  Agent,  at  such  Borrower's  expense,  copies  of
customers'  invoices or the equivalent,  original shipping and delivery receipts
or other proof of delivery,  customers' statements,  customer address lists, the
original  copy  of  all  documents,  including  without  limitation,   repayment
histories  and present  status  reports,  relating  to  Accounts  and such other
documents and information relating to the Accounts as Agent shall specify.

         4.6. NAMES AND  LOCATIONS.  Schedule 4.6 sets forth (a) all legal names
and all other names (including trade names, fictitious names and business names)
under  which any Loan  Party  currently  conducts  business,  or has at any time
during the past five years conducted business,  (b) the name of any entity which
any Loan Party has  acquired in whole or in part or from whom any Loan Party has
acquired a  significant  amount of assets  within the past five  years,  (c) the
location of each Loan  Party's  principal  place of  business,  (d) the state or
other  jurisdiction of organization for each Loan Party and sets forth each Loan
Party's organizational identification number or specifically designates that one
does not exist, (e) the location of each Loan Party's books and records, (f) the
location  of all  other  offices  of each  Loan  Party,  and (g) all  Collateral
locations  (designating Inventory and Equipment locations and indicating between
owned,  leased,  warehouse,  storage,  and processor  locations).  The locations
designated  on  Schedule  4.6 are the Loan  Parties'  sole  locations  for their
respective  businesses  and the  Collateral.  Each Loan Party will give Agent at
least thirty (30) days advance  written  notice of any: (a) change of name or of
any new trade name or fictitious  business name of any Loan Party, (b) change of
principal place of business of any Loan Party, (c) change in the location of any
Loan Party's books and records or the Collateral,  (d) new location for any Loan
Party's books and records or the Collateral,  or (e) changes in any Loan Party's
state or other jurisdiction of organization or its organizational identification
number.  No Loan Party  maintains or will maintain any  Collateral at any leased
location  set forth on  Schedule  4.7(a-2),  other  than de  minimis  amounts of
Collateral.

         4.7. TITLE TO PROPERTIES;  LIENS. Each Loan Party has good,  sufficient
and  legal  title to,  or  interest  in,  all of the  Collateral  (and any other
material properties and assets, if any) and will have good, sufficient and legal
title of all after-acquired  Collateral (and any other  after-acquired  material
properties and assets, if any), in each case, free and clear of all Liens except
for the Permitted  Encumbrances.  Agent has a valid,  perfected and,  except for


                                       53


Liens set forth in clauses  (a),  (c),  (d),  (e) and (j) of the  definition  of
Permitted  Encumbrances,  first priority Liens in the  Collateral,  securing the
payment of the  Obligations,  and such Liens are  entitled to all of the rights,
priorities and benefits  afforded by the UCC or other  applicable law as enacted
in any relevant  jurisdiction  which relates to perfected  Liens. The applicable
Loan Party owns good and marketable, indefeasible fee simple title to all of the
real estate described on Schedule 4.7(a-1) hereto as owned by it and has a valid
leasehold  interest in all of the real  estate  described  on Schedule  4.7(a-2)
hereto  as  leased  by it,  in each  case  free and  clear of all Liens or other
encumbrances of any kind,  except as described in Schedule  4.7(a-1) or 4.7(a-2)
as  applicable  and  subject  to  clauses  (a),  (d),  (g),  (h)  and (j) of the
definition of Permitted  Encumbrances.  Schedules  4.7(a-1) and 4.7(a-2)  hereto
correctly identify as of the Closing Date (x) each parcel of real property owned
by each Loan Party,  together in each case with an accurate  street  address and
description of the use of such parcel,  (y) each parcel of real property  leased
by or to a Loan Party, together in each case with an accurate street address and
description  of the use of such  parcel,  and (z) each  other  interest  in real
property  owned,  leased or  granted to or held by a Loan  Party.  Except as set
forth on Schedules 4.7(a-1) and 4.7(a-2):

                           (i) no  structure  owned or  leased  by a Loan  Party
                  fails to  conform  in any  material  respect  with  applicable
                  ordinances, regulations, zoning laws and restrictive covenants
                  (including  in any such  case  and  without  limitation  those
                  relating to  environmental  protection)  nor  encroaches  upon
                  property of others,  nor is any such real property  encroached
                  upon by  structures  of others in any case in any manner  that
                  would have or could be reasonably  expected to have a Material
                  Adverse  Effect on the  Agent's or  Lenders'  interest  in any
                  material Collateral located on the premises or otherwise would
                  have or would be reasonably  likely to have a Material Adverse
                  Effect;

                           (ii)  no  charges  or  violations  have  been  filed,
                  served,  made or  threatened,  to the  knowledge  of any  Loan
                  Party,  against or relating to any such  property or structure
                  or any of the  operations  conducted  at any such  property or
                  structure,  as a result of any violation or alleged  violation
                  of  any  applicable  ordinances,  requirements,   regulations,
                  zoning laws or  restrictive  covenants  (including in any such
                  case and without  limitation  those relating to  environmental
                  protection) or as a result of any encroachment on the property
                  of others  where the  effect  of same  would  have or could be
                  reasonably  expected to have a Material  Adverse Effect on the
                  Agent's  or  Lenders'  interest  in  any  material  Collateral
                  located on the  premises or  otherwise  would have or would be
                  reasonably likely have a Material Adverse Effect;

                           (iii) other than pursuant to applicable laws,  rules,
                  regulations or ordinances, covenants that run with the land or
                  provisions  in  the   applicable   leases,   there  exists  no
                  restriction  on the use,  transfer or  mortgaging  of any such
                  property, subject to the Title Encumbrances;

                           (iv) the applicable Loan Party has adequate permanent
                  rights of ingress to and egress from any such property used by
                  it for the operations conducted thereon;


                                       54


                           (v)  except  as  expressly  set  forth  in the  lease
                  agreements  to  which  such  property  relates,  there  are no
                  developments  affecting  any of the real property or interests
                  therein  pending  or  threatened  which  might  reasonably  be
                  expected to curtail or interfere in any material  respect with
                  the use of such  property for the purposes for which it is now
                  used; and

                           (vi) No Loan Party has any option in, or any right or
                  obligation to acquire any interest in, any real property;

                  Except  as set  forth in  Schedule  4.7(a-1)  or  4.7(a-2)  as
applicable,  the applicable Loan Party owns and has good and marketable title to
all the owned  properties and assets  reflected on its most recent balance sheet
and valid  leasehold  interests  in the  property it leases  subject to no Liens
(other  than  Liens  described  in clauses  (a),  (d),  (g),  (h) and (j) of the
definition of Permitted Encumbrances), and all such leases are in full force and
effect and the applicable Loan Party enjoys peaceful and undisturbed  possession
under all such leases.

         4.8.  LITIGATION;  ADVERSE  FACTS.  There are no judgments  outstanding
against any Loan Party or affecting  any property of any Loan Party nor is there
any action,  charge,  claim, demand, suit,  proceeding,  petition,  governmental
investigation  or  arbitration  now  pending  or, to the best  knowledge  of any
Responsible  Officer,  threatened  against  or  affecting  any Loan Party or any
property  of any Loan Party which  would  reasonably  be expected to result in a
Material  Adverse  Effect.  Promptly  upon  any  Responsible  Officer  obtaining
knowledge of (a) the institution of any action, suit,  proceeding,  governmental
investigation or arbitration against or affecting any Loan Party or any property
of any Loan Party not  previously  disclosed in writing by Loan Parties to Agent
or (b) any material  development in any action, suit,  proceeding,  governmental
investigation  or arbitration at any time pending  against or affecting any Loan
Party or any  property of any Loan Party which would  reasonably  be expected to
have a Material  Adverse  Effect,  the applicable  Loan Party will promptly give
notice thereof to Agent in writing and provide such other  information as may be
reasonably available to enable Agent and its counsel to evaluate such matter.

         4.9. PAYMENT OF TAXES. All material tax returns and reports of any Loan
Party  required  to be filed  by any of them  have  been  timely  filed  and are
complete and accurate in all material respects. All taxes, assessments, fees and
other governmental charges which are due and payable by any Loan Party have been
paid when  due;  provided  that no such tax need be paid if such  Loan  Party is
contesting same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such Loan Party has established appropriate reserves
as shall be required in conformity  with GAAP.  As of the Closing Date,  none of
the income tax returns of any Loan Party are under audit and Loan Parties  shall
promptly  notify Agent in the event that any of Loan Parties' tax returns become
the  subject of an audit.  No tax liens have been filed  against any Loan Party.
The charges, accruals and reserves on the books of each Loan Party in respect of
any taxes or other  governmental  charges are in accordance with GAAP. Each Loan
Party has executed IRS Form 8821designating Agent as such Loan Party's appointee
to receive directly from the IRS, on an on-going basis, certain tax information,
notices and other written  communication and each Loan Party authorizes Agent to
file such Form 8821 with the IRS.  Each  Loan  Party's  respective  federal  tax
identification number is set forth on Schedule 4.9.


                                       55


         4.10.  PERFORMANCE  OF  AGREEMENTS.  No Loan Party is in default in the
performance,  observance or fulfillment of any of the obligations,  covenants or
conditions contained in any material contractual  obligation of any such Person,
and no condition  exists that, with the giving of notice or the lapse of time or
both,  would  constitute  such a default.  Each Loan Party shall promptly notify
Agent  of (a) the  occurrence  of any  default  or  breach  under  any  material
contractual  obligation of any Loan Party,  (b) the  termination of any material
contractual  obligation of any Loan Party,  or (c) the amendment or modification
of any material contractual obligation of any Loan Party. Loan Parties shall not
amend or modify  any  material  contractual  obligation  of any Loan  Party in a
manner that would  reasonably be expected to be  materially  adverse to Agent or
any Lender without Agent's prior written consent.

         4.11. EMPLOYEE BENEFIT PLANS. Each Loan Party, each ERISA Affiliate and
Employee  Benefit  Plan  is in  compliance,  and  will  continue  to  remain  in
compliance,  in all material  respects with all applicable  provisions of ERISA,
the IRC and all other  applicable laws and the  regulations and  interpretations
thereof with respect to all Employee  Benefit Plans.  No material  liability has
been incurred or will be incurred by any Loan Party or any ERISA Affiliate which
remains unsatisfied for any funding obligation,  taxes or penalties with respect
to any Employee  Benefit Plan. Each Loan Party and each ERISA Affiliate has made
and shall continue to make all contributions  required to be made by such Person
to each Employee  Benefit Plan when due. No Loan Party or ERISA  Affiliate shall
establish any new Employee  Benefit Plan or amend any existing  Employee Benefit
Plan  if  the  liability   (contingent  or  otherwise)  or  increased  liability
(contingent or otherwise)  resulting from such  establishment or amendment could
be material.

                  No prohibited  transaction  (within the meaning of Section 406
of ERISA or Section 4975 of the IRC) has  occurred  with respect to any Employee
Benefit Plan (other than a  Multiemployer  Plan) subject to Part 4 of Subtitle B
of Title I of ERISA  which  could  result in  material  liabilities  to any Loan
Party.

                  No Termination Event has occurred, is planned or is reasonably
expected to occur,  and no condition or event currently exists or is expected to
occur that could result in any such  Termination  Event.  Except as set forth in
Schedule 4.11, no Employee  Benefit Plan has incurred any  "accumulated  funding
deficiency"  (within  the  meaning of Section 302 of ERISA or Section 412 of the
IRC),  whether  or  not  waived.  No  Pension  Benefit  Plan  has  incurred  any
"accumulated  funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the IRC), whether or not waived. The aggregate "projected benefit
obligations"  (within the meaning of Statement of Financial Accounting Standards
87) under all Pension  Benefit  Plans  (other than  Multiemployer  Plans) do not
exceed the  aggregate  fair market value of the assets of such  Pension  Benefit
Plans by more than $250,000,  in each case as of the latest actuarial  valuation
date for such Pension  Benefit Plans  (determined  in  accordance  with the same
actuarial  assumptions  and methods as those used by the Pension  Benefit Plans'
actuary in its  valuation of such  Pension  Benefit  Plans as of such  valuation
date).  No Loan Party or ERISA  Affiliate has any  contingent  liabilities  with
respect to any post-retirement benefits under any employee welfare benefit plan,
other than liability for continuation coverage described in Part 6 of Title I of
ERISA or disclosed on Schedule 4.11.

                  No Loan  Party nor any ERISA  Affiliate  has  incurred,  or is
reasonably  expected  to incur any  material  withdrawal  liability  (within the
meaning  given such term under Part I of Subtitle E of Title IV of ERISA) to any


                                       56


Multiemployer  Plan.  No Loan  Party or any ERISA  Affiliate  has  received  any
notification  that  any  Multiemployer  Plan is in  reorganization  or has  been
terminated,  partitioned or reorganized within the meaning of Title IV of ERISA,
and,  to the best of each  Loan  Party's  knowledge,  no  Multiemployer  Plan is
reasonably expected to be in reorganization or to be terminated,  partitioned or
reorganized within the meaning of Title IV of ERISA.

         4.12.  BROKER'S FEES. Except as set forth on Schedule 4.12, no broker's
or  finder's  fee or  commission  will be  payable  with  respect  to any of the
transactions contemplated hereby.

         4.13. ENVIRONMENTAL  COMPLIANCE.  Except as set forth on Schedule 4.13,
each Loan Party is and shall continue to remain in material  compliance with all
applicable  Environmental  Laws. Except as set forth on Schedule 4.13, there are
no  claims,  liabilities,  Liens,  investigations,   litigation,  administrative
proceedings,  whether pending or threatened,  or judgments or orders relating to
any  Hazardous  Materials  asserted  or  threatened  against  any Loan  Party or
relating to any real property currently or formerly owned, leased or operated by
any Loan Party.

         4.14.  SOLVENCY.  From and after the date of this Agreement,  each Loan
Party:  (a) owns assets the fair  saleable  value of which are greater  than the
total amount of its  liabilities  (including  contingent  liabilities);  (b) has
capital that is not unreasonably  small in relation to its business as presently
conducted or any contemplated or undertaken transaction; and (c) does not intend
to incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.

         4.15.  DISCLOSURE.  No  representation  or  warranty  of any Loan Party
contained in this Agreement, the financial statements, the other Loan Documents,
or any other document,  certificate or written  statement  furnished to Agent or
any  Lender by or on behalf of any such  Person for use in  connection  with the
Loan  Documents  contains any untrue  statement  of a material  fact or omitted,
omits  or will  omit to state a  material  fact  necessary  in order to make the
statements   contained  herein  or  therein  not  misleading  in  light  of  the
circumstances  in which the same were made.  There is no material  fact known to
any Loan Party that has had or could have a Material Adverse Effect and that has
not  been  disclosed  herein  or  in  such  other  documents,  certificates  and
statements  furnished  to Agent or any  Lender  for use in  connection  with the
transactions contemplated hereby.

         4.16.  INSURANCE.  Each Loan  Party  maintains  and shall  continue  to
maintain  adequate  insurance  policies and shall provide Agent with evidence of
such  insurance  coverage  for  public  liability,   property  damage,   product
liability, and business interruption with respect to its business and properties
and the business and  properties of its  Subsidiaries  against loss or damage of
the kinds  customarily  carried or maintained  by  corporations  of  established
reputation engaged in similar businesses and in amounts acceptable to Agent. The
Loan  Parties  shall  maintain  and at all times  after the  Closing  Date shall
continue to  maintain  an  environmental  insurance  policy with  respect to its
properties  reasonably  acceptable  to Agent  in such  amount  as is  reasonably
acceptable to Agent, it being agreed that the environmental  insurance policy in
effect on the Closing Date is acceptable  to Agent.  Each Loan Party shall cause
Agent at all times to be named as loss payee on all insurance  policies relating
to any  Collateral  and shall cause Agent at all times to be named as additional
insured  under all  liability  policies  (including,  without  limitation,  with


                                       57


respect  to the  environmental  insurance  policy),  in each  case  pursuant  to
appropriate  endorsements in form and substance reasonably satisfactory to Agent
and shall collaterally  assign to Agent, for itself and on behalf of Lenders, as
security for the payment of the Obligations all business interruption  insurance
of each Loan Party. No notice of cancellation  has been received with respect to
such policies and each Loan Party is in compliance with all conditions contained
in such policies.  Any proceeds received from any policies of insurance relating
to any Collateral shall be applied to the Obligations as set forth in subsection
2.4(B)(2).  Each Loan  Party  shall  provide  Agent  evidence  of the  insurance
coverage and of the  assignments  and  endorsements  required by this  Agreement
immediately  upon request by Agent and upon renewal of any existing  policy.  If
any Loan  Party  elects to  change  insurance  carriers,  policies  or  coverage
amounts,  such Loan Party shall notify Agent and provide  Agent with evidence of
the updated insurance coverage and of the assignments and endorsements  required
by this  Agreement.  In the event any Loan  Party  fails to  provide  Agent with
evidence of the insurance coverage required by this Agreement, Agent may, but is
not required to, purchase  insurance at Loan Parties' expense to protect Agent's
and the Lender's interests in the Collateral.  This insurance may, but need not,
protect Loan Parties' interests. The coverage purchased by Agent may not pay any
claim made by any Loan Party or any claim that is made against any Loan Party in
connection  with the  Collateral.  Loan Parties may later  cancel any  insurance
purchased by Agent,  but only after providing Agent with evidence that each Loan
Party has obtained  insurance as required by this Agreement.  If Agent purchases
insurance for the Collateral,  each Loan Party will be responsible for the costs
of that insurance, including interest thereon and other charges imposed on Agent
in connection  with the placement of the insurance,  until the effective date of
the cancellation or expiration of the insurance,  and such costs may be added to
the  Obligations.  The  costs  of the  insurance  may be more  than  the cost of
insurance Borrower is able to obtain on its own.

         4.17.  COMPLIANCE WITH LAWS;  GOVERNMENT  AUTHORIZATIONS;  CONSENTS. No
Loan Party is in  violation  of any law,  ordinance,  rule,  regulation,  order,
policy,  guideline or other requirement of (a) any Governmental Authority in all
jurisdictions  in  which  any  Loan  Party is now  doing  business,  and (b) any
government  authority otherwise having jurisdiction over the conduct of any Loan
Party  or any of  its  respective  businesses,  or the  ownership  of any of its
respective  properties,  which violation would subject any Loan Party, or any of
their  respective  officers to  criminal  liability  or have a Material  Adverse
Effect and no such violation has been alleged.  Each Loan Party will comply with
the requirements of all applicable laws, ordinances, rules, regulations, orders,
policies,  guidelines or other requirements of (a) any Governmental Authority as
now in effect and which may be imposed  in the  future in all  jurisdictions  in
which any Loan Party is now doing  business or may hereafter be doing  business,
and (b) any government  authority otherwise having jurisdiction over the conduct
of any Loan Party or any of its respective  businesses,  or the ownership of any
of its respective properties,  except to the extent the noncompliance with which
would not have a Material Adverse Effect.  No  authorization,  approval or other
action by, and no notice to or filing with, any domestic or foreign Governmental
Authority or regulatory  body or consent of any other Person is required for (a)
the grant by each Loan Party of the Liens granted  hereby or for the  execution,
delivery or  performance  of this  Agreement or the other Loan Documents by each
Loan Party;  (b) the  perfection of the Liens granted hereby and pursuant to any
other  Loan  Documents  (except  for filing UCC  financing  statements  with the
appropriate  jurisdiction  and filing any Patent Security  Agreement,  Trademark
Security  Agreement and Copyright  Security  Agreement  with the U.S.  Copyright


                                       58


Office and the U.S.  Patent and Trademark  Office,  as  applicable);  or (c) the
exercise by Agent of its rights and remedies  hereunder (except as may have been
taken by or at the direction of a Loan Party or Agent).

         4.18.  EMPLOYEE  MATTERS.  Except as set forth on Schedule 4.18, (a) no
Loan Party nor any of such Loan Party's  employees is subject to any  collective
bargaining  agreement,  (b) no petition for  certification  or union election is
pending  with  respect  to the  employees  of any  Loan  Party  and no  union or
collective  bargaining unit has sought such  certification  or recognition  with
respect  to the  employees  of any Loan  Party  and (c)  there  are no  strikes,
slowdowns,  work stoppages or controversies pending or, to the best knowledge of
any Responsible Officer after due inquiry, threatened between any Loan Party and
its respective employees, other than employee grievances arising in the ordinary
course  of  business,  which  would  reasonably  be  expected  to  have,  either
individually or in the aggregate, a Material Adverse Effect. Except as set forth
on Schedule 4.18, no Loan Party is subject to an employment contract.

         4.19. GOVERNMENTAL  REGULATION.  None of the Loan Parties is subject to
regulation  under the Public  Utility  Holding  Company Act of 1935, the Federal
Power  Act or the  Investment  Company  Act of 1940 or to any  federal  or state
statute or regulation  limiting its ability to incur  indebtedness  for borrowed
money.

         4.20. ACCESS TO ACCOUNTANTS AND MANAGEMENT.  Each Loan Party authorizes
Agent and Lenders to discuss the financial condition and financial statements of
each Loan Party with Loan Parties'  Accountants  upon reasonable  notice to Loan
Parties of its intention to do so, and authorizes  Loan Parties'  Accountants to
respond to all of Agent's inquiries. Agent and each Lender may, with the consent
of Agent,  which will not be  unreasonably  denied,  confer at reasonable  times
during normal  business  hours with Loan  Parties'  senior  management  directly
regarding Loan Parties' business, operations and financial condition.

         4.21. INSPECTION. Each Loan Party shall permit Agent and any authorized
representatives  designated by Agent to visit and inspect any of the  properties
of any Loan Party,  including  their financial and accounting  records,  and, in
conjunction  with such  inspection,  to make copies and take extracts  therefrom
(all to be subject to subsection 12.18), and to discuss their affairs,  finances
and business  with their  officers and any Loan  Parties'  Accountants,  at such
reasonable  times during normal business hours and as often as may be reasonably
requested.  Each  Lender  may with  the  consent  of  Agent,  which  will not be
unreasonably denied, accompany Agent on any such visit or inspection.

         4.22.  COLLECTION  OF  ACCOUNTS  AND  PAYMENTS.  Each Loan Party  shall
establish lockboxes and blocked accounts  (collectively,  "Blocked Accounts") in
such Loan Party's name with such banks ("Collecting Banks") as are acceptable to
Agent  (subject to irrevocable  instructions  acceptable to Agent as hereinafter
set forth) to which all Account Debtors or other payment obligors shall directly
remit all  payments on each Loan  Party's  Accounts and in which each Loan Party
will  immediately  deposit all payments  made for  Inventory  or other  payments
constituting proceeds of Collateral received by such Loan Party in the identical
form in which such payment was made,  whether by cash or check.  The  Collecting
Banks shall acknowledge and agree, in a manner reasonably  satisfactory to Agent
and with the written  consent of the applicable Loan Party that (a) all payments
made to the Blocked  Accounts are the sole and exclusive  property of Agent, for


                                       59


its benefit and for the benefit of  Lenders,  (b) the  Collecting  Banks have no
right to setoff against the Blocked Accounts,  (c) the Collecting Banks will not
take any Lien in the Blocked Accounts, (d) the Collecting Banks will comply with
instructions  originated  by Agent  directing  disposition  of the  funds in the
Blocked  Accounts without the further consent of any Loan Party and (e) all such
payments  received will be promptly  transferred to Agent's  Account.  Each Loan
Party hereby agrees that all payments made to such Blocked Accounts or otherwise
received by Agent and whether on the Accounts or as proceeds of other Collateral
or otherwise will be the sole and exclusive  property of Agent,  for the benefit
of  itself  and  Lenders.  Each  Loan  Party  shall  irrevocably  instruct  each
Collecting  Bank to promptly  transfer  all  payments or deposits to the Blocked
Accounts into Agent's  Account.  If any Loan Party,  or any of their  respective
Affiliates, employees, agents or any other Persons acting for or in concert with
such Loan Party, shall receive any monies,  checks,  notes,  drafts or any other
payments  relating  to and/or  proceeds  of any Loan  Party's  Accounts or other
Collateral,  such Loan Party or such Person shall hold such  instrument or funds
in trust for Agent, and, immediately upon receipt thereof,  shall remit the same
or cause the same to be remitted,  in kind, to the Blocked  Accounts or to Agent
at its address set forth in subsection 10.3 below.

         4.23.  PAYMENT OF TAXES BY AGENT.  If any of the Collateral  includes a
charge for any tax payable to any  governmental  tax authority,  Agent is hereby
authorized  (but in no event  obligated)  in its  discretion  to pay the  amount
thereof to the proper taxing  authority for the account of any Loan Party and to
charge the Loan Party's  account  therefore.  The  Borrowing  Agent shall notify
Agent if any Collateral include any tax due to any such taxing authority and, in
the  absence of such  notice,  the Agent shall have the right to retain the full
proceeds  of such  Collateral  and shall not be liable for any taxes that may be
due from any Loan Party by reason of the sale of any of the Collateral.

         4.24. AMENDMENT OF SCHEDULE.  Each Loan Party may amend any one or more
of the  Schedules  referred in this Section 4 (subject to prior notice to Agent,
as applicable) and any  representation,  warranty,  or covenant contained herein
which  refers  to any such  Schedule  shall  from and after the date of any such
amendment  refer to such Schedule as so amended;  provided  however,  that in no
event shall the amendment of any such Schedule  constitute a waiver by Agent and
Lenders of any  Default  or Event of Default  that  exists  notwithstanding  the
amendment of such Schedule.

SECTION 5     REPORTING AND OTHER AFFIRMATIVE COVENANTS

         Each  Loan  Party  covenants  and  agrees  that,  so long as any of the
Commitments  hereunder shall be in effect and until payment in full, in cash, of
all Obligations and termination of all Lender Letters of Credit, each Loan Party
shall  perform,  and  shall  cause  each of its  Subsidiaries  to  perform,  all
covenants in this Section 5.

         5.1. FINANCIAL STATEMENTS AND OTHER REPORTS.  Loan Parties will deliver
to Agent and each Lender (unless  specified to be delivered solely to Agent) the
financial statements and other reports contained in the Reporting Rider attached
hereto.

         5.2. MAINTENANCE OF PROPERTIES.  Each Loan Party will maintain or cause
to be  maintained  in good  repair,  working  order and  condition  all material
properties  used in the business of each Loan Party and will make or cause to be
made all appropriate repairs, renewals and replacements thereof.


                                       60


         5.3.  FURTHER  ASSURANCES.  Each Loan Party  shall,  from time to time,
execute  such  guaranties,  financing  or  continuation  statements,  documents,
security  agreements,  reports  and other  documents  or  deliver  to Agent such
instruments,  certificates  of  title,  mortgages,  deeds  of  trust,  or  other
documents as Agent at any time may  reasonably  request to evidence,  perfect or
otherwise implement the guaranties and security for repayment of the Obligations
provided for in the Loan Documents.

         5.4. MORTGAGES; TITLE INSURANCE; SURVEYS.

                  (A) TITLE  INSURANCE.  On the Closing  Date (or within  thirty
(30)  days  following  delivery  of any  Mortgage  with  respect  to  Additional
Mortgaged  Property),  Loan  Parties  shall  deliver or cause to be delivered to
Agent ALTA lender's title insurance policies issued by title insurers reasonably
satisfactory  to Agent (the  "Mortgage  Policies")  in form and substance and in
amounts  reasonably  satisfactory to Agent assuring Agent that the Mortgages are
valid and enforceable first priority mortgage liens on the respective  Mortgaged
Property or  Additional  Mortgaged  Property,  free and clear of all defects and
encumbrances  except Permitted  Encumbrances.  The Mortgage Policies shall be in
form and  substance  reasonably  satisfactory  to Agent  and  shall  include  an
endorsement insuring against the effect of future advances under this Agreement,
for mechanics' liens and for any other matter that Agent may reasonably request.
In the case of each  leasehold  constituting  Mortgaged  Property or  Additional
Mortgaged  Property,  Agent shall have received such estoppel letters,  consents
and waivers from the landlords and  non-disturbance  agreements from any holders
of mortgages or deeds of trust on such real estate as may have been requested by
Agent, which letters shall be in form and substance  reasonably  satisfactory to
Agent.

                  (B)  ADDITIONAL  MORTGAGED  PROPERTY.  Loan  Parties  shall as
promptly  as  possible  (and in any event  within  thirty  (30) days  after such
designation)  deliver to Agent a fully executed Mortgage,  in form and substance
reasonably  satisfactory  to Agent  together with title  insurance  policies and
surveys on any Additional Mortgaged Property designated by Agent.

                  (C) SURVEYS.  On or before the Closing Date (or within  thirty
(30)  days  following  delivery  of any  Mortgage  with  respect  to  Additional
Mortgaged  Property),  Loan  Parties  shall  deliver or cause to be delivered to
Agent current surveys,  certified by a licensed surveyor,  for all real property
that is the subject of the  Mortgage  Policies  including  Additional  Mortgaged
Property  for which a  Mortgage  Policy is  issued.  All such  surveys  shall be
sufficient to allow the issuer of the mortgage  policy to issue an ALTA lender's
policy.

                  (D) ADDITIONAL REAL PROPERTY DELIVERIES. Each Loan Party shall
furnish to Agent for the benefit of the  Lenders,  on or before the Closing Date
(or within thirty (30) days  following  delivery of any Mortgage with respect to
Additional Mortgaged Property),  at the expense of the Loan Parties, in addition
to the  items  set  forth  in  Section  5.4(A),(B)  and (C) or under  any  other
provision  hereof,  (i) such  other  certificates  and  documents  as Agent  may
reasonably  request and which are customary in financing of this type, (ii) with
respect to any real property to be subject to a Mortgage,  appraisals  for owned
real  property as shall be requested by Agent,  and (iii) flood  insurance  with


                                       61


respect to any real  property  subject to any  Mortgage to the extent such flood
insurance can be obtained by the Loan Parties on commercially  reasonable terms;
provided,  however,  that, at the cost and expense of the Loan Parties, the Loan
Parties  shall in any event  maintain  and  shall  furnish  to the  Agent  flood
insurance  with  respect to any real  property  subject to any  Mortgage  to the
extent  flood  insurance  with  respect to such real  property is required to be
maintained  by  applicable  law (whether  such law is  applicable to any Lender,
including,  without  limitation,  by reason of such Mortgage,  any Loan Party or
otherwise).  This  Section  5.4 shall  not be deemed to allow any Loan  Party to
acquire any property if otherwise prohibited by this Agreement.

         5.5.  USE OF  PROCEEDS  AND MARGIN  SECURITY.  Borrowers  shall use the
proceeds of all Loans for proper business purposes (as described in the recitals
to this Agreement)  consistent  with all applicable  laws,  statutes,  rules and
regulations.  No  portion  of the  proceeds  of any  Loan  shall be used for the
purpose of purchasing or carrying  margin stock within the meaning of Regulation
U, or in any manner that might cause the  borrowing or the  application  of such
proceeds to violate  Regulation T or Regulation X or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the Exchange Act.

         5.6. MAINTENANCE OF PROPERTIES. The Loan Parties shall, and shall cause
their respective  Subsidiaries to, maintain and preserve all of their respective
properties (excluding Equipment which is subject to Section 4.5(C) hereof) which
are necessary or useful in the proper  conduct of their business in good working
order and  condition,  ordinary wear,  tear,  and casualty  excepted and make or
cause to be made all  appropriate  repairs,  renewals and  replacements  thereof
(except where the failure to do so would not reasonably be expected to result in
a Material Adverse  Effect),  and comply at all times with the provisions of all
material  leases to which it is a party as lessee,  so as to prevent any loss or
forfeiture thereof or thereunder. Each Loan Party will maintain and preserve its
existence, rights, privileges, permits, licenses,  authorizations and approvals,
and become or remain duly qualified and in good standing in each jurisdiction in
which the character of the  properties  owned or leased by such Loan Party or in
which the transaction of its business makes such qualification necessary.

         5.7.  GMAC CF FEE LETTER.  The Loan Parties agree that on and after the
Closing Date, all Loan Parties shall be a party to, bound by and obligated under
the GMAC CF Fee Letter.

         5.8.  ADDITIONAL  COLLATERAL.  The Loan Parties  acknowledge that it is
their intention to provide the Agent with a Lien on all the property of the Loan
Parties  (personal,  real and mixed),  whether now owned or  hereafter  acquired
(other  than as  agreed  to in  writing  by the  Agent),  subject  only to Liens
permitted  hereunder.  Loan Parties shall from time to time promptly  notify the
Agent of the acquisition by any Loan Party of any material property in which the
Agent does not then hold a perfected Lien (other than as agreed to in writing by
the Agent),  or the creation or existence of any such property,  and such person
shall,  upon request by the Agent,  promptly execute and deliver to the Agent or
cause to be executed  and  delivered to the Agent  pledge  agreements,  security
agreements,  mortgages or other like  agreements  with respect to such property,
together with such other  documents,  certificates,  opinions of counsel and the
like as the Agent shall reasonably request in connection therewith,  in form and
substance satisfactory to the Agent, such that the Agent shall receive valid and
perfected  first priority Liens (subject to the Permitted  Encumbrances)  on all


                                       62


such property  (including property which, on the Closing Date, is not subject to
a Lien in favor of the  Agent).  In  addition,  in the event that any Loan Party
acquires  or  owns  any  material  trademarks,   copyrights,  patents  or  other
intellectual  property,  the Loan  Parties  shall  notify the Agent  promptly in
writing and shall  execute,  or cause the execution of a security  agreement and
other  documents  with  respect   thereto  in  form  and  substance   reasonably
satisfactory to the Agent.

SECTION 6     FINANCIAL COVENANTS

         Loan Parties  covenant and agree that so long as any of the Commitments
remain in  effect  and  until  indefeasible  payment  in full,  in cash,  of all
Obligations and termination of all Lender Letters of Credit,  Loan Parties shall
comply  with  and  shall  cause  each of its  Subsidiaries  to  comply  with all
covenants contained in the Financial Covenant Rider.

SECTION 7     NEGATIVE COVENANTS

         Each  Loan  Party  covenants  and  agrees  that  so  long as any of the
Commitments remain in effect and until indefeasible payment in full, in cash, of
all Obligations and termination of all Lender Letters of Credit, each Loan Party
shall not and will not permit any of its Subsidiaries to:

         7.1.  INDEBTEDNESS  AND  LIABILITIES.  Directly or  indirectly  create,
incur,  assume,  guaranty,  or otherwise become or remain directly or indirectly
liable, on a fixed or contingent basis, with respect to any Indebtedness except:
(a) the Obligations;  (b)  intercompany  Indebtedness  among the Borrowers;  (c)
intercompany  Indebtedness  of one or more  Guarantors to one or more Borrowers,
not to exceed $2,000,000 outstanding at any time in the aggregate; provided that
such  Indebtedness is subordinated in right of payment to the  Obligations;  (d)
Indebtedness  (excluding  Capital  Leases)  not  to  exceed  $1,000,000  in  the
aggregate at any time outstanding, either unsecured or secured by purchase money
Liens  permitted by Section 7.3; (e)  Indebtedness  under Capital  Leases not to
exceed  $5,000,000  outstanding at any time in the aggregate;  (f)  Indebtedness
pursuant  to the Second  Lien Term Loan  Documents,  not to exceed an  aggregate
principal  amount of  $45,000,000  less any  payments  of  principal  in respect
thereof  (to the extent  permitted  by the Second  Lien Term Loan  Subordination
Agreement) and (g)  Indebtedness  existing on the Closing Date and identified on
Schedule 7.1. No Loan Party will, incur any Liabilities  except for Indebtedness
permitted  herein and trade payables and normal  accruals in the ordinary course
of business  not yet due and payable or with  respect to which any Loan Party is
contesting  in  good  faith  the  amount  or  validity  thereof  by  appropriate
proceedings  and then only to the extent  that such Loan  Party has  established
adequate reserves therefor under GAAP.

         7.2. GUARANTIES.  Except (i) as provided under the Loan Documents, (ii)
for  guarantees  of the Second  Lien Term Loan Debt  pursuant to the Second Lien
Term Loan  Documents  (to the  extent  permitted  by the  Second  Lien Term Loan
Subordination Agreement),  and (iii) for endorsements of instruments or items of
payment for  collection in the ordinary  course of business,  no Loan Party will
guaranty,  endorse,  or  otherwise in any way become or be  responsible  for any
obligations of any other Person,  whether directly or indirectly by agreement to
purchase the  indebtedness of any other Person or through the purchase of goods,
supplies or services,  or maintenance of working  capital or other balance sheet
covenants or  conditions,  or by way of stock  purchase,  capital  contribution,


                                       63


advance or loan for the purpose of paying or  discharging  any  indebtedness  or
obligation of such other Person or otherwise.

         7.3. TRANSFERS, LIENS AND RELATED MATTERS.

                  (A) TRANSFERS. Sell, assign (by operation of law or otherwise)
or  otherwise  dispose  of,  or grant  any  option  with  respect  to any of the
Collateral,  except that each Loan Party may (1) in the  ordinary  course of its
business, sell Inventory to a Buyer in Ordinary Course of Business and license a
General  Intangible to a Licensee in Ordinary  Course of Business;  and (2) make
Asset  Dispositions  of equipment  and real  property,  if all of the  following
conditions are met: (a) the market value of assets sold or otherwise disposed of
in any  single  transaction  or series of related  transactions  does not exceed
$2,000,000,  the aggregate market value of assets sold or otherwise  disposed of
in any Fiscal Year does not exceed  $3,000,000 and the aggregate market value of
assets sold or  otherwise  disposed  of after the  Closing  Date does not exceed
$6,000,000;  (b) the consideration received is at least equal to the fair market
value of such assets; (c) the sole  consideration  received is cash; (d) the net
proceeds of such Asset  Disposition  are applied as required by subsection  2.4;
(e) after giving effect to the sale or other  disposition of the assets included
within the Asset  Disposition  and the  repayment  of the  Obligations  with the
proceeds  thereof,  Loan Parties on a consolidated  basis are in compliance on a
pro forma basis with the  covenants set forth in the  Financial  Covenant  Rider
recomputed for the most recently ended month for which  information is available
and is in  compliance  with all other  terms and  conditions  contained  in this
Agreement;  and (f) no Default  or Event of  Default  shall then exist or result
from  such  sale  or  other  disposition.  Notwithstanding  the  foregoing,  the
Transaction shall be permitted.

                  (B) LIENS.  Except for  Permitted  Encumbrances,  directly  or
indirectly create,  incur, assume or permit to exist any Lien on or with respect
to any of the Collateral or any proceeds, income or profits therefrom.

                  (C) NO NEGATIVE  PLEDGES.  Enter into or assume any  agreement
(other than (i) the Loan  Documents or (ii) the Second Lien Term Loan  Documents
(to the  extent not in  violation  of the  Second  Lien Term Loan  Subordination
Agreement))  prohibiting  the  creation  or  assumption  of any  Lien  upon  its
properties or assets, whether now owned or hereafter acquired.

                  (D)  NO  RESTRICTIONS  ON  SUBSIDIARY  DISTRIBUTIONS  TO  LOAN
PARTIES.  Except as  provided  (i) herein and (ii) in the Second  Lien Term Loan
Documents  (to  the  extent  not in  violation  of the  Second  Lien  Term  Loan
Subordination  Agreement),  directly or indirectly  create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any such Subsidiary to: (1) pay dividends or make any
other  distribution  on any of such  Subsidiary's  capital stock owned by a Loan
Party; (2) pay any indebtedness  owed to a Loan Party or any other Subsidiary of
a Loan Party; (3) make loans or advances to a Loan Party or any other Subsidiary
of a Loan Party;  or (4)  transfer any of its property or assets to a Loan Party
or any other Subsidiary of a Loan Party.

         7.4.  INVESTMENTS AND LOANS.  Make or permit to exist investments in or
loans to any other Person,  except:  (a) cash in aggregate  amount not to exceed
$1,000,000  held in  Deposit  Accounts  maintained  in the  ordinary  course  of
business,  so long as such  Deposit  Accounts  are subject to a deposit  account


                                       64


control agreement unless otherwise agreed to by Agent; (b) loans and advances to
employees for moving,  entertainment,  travel and other similar  expenses in the
ordinary course of business in an aggregate  outstanding amount not in excess of
$500,000  at  any  time,  and  (c)  as   contemplated  in  connection  with  the
Transaction.

         7.5. RESTRICTED JUNIOR PAYMENTS. Directly or indirectly declare, order,
pay, make or set apart any sum for any Restricted  Junior  Payment,  except that
(a) Loan  Parties may make  Restricted  Junior  Payments  with  respect to their
common  stock  to the  extent  necessary  to  permit  Loan  Parties  to pay  the
Obligations/or  the Second Lien Term Loan Debt (to the extent  Loan  Parties are
permitted to make such  payments  with respect to the Second Lien Term Loan Debt
under the Second  Lien Term Loan  Subordination  Agreement)  and to permit  Loan
Parties to pay expenses  incurred in the ordinary  course of business,  (b) Loan
Parties  may  make  payments  of any  sponsor  management  fees  not  to  exceed
$1,500,000 in the aggregate in any fiscal year,  with (i) $1,000,000  payable to
AIP annually and (ii) $500,000  payable to BNS annually,  but only to the extent
no Default or Event of Default is then existing or would be created thereby, (c)
Loan Parties may make  payments of up to $250,000 in the  aggregate per annum to
AIP and BNS, in respect of out of pocket  expenses;  (d) Holdings may repurchase
its Equity Interests from directors,  executive officers,  members of management
or  employees  of  Holdings  and its  Subsidiaries  upon the death,  disability,
retirement or  termination of such  directors,  executive  officers,  members of
management  or  employees,  so long as no  Default  or Event of  Default is then
existing or would be created  thereby and the aggregate  amount of cash expended
by Holdings  does not exceed  $500,000 in any fiscal year of Holdings;  (e) Loan
Parties may make payments required under the Tax Sharing Agreement (as in effect
on the Closing  Date);  (f) Loan Parties may pay the fees payable on the Closing
Date to AIP and Steel Partners II, L.P., which have previously been disclosed in
writing to Agent;  (g) Loan  Parties may make  payments of Merger  Consideration
after the Closing  Date with amounts  released  from the Closing Date Reserve or
amounts  received from the Disbursing  Agent and applied to the Revolving  Loans
pursuant to subsection 2.4(B)(6) to the extent that such amounts shall have been
reserved for immediately prior to such payment pursuant to subsection 2.4(B)(6),
PROVIDED  that  notwithstanding  the  foregoing,  after the  release of any such
reserve under subsection 2.4(B)(6), Loan Parties may still make such payments of
Merger  Consideration,  so long as (i) no  Default  or Event of  Default is then
existing or would be created thereby and (ii) either,  (x) the aggregate  amount
of all such payments do not exceed $750,000,  or (y) to the extent the aggregate
amount of all such payments exceed  $750,000,  solely with respect to the amount
of such payments in excess of $750,000 in the aggregate,  after giving effect to
any such payment Borrowers have at least $7,500,000 of Undrawn Availability; and
(h) Loan  Parties  may make up to  $2,000,000  in the  aggregate  of payments in
connection with or relating to the repurchase, cancellation or extinguishment of
the Equity Interests of Collins that existed prior to the Merger,  so long as no
Default or Event of Default is then  existing  or would be created  thereby  and
after giving effect to any such payment  Borrowers  have at least  $7,500,000 of
Undrawn Availability.

         7.6. RESTRICTION ON FUNDAMENTAL CHANGES. (a) Enter into any transaction
of merger or consolidation  (other than the Merger);  (b) liquidate,  wind-up or
dissolve itself (or suffer any liquidation or  dissolution);  (c) convey,  sell,
lease,  sublease,  transfer or  otherwise  dispose of, in one  transaction  or a
series of  transactions,  all or any substantial part of its business or assets,
or the capital stock of any of its Subsidiaries,  whether now owned or hereafter
acquired PROVIDED,  HOWEVER,  the Guarantors (other than Holdings) may (i) merge
with and into  each  other  and/or  into  Borrowers,  so long as the  applicable


                                       65


Borrower is the surviving  entity,  or (ii) convey all or  substantially  all of
their assets to each other or to any entity wholly owned,  in the aggregate,  by
the Loan Parties, or (iii) liquidate, wind-up or dissolve, so long as any assets
of such Guarantor are transferred to another Loan Party,  provided that, in each
case of the foregoing instances,  the Loan Parties shall give the Agent at least
30 days  notice  thereof  prior to any such  merger,  conveyance  of  assets  or
liquidation,  wind-up or dissolution and,  provided  further,  immediately after
such merger, conveyance,  liquidation,  wind-up or dissolution, the Loan Parties
would not, as a result of such  transaction,  breach any other  obligation under
any  Loan  Documents;  or  (d)  acquire  by  purchase  or  otherwise  all or any
substantial  part of the  business  or assets  of, or stock or other  beneficial
ownership of, any Person.

         7.7.  CHANGES  RELATING TO SECOND LIEN TERM LOAN DEBT.  Change or amend
the terms of the Second Lien Term Loan  Documents if such change or amendment is
not permitted under the Second Lien Term Loan Subordination Agreement.

         7.8. TRANSACTIONS WITH AFFILIATES.  Directly or indirectly,  enter into
or permit to exist any transaction (including the purchase,  sale or exchange of
property  or the  rendering  of any  service)  with  any  Affiliate  or with any
officer,  director or employee of any Loan Party, except for transactions in the
ordinary course of any Loan Party's  business and upon fair and reasonable terms
which are fully  disclosed to Agent and Lenders and which are no less  favorable
to Loan Parties than it would  obtain in a comparable  arm's length  transaction
with an unaffiliated Person.

         7.9.  CONDUCT OF BUSINESS.  From and after the Closing Date,  engage in
any business other than businesses of the type engaged in by Loan Parties on the
Closing Date.

         7.10.  TAX  CONSOLIDATIONS.  File  or  consent  to  the  filing  of any
consolidated income tax return with any Person other than the other Loan Parties
or BNS;  provided that in the event any Loan Party files a  consolidated  return
with any such  Person  (including  BNS),  such Loan  Party's  contribution  with
respect to taxes as a result of the filing of such consolidated return shall not
be greater,  nor the receipt of tax benefits less, than they would have been had
such Loan Party not filed a consolidated return with such Person.

         7.11.  SUBSIDIARIES.  Other than the Subsidiaries set forth on Schedule
7.11 and except as  contemplated to occur on or prior to the Closing Date by the
terms  of  the  Merger   Documents,   establish,   create  or  acquire  any  new
Subsidiaries.

         7.12. FISCAL YEAR; TAX DESIGNATION. Change its Fiscal Year; or elect to
be designated as an entity other than a C corporation as defined in IRC.

         7.13. PRESS RELEASE;  PUBLIC OFFERING  MATERIALS.  Disclose the name of
Agent or any Lender in any press release or in any  prospectus,  proxy statement
or other  materials  filed with any  governmental  entity  relating  to a public
offering  of the  capital  stock of any Loan Party  except as may be required by
law.

         7.14.  BANK ACCOUNTS.  Establish any new bank  accounts,  or attempt to
amend or terminate  any Blocked  Account or lockbox  agreement  without  Agent's
prior written consent.


                                       66


         7.15.  IRS FORM 8821.  Revoke IRS Form 8821  designating  Agent as Loan
Parties'  appointee  to receive  directly  from the IRS, on an  on-going  basis,
certain tax information, notices and other written communication or fail to take
actions  necessary to renew such Form 8821 prior to its  expiration for all time
periods prior to the Termination Date.

SECTION 8     DEFAULT, RIGHTS AND REMEDIES

           8.1.  EVENT OF DEFAULT.  "Event of Default" shall mean the occurrence
or  existence  of any  one or more  of the  following  (for  each  subsection  a
different  grace or cure period may be specified,  if no grace or cure period is
specified,  such  occurrence  or existence  constitutes  an  immediate  Event of
Default):

                  (A) PAYMENT. Failure to make payment of any of the Obligations
when due; or

                  (B) DEFAULT IN OTHER AGREEMENTS. (1) Failure of any Loan Party
to pay when due any  principal  or interest on the Second Lien Term Loan Debt or
any other Indebtedness  (other than the Obligations) or (2) breach or default of
any Loan Party with respect to the Second Lien Term Loan  Documents or any other
Indebtedness  (other than the Obligations) and such failure continues beyond any
applicable grace period;  if such failure to pay, breach or default entitles the
holder to cause  such  Indebtedness  having an  individual  principal  amount in
excess of $250,000 or having an aggregate principal amount in excess of $500,000
to become or be declared due prior to its stated maturity,  or (3) breach of any
of the provisions of the Merger Documents; or

                  (C) BREACH OF CERTAIN PROVISIONS. Failure of any Loan Party to
perform or comply with any term or condition contained in subparagraphs (1), (2)
and (3) of the Reporting Rider and subsections  5.3, 5.4 or 5.5, or contained in
Section 4, Section 6, Section 7 or the Financial Covenants Rider; or

                  (D)  BREACH  OF  WARRANTY.   Any   representation,   warranty,
certification  or other statement made by any Loan Party in any Loan Document or
in any  statement  or  certificate  at any time given by such  Person in writing
pursuant  or in  connection  with any  Loan  Document  is false in any  material
respect on the date made; or

                  (E)  OTHER  DEFAULTS  UNDER  LOAN  DOCUMENTS.  Any Loan  Party
defaults in the  performance  of or compliance  with any term  contained in this
Agreement  other than  those  otherwise  set forth in this  subsection  8.1,  or
defaults in the  performance  of or  compliance  with any term  contained in the
other Loan  Documents and such default is not remedied or waived within  fifteen
(15) days after notice from Agent, or Requisite  Lenders,  to Borrowing Agent of
such default; or

                  (F) CHANGE IN CONTROL. (1) the consummation of any transaction
(including any merger or consolidation) the result of which is that any "person"
or "group" (as such terms are defined for purposes of the Securities Act), other
than Steel  Partners  II, L.P. or one of its  Affiliates  of which Steel owns at
least 20% of the  Equity  Interests  of each class of Equity  Interests  of such
Affiliate,  becomes  the owner,  directly or  indirectly,  of 35% or more of the
issued  and  outstanding  Equity  Interests  of BNS;  (2)  Steel  ceases  to (i)
beneficially own and control, directly or indirectly, at least 20% of the Equity
Interests of each class of Equity  Interests of BNS entitled  (without regard to


                                       67


the  occurrence of any  contingency)  to vote for the election of the members of
the board of directors of BNS or (ii) have at least two  representatives  on the
board of directors of BNS; (3) BNS ceases to (i)  beneficially  own and control,
directly  or  indirectly,  at least 80% of the  issued  and  outstanding  Equity
Interests of each class of Equity Interests of Holdings entitled (without regard
to the occurrence of any contingency) to vote for the election of the members of
the board of directors of Holdings or (ii) have the right to elect or appoint at
least four of the five members of the board of directors of Holdings; (4) AIP/CH
ceases to beneficially own and control,  directly or indirectly, at least 15% of
the issued and outstanding Equity Interests of each class of Equity Interests of
Holdings  entitled (without regard to the occurrence of any contingency) to vote
for the  election  of the members of the board of  directors  of  Holdings;  (5)
Holdings  ceases to own 100% of the Equity  Interests  of  Collins;  (6) Collins
ceases to own 100% of the  Equity  Interests  of any of its  direct or  indirect
Subsidiaries or (7) any "Change of Control" occurs under, and as defined in, the
Second Lien Term Loan Documents; or

                  (G) INVOLUNTARY BANKRUPTCY;  APPOINTMENT OF RECEIVER, ETC. (1)
A court enters a decree or order for relief with respect to any Loan Party in an
involuntary  case under any applicable  bankruptcy,  insolvency or other similar
law now or  hereafter  in effect,  which  decree or order is not stayed or other
similar relief is not granted under any applicable  federal or state law; or (2)
the  continuance  of any of the  following  events  for sixty  (60) days  unless
dismissed,  bonded or discharged:  (a) an involuntary case is commenced  against
any Loan Party, under any applicable bankruptcy, insolvency or other similar law
now or  hereafter  in  effect;  or  (b) a  receiver,  liquidator,  sequestrator,
trustee, custodian or other fiduciary having similar powers over any Loan Party,
or over all or a substantial part of their respective property, is appointed; or

                  (H) VOLUNTARY  BANKRUPTCY;  APPOINTMENT OF RECEIVER,  ETC. (1)
Any Loan Party  commences  a  voluntary  case under any  applicable  bankruptcy,
insolvency or other  similar law now or hereafter in effect,  or consents to the
entry of an order for relief in an  involuntary  case or to the conversion of an
involuntary  case to a  voluntary  case  under any such law or  consents  to the
appointment of or taking  possession by a receiver,  trustee or other  custodian
for all or a substantial  part of its property;  or (2) any Loan Party makes any
assignment  for the benefit of  creditors;  or (3) the board of directors of any
Loan Party adopts any resolution or otherwise  authorizes  action to approve any
of the actions referred to in this subsection 8.1(H); or

                  (I) LIENS.  Any lien,  levy or assessment is filed or recorded
with  respect  to or  otherwise  imposed  upon all or any  material  part of the
Collateral  or the  assets  of  any  Loan  Party  by the  United  States  or any
department or instrumentality  thereof or by any state, county,  municipality or
other  governmental  agency (other than Permitted  Encumbrances)  and such lien,
levy or assessment is not stayed,  vacated,  paid or discharged  within ten (10)
days; or

                  (J) JUDGMENT,  ATTACHMENTS AND LITIGATION. Any money judgment,
writ or warrant of attachment, or similar process involving (1) an amount in any
individual  case in excess of $500,000 or (2) an amount in the  aggregate at any
time in excess of $1,000,000 (in either case not adequately covered by insurance
as to which the insurance company has acknowledged coverage) is entered or filed
against  any  Loan  Party  or  any  of  their  respective   assets  and  remains
undischarged,  unvacated, unbonded or unstayed for a period of thirty (30) days,
but in any event not later than five (5) days prior to the date of any  proposed
sale thereunder;  or an event occurs or circumstance  arises with respect to any


                                       68


litigation  involving  the Loan  Parties  which  could have a  Material  Adverse
Effect; or

                  (K)  DISSOLUTION.  Any  order,  judgment  or decree is entered
against any Loan Party  decreeing the dissolution or split up of such Loan Party
and such order remains undischarged or unstayed for a period in excess of twenty
(20)  days,  but in any event not later  than five (5) days prior to the date of
any proposed dissolution or split up; or

                  (L)  SOLVENCY.  Any  Loan  Party  ceases  to  be  solvent  (as
represented  by such Loan Party in  subsection  4.14) or admits in  writing  its
present or prospective inability to pay its debts as they become due; or

                  (M) INJUNCTION.  Any Loan Party is enjoined,  restrained or in
any way prevented by the order of any court or any  administrative or regulatory
agency from  conducting  all or any material part of its business and such order
continues for thirty (30) days or more; or

                  (N)  INVALIDITY OF LOAN  DOCUMENTS.  Any of the Loan Documents
for any  reason,  other than a partial or full  release in  accordance  with the
terms  thereof,  ceases to be in full force and effect or is declared to be null
and void, or any Loan Party denies that it has any further  liability  under any
Loan Documents to which it is party, or gives notice to such effect; or

                  (O)  FAILURE  OF  SECURITY.  Agent,  on behalf  of itself  and
Lenders,  does not have or ceases to have a valid and perfected  first  priority
security interest in the Collateral (subject, as to priority, to Liens described
in clauses (b), (c) and/or (e) of the definition of Permitted Encumbrances),  in
each case,  for any reason other than the failure of Agent or any Lender to take
any action within its control; or

                  (P) DAMAGE, STRIKE, CASUALTY. Any material damage to, or loss,
theft or destruction of, any Collateral,  whether or not insured, or any strike,
lockout, labor dispute,  embargo,  condemnation,  act of God or public enemy, or
other casualty which causes,  for more than fifteen (15) consecutive days beyond
the coverage  period of any  applicable  business  interruption  insurance,  the
cessation or  substantial  curtailment  of revenue  producing  activities at any
facility  of  Borrower  or  any  of  its  Subsidiaries  if  any  such  event  or
circumstance would reasonably be expected to have a Material Adverse Effect; or

                  (Q) LICENSES AND PERMITS.  The loss,  suspension or revocation
of, or failure to renew, any license or permit now held or hereafter acquired by
any Loan Party, if such loss,  suspension,  revocation or failure to renew would
reasonably be expected to have a Material Adverse Effect; or

                  (R)  FORFEITURE.  There is filed  against  any Loan  Party any
civil  or  criminal  action,  suit or  proceeding  under  any  federal  or state
racketeering  statute (including,  without limitation,  the Racketeer Influenced
and Corrupt  Organization Act of 1970), which action,  suit or proceeding (1) is
not dismissed  within one hundred twenty (120) days; and (2) would reasonably be
expected to result in the  confiscation or forfeiture of any material portion of
the Collateral; or

                  (S) MERGER.  Any of the Merger  Documents ceases to be in full
force and effect or is declared  null and void or the Merger is not  consummated
on the Closing Date; or


                                       69


                  (T) AIP MANAGEMENT  AGREEMENT/SHAREHOLDER'S  AGREEMENT. Either
the AIP Management Agreement or the Shareholder's Agreement ceases to be in full
force and effect or is declared  null and void or any material  provision of the
AIP Management  Agreement or the Shareholder's  Agreement is amended without the
prior written consent of Agent; or

                  (U) SECOND LIEN TERM LOAN SUBORDINATION  AGREEMENT. Any breach
or  violation  by a Loan  Party  of the  Second  Lien  Term  Loan  Subordination
Agreement,  or if a court of competent jurisdiction issues an order finding that
any material provision of any of the foregoing agreement is invalid,  illegal or
unenforceable.

         8.2.  SUSPENSION OF COMMITMENTS.  Upon the occurrence of any Default or
Event of Default,  notwithstanding  any grace period or right to cure, Agent may
or upon demand by Requisite Lenders shall, without notice or demand, immediately
cease making additional Loans and the Commitments  shall be suspended;  provided
that, in the case of a Default,  if the subject  condition or event is waived or
cured within any  applicable  grace or cure  period,  the  Commitments  shall be
reinstated.

         8.3.  ACCELERATION.  Upon  the  occurrence  of  any  Event  of  Default
described in the foregoing  subsections  8.1(G) or 8.1(H), all Obligations shall
automatically become immediately due and payable,  without presentment,  demand,
protest or other  requirements  of any kind,  all of which are hereby  expressly
waived by each Loan Party, and the Commitments shall thereupon  terminate.  Upon
the occurrence and during the  continuance of any other Event of Default,  Agent
may, and upon demand by Requisite  Lenders shall, by written notice to Borrowing
Agent,  (a) declare all or any  portion of the  Obligations  to be, and the same
shall forthwith  become,  immediately due and payable and the Commitments  shall
thereupon  terminate and (b) demand that Loan Parties  immediately  deposit with
Agent an amount equal to one hundred five percent (105%) of the Letter of Credit
Reserve and deposit the prepayment of fees payable under subsection  2.3(B) with
respect to such Lender  Letters of Credit for the full  remaining  terms of such
Lender Letters of Credit;  provided,  however,  if any of such Lender Letters of
Credit are terminated,  the unearned portion of such prepaid fee attributable to
such Lender Letter of Credit shall be refunded to Borrowers.

         8.4.  REMEDIES.  If any Event of  Default  shall have  occurred  and be
continuing, in addition to and not in limitation of any other rights or remedies
available  to Agent and Lenders at law or in equity,  Agent may,  and shall upon
the request of  Requisite  Lenders,  exercise in respect of the  Collateral,  in
addition  to all other  rights and  remedies  provided  for herein or  otherwise
available to it, all the rights and remedies of a secured party on default under
the UCC (whether or not the UCC applies to the affected Collateral) and may also
(a) require Loan Parties to, and each Loan Party hereby  agrees that it will, at
its expense and upon  request of Agent  forthwith,  assemble  all or part of the
Collateral  as directed by Agent and make it available to Agent at a place to be
designated by Agent which is reasonably convenient to both parties; (b) withdraw
all cash in the  Blocked  Accounts  and  apply  such  monies in  payment  of the
Obligations in the manner  provided in subsection 8.7; and (c) without notice or
demand or legal  process,  enter  upon any  premises  of any Loan Party and take
possession of the Collateral.  Each Loan Party agrees that, to the extent notice
of sale of the Collateral or any part thereof shall be required by law, at least
ten (10) days  notice  to  Borrowing  Agent of the time and place of any  public
disposition or the time after which any private  disposition (which notice shall
include any other  information  required by law) is to be made shall  constitute


                                       70


reasonable notification. At any disposition of the Collateral (whether public or
private), if permitted by law, Agent or any Lender may bid (which bid may be, in
whole or in part, in the form of cancellation of indebtedness) for the purchase,
lease,  or licensing of the Collateral or any portion thereof for the account of
Agent or such Lender.  Agent shall not be obligated to make any  disposition  of
Collateral  regardless  of notice of  disposition  having been given.  Each Loan
Party shall remain  liable for any  deficiency.  Agent may adjourn any public or
private  disposition  from  time to time by  announcement  at the time and place
fixed therefor, and such disposition may, without further notice, be made at the
time and place to which it was so adjourned.  Agent is not obligated to make any
representations  or  warranties  in  connection  with  any  disposition  of  the
Collateral.  To the extent permitted by law, each Loan Party hereby specifically
waives all rights of  redemption,  stay or  appraisal,  which it has or may have
under any law now existing or hereafter, enacted. Agent shall not be required to
proceed  against any Collateral but may proceed against one or more Loan Parties
directly.

         8.5.   APPOINTMENT   OF   ATTORNEY-IN-FACT.   Each  Loan  Party  hereby
constitutes and appoints Agent as such Loan Party's  attorney-in-fact  with full
authority in the place and stead of such Loan Party and in the name of such Loan
Party,  Agent or  otherwise,  from time to time in Agent's  discretion  while an
Event of Default is continuing to take any action and to execute any  instrument
that Agent may deem  necessary or advisable to  accomplish  the purposes of this
Agreement,  including: (a) to ask, demand, collect, sue for, recover,  compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the  Collateral;  (b) to enforce the  obligations of any
Account  Debtor or other  Person  obligated  on the  Collateral  and enforce the
rights of any Loan Party with  respect to such  obligations  and to any property
that  secures  such  obligations;  (c) to file any  claims or take any action or
institute  any  proceedings  that Agent may deem  necessary or desirable for the
collection of or to preserve the value of any of the  Collateral or otherwise to
enforce the rights of Agent and Lenders with  respect to any of the  Collateral;
(d) to pay or  discharge  taxes or Liens  levied  or placed  upon or  threatened
against  the  Collateral,  the  legality  or  validity  thereof  and the amounts
necessary  to  discharge  the  same  to be  determined  by  Agent  in  its  sole
discretion,  and such  payments  made by Agent to  become  Obligations,  due and
payable  immediately  without  demand;  (e) to sign and  endorse  any  invoices,
freight  or express  bills,  bills of lading,  storage  or  warehouse  receipts,
assignments,  verifications  and notices in connection  with  Accounts,  Chattel
Paper or General Intangibles and other Documents relating to the Collateral; and
(f)  generally  to take any act  required of any Loan Party  under  Section 4 or
Section 5 of this Agreement,  and to sell, transfer,  pledge, make any agreement
with  respect  to or  otherwise  deal  with any of the  Collateral  as fully and
completely as though Agent were the absolute owner thereof for all purposes, and
to do, at Agent's option and Loan Parties' expense,  at any time or from time to
time,  all acts and things that Agent deems  necessary  to protect,  preserve or
realize upon the  Collateral.  Each Loan Party hereby  ratifies and approves all
acts of Agent made or taken pursuant to this  subsection 8.5. The appointment of
Agent as each Loan Party's  attorney  and Agent's  rights and powers are coupled
with  an  interest  and  are  irrevocable,  so  long  as any of the  Commitments
hereunder shall be in effect and until indefeasible payment in full, in cash, of
all Obligations and termination of all Lender Letters of Credit.

         8.6.   LIMITATION  ON  DUTY  OF  AGENT  AND  LENDERS  WITH  RESPECT  TO
COLLATERAL. Beyond the safe custody thereof, Agent and each Lender shall have no
duty with respect to any  Collateral in its  possession (or in the possession of
any agent or bailee) or with respect to any income  thereon or the  preservation


                                       71


of rights against prior parties or any other rights  pertaining  thereto.  Agent
shall  be  deemed  to  have  exercised   reasonable  care  in  the  custody  and
preservation  of the  Collateral in its possession if the Collateral is accorded
treatment  substantially  equal to that which Agent  accords  its own  property.
Neither  Agent nor any  Lender  shall be liable or  responsible  for any loss or
damage to any of the Collateral,  or for any diminution in the value thereof, by
reason of the act or  omission of any  warehouse,  carrier,  forwarding  agency,
consignee,  broker or other agent or bailee selected by Loan Parties or selected
by Agent in good faith.

         8.7. APPLICATION OF PROCEEDS.  Notwithstanding anything to the contrary
contained in this  Agreement,  upon the occurrence and during the continuance of
an Event of Default,  (a) each Loan Party irrevocably waives the right to direct
the application of any and all payments at any time or times thereafter received
by  Agent  from or on  behalf  of any  Loan  Party,  and  Agent  shall  have the
continuing  and  exclusive  right to apply and to reapply  any and all  payments
received at any time or times after the occurrence and during the continuance of
an Event of Default  against  the  Obligations  in such manner as Agent may deem
advisable  notwithstanding  any  previous  application  by Agent  and (b) in the
absence of a specific  determination by Agent with respect thereto, the proceeds
of any sale of, or other  realization  upon,  all or any part of the  Collateral
shall be applied: first, to all fees, costs and expenses incurred by or owing to
Agent and then any  Lender  with  respect  to this  Agreement,  the  other  Loan
Documents  or the  Collateral;  second,  to accrued  and unpaid  interest on the
Obligations  (including  any  interest  which  but  for  the  provisions  of any
bankruptcy or insolvency law would have accrued on such amounts);  third, to the
principal  amounts of the  Obligations  outstanding  in a manner as Agent  shall
determine in its sole discretion;  and fourth,  to any other  Obligations of any
Loan Party owing to Agent or any Lender  under the Loan  Documents.  Any balance
remaining  shall be delivered to Borrowing  Agent or to whomever may be lawfully
entitled to receive  such balance or as a court of  competent  jurisdiction  may
direct.

         8.8. LICENSE OF INTELLECTUAL PROPERTY.  Each Loan Party hereby assigns,
transfers and conveys to Agent, for the benefit of Agent and Lenders,  effective
upon the occurrence of any Event of Default hereunder,  the non-exclusive  right
and  license to use all  Intellectual  Property  owned or used by any Loan Party
together with any goodwill associated therewith,  all to the extent necessary to
enable Agent to realize on the  Collateral  and any successor or assign to enjoy
the  benefits  of the  Collateral.  This right and  license  shall  inure to the
benefit of all successors,  assigns and transferees of Agent and its successors,
assigns and  transferees,  whether by  voluntary  conveyance,  operation of law,
assignment,  transfer,  foreclosure,  deed in lieu of  foreclosure or otherwise.
Such right and license is granted  free of charge and,  except to the extent the
failure to obtain such consent would result in a Material  Adverse Effect,  does
not require the consent of any other Person.

         8.9. WAIVERS;  NON-EXCLUSIVE  REMEDIES. No failure on the part of Agent
or any Lender to exercise,  and no delay in exercising  and no course of dealing
with  respect to, any right  under this  Agreement  or the other Loan  Documents
shall operate as a waiver thereof;  nor shall any single or partial  exercise by
Agent or any Lender of any right under this Agreement or any other Loan Document
preclude  any other or further  exercise  thereof or the  exercise  of any other
right.  The rights in this Agreement and the other Loan Documents are cumulative
and shall in no way limit any other remedies provided by law.



                                       72


SECTION 9     AGENT

         9.1. AGENT.

                  (A)  APPOINTMENT.  Each Lender hereto and,  upon  obtaining an
interest  in any Loan,  any  participant,  transferee  or other  assignee of any
Lender irrevocably appoints,  designates and authorizes GMAC CF as Agent to take
such  actions or refrain  from taking such action as its agent on its behalf and
to exercise  such powers  hereunder  and under the other Loan  Documents  as are
delegated  by the terms  hereof and  thereof,  together  with such powers as are
reasonably  incidental  thereto.  Neither  the Agent  nor any of its  directors,
officers,  employees  or agents  shall be liable  for any  action so taken.  The
provisions  of this  subsection  9.1 are  solely  for the  benefit  of Agent and
Lenders and no Loan Party shall have any rights as a third party  beneficiary of
any of the provisions  hereof. In performing its functions and duties under this
Agreement  and the other  Loan  Documents,  Agent  shall act  solely as agent of
Lenders  and does not  assume  and  shall  not be  deemed  to have  assumed  any
obligation toward or relationship of agency or trust with or for any Borrower or
any other Loan Party.  Agent may perform any of its duties  hereunder,  or under
the Loan Documents, by or through its agents or employees.

                  (B) NATURE OF DUTIES. Agent shall have no duties,  obligations
or responsibilities except those expressly set forth in this Agreement or in the
Loan Documents.  The duties of Agent shall be mechanical and  administrative  in
nature.  Agent shall not have by reason of this Agreement a fiduciary,  trust or
agency  relationship with or in respect of any Lender, any Borrower or any other
Loan Party.  Nothing in this Agreement or any of the Loan Documents,  express or
implied,  is  intended  to or  shall be  construed  to  impose  upon  Agent  any
obligations in respect of this Agreement or any of the Loan Documents  except as
expressly set forth herein or therein.  Each Lender shall make its own appraisal
of the credit worthiness of each Loan Party, and shall have independently  taken
whatever  steps it considers  necessary to evaluate the financial  condition and
affairs of Loan Parties, and Agent shall have no duty or responsibility,  either
initially  or on a  continuing  basis,  to provide any Lender with any credit or
other  information  with  respect  thereto  (other  than as  expressly  required
herein),  whether coming into its  possession  before the Closing Date or at any
time or times thereafter.  If Agent seeks the consent or approval of any Lenders
to the taking or refraining from taking any action  hereunder,  then Agent shall
send notice thereof to each Lender.  Agent shall promptly notify each Lender any
time that the  Requisite  Lenders have  instructed  Agent to act or refrain from
acting pursuant hereto.

                  (C) RIGHTS,  EXCULPATION,  ETC.  Neither  Agent nor any of its
officers,  directors,  employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the Loan Documents, or
in connection  herewith or  therewith,  except that Agent shall be liable to the
extent of its own gross  negligence  or willful  misconduct  as  determined by a
court of competent jurisdiction. Agent shall not be liable for any apportionment
or  distribution  of  payments  made  by  it in  good  faith  and  if  any  such
apportionment  or distribution  is subsequently  determined to have been made in
error,  the sole  recourse  of any Lender to whom  payment was due but not made,
shall be to recover  from other  Lenders  any payment in excess of the amount to
which they are determined to be entitled (and such other Lenders hereby agree to
return to such Lender any such  erroneous  payments  received by them).  Neither
Agent  nor any of its  agents or  representatives  shall be  responsible  to any
Lender for any recitals, statements, representations or warranties herein or for


                                       73


the   execution,    effectiveness,    genuineness,   validity,   enforceability,
collectibility, or sufficiency of this Agreement or any of the Loan Documents or
the transactions  contemplated  thereby,  or for the financial  condition of any
Loan Party.  Agent shall not be required to make any inquiry  concerning  either
the  performance or observance of any of the terms,  provisions or conditions of
this  Agreement or any of the Loan  Documents or the financial  condition of any
Loan Party,  or the  existence or possible  existence of any Default or Event of
Default. Agent may at any time request instructions from Lenders with respect to
any actions or approvals  which by the terms of this  Agreement or of any of the
Loan Documents  Agent is permitted or required to take or to grant,  and if such
instructions  are  promptly  requested,  Agent shall be  absolutely  entitled to
refrain  from taking any action or to  withhold  any  approval  and shall not be
under any liability  whatsoever to any Person for refraining  from any action or
withholding  any approval  under any of the Loan  Documents  until it shall have
received such  instructions  from Requisite Lenders or all or such other portion
of the Lenders as shall be prescribed by this  Agreement.  Without  limiting the
foregoing,  no Lender shall have any right of action whatsoever against Agent as
a result of Agent acting or refraining  from acting under this  Agreement or any
of the other Loan  Documents in accordance  with the  instructions  of Requisite
Lenders in the absence of an express  requirement  for a greater  percentage  of
Lender approval hereunder for such action.

                  (D) RELIANCE. Agent shall be under no duty to examine, inquire
into, or pass upon the validity, effectiveness or genuineness of this Agreement,
any other Loan Document, or any instrument,  document or communication furnished
pursuant hereto or in connection herewith.  Agent shall be entitled to rely, and
shall  be  fully  protected  in  relying,  upon  any  written  or oral  notices,
statements,  certificates, orders or other documents or any telephone message or
other communication  (including any writing, fax, telecopy or telegram) believed
by it in good faith to be genuine and correct and to have been  signed,  sent or
made by the proper  Person,  and with respect to all matters  pertaining to this
Agreement or any of the Loan  Documents and its duties  hereunder or thereunder.
Agent shall be entitled  to rely upon the advice of legal  counsel,  independent
accountants, and other experts selected by Agent in its sole discretion.

                  (E)  INDEMNIFICATION.  Lenders will  reimburse  and  indemnify
Agent for and against any and all  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits,  costs,  expenses  (including,  without
limitation,  reasonable attorneys' fees and expenses), advances or disbursements
of any kind or  nature  whatsoever  which may be  imposed  on,  incurred  by, or
asserted  against Agent in any way relating to or arising out of this  Agreement
or any of the Loan  Documents or any action taken or omitted by Agent under this
Agreement or any of the Loan Documents,  in proportion to each Lender's Pro Rata
Share,  but  only  to the  extent  that  any of the  foregoing  is not  promptly
reimbursed by Loan Parties; provided, however, no Lender shall be liable for any
portion of such liabilities,  obligations,  losses, damages, penalties, actions,
judgments,  suits,  costs,  expenses,  advances or disbursements  resulting from
Agent's  gross  negligence  or  willful  misconduct  as  determined  by a  final
non-appealable judgment by a court of competent  jurisdiction.  If any indemnity
furnished  to  Agent  for  any  purpose  shall,  in the  opinion  of  Agent,  be
insufficient  or become  impaired,  Agent may call for additional  indemnity and
cease, or not commence,  to do the acts indemnified against, even if so directed
by Lenders or Requisite Lenders,  until such additional  indemnity is furnished.
The  obligations  of Lenders  under this  subsection  9.1(E)  shall  survive the
payment in full of the Obligations and the termination of this Agreement.


                                       74


                  (F) GMAC CF INDIVIDUALLY.  With respect to its Commitments and
the Loans made by it,  GMAC CF shall have and may  exercise  the same rights and
powers  hereunder and is subject to the same  obligations and liabilities as and
to the extent set forth  herein for any other  Lender.  The terms  "Lenders"  or
"Requisite  Lenders"  or any similar  terms  shall,  unless the context  clearly
otherwise  indicates,  include GMAC CF in its individual capacity as a Lender or
one of the  Requisite  Lenders.  GMAC CF, either  directly or through  strategic
affiliations, may lend money to, acquire equity or other ownership interests in,
provide advisory services to and generally engage in any kind of banking,  trust
or other business with any Loan Party as if it were not acting as Agent pursuant
hereto and without any duty to account  therefor  to  Lenders.  GMAC CF,  either
directly  or  through  strategic   affiliations,   may  accept  fees  and  other
consideration from any Loan Party for services in connection with this Agreement
or  otherwise  without  having to account for the same to  Lenders.  Each Lender
acknowledges  that GMAC CF may purchase certain equity interests in certain Loan
Parties and each Lender (x)  consents  thereto and (y) waives any actual  and/or
potential  conflict of interest or other claims with respect to GMAC CF as Agent
and as a Lender and as a holder of an equity interest in certain Loan Parties.

                  (G) SUCCESSOR AGENT.

                           (1)   RESIGNATION.   Agent   may   resign   from  the
performance  of all its agency  functions  and duties  hereunder  at any time by
giving at least thirty (30)  Business  Days' prior  written  notice to Borrowing
Agent and the Lenders. Such resignation shall take effect upon the acceptance by
a successor Agent of appointment as provided below.

                           (2) APPOINTMENT OF SUCCESSOR. Upon any such notice of
resignation  pursuant to subsection  9.1(G)(1)  above,  Requisite  Lenders shall
appoint a successor Agent which,  unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to Loan Parties. If a successor Agent
shall not have been so  appointed  within said thirty (30)  Business Day period,
the  retiring  Agent,  upon  notice to  Borrowing  Agent,  shall then  appoint a
successor  Agent who shall serve as Agent until such time,  if any, as Requisite
Lenders appoint a successor Agent as provided above.

                           (3)  SUCCESSOR  AGENT.  Upon  the  acceptance  of any
appointment  as Agent  under  the Loan  Documents  by a  successor  Agent,  such
successor  Agent  shall  thereupon  succeed  to and become  vested  with all the
rights,  powers,  privileges and duties of the retiring Agent,  and the retiring
Agent  shall be  discharged  from its  duties  and  obligations  under  the Loan
Documents.  After any retiring  Agent's  resignation as Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions  taken or omitted to
be taken by it while it was Agent.

                  (H) COLLATERAL MATTERS.

                           (1) RELEASE OF COLLATERAL. Lenders hereby irrevocably
authorize  Agent,  at its option  and in its  discretion,  to  release  any Lien
granted  to or held by Agent upon any  Collateral  (a) upon  termination  of the
Commitments and upon payment and  satisfaction  of all  Obligations  (other than
contingent  indemnification  obligations  to the  extent no claims  giving  rise


                                       75


thereto have been asserted); or (b) constituting property being sold or disposed
of if the applicable  Loan Party certifies to Agent that the sale or disposition
is made in compliance  with the provisions of this Agreement (and Agent may rely
in good faith conclusively on any such certificate, without further inquiry). In
addition, with the consent of Requisite Lenders, Agent may release Liens granted
to or held by Agent upon any Collateral  having a book value of not greater than
ten percent  (10%) of the total book value of all  Collateral,  as determined by
Agent,  either in a single  transaction or in a series of related  transactions;
provided, however, in no event will Agent, acting under the authority granted to
it pursuant to this sentence,  release during any calendar year Liens granted to
or held by Agent  upon any  Collateral  having a total  book  value in excess of
twenty percent (20%)of the total book value of all Collateral,  as determined by
Agent.

                           (2) CONFIRMATION OF AUTHORITY; EXECUTION OF RELEASES.
Without in any manner limiting Agent's  authority to act without any specific or
further  authorization  or  consent  by  Lenders  (as set  forth  in  subsection
9.1(H)(1)  above),  each Lender  agrees to confirm in writing,  upon  request by
Agent or Borrowing Agent, the authority to release any Collateral conferred upon
Agent under  clauses (a) and (b) of  subsection  9.1(H)(1).  To the extent Agent
agrees to  release  any Lien  granted  to or held by Agent as  authorized  under
subsection 9.1(H)(1),  (a) Agent is hereby irrevocably authorized by Lenders to,
execute such  documents as may be necessary to evidence the release of the Liens
granted to Agent,  for the benefit of Agent and Lenders,  upon such  Collateral;
provided, however, that Agent shall not be required to execute any such document
on terms which,  in Agent's  opinion,  would expose Agent to liability or create
upon Agent any  obligation or entail any  consequence  other than the release of
such Liens without  recourse or warranty,  and (b) Loan Parties shall provide at
least  ten (10)  Business  Days  prior  written  notice of any  request  for any
document  evidencing  such release of the Liens and Loan Parties  agree that any
such release shall not in any manner discharge, affect or impair the Obligations
or any  Liens  granted  to  Agent  on  behalf  of  Agent  and  Lenders  upon (or
obligations of any Loan Party, in respect of) all interests retained by any Loan
Party,  including,  without  limitation,  the proceeds of any sale, all of which
shall continue to constitute  part of the property  covered by this Agreement or
the Loan Documents.

                           (3) ABSENCE OF DUTY.  Agent shall have no  obligation
whatsoever to any Lender or any other Person to assure that the property covered
by this Agreement or the Loan Documents  exists or is owned by any Loan Party or
is cared for,  protected  or insured  or has been  encumbered  or that the Liens
granted to Agent on behalf of Agent and Lenders  herein or pursuant  hereto have
been  properly or  sufficiently  or lawfully  created,  perfected,  protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care,  disclosure or fidelity,  or to
continue  exercising,  any of the  rights,  authorities  and  powers  granted or
available to Agent in this Agreement or in any of the Loan  Documents,  it being
understood and agreed that in respect of the property  covered by this Agreement
or the Loan Documents or any act,  omission or event related thereto,  Agent may
act in any manner it may deem appropriate, in its discretion,  given Agent's own
interest in property  covered by this  Agreement or the Loan Documents as one of
the Lenders and that Agent shall have no duty or liability  whatsoever to any of
the other Lenders;  provided,  however,  that Agent shall exercise the same care
which it would in dealing with loans for its own account.

                  (I)  AGENCY  FOR  PERFECTION.  Agent  and each  Lender  hereby
appoint  each  other  Lender  as agent for the  purpose  of  perfecting  Agent's
security  interest in assets which,  in accordance  with the Uniform  Commercial


                                       76


Code in any applicable jurisdiction,  can be perfected by possession or Control.
Should any Lender (other than Agent) obtain possession of any such assets,  such
Lender shall notify Agent thereof,  and, promptly upon Agent's request therefor,
shall deliver such assets to Agent or in accordance  with Agent's  instructions.
The Agent may file such  proofs of claim or  documents  as may be  necessary  or
advisable  in order to have the claims of the Agent and the  Lenders  (including
any claim for the reasonable compensation,  expenses, disbursements and advances
of the Agent and the Lenders,  their respective  agents,  financial advisors and
counsel), allowed in any judicial proceedings relative to any Loan Party, or any
of their respective  creditors or property,  and shall be entitled and empowered
to collect,  receive and  distribute  any monies,  securities or other  property
payable  or  deliverable  on any such  claims.  Any  custodian  in any  judicial
proceedings  relative to any Loan Party is hereby  authorized  by each Lender to
make payments to the Agent and, in the event that the Agent shall consent to the
making of such payments directly to the Lenders,  to pay to the Agent any amount
due for the reasonable compensation, expenses, disbursements and advances of the
Agent, its agents, financial advisors and counsel, and any other amounts due the
Agent.  Nothing contained in this Agreement or the other Loan Documents shall be
deemed to  authorize  the Agent to authorize or consent to or accept or adopt on
behalf of any  Lender any plan of  reorganization,  arrangement,  adjustment  or
composition  affecting  the Loans,  or the rights of any holder  thereof,  or to
authorize  the Agent to vote in  respect  of the claim of any Lender in any such
proceeding, except as specifically permitted herein.

                  (J) EXERCISE OF REMEDIES.  Each Lender agrees that it will not
have any right  individually to enforce or seek to enforce this Agreement or any
Loan Document or to realize upon any  collateral  security for the  Obligations,
unless  instructed to do so by Agent,  it being  understood and agreed that such
rights and remedies may be exercised only by Agent.

         9.2. NOTICE OF DEFAULT.

                  Agent shall not be deemed to have  knowledge  or notice of the
occurrence of any Default or Event of Default except with respect to defaults in
the payment of principal, interest and fees required to be paid to Agent for the
account of Lenders,  unless  Agent  shall have  received  written  notice from a
Lender or Borrowing Agent  referring to this Agreement,  describing such Default
or Event of Default and stating that such notice is a "notice of default". Agent
will notify each Lender of its receipt of any such notice.

         9.3. ACTION BY AGENT.

                  Agent shall take such  action  with  respect to any Default or
Event of Default as may be  requested by Requisite  Lenders in  accordance  with
Section 8. Unless and until Agent has received any such request,  Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to any Default or Event of Default as it shall deem advisable or in
the best interests of Lenders.

         9.4. AMENDMENTS, WAIVERS AND CONSENTS.

                  (A)  PERCENTAGE  OF  LENDERS  REQUIRED.  Except  as  otherwise
provided  herein  or  in  any  of  the  other  Loan  Documents,   no  amendment,
modification,  termination  or waiver of any provision of this  Agreement or any


                                       77


other Loan  Document,  or consent to any departure by any Loan Party  therefrom,
shall in any event be  effective  unless the same shall be in writing and signed
by Requisite  Lenders (or, Agent, if expressly set forth herein or in any of the
other Loan Documents) and the applicable Loan Party;  provided however,  that no
amendment,  modification,  termination,  waiver or consent  with  respect to the
Second  Lien Term Loan  Subordination  Agreement  shall be  effective  unless in
writing and signed by the Agent, with the consent of the Requisite Lenders,  and
no amendment,  modification,  termination, waiver or consent shall be effective,
unless in writing and signed by all  Lenders,  to do any of the  following:  (1)
increase  any of the  Commitments;  (2) reduce the  principal  of or the rate of
interest  on any Loan or reduce  the fees  payable  with  respect to any Loan or
Lender Letter of Credit;  (3) extend the  Termination  Date or the scheduled due
date for all or any portion of  principal  of the Loans or any  interest or fees
due hereunder or under any other Loan Document;  (4) amend the definition of the
term  "Requisite  Lenders" or the  percentage of Lenders which shall be required
for Lenders to take any action hereunder; (5) amend or waive this subsection 9.4
or the  definitions  of the terms  used in this  subsection  9.4  insofar as the
definitions  affect the substance of this  subsection  9.4; (6) increase by more
than five  percent  each/in  the  aggregate  the  percentages  contained  in the
definition  of  Borrowing  Base;  (7)  release  Collateral  (except if the sale,
disposition or release of such Collateral is permitted  under  subsection 7.3 or
subsection  9.1 or  under  any  other  Loan  Document);  or (8)  consent  to the
assignment,  delegation or other transfer by any Loan Party of any of its rights
and obligations under any Loan Document;  provided,  further, that no amendment,
modification,  termination,  waiver or consent affecting the rights or duties of
Agent  under  this  Section 9 or under any Loan  Document  shall in any event be
effective,  unless in writing  and signed by Agent,  in  addition to the Lenders
required  to take  such  action,  and  provided,  further,  that  no  amendment,
modification,  termination,  waiver or consent of any provision  relating to the
Swingline  Loan shall be  effective  unless in writing  and signed by  Swingline
Lender. Any amendment, modification,  termination, waiver or consent effected in
accordance  with this  Section  9 shall be  binding  upon each  Lender or future
Lender and, if signed by a Loan Party, on such Loan Party.

                  (B) SPECIFIC PURPOSE OR INTENT. Each amendment,  modification,
termination,  waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No amendment, modification,
termination,  waiver or consent  shall be required for Agent to take  additional
Collateral.

                  (C) FAILURE TO GIVE  CONSENT;  REPLACEMENT  OF  NON-CONSENTING
LENDER. In the event Agent requests the consent of a Lender and does not receive
a written  consent or denial  thereof  within ten (10)  Business Days after such
Lender's receipt of such request, then such Lender will be deemed to have denied
the giving of such  consent.  If, in  connection  with any  proposed  amendment,
modification,  termination  or waiver of any of the provisions of this Agreement
requiring the consent or approval of all Lenders under this  subsection 9.4, the
consent of GMAC CF is  obtained  but the  consent  of one or more other  Lenders
whose consent is required is not obtained,  then Borrowers shall have the right,
so long as all such  non-consenting  Lenders  are either  replaced or prepaid as
described in clauses (1) or (2) below, to either (1) replace the  non-consenting
Lenders with one or more Replacement  Lenders pursuant to subsection 2.11(A), as
if such Lender were an Affected Lender thereunder, but only so long as each such
Replacement Lender consents to the proposed amendment, modification, termination
or waiver, or (2) prepay in full the Obligations of the  non-consenting  Lenders
and terminate the  non-consenting  Lenders'  Commitments  pursuant to subsection
2.11(B), as if such Lender were an Affected Lender thereunder.


                                       78


                  Notwithstanding  anything in this  subsection  9.4,  Agent and
Loan Parties,  without the consent of either  Requisite  Lenders or all Lenders,
may execute  amendments to this Agreement and the Loan Documents,  which consist
solely of the making of typographical corrections.

         9.5. ASSIGNMENTS AND PARTICIPATIONS IN LOANS.

                  (A)  ASSIGNMENTS.  Each  Lender  may  assign  its  rights  and
delegate its obligations under this Agreement to an Eligible Assignee; provided,
however,  (1) such Lender  (other  than GMAC CF) shall first  obtain the written
consent of Agent and,  provided that no Event of Default shall then exist and be
continuing,  Borrowing Agent,  neither of which shall be unreasonably  withheld,
(2) the amount of Commitments  and Loans of the assigning  Lender being assigned
shall in no event be less than the  lesser of (a)  $5,000,000  or (b) the entire
amount of the  Commitments  and Loans of such  assigning  Lender and (3)(a) each
such  assignment  shall be of a pro rata portion of all such assigning  Lender's
Loans and Commitments  hereunder,  and (b) the parties to such assignment  shall
execute and deliver to Agent for  acceptance  and  recording  a  Assignment  and
Acceptance  Agreement together with (i) a processing and recording fee of $3,500
payable by the assigning  Lender to Agent and (ii) each of the Notes  originally
delivered to the assigning Lender.  The administrative fee referred to in clause
(3) of the  preceding  sentence  shall not apply to an  assignment of a security
interest in all or any portion of a Lender's  rights under this Agreement or the
other Loan  Documents,  as described in clause (1) of  subsection  9.5(D) below.
Upon receipt of all of the foregoing, Agent shall notify Borrowing Agent of such
assignment  and  Borrowers  shall comply with their  obligations  under the last
sentence of subsection  2.1(D).  In the case of an assignment  authorized  under
this subsection 9.5, the assignee shall be considered to be a "Lender" hereunder
and Loan Parties hereby acknowledge and agree that any assignment will give rise
to a direct  obligation  of Loan Parties to the assignee.  The assigning  Lender
shall be relieved of its obligations to make Loans hereunder with respect to the
assigned portion of its Commitment.

                  (B) PARTICIPATIONS. Each Lender may sell participations in all
or any part of any Loans or Commitments made by it to another Person;  provided,
however,  such Lender  shall first  obtain the prior  written  consent of Agent,
which consent shall not be  unreasonably  withheld.  All amounts payable by Loan
Parties  hereunder  shall be  determined  as if that  Lender  had not sold  such
participation and the holder of any such participation  shall not be entitled to
require such Lender to take or omit to take any action  hereunder  except action
directly effecting (1) any reduction in the principal amount or an interest rate
on any  Loan  in  which  such  holder  participates;  (2) any  extension  of the
Termination  Date or the date fixed for any  payment of  interest  or  principal
payable with respect to any Loan in which such holder participates;  and (3) any
release of substantially all of the Collateral.  Loan Parties hereby acknowledge
and agree that the participant  under each  participation  shall for purposes of
subsections 2.8, 2.9, 2.10, 9.6 and 12.2 be considered to be a "Lender".

                  (C) NO RELIEF OF  OBLIGATIONS;  COOPERATION;  ABILITY  TO MAKE
LIBOR LOANS.  Except as otherwise provided in subsection 9.5(A) no Lender shall,
as between Loan Parties and that Lender,  be relieved of any of its  obligations


                                       79


hereunder as a result of any sale,  assignment,  transfer or negotiation  of, or
granting of participation  in, all or any part of the Loans or other Obligations
owed to such Lender.  Each Lender may furnish any  information  concerning  Loan
Parties in the possession of that Lender from time to time to Eligible Assignees
and  participants  (including  prospective  assignees  and  participants).  Loan
Parties agree that they will use their best efforts to assist and cooperate with
Agent and any Lender in any manner reasonably  requested by Agent or such Lender
to  effect  the  sale  of a  participation  or an  assignment  described  above,
including,  without  limitation,  assistance in the  preparation  of appropriate
disclosure documents or placement memoranda.  Notwithstanding anything contained
in this Agreement to the contrary, so long as the Requisite Lenders shall remain
capable of making LIBOR Loans, no Person shall become a Lender  hereunder unless
such Person shall also be capable of making LIBOR Loans.

                  (D)   SECURITY    INTERESTS;    ASSIGNMENT   TO    AFFILIATES.
Notwithstanding any other provision set forth in this Agreement,  any Lender may
at any time following written notice to Agent (1) pledge the Obligations held by
it or create a security  interest in all or any portion of its rights under this
Agreement or the other Loan Documents in favor of any Person; provided,  however
(a) no such pledge or grant of security  interest  to any Person  shall  release
such Lender from its obligations  hereunder or under any other Loan Document and
(b) the  acquisition  of  title to such  Lender's  Obligations  pursuant  to any
foreclosure or other exercise of remedies by such Person shall be subject to the
provisions  of this  Agreement  and the other  Loan  Documents  in all  respects
including,  without limitation,  any consent required by subsection 9.5; and (2)
subject to complying with the  provisions of subsection  9.5 (A),  assign all or
any portion of its funded loans to an Eligible Assignee which is a Subsidiary of
such Lender or its parent company, to one or more other Lenders, or to a Related
Fund. For purposes of this paragraph,  a "Related Fund" shall mean, with respect
to any Lender,  a fund or other  investment  vehicle that invests in  commercial
loans and is  managed  by such  Lender or by the same  investment  advisor  that
manages such Lender or by an Affiliate of such investment advisor.

                  (E)  RECORDING  OF  ASSIGNMENTS.  Agent shall  maintain at its
office in New York, New York a copy of each Assignment and Acceptance  Agreement
delivered to it and a register for the recordation of the names and addresses of
Lenders, and the commitments of, and principal amount of the Loans owing to each
Lender  pursuant  to the terms  hereof from time to time (the  "Register").  The
entries in the  Register  shall be  presumptive  evidence of the amounts due and
owing to Lender in the absence of manifest error.  Loan Parties,  Agent and each
Lender may treat each Person whose name is recorded in the Register  pursuant to
the terms hereof as a Lender  hereunder for all purposes of this Agreement.  The
Register shall be available for inspection by Borrowing Agent and any Lender, at
any reasonable time upon reasonable prior notice.

         9.6. SET OFF AND SHARING OF PAYMENTS.  In addition to any rights now or
hereafter  granted under applicable law and not by way of limitation of any such
rights,  upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby  authorized by each Loan Party at any time or from time to
time, with reasonably  prompt subsequent notice to Borrowing Agent (any prior or
contemporaneous  notice  being  hereby  expressly  waived)  to  set  off  and to
appropriate  and to apply any and all (a) balances held by such Lender at any of
its offices for the account of Loan Parties (regardless of whether such balances
are then due to Loan Parties),  and (b) other property at any time held or owing


                                       80


by such  Lender  to or for the  credit  or for the  account  of any Loan  Party,
against and on account of any of the  Obligations;  except that no Lender  shall
exercise any such right without the prior written  consent of Agent.  Any Lender
exercising  its right to set off shall  purchase for cash (and the other Lenders
shall  sell)  interests  in each of such  other  Lender's  Pro Rata Share of the
Obligations  as would be  necessary  to cause all Lenders to share the amount so
set off with each other  Lender in  accordance  with their  respective  Pro Rata
Shares. Each Loan Party agrees, to the fullest extent permitted by law, that any
Lender may  exercise  its right to set off with  respect to amounts in excess of
its Pro Rata  Share of the  Obligations  and upon  doing so shall  deliver  such
amount  so set off to Agent  for the  benefit  of Agent  and of all  Lenders  in
accordance with their Pro Rata Shares.

         9.7.  DISBURSEMENT OF FUNDS. Agent may, on behalf of Lenders,  disburse
funds to Borrowers for Loans  requested.  Each Lender shall  reimburse  Agent on
demand for all funds  disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro Rata Share of any Loan or Advance before
Agent  disburses same to Borrowers.  If Agent elects to require that each Lender
make funds  available to Agent prior to a  disbursement  by Agent to  Borrowers,
Agent  shall  advise  each Lender by  telephone,  telex,  fax or telecopy of the
amount of such Lender's Pro Rata Share of the Loan requested by Borrowing  Agent
no later  than 1:00  p.m.  New York City  time on the  Funding  Date  applicable
thereto,  and each such Lender  shall pay Agent such  Lender's Pro Rata Share of
such requested  Loan, in same day funds,  by wire transfer to Agent's account on
such Funding Date.

         9.8. SETTLEMENTS, PAYMENTS AND INFORMATION.

                  (A) REVOLVING ADVANCES AND PAYMENTS; FEE PAYMENTS.

                           (1)  Fluctuation  of  Revolving  Loan  Balance.   The
Revolving  Loan  balance  may  fluctuate   from  day  to  day  through   Agent's
disbursement of funds to, and receipt of funds from,  Loan Parties.  In order to
minimize  the  frequency of  transfers  of funds  between  Agent and each Lender
notwithstanding  terms to the contrary set forth in Section 2 and subsection 9.7
or subsection 9.9,  Revolving  Advances and  repayments,  except as set forth in
subsection 2.1(C), will be settled according to the procedures described in this
subsection 9.8.  Notwithstanding  these procedures,  each Lender's obligation to
fund its portion of any advances made by Agent to Borrowers will commence on the
date such advances are made by Agent.  Such payments will be made by such Lender
without set-off, counterclaim or reduction of any kind.

                           (2)  SETTLEMENT   DATES.   Once  each  week  for  the
Revolving Loan or more frequently  (including  daily),  if Agent so elects (each
such day being a "Settlement Date"), Agent will advise each Lender by telephone,
fax or  telecopy  of the  amount of each  such  Lender's  Pro Rata  Share of the
Revolving Loan. In the event payments are necessary to adjust the amount of such
Lender's  required Pro Rata Share of the Revolving Loan balance to such Lender's
actual Pro Rata Share of the Revolving Loan balance as of any  Settlement  Date,
the party from which such payment is due will pay the other,  in same day funds,
by wire  transfer to the other's  account not later than 3:00 p.m. New York City
time on the Business Day following the Settlement Date.



                                       81


                           (3)  SETTLEMENT  DEFINITIONS.  For  purposes  of this
subsection  9.8(A),  the following  terms and conditions  will have the meanings
indicated:

                                    (a)  "Daily  Loan  Balance"  means an amount
calculated as of the end of each calendar day by subtracting  (i) the cumulative
principal  amount  paid by Agent to a Lender  on a Loan  from the  Closing  Date
through and including  such calendar  day,  from (ii) the  cumulative  principal
amount on a Loan  advanced by such Lender to Agent on that Loan from the Closing
Date through and including such calendar day.

                                    (b) "Daily  Interest  Rate"  means an amount
calculated  by dividing the interest  rate payable to a Lender on a Loan (as set
forth in subsection 2.2) as of each calendar day by three hundred sixty (360).

                                    (c) "Daily Interest  Amount" means an amount
calculated  by  multiplying  the Daily Loan Balance of a Loan by the  associated
Daily Interest Rate on that Loan.

                                    (d)   "Interest   Ratio"   means  a   number
calculated  by dividing the total  amount of the interest on a Loan  received by
Agent with  respect to the  immediately  preceding  month by the total amount of
interest on that Loan due from Borrower during the immediately preceding month.

                           (4) SETTLEMENT PAYMENTS. On the first Business Day of
each month  ("Interest  Settlement  Date"),  Agent will  advise  each  Lender by
telephone,  fax or telecopy of the amount of such Lender's share of interest and
fees on each of the  Loans  as of the  end of the  last  day of the  immediately
preceding month.  Provided that such Lender has made all payments required to be
made by it under this Agreement, Agent will pay to such Lender, by wire transfer
to such Lender's  account (as specified by such Lender on the signature  page of
this Agreement or the applicable Assignment and Acceptance Agreement, as amended
by such  Lender  from time to time  after the date  hereof or in the  applicable
Assignment and Acceptance Agreement) not later than 3:00 p.m. New York City time
on the next Business Day following the Interest  Settlement  Date, such Lender's
share of interest and fees on each of the Loans. Such Lender's share of interest
on each Loan will be  calculated  for that  Loan by  adding  together  the Daily
Interest  Amounts  for each  calendar  day of the prior  month for that Loan and
multiplying the total thereof by the Interest Ratio for that Loan. Such Lender's
share of the Unused Line Fee described in  subsection  2.3(A) shall be an amount
equal to (a)(i) such Lender's  average  Revolving  Loan  Commitment  during such
month,  LESS (ii) the sum of (x) such Lender's average Daily Loan Balance of the
Revolving  Loans,  PLUS (y) such  Lender's  Pro Rata Share of the average  daily
aggregate  amount of Letter of Credit  Reserve,  in each case for the  preceding
month,  MULTIPLIED BY (b) the  percentage  required by subsection  2.3(A).  Such
Lender's  share of all fees paid to Agent for the  benefit of Lenders  hereunder
shall be paid and calculated  based on such Lender's  Commitment with respect to
the Loans on which  such  fees are  associated.  To the  extent  Agent  does not
receive the total  amount of any fee owing by  Borrowers  under this  Agreement,
each amount  payable by Agent to a Lender under this  subsection  9.8(A)(4) with
respect to such fee shall be reduced on a pro rata basis. Any funds disbursed or
received by Agent pursuant to this  Agreement,  including,  without  limitation,
under subsections 9.7, 9.8(A)(1), and 9.9, prior to the Settlement Date for such
disbursement  or payment shall be deemed  advances or remittances by GMAC CF, in


                                       82


its capacity as a Lender, for purposes of calculating interest and fees pursuant
to this subsection 9.8(A)(4).

                  (B) TERM LOAN  PRINCIPAL  PAYMENTS.  Provided that such Lender
has made all payments  required to be made by it under this Agreement,  payments
of principal of the Term Loan will be settled on the date of receipt if received
by  Agent  on the  first  Business  Day of a  month  and  on  the  Business  Day
immediately  following the date of receipt if received on any day other than the
first Business Day of a month.

                  (C) RETURN OF PAYMENTS.

                           (1) RECOVERY AFTER  NON-RECEIPT OF EXPECTED  PAYMENT.
If Agent  pays an amount  to a Lender  under  this  Agreement  in the  belief or
expectation  that a related  payment  has been or will be received by Agent from
any Loan Party and such  related  payment is not  received by Agent,  then Agent
will be entitled  to recover  such  amount  from such  Lender  without  set-off,
counterclaim or deduction of any kind together with interest  thereon,  for each
day from and including  the date such amount is made  available by Agent to such
Lender to but  excluding  the date of repayment to Agent,  at the greater of the
Federal Funds  Effective Rate and a rate  determined by Agent in accordance with
banking industry rules on interbank compensation.

                           (2) RECOVERY OF RETURNED PAYMENT. If Agent determines
at any time that any  amount  received  by Agent  under this  Agreement  must be
returned  to any  Loan  Party  or  paid  to any  other  Person  pursuant  to any
requirement of law, court order or otherwise,  then,  notwithstanding  any other
term or condition of this  Agreement,  Agent will not be required to  distribute
any portion thereof to any Lender. In addition,  each Lender will repay to Agent
on demand any portion of such amount that Agent has  distributed to such Lender,
together  with interest at such rate, if any, as Agent is required to pay to any
Loan Party or such other Person,  without set-off,  counterclaim or deduction of
any kind.

         9.9. DISCRETIONARY ADVANCES.  Notwithstanding anything contained herein
to the contrary,  Agent may, in its sole discretion,  make Revolving Advances in
excess of the  limitations  set forth in the Borrowing Base but not in excess of
the Revolving  Loan  Commitment  for the purpose of preserving or protecting the
Collateral or for incurring any costs  associated  with  collection or enforcing
rights or remedies against the Collateral,  or incurred in any action to enforce
this Agreement or any other Loan Document.

                  Upon  Agent's  making of any  Revolving  Advances  under  this
Section  9.9,  each  of  the  Lenders  shall  be  deemed  to  have  irrevocably,
unconditionally  and immediately  purchased from Agent a  participation  in such
Revolving  Advances in an amount  equal to such  Lender's  Pro Rata Share of the
Revolving Loan Commitment multiplied by the total amount of such Revolving Loans
outstanding  under this Section 9.9.  Each Lender shall effect such  purchase by
making  available the amount of such Lender's  participation  in such  Revolving
Loans in U.S. Dollars in immediately  available funds to Agent's Account. In the
event any Lender  fails to make  available  to Agent when due the amount of such
Lender's  participation  in such  Revolving  Loans,  Agent  shall be entitled to
recover  such amount on demand from such Lender  together  with  interest at the
Federal  Funds  Effective  Rate.  Each such  purchase by a Lender  shall be made
without recourse to Agent,  without  representation or warranty of any kind, and
shall be effected and evidenced pursuant to documents  reasonably  acceptable to


                                       83


Agent.  The  obligations  of the  Lenders  under  this  subsection  9.9 shall be
absolute,  irrevocable and unconditional,  shall be made under all circumstances
and shall not be affected, reduced or impaired for any reason whatsoever.

SECTION 10        BORROWING AGENCY

         10.1. BORROWING AGENCY PROVISIONS.

                  (A)  DESIGNATION  OF BORROWING  AGENT.  Each  Borrower  hereby
irrevocably  designates Borrowing Agent to be its attorney and agent and in such
capacity  to borrow,  sign and  endorse  notes,  and  execute  and  deliver  all
instruments,  documents,  writings  and  further  assurances  now  or  hereafter
required  hereunder,  on  behalf  of such  Borrower  or  Borrowers,  and  hereby
authorizes Agent to pay over or credit all loan proceeds hereunder in accordance
with the request of Borrowing Agent.

                  (B) INDEMNIFICATIONS.  The handling of this credit facility as
a co-borrowing  facility with a Borrowing  Agent in the manner set forth in this
Agreement is solely as an accommodation to Borrowers and at their request.  None
of Agent, any Issuing Lender or any Lender shall incur liability to Borrowers as
a result thereof.  To induce Agent and the Lenders to do so and in consideration
thereof,  each Borrower hereby  indemnifies  Agent, each Lender and each Issuing
Lender and holds Agent,  each Lender and each Issuing  Lender  harmless from and
against any and all liabilities,  expenses, losses, damages and claims of damage
or injury asserted against Agent, any Lender or any Issuing Lender by any Person
arising from or incurred by reason of the handling of the financing arrangements
of Borrowers as provided herein,  reliance by Agent or any Lender on any request
or instruction  from  Borrowing  Agent or any other action taken by Agent or any
Lender with respect to this Subsection  10.1(B) except due to willful misconduct
or gross (not mere)  negligence  by the  indemnified  party (as  determined by a
court of competent jurisdiction in a final non-appealable judgment).

                  (C) OBLIGATIONS  ABSOLUTE.  All Obligations shall be joint and
several,  and  each  Borrower  shall  make  payment  upon  the  maturity  of the
Obligations by acceleration  or otherwise,  and such obligation and liability on
the  part  of each  Borrower  shall  in no way be  affected  by any  extensions,
renewals  and  forbearance  granted  by Agent or any  Lender to any Loan  Party,
failure of Agent or any Lender to give any  Borrower  notice of borrowing or any
other  notice,  any  failure  of Agent or any Lender to pursue or  preserve  its
rights  against  any Loan  Party,  the  release  by Agent or any  Lender  of any
Collateral now or thereafter acquired from any Loan Party, and such agreement by
each Loan Party to pay upon any notice issued pursuant  thereto is unconditional
and  unaffected  by prior  recourse  by Agent or any  Lender to the  other  Loan
Parties or any Collateral for such Loan Party's Obligations or the lack thereof,
irrespective of the validity,  regularity or enforceability of this Agreement or
any other circumstances whatsoever.

                  (D) WAIVERS.  Except as otherwise  expressly  provided in this
Agreement,  each  Borrower  hereby  waives notice of acceptance of its joint and
several liability, notice of any Loan or Lender Letter of Credit issued under or
pursuant to this  Agreement,  notice of the occurrence of any Default,  Event of
Default,  or of any demand for any payment under this  Agreement,  notice of any
action at any time taken or  omitted by Agent or Lenders  under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,


                                       84


generally,  to the extent permitted by applicable law, all demands,  notices and
other  formalities of every kind in connection  with this  Agreement  (except as
otherwise  provided in this  Agreement).  Each Borrower  hereby  assents to, and
waives notice of, any extension or  postponement  of the time for the payment of
any of the Obligations, the acceptance of any payment of any of the Obligations,
the  acceptance of any partial  payment  thereon,  any waiver,  consent or other
action or  acquiescence  by Agent or  Lenders at any time or times in respect of
any default by any  Borrower in the  performance  or  satisfaction  of any term,
covenant,   condition  or  provision  of  this  Agreement,  any  and  all  other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking,  addition,  substitution or release, in whole or in part, at any
time or times,  of any  security  for any of the  Obligations  or the  addition,
substitution or release, in whole or in part, of any Borrower.  Without limiting
the  generality of the foregoing,  each Borrower  assents to any other action or
delay in  acting  or  failure  to act on the part of  Agent or any  Lender  with
respect to the  failure by any  Borrower  to comply  with any of its  respective
Obligations, including any failure strictly or diligently to assert any right or
to pursue any  remedy or to comply  fully with  applicable  laws or  regulations
thereunder,  which might,  but for the provisions of this Section afford grounds
for  terminating,  discharging  or relieving any Borrower,  in whole or in part,
from any of its Obligations  under this Section,  it being the intention of each
Borrower that, so long as any of the Obligations  hereunder remain  unsatisfied,
the  Obligations  of each  Borrower  under this Section  shall not be discharged
except by  performance  and then only to the  extent  of such  performance.  The
Obligations  of each  Borrower  under this Section  shall not be  diminished  or
rendered   unenforceable  by  any  winding  up,   reorganization,   arrangement,
liquidation,  reconstruction or similar  proceeding with respect to any Borrower
or Agent or any  Lender.  Each  Borrower  represents  and  warrants to Agent and
Lenders that such Borrower is currently  informed of the financial  condition of
Borrowers and of all other  circumstances  which a diligent inquiry would reveal
and which bear upon the risk of  nonpayment  of the  Obligations.  Each Borrower
further represents and warrants to Agent and Lenders that such Borrower has read
and understands  that terms and conditions of the Loan Documents.  Each Borrower
hereby covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.  Each Borrower waives all rights and defenses arising out of
an election of  remedies  by Agent or any Lender,  even though that  election of
remedies,  such as a  nonjudicial  foreclosure  with  respect to security  for a
guaranteed  obligation,  has  destroyed  Agent's  or  such  Lender's  rights  of
subrogation and  reimbursement  against such Borrower.  Each Borrower waives all
rights and defenses  that such  Borrower may have  because the  Obligations  are
secured by real property.  This means, among other things: (i) Agent may collect
from such  Borrower  without  first  foreclosing  on any  Collateral  pledged by
Borrowers,  and  (ii) if  Agent  forecloses  on any  real  property  pledged  by
Borrowers:  (A) the amount of the  Obligations  may be reduced only by the price
for  which  that  Collateral  is  sold  at the  foreclosure  sale,  even  if the
Collateral is worth more than the sale price,  (B) Agent and Lenders may collect
from such Borrower even if Agent or Lenders, by foreclosing on the real property
Collateral,  has  destroyed any right such Borrower may have to collect from the
other Borrowers.  This is an unconditional and irrevocable  waiver of any rights
and defenses such Borrower may have because the  Obligations are secured by real
property.



                                       85


         10.2.  WAIVER OF SUBROGATION.  Each Loan Party expressly waives any and
all rights of subrogation,  reimbursement,  indemnity, exoneration, contribution
of any other claim which such Loan Party may now or  hereafter  have against the
other Loan  Parties or other  Person  directly  or  contingently  liable for the
Obligations  hereunder,  or against or with  respect to the other Loan  Parties'
property  (including,  without limitation,  any property which is Collateral for
the  Obligations),  arising from the existence or performance of this Agreement,
until termination of this Agreement and repayment in full of the Obligations.

         10.3.  Interdependent  Companies.  The Borrowers  acknowledge and agree
that they are a part of an integrated, interdependent group of companies that on
a regular  basis make  intercompany  loans to one another and that the Agent and
Lenders are relying upon the joint and several  obligations  of the Borrowers in
providing  the  financing  accommodations  described  herein  and would not have
provided such accommodations  without such joint and several undertakings of all
of the Borrowers.

SECTION 11    GUARANTY

         11.1.  UNCONDITIONAL  GUARANTY.  Each Guarantor hereby  unconditionally
guarantees,  as a  primary  obligor  and not  merely as a  surety,  jointly  and
severally  with each other  Guarantor when and as due,  whether at maturity,  by
acceleration,  by  notice  of  prepayment  or  otherwise,  the due and  punctual
performance of all Obligations of each other party hereto.  Without limiting the
generality of the  foregoing,  each  Guarantor's  liability  shall extend to all
amounts  that  constitute  part  of the  Obligations  and  would  be owed by the
Borrowers to the Agent or the Lenders  under any Loan  Document but for the fact
that  they  are  unenforceable  or  not  allowable  due to  the  existence  of a
bankruptcy,  reorganization or similar proceeding involving any Loan Party. Each
payment made by any Guarantor  pursuant to this Guaranty shall be made in lawful
money of the United States in immediately  available  funds, (a) without set-off
or counterclaim  and (b) free and clear of and without  deduction or withholding
for or on account  of any  present  and future  Charges  and any  conditions  or
restrictions resulting in Charges and all penalties, interest and other payments
on or in respect  thereof (except for Charges based on the overall net income of
Agent or a Lender)  ("Tax" or "Taxes")  unless  Guarantor is compelled by law to
make payment subject to such Taxes.

         11.2.  TAXES.  All Taxes in respect  of this  Guaranty  or any  amounts
payable or paid under this Guaranty  shall be paid by Guarantor  when due and in
any event prior to the date on which penalties  attach  thereto.  Each Guarantor
will indemnify  Agent and each of the Lenders against and in respect of all such
Taxes. Without limiting the generality of the foregoing, if any Taxes or amounts
in respect thereof must be deducted or withheld from any amounts payable or paid
by any Guarantor hereunder,  such Guarantor shall pay such additional amounts as
may be necessary to ensure that the Agent and each of the Lenders receives a net
amount  equal  to the full  amount  which it would  have  received  had  payment
(including of any additional  amounts  payable under this Section 11.2) not been
made  subject to such  Taxes.  Within  thirty  (30) days of each  payment by any
Guarantor  hereunder  of Taxes or in  respect  of Taxes,  such  Guarantor  shall
deliver  to Agent  satisfactory  evidence  (including  originals,  or  certified
copies, of all relevant receipts) that such Taxes have been duly remitted to the
appropriate authority or authorities.


                                       86


         11.3. WAIVERS OF NOTICE, DEMAND, ETC. Each Guarantor hereby absolutely,
unconditionally  and  irrevocably  waives (i) promptness,  diligence,  notice of
acceptance,  notice of  presentment  of payment and any other notice  hereunder,
(ii) demand of payment, protest, notice of dishonor or nonpayment, notice of the
present and future amount of the  Obligations  and any other notice with respect
to the Obligations,  (iii) any requirement that the Agent or any Lender protect,
secure,  perfect or insure any security interest or Lien or any property subject
thereto or exhaust any right or take any action against any other Loan Party, or
any Person or any  Collateral,  (iv) any other action,  event or precondition to
the  enforcement  hereof  or the  performance  by  each  such  Guarantor  of the
Obligations, and (v) any defense arising by any lack of capacity or authority or
any other  defense of any Loan Party or any notice,  demand or defense by reason
of cessation from any cause of Obligations other than payment and performance in
full of the  Obligations  by the Loan  Parties  and any  defense  that any other
guarantee or security was or was to be obtained by Agent.

         11.4. NO INVALIDITY,  IRREGULARITY,  ETC. No invalidity,  irregularity,
voidableness,  voidness  or  unenforceability  of  this  Agreement  or any  Loan
Document or any other agreement or instrument relating thereto, or of all or any
part of the  Obligations  or of any collateral  security  therefor shall affect,
impair or be a defense hereunder.

         11.5. INDEPENDENT  LIABILITY.  The Guaranty hereunder is one of payment
and performance, not collection, and the obligations of each Guarantor hereunder
are  independent of the  Obligations  of the other Loan Parties,  and a separate
action or actions may be brought and prosecuted against any Guarantor to enforce
the terms and  conditions  of this  Section  11.5,  irrespective  of whether any
action is brought  against any other Loan Party or other  Persons or whether any
other Loan Party or other Persons are joined in any such action or actions. Each
Guarantor  waives  any right to  require  that any resort be had by Agent or any
Lender to any security held for payment of the  Obligations or to any balance of
any  deposit  account or credit on the books of any Agent or any Lender in favor
of any Loan Party or any other  Person.  No  election  to proceed in one form of
action or  proceedings,  or against any  Person,  or on any  Obligations,  shall
constitute  a waiver of Agent's  right to proceed in any other form of action or
proceeding  or against any other  Person  unless  Agent has  expressed  any such
waiver in writing.  Without limiting the generality of the foregoing,  no action
or proceeding  by Agent against any Loan Party under any document  evidencing or
securing indebtedness of any Loan Party to Agent shall diminish the liability of
any Guarantor  hereunder,  except to the extent Agent receives actual payment on
account of Obligations by such action or proceeding,  notwithstanding the effect
of any such election,  action or proceeding upon the right of subrogation of any
Guarantor in respect of any Loan Party.

         11.6. INDEMNITY.  As an original and independent  obligation under this
Guaranty,  each Guarantor  shall (a) indemnify the Agent and each of the Lenders
and keep the  Agent  and each of the  Lenders  indemnified  against  all  costs,
losses,  expenses and liabilities of whatever kind resulting from the failure by
any  party  to make  due  and  punctual  payment  of any of the  Obligations  or
resulting  from  any  of the  Obligations  being  or  becoming  void,  voidable,
unenforceable  or  ineffective   against  Borrowers   (including,   but  without
limitation,  all legal and other  costs,  Charges and  expenses  incurred by the
Agent and each of the Lenders,  or any of them in connection  with preserving or
enforcing,  or  attempting  to  preserve  or  enforce,  its  rights  under  this
Guaranty),  except to the  extent  that any of the same  results  from the gross
negligence or willful  misconduct by Agent or any Lender;  and (b) pay on demand


                                       87


the amount of such costs, losses,  expenses and liabilities whether or not Agent
or any of the Lenders have  attempted to enforce any rights against any Borrower
or any other Person or otherwise.

         11.7.  LIABILITY  ABSOLUTE.  The liability of each Guarantor  hereunder
shall be absolute,  unlimited and  unconditional and shall not be subject to any
reduction,  limitation,  impairment,  discharge or  termination  for any reason,
including,   without  limitation,  any  claim  of  waiver,  release,  surrender,
alteration  or  compromise,  and shall not be subject  to any claim,  defense or
setoff,  counterclaim,  recoupment  or  termination  whatsoever by reason of the
invalidity, illegality or unenforceability of any other Obligation or otherwise.
Without  limiting the  generality  of the  foregoing,  the  obligations  of each
Guarantor  shall not be discharged or impaired,  released,  limited or otherwise
affected by:

                           (i) any  change  in the  manner,  place  or  terms of
                  payment or performance,  and/or any change or extension of the
                  time  of  payment  or  performance  of,  release,  renewal  or
                  alteration  of,  or  any  new   agreements   relating  to  any
                  Obligation,  any security therefor,  or any liability incurred
                  directly or indirectly in respect  thereof,  or any rescission
                  of,  or  amendment,  waiver or other  modification  of, or any
                  consent  to  departure   from,  this  Agreement  or  any  Loan
                  Document,  including any increase in the Obligations resulting
                  from the  extension  of  additional  credit to any Borrower or
                  otherwise;

                           (ii) any sale, exchange,  release,  surrender,  loss,
                  abandonment,  realization  upon any property by  whomsoever at
                  any  time  pledged  or  mortgaged  to  secure,   or  howsoever
                  securing,  all or any of the  Obligations,  and/or  any offset
                  there  against,   or  failure  to  perfect,  or  continue  the
                  perfection of, any Lien in any such property,  or delay in the
                  perfection  of any such Lien, or any amendment or waiver of or
                  consent to departure from any other guaranty for all or any of
                  the Obligations;

                           (iii)  the  failure  of the  Agent or any  Lender  to
                  assert any claim or demand or to  enforce  any right or remedy
                  against  any  Borrower  or any other  Loan  Party or any other
                  Person  under the  provisions  of this  Agreement  or any Loan
                  Document or any other  document  or  instrument  executed  and
                  delivered in connection herewith or therewith;

                           (iv) any settlement or compromise of any  Obligation,
                  any security therefor or any liability (including any of those
                  hereunder)  incurred directly or indirectly in respect thereof
                  or hereof,  and any subordination of the payment of all or any
                  part thereof to the payment of any obligation  (whether due or
                  not) of any Loan Party to  creditors  of any Loan Party  other
                  than any other Loan Party;

                           (v) any  manner  of  application  of  Collateral,  or
                  proceeds  thereof,  to all or any of the  Obligations,  or any
                  manner of sale or other  disposition of any Collateral for all
                  or any of the  Obligations  or any  other  assets  of any Loan
                  Party; and


                                       88


                           (vi) any other agreements or circumstance  (including
                  any statute of limitations) of any nature  whatsoever that may
                  or might in any manner or to any  extent  vary the risk of any
                  Guarantor,  or  that  might  otherwise  at  law  or in  equity
                  constitute  a defense  available  to, or a  discharge  of, the
                  Guaranty hereunder and/or the obligations of any Guarantor, or
                  a defense  to, or  discharge  of,  any Loan Party or any other
                  Person or party hereto or the  Obligations  or otherwise  with
                  respect to the Advances,  Letters of Credit or other financial
                  accommodations  to any  Borrower  pursuant  to this  Agreement
                  and/or the Loan Documents.

         11.8. ACTION BY AGENT WITHOUT NOTICE. The Agent shall have the right to
take any action set forth in Section 8.4 without notice to or the consent of any
Guarantor and each  Guarantor  expressly  waives any right to notice of, consent
to,  knowledge of and  participation  in any  agreements  relating to any of the
above or any other present or future event relating to Obligations whether under
this  Agreement  or  otherwise  or any right to challenge or question any of the
above and waives any defenses of such Guarantor which might arise as a result of
such actions.

         11.9.  APPLICATION OF PROCEEDS.  Agent may at any time and from time to
time (whether prior to or after the revocation or termination of this Agreement)
without  the  consent of, or notice to, any  Guarantor,  and  without  incurring
responsibility to any Guarantor or impairing or releasing the Obligations, apply
any sums by whomsoever paid or howsoever realized to any Obligations  regardless
of what Obligations remain unpaid.

         11.10. CONTINUING EFFECTIVENESS.

                  (A)  REINSTATEMENT.  The Guaranty  provisions herein contained
shall continue to be effective or be reinstated, as the case may be, if claim is
ever made upon the Agent or any Lender for  repayment  or recovery of any amount
or  amounts  received  by such  Person in  payment  or on  account of any of the
Obligations  and such  Person  repays all or part of said  amount for any reason
whatsoever,  including, without limitation, by reason of any judgment, decree or
order of any court or administrative  body having  jurisdiction over such Person
or the respective property of each, or any settlement or compromise of any claim
effected by such Person with any such claimant  (including any Loan Party);  and
in such event each  Guarantor  hereby  agrees  that any such  judgment,  decree,
order,  settlement or compromise  or other  circumstances  shall be binding upon
such Guarantor, notwithstanding any revocation hereof or the cancellation of any
note or other instrument evidencing any Obligation,  and each Guarantor shall be
and remain  liable to the Agent  and/or the  Lenders for the amount so repaid or
recovered  to the same  extent  as if such  amount  had  never  originally  been
received by such Person(s).

                  (B) NO MARSHALLING. Agent shall not be required to marshal any
assets in favor of any Guarantor, or against or in payment of Obligations.

                  (C)  PRIORITY  OF CLAIMS.  No  Guarantor  shall be entitled to
claim  against any present or future  security held by Agent from any Person for
Obligations  in  priority to or equally  with any claim of Agent,  or assert any
claim for any  liability  of any Loan Party to any  Guarantor  in priority to or
equally with claims of Agent for Obligations, and no Guarantor shall be entitled


                                       89


to compete with Agent with respect to, or to advance any equal or prior claim to
any security held by Agent for Obligations.

                  (D) INVALIDATED  PAYMENTS. If any Loan Party makes any payment
to Agent, which payment is wholly or partly subsequently  invalidated,  declared
to be  fraudulent  or  preferential,  set aside or  required to be repaid to any
Person  under any  federal  or  provincial  statute  or at  common  law or under
equitable  principles,  then to the  extent  of  such  payment,  the  Obligation
intended to be paid shall be revived and  continued  in full force and effect as
if the payment had not been made,  and the resulting  revived  Obligation  shall
continue to be guaranteed, uninterrupted, by each Guarantor hereunder.

                  (E)  ASSIGNMENT  AND WAIVER.  All  present  and future  monies
payable by any Loan Party to any  Guarantor,  whether  arising out of a right of
subrogation  or  otherwise,  are  assigned  to Agent for its benefit and for the
ratable  benefit of the Lenders as security  for such  Guarantor's  liability to
Agent and the Lenders  hereunder and,  except (so long as no Default or Event of
Default has occurred and is continuing)  for monies payable by any Loan Party to
any  Guarantor in the ordinary  course of business,  each  Guarantor  waives any
right to demand any and all present and future monies  payable by any Loan Party
to such  Guarantor,  whether arising out of a right of subrogation or otherwise.
Except to the extent prohibited otherwise by this Agreement, all monies received
by any  Guarantor  from any Loan Party shall be held by such  Guarantor as agent
and trustee for Agent.  This assignment and waiver shall only terminate when the
Obligations  are  paid in  full  in  cash  and  this  Agreement  is  irrevocably
terminated.

                  (F) PAYMENTS TO GUARANTORS.  Each Loan Party acknowledges this
assignment and waiver and, except as otherwise set forth herein,  agrees to make
no payments,  except (so long as no Default or Event of Default has occurred and
is  continuing)  in  the  ordinary  course  of  business  consistent  with  past
practices,  to any Guarantor  without the prior written  consent of Agent.  Each
Loan Party agrees to give full effect to the provisions hereof.

         11.11.  ENFORCEMENT.  Upon the occurrence and during the continuance of
any  Event of  Default,  Agent may and upon  written  request  of the  Requisite
Lenders  shall,  without  notice to or demand  upon any Loan  Party or any other
Person,  declare any obligations of such Guarantor hereunder immediately due and
payable,  and shall be entitled to enforce the  obligations  of each  Guarantor.
Upon such declaration by Agent,  Agent and the Lenders are hereby  authorized at
any  time  and  from  time to time to set  off and  apply  any and all  deposits
(general or special, time or demand,  provisional or final) at any time held and
other  indebtedness  at any time  owing by  Agent or the  Lenders  to or for the
credit or the account of any Guarantor against any and all of the obligations of
each Guarantor now or hereafter existing hereunder,  whether or not Agent or the
Lenders  shall have made any demand  hereunder  against any other Loan Party and
although such  obligations may be contingent and unmatured.  The rights of Agent
and  the  Lenders  hereunder  are in  addition  to  other  rights  and  remedies
(including  other rights of set-off) which Agent and the Lenders may have.  Upon
such  declaration by Agent,  with respect to any claims (other than those claims
referred to in the immediately preceding paragraph) of any Guarantor against any
Loan Party (the "Claims"),  Agent shall have the full right on the part of Agent
in its own name or in the name of such  Guarantor  to collect and  enforce  such
Claims  by legal  action,  proof  of debt in  bankruptcy  or  other  liquidation
proceedings,  vote in any  proceeding  for the  arrangement of debts at any time
proposed, or otherwise,  Agent and each of its officers being hereby irrevocably


                                       90


constituted  attorneys-in-fact  for  each  Guarantor  for  the  purpose  of such
enforcement  and for the purpose of endorsing in the name of each  Guarantor any
instrument for the payment of money.  Each Guarantor will receive as trustee for
Agent and will pay to Agent  forthwith  upon receipt  thereof any amounts  which
such  Guarantor  may receive from any Loan Party on account of the Claims.  Each
Guarantor agrees that at no time hereafter will any of the Claims be represented
by any notes, other negotiable instruments or writings, except and in such event
they  shall  either be made  payable to Agent,  or if payable to any  Guarantor,
shall  forthwith be endorsed by such Guarantor to Agent.  Each Guarantor  agrees
that no payment on account of the Claims or any security  interest therein shall
be created,  received,  accepted or retained during the continuance of any Event
of Default nor shall any  financing  statement be filed with respect  thereto by
any Guarantor.

         11.12.  STATUTE OF  LIMITATIONS.  Any  acknowledgment  or new  promise,
whether by payment of principal or interest or otherwise and whether by any Loan
Party or others with respect to any of the Obligations  shall, if the statute of
limitations  in favor of any  Guarantor  against the Agent or the Lenders  shall
have commenced to run, toll the running of such statute of  limitations  and, if
the  period of such  statute of  limitations  shall have  expired,  prevent  the
operation of such statute of limitations.

         11.13. INTEREST. All amounts due, owing and unpaid from time to time by
any Guarantor  hereunder shall bear interest at the interest rate per annum then
chargeable  with  respect to Base Rate  Loans  constituting  Revolving  Advances
(without duplication of interest on the underlying Obligation).

         11.14.  CURRENCY CONVERSION.  Without limiting any other rights in this
Agreement,  if for the  purposes  of  obtaining  judgment  in any  court  in any
jurisdiction with respect to this Guaranty or any other Loan Document it becomes
necessary to convert into the currency of such  jurisdiction  (herein called the
"Judgment  Currency")  any amount due  hereunder in any currency  other than the
Judgment  Currency,  then  conversion  shall  be  made at the  rate of  exchange
prevailing  on the Business Day before the day on which  judgment is given.  For
this  purpose,  "rate of exchange"  means the rate at which Agent would,  on the
relevant date at or about 12:00 noon (New York City time), be prepared to sell a
similar  amount of such  currency in New York,  New York  against  the  Judgment
Currency. In the event that there is a change in the rate of exchange prevailing
between the  Business  Day before the day on which the judgment is given and the
date of payment of the amount due,  Guarantor will, on the date of payment,  pay
such  additional  amounts (if any) as may be necessary to ensure that the amount
paid on such date is the amount in the Judgment Currency which when converted at
the rate of  exchange  prevailing  on the date of payment is the amount then due
under this  Guaranty  or any other Loan  Document  in such other  currency.  Any
additional  amount due from Guarantor  under this Section 11.15 will be due as a
separate debt and shall not be affected by judgment being obtained for any other
sums  due  under  or in  respect  of this  Agreement  or any of the  other  Loan
Documents.

         11.15.  ACKNOWLEDGEMENT.  Each Guarantor acknowledges receipt of a copy
of each of this Agreement and the other Loan Documents.  Each Guarantor has made
an independent  investigation of the Loan Parties and of the financial condition
of the Loan Parties. Neither Agent nor any Lender has made and neither Agent nor
any  Lender  does  make any  representations  or  warranties  as to the  income,
expense,  operation,  finances or any other matter or thing  affecting  any Loan


                                       91


Party nor has Agent or any Lender made any  representations  or warranties as to
the amount or nature of the  Obligations of any Loan Party to which this Section
11 applies as specifically  herein set forth, nor has Agent or any Lender or any
officer, agent or employee of Agent or any Lender or any representative thereof,
made any other oral  representations,  agreements or  commitments of any kind or
nature,   and  each  Guarantor  hereby  expressly   acknowledges  that  no  such
representations  or  warranties  have  been  made and such  Guarantor  expressly
disclaims reliance on any such representations or warranties.

         11.16.  CONTINUING  EFFECTIVENESS.  The  provisions  of this Section 11
shall  remain in effect  until the  indefeasible  payment in full in cash of all
Obligations and irrevocable  termination of this  Agreement.  Payments  received
from Guarantors  pursuant to this Section 11 shall be applied in accordance with
Section 8.7 of this Agreement.

         11.17. LIMITATION OF GUARANTY. Notwithstanding anything to the contrary
contained in this Section 11, the Guaranty of each Guarantor  under this Section
11 that is also a Borrower  is limited  to the Term Loan  Obligations,  PROVIDED
that the foregoing shall not affect such Guarantor's obligations as a "Borrower"
with respect to the Obligations.  For purposes of this subsection  11.17,  "Term
Loan Obligations" means all amounts from time to time payable in connection with
the Term Loan  (including,  without  limitation,  all interest,  fees,  cost and
expenses  accrued  or  incurred  after  the  filing  of any  petition  under any
bankruptcy  or insolvency  law  (regardless  of whether  allowed or allowable in
whole or in part as a claim therein) and all other  Obligations  relating to the
Term Loan.

SECTION 12    MISCELLANEOUS

         12.1.  EXPENSES AND ATTORNEYS'  FEES.  Whether or not the  transactions
contemplated hereby shall be consummated, each Loan Party agrees to promptly pay
all  fees,   costs  and  expenses   incurred  in  connection  with  any  matters
contemplated  by or arising out of this  Agreement  or the other Loan  Documents
including the following,  and all such fees, costs and expenses shall be part of
the  Obligations,  payable on demand and  secured by the  Collateral:  (a) fees,
costs and expenses incurred by Agent (including  reasonable  attorneys' fees and
expenses,  the  allocated  costs of  Agent's  internal  legal  staff and fees of
environmental  consultants,  accountants  and other  professionals  retained  by
Agent)  incurred in  connection  with the  examination,  review,  due  diligence
investigation, documentation and closing of the financing arrangements evidenced
by the Loan Documents; (b) fees, costs and expenses incurred by Agent (including
reasonable attorneys' fees and expenses, the allocated costs of Agent's internal
legal  staff  and  fees of  environmental  consultants,  accountants  and  other
professionals  retained  by  Agent)  incurred  in  connection  with the  review,
negotiation,    preparation,    documentation,    execution,   syndication   and
administration  of the Loan Documents,  the Loans, and any amendments,  waivers,
consents,   forbearances  and  other  modifications   relating  thereto  or  any
subordination or intercreditor  agreements,  including reasonable  documentation
charges  assessed  by Agent  for  amendments,  waivers,  consents  and any other
documentation  prepared by Agent's  internal  legal staff;  (c) fees,  costs and
expenses (including  reasonable  attorneys' fees and allocated costs of internal
legal  staff)  incurred  by Agent or any  Lender  in  creating,  perfecting  and
maintaining  perfection  of Liens in favor of  Agent,  on  behalf  of Agent  and
Lenders;  (d) fees,  costs and  expenses  incurred by Agent in  connection  with
forwarding to Borrowers the proceeds of Loans including  Agent's or any Lenders'
standard  wire  transfer  fee;  (e)  fees,  costs,  expenses  and bank  charges,


                                       92


including bank charges for returned  checks,  incurred by Agent or any Lender in
establishing,  maintaining and handling lock box accounts,  blocked  accounts or
other  accounts for  collection of the  Collateral;  (f) fees,  costs,  expenses
(including  reasonable  attorneys'  fees and allocated  costs of internal  legal
staff) of Agent or any Lender and costs of  settlement  incurred  in  collecting
upon or enforcing  rights  against the  Collateral  or incurred in any action to
enforce this  Agreement  or the other Loan  Documents or to collect any payments
due from any Borrower or any other Loan Party under this  Agreement or any other
Loan Document or incurred in connection with any refinancing or restructuring of
the credit arrangements provided under this Agreement,  whether in the nature of
a "workout" or in connection  with any  insolvency or bankruptcy  proceedings or
otherwise.

         12.2.  INDEMNITY.  In addition  to the payment of expenses  pursuant to
subsection 12.1,  whether or not the transactions  contemplated  hereby shall be
consummated,  each Loan Party agrees to  indemnify,  pay and hold Agent and each
Lender, and the officers, directors,  employees, agents, consultants,  auditors,
persons  engaged by Agent or any Lender,  to evaluate or monitor the Collateral,
affiliates and attorneys of Agent, Lender and such holders  (collectively called
the   "Indemnitees")   harmless  from  and  against  any  and  all  liabilities,
obligations,  losses, damages,  penalties,  actions,  judgments,  suits, claims,
costs,  expenses and disbursements of any kind or nature  whatsoever  (including
the fees and  disbursements  of counsel for such  Indemnitees in connection with
any   investigative,   administrative  or  judicial   proceeding   commenced  or
threatened,  whether or not such Indemnity  shall be designated a party thereto)
that may be imposed on, incurred by, or asserted against that Indemnity,  in any
manner relating to or arising out of this Agreement or the other Loan Documents,
the  consummation  of the  transactions  contemplated  by  this  Agreement,  the
statements  contained in the commitment  letters,  if any, delivered by Agent or
any Lender, Agent's and each Lender's agreement to make the Loans hereunder, the
use or intended  use of the  proceeds of any of the Loans or the exercise of any
right or remedy  hereunder or under the other Loan Documents  (the  "Indemnified
Liabilities");  provided  that no Loan  Party  shall have any  obligation  to an
Indemnitee  hereunder with respect to Indemnified  Liabilities  arising from the
gross  negligence or willful  misconduct  of that  Indemnitee as determined by a
final non-appealable judgment by a court of competent jurisdiction.

         12.3.  NOTICES.  Unless otherwise  specifically  provided  herein,  all
notices shall be in writing addressed to the respective party as set forth below
and may be personally  served,  faxed,  telecopied or sent by overnight  courier
service or United  States  mail and shall be deemed to have been  given:  (a) if
delivered in person, when delivered; (b) if delivered by fax or telecopy, on the
date of  transmission if transmitted on a Business Day before 4:00 p.m. New York
City time or, if not, on the next  succeeding  Business Day; (c) if delivered by
overnight  courier,  two  (2)  days  after  delivery  to such  courier  properly
addressed;  or (d) if by U.S. Mail,  four (4) Business Days after  depositing in
the United States mail, with postage prepaid and properly addressed.

         If to Borrowing Agent
         or any Loan Party:         Collins Industries, Inc.
                                    15 Compound Drive
                                    Hutchinson, Kansas 67502-4349
                                    Attention:    Corporate Secretary
                                    Fax/Telecopy No.: (620) 663-1630


                                       93


                  With a copy to:   Olshan Grundman Frome Rosenzweig & Wolosky LLP
                                    Park Avenue Tower
                                    65 East 55th Street
                                    New York, New York 10022
                                    Attention: Adam W. Finerman, Esq.
                                    Fax/Telecopy No.: (212) 451-2222

                  If to Agent or    GMAC COMMERCIAL FINANCE LLC
                  to GMAC CF:       1290 Avenue of the Americas, 3rd Floor
                                    New York, New York 10104
                                    Attn:    SFD Portfolio Manager
                                    Fax/Telecopy No.:  (212) 884-7692

                  With a copy to:   GMAC COMMERCIAL FINANCE LLC
                                    1290 Avenue of the Americas
                                    New York, New York 10104
                                    Attn:  Legal Services/SFD
                                    Fax/Telecopy No.:  (212) 884-7693

                                    and

                                    Hahn & Hessen LLP
                                    488 Madison Avenue
                                    New York, New York 10022
                                    Attn:    Leonard L. Podair, Esq.
                                    Fax/Telecopy No.: (212) 478-7400

                  If to any Lender:  Its address indicated on the signature page
hereto,  in an Assignment and  Acceptance  Agreement or in a notice to Agent and
Borrowing  Agent or to such  other  address  as the party  addressed  shall have
previously  designated  by  written  notice  to  the  serving  party,  given  in
accordance with this subsection 12.3.

         12.4.   SURVIVAL  OF   REPRESENTATIONS   AND   WARRANTIES  AND  CERTAIN
AGREEMENTS.  All  agreements,  representations  and warranties made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
hereunder.  Notwithstanding  anything in this Agreement or implied by law to the
contrary,  the  agreements of each Loan Party,  Agent,  and Lenders set forth in
subsections 9.1(E),  12.1, 12.2, 12.6, 12.11, 12.14, and 12.15 shall survive the
payment of the Loans and the termination of this Agreement.

         12.5.  INDULGENCE NOT WAIVER. No failure or delay on the part of Agent,
any Lender or any  holder of any Note in the  exercise  of any  power,  right or
privilege  hereunder  or under  any  Note  shall  impair  such  power,  right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial  exercise of any such power,  right or privilege
preclude  other or  further  exercise  thereof or of any other  right,  power or
privilege.


                                       94


         12.6.  MARSHALING;  PAYMENTS  SET ASIDE.  Neither  Agent nor any Lender
shall be under any  obligation  to marshal any assets in favor of any Loan Party
or any other party or against or in payment of any or all of the Obligations. To
the extent that any Loan Party  makes a payment or payments to Agent  and/or any
Lender or Agent and/or any Lender  enforces its security  interests or exercises
its rights of setoff,  and such  payment or  payments  or the  proceeds  of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or  preferential,  set aside and/or  required to be repaid to a
trustee,  receiver or any other party under any bankruptcy law, state or federal
law,  common law or equitable  cause,  then to the extent of such recovery,  the
Obligations or part thereof originally intended to be satisfied,  and all Liens,
rights and remedies  therefor,  shall be revived and continued in full force and
effect as if such  payment had not been made or such  enforcement  or setoff had
not occurred.

         12.7.  ENTIRE  AGREEMENT.  This  Agreement and the other Loan Documents
embody the entire  agreement  among the parties  hereto and  supersede all prior
commitments, agreements, representations, and understandings, whether written or
oral,  relating to the subject matter  hereof,  and may not be  contradicted  or
varied by evidence of prior,  contemporaneous,  or subsequent oral agreements or
discussions of the parties hereto.

         12.8. SEVERABILITY.  The invalidity,  illegality or unenforceability in
any  jurisdiction of any provision in or obligation  under this Agreement or the
other  Loan  Documents  shall not  affect or impair the  validity,  legality  or
enforceability of the remaining  provisions or obligations under this Agreement,
or the other Loan Documents.

         12.9.  LENDERS'  OBLIGATIONS  SEVERAL;  INDEPENDENT  NATURE OF LENDERS'
RIGHTS.  The  obligation  of each Lender  hereunder is several and not joint and
neither  Agent  nor any  Lender  shall  be  responsible  for the  obligation  or
Commitment  of any other Lender  hereunder.  In the event that any Lender at any
time should fail to make a Loan as herein provided, the Lenders, or any of them,
at their sole option, may make the Loan that was to have been made by the Lender
so failing to make such Loan.  Nothing  contained  in any Loan  Document  and no
action taken by Agent or any Lender  pursuant  hereto or thereto shall be deemed
to constitute  Lenders to be a partnership,  an association,  a joint venture or
any other kind of entity.  The  amounts  payable at any time  hereunder  to each
Lender shall be a separate and independent  debt,  and,  provided Agent fails or
refuses to exercise  any  remedies  against any Loan Party after  receiving  the
direction of the Requisite Lenders, each Lender shall be entitled to protect and
enforce its rights  arising out of this  Agreement and it shall not be necessary
for any other Lender to be joined as an additional  party in any  proceeding for
such purpose.

         12.10. HEADINGS.  Section and subsection headings in this Agreement are
included  herein for  convenience  of reference  only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.

         12.11.  APPLICABLE  LAW. THIS  AGREEMENT  AND THE OTHER LOAN  DOCUMENTS
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED  AND ENFORCED IN  ACCORDANCE  WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT  REGARD TO CONFLICTS OF LAWS
PRINCIPLES BUT INCLUDING AND GIVING EFFECT TO SECTIONS  5-1401 AND 5-1402 OF THE
NEW YORK  GENERAL  OBLIGATIONS  LAW),  EXCEPT TO THE  EXTENT ANY SUCH OTHER LOAN
DOCUMENT  EXPRESSLY  SELECTS THE LAW OF ANOTHER  JURISDICTION  AS  GOVERING  LAW
THEREOF, IN WHICH CASE THE LAW OF SUCH OTHER JURISDICTION SHALL GOVERN.


                                       95


         12.12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their  respective  successors and
assigns,  provided,  however, no Loan Party may assign its rights or obligations
hereunder without the written consent of Lenders.

         12.13. NO FIDUCIARY RELATIONSHIP; NO DUTY; LIMITATION OF LIABILITIES.

                  (A) NO FIDUCIARY RELATIONSHIP.  No provision in this Agreement
or in any of the other  Loan  Documents  and no course of  dealing  between  the
parties shall be deemed to create any  fiduciary  duty by Agent or any Lender to
any Loan Party.

                  (B) NO DUTY. All attorneys, accountants, appraisers, and other
professional  Persons and consultants retained by Agent or any Lender shall have
the right to act  exclusively  in the interest of Agent or such Lender and shall
have no duty of  disclosure,  duty of  loyalty,  duty of care,  or other duty or
obligation of any type or nature whatsoever to any Loan Party or any of any Loan
Party's shareholders or any other Person.

                  (C) LIMITATION OF  LIABILITIES.  Neither Agent nor any Lender,
nor any affiliate, officer, director, shareholder,  employee, attorney, or agent
of Agent or any Lender shall have any  liability  with respect to, and each Loan
Party hereby waives, releases, and agrees not to sue any of them upon, any claim
for any special,  indirect,  incidental,  or  consequential  damages suffered or
incurred  by any Loan Party in  connection  with,  arising out of, or in any way
related to, this  Agreement  or any of the other Loan  Documents,  or any of the
transactions  contemplated by this Agreement or any of the other Loan Documents.
Each Loan  Party  hereby  waives,  releases,  and agrees not to sue Agent or any
Lender  or any of  Agent's  or any  Lender's  affiliates,  officers,  directors,
employees,  attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan  Documents,  or any of the  transactions  contemplated by this
Agreement or any of the transactions contemplated hereby.

         12.14. CONSENT TO JURISDICTION.  EACH LOAN PARTY HEREBY CONSENTS TO THE
JURISDICTION  OF ANY STATE OR  FEDERAL  COURT  LOCATED  WITHIN THE COUNTY OF NEW
YORK,  STATE  OF NEW  YORK AND  IRREVOCABLY  AGREES  THAT,  SUBJECT  TO  AGENT'S
ELECTION,  ALL  ACTIONS  OR  PROCEEDINGS  ARISING  OUT OF OR  RELATING  TO  THIS
AGREEMENT OR THE OTHER LOAN  DOCUMENTS  SHALL BE LITIGATED IN SUCH COURTS.  EACH
LOAN PARTY EXPRESSLY  SUBMITS AND CONSENTS TO THE  JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON  CONVENIENS.  EACH LOAN PARTY  HEREBY
WAIVES PERSONAL  SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE
OF PROCESS MAY BE MADE UPON  BORROWING  AGENT BY CERTIFIED OR  REGISTERED  MAIL,
RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWING AGENT, AT THE ADDRESS SET FORTH
IN THIS  AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE
SAME HAS BEEN POSTED.  IN ANY  LITIGATION,  TRIAL,  ARBITRATION OR OTHER DISPUTE


                                       96


RESOLUTION  PROCEEDING  RELATING  TO THIS  AGREEMENT  OR ANY OF THE  OTHER  LOAN
DOCUMENTS, ALL DIRECTORS,  OFFICERS,  EMPLOYEES AND AGENTS OF EACH LOAN PARTY OR
OF ITS  AFFILIATES  SHALL BE DEEMED TO BE EMPLOYEES  OR MANAGING  AGENTS OF SUCH
LOAN PARTY FOR  PURPOSES  OF ALL  APPLICABLE  LAW OR COURT RULES  REGARDING  THE
PRODUCTION  OF WITNESSES BY NOTICE FOR TESTIMONY  (WHETHER IN A  DEPOSITION,  AT
TRIAL OR OTHERWISE). EACH LOAN PARTY AGREES THAT AGENT'S OR ANY LENDER'S COUNSEL
IN ANY SUCH DISPUTE  RESOLUTION  PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS
AS IF UNDER  CROSS-EXAMINATION  AND THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM
MAY BE USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE  DEPOSITION.  EACH LOAN
PARTY IN ANY EVENT WILL USE ALL  COMMERCIALLY  REASONABLE  EFFORTS TO PRODUCE IN
ANY SUCH DISPUTE RESOLUTION PROCEEDING,  AT THE TIME AND IN THE MANNER REQUESTED
BY AGENT OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE,  ELECTRONIC
OR OTHER FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE.

         12.15.  WAIVER OF JURY TRIAL.  EACH LOAN  PARTY,  AGENT AND EACH LENDER
HEREBY  WAIVE THEIR  RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
EACH  LOAN  PARTY,  AGENT AND EACH  LENDER  ACKNOWLEDGE  THAT  THIS  WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,  THAT EACH HAS RELIED
ON THE WAIVER IN ENTERING INTO THIS  AGREEMENT AND THE OTHER LOAN  DOCUMENTS AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE  DEALINGS.
EACH LOAN PARTY,  AGENT AND EACH LENDER  WARRANT AND REPRESENT THAT EACH HAS HAD
THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL,  AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

         12.16.  CONSTRUCTION.  Each  Loan  Party,  Agent and each  Lender  each
acknowledge  that it has had the benefit of legal  counsel of its own choice and
has been  afforded an  opportunity  to review this  Agreement and the other Loan
Documents  with its legal  counsel.  This Agreement and the other Loan Documents
shall be construed as if jointly drafted by Loan Parties, Agent and each Lender.

         12.17. COUNTERPARTS;  EFFECTIVENESS. This Agreement and any amendments,
waivers, consents, or supplements may be executed via telecopier or facsimile or
other  electronic  method of transmission  in any number of counterparts  and by
different  parties  hereto  in  separate  counterparts,  each of  which  when so
executed  and  delivered  shall  be  deemed  an  original,   but  all  of  which
counterparts  together  shall  constitute  one and  the  same  instrument.  This
Agreement shall become  effective upon the execution of a counterpart  hereof by
each of the parties hereto.

         12.18.  CONFIDENTIALITY.  Agent and each Lender agree to exercise their
best efforts to keep confidential any non-public  information delivered pursuant
to the Loan Documents and identified as such by Loan Parties and not to disclose
such information to Persons other than to: its respective affiliates,  officers,


                                       97


directors and employees; or its potential assignees or participants;  or Persons
employed  by  or  engaged  by  Agent,  a  Lender  or  a  Lender's  assignees  or
participants including, without limitation,  attorneys,  auditors,  professional
consultants,   rating   agencies  and   portfolio   management   services.   The
confidentiality  provisions  contained  in this  subsection  shall  not apply to
disclosures  (a) required to be made by Agent or any Lender to any regulatory or
governmental  agency or pursuant to legal  process or (b)  consisting of general
portfolio  information that does not identify any Loan Party. The obligations of
Agent and Lenders under this  subsection  12.18 shall  supersede and replace the
obligations of Agent and Lenders under any confidentiality  agreement in respect
of this  financing  executed  and  delivered by Agent or any Lender prior to the
date  hereof.  In no event shall Agent or any Lender be obligated or required to
return  any  materials  furnished  by  Loan  Parties;  provided,  however,  each
potential assignee or participant shall be required to agree that if it does not
become an assignee (or  participant) it shall return all materials  furnished to
it by Loan Parties in connection herewith.

Notwithstanding the foregoing,  and notwithstanding any other express or implied
agreement or understanding to the contrary, each of the parties hereto and their
respective  employees,  representatives,  and other  agents  are  authorized  to
disclose the tax treatment and tax  structure of these  transactions  to any and
all persons,  without  limitation  of any kind.  Each of the parties  hereto may
disclose all  materials of any kind  (including  opinions or other tax analyses)
insofar  as  they  relate  to  the  tax  treatment  and  tax  structure  of  the
transactions  contemplated by the Loan Documents.  This  authorization  does not
extend to disclosure of any other information including (without limitation) (a)
the identities of participants or potential participants in the transactions (b)
the existence or status of any  negotiations,  (c) any pricing  other  financial
information or (d) any other term or detail not related to the tax treatment and
tax structure of the transactions contemplated by the Loan Documents.

         12.19.  PUBLICATION.  Each Loan Party  consents to the  publication  by
Agent of a tombstone or similar  advertising  material relating to the financing
transactions  contemplated by this  Agreement;  provided,  however,  Agent shall
provide  a draft  of any such  tombstone  or  similar  advertising  material  to
Borrowing Agent for review prior to the publication  thereof.  Agent and Lenders
reserve the right to provide industry trade organizations  information necessary
and customary for inclusion in league table measurements.

         12.20.  SPECIAL  PROVISIONS  RELATING TO COLLINS AND ITS  SUBSIDIARIES.
Notwithstanding  anything to the  contrary  contained  in this  Agreement or any
other  Loan  Document,  neither  Collins  nor  any of  its  direct  or  indirect
Subsidiaries  shall be bound by the terms of this  Agreement  or any other  Loan
Document,  or  be  a  "Borrower",  "Guarantor"  or  "Loan  Party"  hereunder  or
thereunder until the  consummation of the Merger,  PROVIDED that Collins and its
direct and indirect Subsidiaries shall be considered  "Borrowers",  "Guarantors"
or "Loan Parties", as applicable,  solely for the purposes of any representation
or warranty contained in this Agreement or any other Loan Document, and any such
representation  or  warranty  with  respect to Collins or its direct or indirect
Subsidiaries  shall be deemed made to Agent and Lenders,  jointly and severally,
by Holdings and CS  Acquisition  until the  consummation  of the Merger at which
time Collins and each of its  Subsidiaries  that is a Loan Party hereunder shall
be deemed to have made each such  representation  and warranty directly to Agent
and Lenders.


                                       98


                  Witness  the  due  execution  hereof  by the  respective  duly
authorized officers of the undersigned as of the date first written above.


                                            CS ACQUISITION CORP., as a Borrower

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------


                                            COLLINS I HOLDING CORP., as a Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------


                                            GMAC COMMERCIAL FINANCE LLC, as
                                            Agent and as a Lender

                                            By: /s/ Eric S. Miller
                                                --------------------------------
                                            Title: Director
                                                   -----------------------------

                                            Revolving Loan Commitment: $
                                                                         -------
                                            Term Loan Commitment:      $
                                                                         -------

                  [SIGNATURE PAGES CONTINUE ON FOLLOWING PAGE]




         Upon the consummation of the Merger,  each signatory hereto agrees that
it shall be bound as a Borrower and/or  Guarantor under this Agreement,  and all
references to "Borrower", "Borrowers",  "Guarantor",  "Guarantors", "Loan Party"
or  "Loan  Parties"  contained  in  this  Agreement  or any of  the  other  Loan
Documents, shall thereafter be deemed to include each signatory hereto.

                                            COLLINS INDUSTRIES, INC., as a Borrower

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------


                                            COLLINS BUS CORPORATION, as a Borrower
                                            and a Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------


                                            WHEELED COACH INDUSTRIES, INC., as a Borrower
                                            and a Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------


                                            CAPACITY OF TEXAS, INC., as a Borrower and
                                            a Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------

                  [SIGNATURE PAGES CONTINUE ON FOLLOWING PAGE]




                                            MID BUS, INC., as a Borrower and a
                                            Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------


                                            MOBILE PRODUCTS, INC., as a Borrower and
                                            a Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------


                                            COLLINS AMBULANCE CORP., as a Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------


                                            WHEELED COACH ENTERPRISES, INC., as a
                                            Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------

                  [SIGNATURE PAGES CONTINUE ON FOLLOWING PAGE]




                                            MOBILE-TECH CORPORATION, as a Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------


                                            WORLD TRANS, INC., as a Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------


                                            BRUTZER CORPORATION, as a Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------


                                            COLLINS FINANCIAL SERVICES, INC., as
                                            a Guarantor

                                            By: /s/ Kenneth Dabrowski
                                                --------------------------------
                                            Title: Chief Executive Officer
                                                   -----------------------------
                                            FEIN:
                                                  ------------------------------




                                    EXHIBITS

A.       Assignment and Acceptance Agreement
B.       Borrowing Base Certificate
C.       Compliance Certificate
D.       Notice of Borrowing




                                    SCHEDULES

1.1(A)   Foreign Account Debtors
2.7(A)   Commercial Tort Claims
3.1(A)   List of Closing Documents
3.1(Y)   Indebtedness to be Defeased
4.1(A)   Chief Executive Office and Organizational Identification Number
4.1(B)   Capitalization of Loan Parties
4.4      Pro Forma
4.5(A)   Deductions and Discounts
4.5(I)   Intellectual Property
4.5(K)   Deposit Accounts
4.5(L)   Bailees
4.6      Business and Trade Names  (Present  and Past Five  Years);  Location of
         Principal Place of Business,  Books and Records and  Collateral;  State
         (other Jurisdiction) of Organization and Organizational  Identification
         Number
4.7(a-1) Owned Real Properties
4.7(a-2) Leased Real Properties
4.9      Federal Tax Identification Numbers
4.11     Employee Benefit Plans
4.12     Broker's or Finder's Fees
4.13     Environmental Matters
4.18     Employee Matters
5.4      Mortgaged Property
7.1      Indebtedness
7.11     Subsidiaries
7.3(B)   Other Liens




                                     RIDERS


A.       Reporting Rider
B.       Financial Covenants Rider




                                 REPORTING RIDER

         This  Reporting  Rider  is  attached  and  made a part of that  certain
Revolving Credit, Term Loan and Security Agreement, dated as of October 31, 2006
and entered into among CS Acquisition Corp.,  Collins Industries,  Inc., certain
Affiliates, GMAC Commercial Finance LLC, as Agent, and certain Lenders.

         1.   ANNUAL FINANCIAL STATEMENTS. Furnish Agent within ninety (90) days
after the end of each  fiscal  year of Loan  Parties,  financial  statements  of
Holdings  and  its  Subsidiaries  on  a  consolidating  and  consolidated  basis
including, but not limited to, statements of income and stockholders' equity and
cash flow  from the  beginning  of the  current  fiscal  year to the end of such
fiscal  year  and the  balance  sheet  as at the end of such  fiscal  year,  all
prepared  in  accordance  with GAAP  applied  on a basis  consistent  with prior
practices,  and in reasonable detail and reported upon without  qualification by
the Loan Parties'  Accountants The report of the Loan Parties' Accountants shall
be accompanied by a statement of the Loan Parties'  Accountants  certifying that
(i) they have  caused  the Loan  Agreement  to be  reviewed,  (ii) in making the
examination upon which such report was based either no information came to their
attention which to their knowledge  constituted an Event of Default or a Default
under this Agreement or any related  agreement or, if such  information  came to
their  attention,  specifying any such Default or Event of Default,  its nature,
when it occurred and whether it is continuing,  and such report shall contain or
have appended thereto calculations which set forth Loan Parties' compliance with
the covenant  set forth on the  Financial  Covenants  Rider.  In  addition,  the
reports  shall be  accompanied  by a  certificate  of each  Loan  Party's  Chief
Financial Officer which shall state that, based on an examination  sufficient to
permit him to make an informed statement, no Default or Event of Default exists,
or, if such is not the case,  specifying  such Default or Event of Default,  its
nature, when it occurred,  whether it is continuing and the steps being taken by
Loan  Parties  with  respect  to such  event,  and such  certificate  shall have
appended thereto  calculations which set forth Loan Parties' compliance with the
covenants set forth on the Financial Covenants Rider.

         2.   [INTENTIONALLY OMITTED].

         3.   MONTHLY  FINANCIAL  STATEMENTS.  Furnish  Agent within thirty (30)
days after the end of each month, an unaudited balance sheet of Holdings and its
Subsidiaries on a consolidated and consolidating basis and unaudited  statements
of  income  and  stockholders'   equity  and  cash  flow  of  Holdings  and  its
Subsidiaries on a consolidated and  consolidating  basis  reflecting  results of
operations  from the  beginning  of the fiscal year to the end of such month and
for such month, prepared on a basis consistent with prior practices and complete
and correct in all material  respects,  subject to normal and recurring year end
adjustments  that  individually  and in the  aggregate  are not  material to the
business of Loan  Parties.  Each such  balance  sheet,  statement  of income and
stockholders'  equity and statement of cash flow shall set forth a comparison of
the figures for (w) the current  fiscal period and (x) the current  year-to-date
with the figures for (y) the same fiscal period and  year-to-date  period of the
immediately preceding fiscal year and (z) the projections for such fiscal period
and  year-to-date  period  delivered  pursuant to item 12 hereof.  The financial
statements  shall be accompanied by a certificate of Holdings'  Chief  Financial
Officer,  which shall state that,  based on an examination  sufficient to permit
him to make an informed statement, no Default or Event of Default exists, or, if
such is not the case,  specifying such Default or Event of Default,  its nature,
when it  occurred,  whether it is  continuing  and the steps being taken by Loan



Parties with respect to such event and,  such  certificate  shall have  appended
thereto calculations which set forth Loan Parties' compliance with the covenants
set forth on the Financial Covenants Rider.

         4.   BORROWING  BASE  CERTIFICATE.  Deliver to Agent,  on the fifteenth
(15th) day of each month (or more frequently if required by Agent),  a Borrowing
Base  Certificate  (which  shall  be  calculated  as of  the  last  day  of  the
immediately preceding month).

         5.   COLLATERAL  REPORTS.  Deliver to Agent on or before the  fifteenth
(15th)  day of each  month as and for the prior  month (a)  accounts  receivable
agings,  (b) accounts payable agings,  and (c) Inventory  reports.  In addition,
each Loan Party shall  deliver to Agent at such  intervals as Agent may require:
(i) confirmatory assignment schedules, (ii) copies of Customer's invoices, (iii)
evidence of shipment or  delivery,  and (iv) such further  schedules,  documents
and/or  information  regarding the  Collateral  as Agent may require  including,
without limitation, trial balances and test verifications.  Agent shall have the
right to confirm and verify all Accounts by any manner and through any medium it
considers advisable and do whatever it may deem reasonably  necessary to protect
its interests hereunder. The items to be provided under items (4) and (5) hereof
are to be in form  reasonably  satisfactory  to Agent and  executed by Borrowing
Agent and delivered to Agent from time to time solely for Agent's convenience in
maintaining records of the Collateral,  and Borrowing Agent's failure to deliver
any of such items to Agent  shall not  affect,  terminate,  modify or  otherwise
limit Agent's Lien with respect to the Collateral.

         6.   DISCLOSURE OF MATERIAL MATTERS. Immediately upon learning thereof,
report to Agent all matters  materially  affecting the value,  enforceability or
collectibility of any portion of the Collateral  including,  without limitation,
any Loan Party's reclamation or repossession of, or the return to any Loan Party
of, a material amount of goods or claims or disputes asserted by any Customer or
other obligor.

         7.   [INTENTIONALLY OMITTED].

         8.   MATERIAL  OCCURRENCES.  Promptly  notify Agent in writing upon the
occurrence of (a) any Event of Default or Default with such notice  stating that
it is a "Notice of Default"; (b) any event of default under the Second Lien Term
Loan Documents;  (c) any event which with the giving of notice or lapse of time,
or both,  would  constitute  an event of default under the Second Lien Term Loan
Documents;  (d) any event,  development  or  circumstance  whereby any financial
statements or other reports  furnished to Agent fail in any material  respect to
present fairly,  in accordance  with GAAP  consistently  applied,  the financial
condition  or  operating  results  of any  Loan  Party  as of the  date  of such
statements;  (e) any accumulated  retirement plan funding  deficiency  which, if
such  deficiency  continued for two plan years and was not corrected as provided
in Section  4971 of the IRC,  could  subject  any Loan Party to a tax imposed by
Section  4971 of the IRC;  (f) each and every  default by any Loan  Party  which
might result in the acceleration of the maturity of any Indebtedness,  including
the names and  addresses  of the holders of such  Indebtedness  with  respect to
which there is a default existing or with respect to which the maturity has been
or could be accelerated, and the amount of such Indebtedness;  and (g) any other
development in the business or affairs of any Loan Party which could  reasonably
be expected  to have a Material  Adverse  Effect;  in each case  describing  the
nature thereof and the action Loan Parties propose to take with respect thereto.




         9.   LITIGATION.  Promptly  notify Agent in writing of any  litigation,
suit or administrative  proceeding  affecting any Loan Party, whether or not the
claim is covered by  insurance,  and of any suit or  administrative  proceeding,
which in any such case would  reasonably be expected to have a Material  Adverse
Effect.

         10.  OTHER  REPORTS.  Furnish  Agent as soon as  available,  but in any
event concurrently with the issuance thereof,  (i) with copies of such financial
statements,  material reports and material returns as each Loan Party shall send
to its  stockholders  and (ii) copies of all notices sent pursuant to the Second
Lien Term Loan Documents.

         11.  ADDITIONAL   INFORMATION.   Furnish  Agent  with  such  additional
information  as Agent  shall  reasonably  request  in order to  enable  Agent to
determine  whether  the terms,  covenants,  provisions  and  conditions  of this
Agreement have been complied with by Loan Parties including,  without limitation
and  without  the  necessity  of  any  request  by  Agent,  (a)  copies  of  all
environmental  audits and reviews,  (b) at least thirty (30) days prior thereto,
notice of any Loan Party's opening of any new office or place of business or any
Loan  Party's  closing  of any  existing  office or place of  business,  and (c)
promptly upon any Loan Party's learning thereof,  notice of any labor dispute to
which any Loan Party may become a party, any strikes or walkouts relating to any
of its plants or other  facilities,  and the expiration of any labor contract to
which any Loan Party is a party or by which any Loan Party is bound.

         12.  PROJECTED OPERATING BUDGET.  Furnish Agent, prior to the beginning
of each  fiscal year of  Holdings,  commencing  with the fiscal year  commencing
November 1, 2007, a month by month projected  operating  budget and cash flow of
Holdings and its Subsidiaries on a consolidated and consolidating basis for such
fiscal year (including an income statement for each month and a balance sheet as
at the end of the last month in each fiscal  quarter),  such  projections  to be
accompanied by a certificate  signed by the President or Chief Financial Officer
of each Loan Party to the effect that such projections have been prepared on the
basis of sound  financial  planning  practice  consistent  with past budgets and
financial  statements  and that  such  officer  has no reason  to  question  the
reasonableness  of any  material  assumptions  on which  such  projections  were
prepared.

         13.  VARIANCES FROM OPERATING BUDGET. Furnish Agent,  concurrently with
the delivery of the financial statements referred to in item 1 hereof, a written
report summarizing all material variances from budgets submitted by Loan Parties
pursuant to item 12 hereof and a  discussion  and  analysis by  management  with
respect to such variances.

         14.  NOTICE OF SUITS, ADVERSE EVENTS.  Furnish Agent with prompt notice
of (i) any lapse or other termination of any Consent issued to any Loan Party by
any Governmental Authority or any other Person that is material to the operation
of any Loan Party's business,  (ii) any refusal by any Governmental Authority or
any other  Person to renew or extend any such  Consent;  and (iii) copies of any
periodic  or  special  reports  filed by any Loan  Party  with any  Governmental
Authority  or  Person,  if such  reports  indicate  any  material  change in the
business,  operations,  affairs or  condition  of any Loan  Party,  or if copies
thereof are  requested  by Agent or any Lender,  and (iv) copies of any material
notices and other communications from any Governmental Authority or Person which
specifically relate to any Loan Party.




         15.  ERISA NOTICES AND REQUESTS.  Furnish Agent with immediate  written
notice  in the event  that (i) any Loan  Party or any  member of the  Controlled
Group  knows or has  reason  to know  that a  Termination  Event  has  occurred,
together with a written  statement  describing  such  Termination  Event and the
action,  if any,  which  such Loan Party or member of the  Controlled  Group has
taken, is taking,  or proposes to take with respect thereto and, when known, any
action taken or threatened by the IRS,  Department of Labor or PBGC with respect
thereto,  (ii) any Loan Party or any member of the Controlled Group knows or has
reason to know that a  prohibited  transaction  (as defined in  Sections  406 of
ERISA  and 4975 of the IRC)  has  occurred  together  with a  written  statement
describing  such  transaction and the action which such Loan Party or any member
of the  Controlled  Group has taken,  is taking or proposes to take with respect
thereto,  (iii) a funding waiver request has been filed with respect to any Plan
together with all communications received by any Loan Party or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establishment of any new Plan or the commencement of
contributions  to any  Plan  to  which  any  Loan  Party  or any  member  of the
Controlled Group was not previously contributing shall occur, (v) any Loan Party
or any member of the  Controlled  Group shall  receive from the PBGC a notice of
intention  to terminate a Plan or to have a trustee  appointed  to  administer a
Plan,  together  with  copies of each such  notice,  (vi) any Loan  Party or any
member of the  Controlled  Group shall  receive  any  favorable  or  unfavorable
determination  letter from the IRS regarding the  qualification  of a Plan under
Section 401(a) of the IRC,  together with copies of each such letter;  (vii) any
Loan  Party  or any  member  of the  Controlled  Group  shall  receive  a notice
regarding the imposition of withdrawal  liability,  together with copies of each
such notice;  (viii) any Loan Party or any member of the Controlled  Group shall
fail to make a required  installment or any other required payment under Section
412 of the IRC on or before the due date for such  installment or payment;  (ix)
any  Loan  Party  or any  member  of  the  Controlled  Group  knows  that  (a) a
Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of
a Multiemployer Plan intends to terminate a Multiemployer  Plan, or (c) the PBGC
has  instituted  or will  institute  proceedings  under Section 4042 of ERISA to
terminate a Multiemployer Plan.

         16.  ENVIRONMENTAL  REPORTS.  Furnish  Agent,   concurrently  with  the
delivery of the financial statements referred to in items 1 and 3 hereof, with a
certificate  signed by the President of each Loan Party stating,  to the best of
his  knowledge,  that each Loan Party is in compliance in all material  respects
with all federal, state and local laws relating to environmental  protection and
control and occupational  safety and health. To the extent any Loan Party is not
in compliance  with the foregoing  laws,  the  certificate  shall set forth with
specificity all areas of non-compliance  and the proposed action Loan Party will
implement in order to achieve full compliance.

         17.  CHASSIS STATUS REPORT.  Borrowers shall cooperate with the trustee
under the Trust  Agreement  and shall assure that the Trustee is able to furnish
Agent, not later than the third day of each calendar week a report,  accompanied
by copies of the underlying  documents to the extent  requested by Agent, of all
manufacturers'  certificates  or statements of origin and other title  documents
relating to motor vehicle  chassis and motor  vehicles held by the trustee under
the Trust  Agreement as of the close of business on the last Business Day of the
immediately preceding calendar week.




         18.  ADDITIONAL DOCUMENTS.  Execute and deliver to Agent, upon request,
such  documents  and  agreements  as Agent  may,  from time to time,  reasonably
request to carry out the purposes, terms or conditions of this Agreement.




                            FINANCIAL COVENANTS RIDER

         This  Financial  Covenants  Rider is  attached  and made a part of that
certain  Loan and Security  Agreement,  dated as of October 31, 2006 and entered
into among CS Acquisition Corp., Collins Industries, Inc., certain Affiliates of
Collins  Industries,  Inc., GMAC Commercial  Finance LLC, as Agent,  and certain
Lenders.

         A. MINIMUM  EBITDA.  Holdings and its  Subsidiaries  on a  consolidated
basis shall at all times maintain EBITDA of at least the amounts set forth below
for each rolling  twelve (12) month period ending on the last day of each fiscal
quarter set forth below.

                   Fiscal Quarter Ending                  Amount
                   ---------------------                  ------

                  January 31, 2007                      $21,000,000
                   April 30, 2007                       $18,000,000
                    July 31, 2007                       $17,000,000
                  October 31, 2007                      $16,000,000
                  January 31, 2008                      $17,000,000
                   April 30, 2008                       $17,500,000
   July 31, 2008 and the last day of each fiscal        $18,000,000
               quarter ending thereafter


         B. TOTAL  LEVERAGE.  Holdings and its  Subsidiaries  on a  consolidated
basis  shall  not  permit  the  ratio  of (a)  Holdings'  and its  Subsidiaries'
Indebtedness  on a consolidated  basis,  to (b) Holdings' and its  Subsidiaries'
EBITDA for the trailing twelve months on a consolidated  basis,  each calculated
as of the last day of any fiscal  quarter set forth below to be greater than the
ratio set forth below for such periods:

                   Fiscal Quarter Ending                     Ratio
                   ---------------------                     -----

                     January 31, 2007                     4.75 to 1.0
                      April 30, 2007                      4.75 to 1.0
                       July 31, 2007                      4.75 to 1.0
                     October 31, 2007                     4.75 to 1.0
                     January 31, 2008                     4.50 to 1.0
                      April 30, 2008                      4.50 to 1.0
                       July 31, 2008                      4.25 to 1.0
                     October 31, 2008                     4.25 to 1.0
                     January 31, 2009                     4.00 to 1.0
                      April 30, 2009                      4.00 to 1.0
                       July 31, 2009                      4.00 to 1.0
                     October 31, 2009                     4.00 to 1.0
                     January 31, 2010                     3.75 to 1.0
                      April 30, 2010                      3.75 to 1.0
                       July 31, 2010                      3.75 to 1.0
                     October 31, 2010                     3.75 to 1.0
    January 31, 2011 and the last day of each fiscal     3.50 to 1.00
               quarter ending thereafter




         D. CAPITAL  EXPENDITURE  LIMITS.  The  aggregate  amount of all Capital
Expenditures,   (excluding,   in  each  case,  expenditures  for  trade-ins  and
replacement of assets to the extent funded with casualty insurance  proceeds) of
Holdings and its  Subsidiaries  on a consolidated  basis in any Fiscal Year will
not exceed the amount set forth below for each period set forth below.

                       Period                                Amount
                       ------                                ------
                   Fiscal Year 2007                        $5,500,000

          Fiscal Year 2008 and each Fiscal Year            $5,000,000
                 ending thereafter

         E.  FIXED  CHARGE   COVERAGE.   Holdings  and  its  Subsidiaries  on  a
consolidated  basis shall not permit their Fixed Charge Coverage for the rolling
twelve (12) month period ending on the last day of each fiscal quarter set forth
below to be less than the ratio set forth below for such periods, PROVIDED that,
notwithstanding the foregoing, for the purposes of determining Fixed Charges (x)
for  the  period  ending  January  31,  2007,  sub-clauses  (a)  and  (c) of the
definition  of Fixed  Charges  (I.E.,  Cash  Interest  Expense  and  income  and
franchise  taxes) shall each be  determined  by taking the actual  amounts under
such  sub-clauses for the three month period ending on such date and multiplying
such amounts by 4, (y) for the period ending April 30, 2007, sub-clauses (a) and
(c) of the definition of Fixed Charges (I.E.,  Cash Interest  Expense and income
and franchise taxes) shall each be determined by taking the actual amounts under
such  sub-clauses  for the six month period ending on such date and  multiplying
such amounts by 2 and (z) for the period ending July 31, 2007,  sub-clauses  (a)
and (c) of the  definition of Fixed  Charges  (I.E.,  Cash Interest  Expense and
income  and  franchise  taxes)  shall  each be  determined  by taking the actual
amounts under such sub-clauses for the nine month period ending on such date and
(i) dividing each such amount by 3 and then (ii) multiplying each such amount by
4.

                   Fiscal Quarter Ending                     Ratio
                   ---------------------                     -----

                     January 31, 2007                     1.15 to 1.0
                      April 30, 2007                      1.15 to 1.0
                       July 31, 2007                      1.15 to 1.0
                     October 31, 2007                     1.15 to 1.0
                     January 31, 2008                     1.25 to 1.0
                      April 30, 2008                      1.25 to 1.0
                       July 31, 2008                      1.25 to 1.0
                     October 31, 2008                     1.25 to 1.0
                     January 31, 2009                     1.35 to 1.0
                      April 30, 2009                      1.35 to 1.0
                       July 31, 2009                      1.35 to 1.0
                     October 31, 2009                     1.35 to 1.0
 January 31, 2010 and the last day of each fiscal         1.50 to 1.0
                quarter ending thereafter

EX-10.04

                                                                    Exhibit 10.4



                           LOAN AND SECURITY AGREEMENT

                          DATED AS OF OCTOBER 31, 2006

                                      among

                              CS ACQUISITION CORP.
                            COLLINS INDUSTRIES, INC.
                             COLLINS BUS CORPORATION
                         WHEELED COACH INDUSTRIES, INC.
                             CAPACITY OF TEXAS, INC.
                                  MID BUS, INC.
                                       and
                              MOBILE PRODUCTS, INC.

                                  as Borrowers,

                          The GUARANTORS named herein,

                                       and

                               ORIX FINANCE CORP.,

                          as Agent and as a Lender, and

                       The Financial Institution(s) Listed
                         on the Signature Pages Hereof,

                                   as Lenders




                                TABLE OF CONTENTS

SECTION 1   DEFINITIONS AND ACCOUNTING TERMS                                   1
1.1.     Certain Defined Terms.................................................1
1.2.     UCC Defined Terms....................................................17
1.3.     Accounting Terms.....................................................17
1.4.     Other Definitional Provisions........................................18

SECTION 2   LOANS AND COLLATERAL                                              18
2.1.     Loans................................................................18
         (A)   [Intentionally Omitted]........................................18
         (B)   [Intentionally Omitted]........................................18
         (C)   Term Loan......................................................18
         (D)   [Intentionally Omitted]........................................18
         (E)   Notes..........................................................18
         (F)   [Intentionally Omitted]........................................18
         (G)   [Intentionally Omitted]........................................18
         (H)   [Intentionally Omitted]........................................18
2.2.     Interest.............................................................19
         (A)   Rate of Interest...............................................19
         (B)   Computation and Payment of Interest............................19
         (C)   Interest Laws..................................................19
         (D)   Conversion or Continuation.....................................20
2.3.     Fees.................................................................21
         (A)   Arrangement Fee................................................21
         (B)   Prepayment Fees................................................21
         (C)   [Intentionally Omitted]........................................21
         (D)   [Intentionally Omitted]........................................21
         (E)   [Intentionally Omitted]........................................21
         (F)   Other Fees and Expenses........................................21
         (G)   [Intentionally Omitted]........................................21
2.4.     Payments and Prepayments.............................................21
         (A)   Manner and Time of Payment.....................................21
         (B)   Mandatory Prepayments..........................................22
         (1)   [Intentionally Omitted]........................................22
         (2)   Prepayments from Proceeds of Asset Dispositions................22
         (3)   [Intentionally Omitted]........................................22
         (4)   Prepayments from Issuance of Securities........................22
         (5)   Prepayments from Tax Refunds. .................................22
         (6)   Prepayments from Payments Received from the
               Disbursing Agent...............................................23
         (C)   Voluntary Prepayments and Repayments...........................23
         (D)   Payments on Business Days......................................23
         (E)   Application of Prepayment Proceeds.............................23
2.5.     Term of this Agreement...............................................23
2.6.     Statements...........................................................23


                                        i


2.7.     Grant of Security Interest...........................................23
         (A)   Grant of Liens in the Collateral...............................23
         (B)   Loan Parties Remain Liable.....................................24
2.8.     Yield Protection.....................................................24
         (A)   Capital Adequacy and Other Adjustments.........................24
         (B)   Increased LIBOR Funding Costs..................................25
2.9.     Taxes................................................................25
         (A)   No Deductions..................................................25
         (B)   Changes in Tax Laws............................................25
         (C)   Foreign Lenders................................................26
         (D)   Mitigation.....................................................26
2.10.    Required Termination and Prepayment..................................27
2.11.    Optional Prepayment/Replacement of Lenders...........................27
         (A)   Replacement of an Affected Lender..............................27
         (B)   Prepayment of an Affected Lender...............................27
2.12.    Compensation.........................................................27
2.13.    Booking of LIBOR Loans...............................................28
2.14.    Assumptions Concerning Funding of LIBOR Loans........................28
2.15.    Endorsement; Insurance Claims........................................28

SECTION 3   CONDITIONS TO LOANS                                               28
3.1.     Closing Date.........................................................28
         (A)   Closing Deliveries.............................................28
         (B)   Security Interests.............................................29
         (C)   Closing Date Availability......................................29
         (D)   Representations and Warranties.................................29
         (E)   Fees...........................................................29
         (F)   No Default.....................................................29
         (G)   Performance of Agreements......................................29
         (H)   No Prohibition.................................................29
         (I)   No Litigation..................................................29
         (J)   Delivery of Merger Documents...................................29
         (K)   First Lien Debt................................................30
         (L)   Equity Contribution............................................30
         (M)   Collateral Audit...............................................30
         (N)   Management Meetings............................................30
         (O)   Environmental Audit and Assessment.............................31
         (P)   Insurance......................................................31
         (Q)   Financial Information..........................................31
         (R)   Material Adverse Change........................................31
         (S)   Federal and Missouri State Law Compliance......................31
         (T)   Solvency.......................................................31
         (U)   Management Agreement...........................................31
         (V)   Structure of Loan Parties......................................31
         (W)   Federal Compliance.............................................31
         (X)   Intercreditor Agreements.......................................31
         (Y)   Repayment of Existing Indebtedness.............................31


                                       ii


         (Z)   Trust Agreement................................................32
         (AA)  Warranty Plans.................................................32
3.2.     [Intentionally Omitted]..............................................32

SECTION 4   REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS                 32
4.1.     Organization, Powers, Capitalization.................................32
         (A)   Organization and Powers........................................32
         (B)   Capitalization.................................................32
4.2.     Authorization of Borrowing, No Conflict..............................33
4.3.     Financial Condition..................................................33
4.4.     Indebtedness and Liabilities.........................................33
4.5.     Collateral Warranties and Covenants..................................34
         (A)   Accounts Warranties and Covenants..............................34
         (B)   Inventory Warranties and Covenants.............................34
         (C)   Equipment Warranties and Covenants.............................34
         (D)   Chattel Paper Warranties and Covenants.........................35
         (E)   Instruments Warranties and Covenants...........................35
         (F)   Investment Property Warranties and Covenants...................35
         (G)   Letters of Credit Warranties and Covenants.....................35
         (H)   General Intangibles Warranties and Covenants...................36
         (I)   Intellectual Property Warranties and Covenants.................36
         (J)   Commercial Tort Claims Warranties and Covenants................36
         (K)   Deposit Accounts; Bank Accounts Warranties and Covenants.......37
         (L)   Bailees........................................................37
         (M)   Collateral Description; Use of Collateral......................37
         (N)   Collateral Filing Requirements; Collateral Records.............37
         (O)   Federal Claims.................................................37
         (P)   Agent Authorized...............................................38
         (Q)   Invoices.......................................................38
4.6.     Names and Locations..................................................38
4.7.     Title to Properties; Liens...........................................38
4.8.     Litigation; Adverse Facts............................................40
4.9.     Payment of Taxes.....................................................40
4.10.    Performance of Agreements............................................40
4.11.    Employee Benefit Plans...............................................41
4.12.    Broker's Fees........................................................42
4.13.    Environmental Compliance.............................................42
4.14.    Solvency.............................................................42
4.15.    Disclosure...........................................................42
4.16.    Insurance............................................................42
4.17.    Compliance with Laws; Government Authorizations; Consents............43
4.18.    Employee Matters.....................................................43
4.19.    Governmental Regulation..............................................44
4.20.    Access to Accountants and Management.................................44
4.21.    Inspection...........................................................44
4.22.    [Intentionally Omitted]..............................................44
4.23.    Payment of Taxes by Agent............................................44


                                      iii


4.24.    Amendment of Schedule................................................44

SECTION 5   REPORTING AND OTHER AFFIRMATIVE COVENANTS                         45
5.1.     Financial Statements and Other Reports...............................45
5.2.     Maintenance of Properties............................................45
5.3.     Further Assurances...................................................45
5.4.     Mortgages; Title Insurance; Surveys..................................45
         (A)   Title Insurance................................................45
         (B)   Additional Mortgaged Property..................................45
         (C)   Surveys........................................................46
         (D)   Additional Real Property Deliveries............................46
5.5.     Use of Proceeds and Margin Security..................................46
5.6.     Maintenance of Properties............................................46
5.7.     [Intentionally Omitted]..............................................46
5.8.     46
5.9.     Additional Collateral................................................47

SECTION 6   FINANCIAL COVENANTS                                               47

SECTION 7   NEGATIVE COVENANTS                                                47
7.1.     Indebtedness and Liabilities.........................................47
7.2.     Guaranties...........................................................48
7.3.     Transfers, Liens and Related Matters.................................48
         (A)   Transfers......................................................48
         (B)   Liens..........................................................48
         (C)   No Negative Pledges............................................48
         (D)   No Restrictions on Subsidiary Distributions to Loan Parties....49
7.4.     Investments and Loans................................................49
7.5.     Restricted Payments..................................................49
7.6.     Restriction on Fundamental Changes...................................50
7.7.     Changes Relating to First Lien Debt..................................50
7.8.     Transactions with Affiliates.........................................50
7.9.     Conduct of Business..................................................50
7.10.    Tax Consolidations...................................................50
7.11.    Subsidiaries.........................................................51
7.12.    Fiscal Year; Tax Designation.........................................51
7.13.    Press Release; Public Offering Materials.............................51
7.14.    [Intentionally Omitted]..............................................51
7.15.    IRS Form 8821........................................................51

SECTION 8   DEFAULT, RIGHTS AND REMEDIES                                      51
8.1.     Event of Default.....................................................51
         (A)   Payment........................................................51
         (B)   Default in Other Agreements....................................51
         (C)   Breach of Certain Provisions...................................51
         (D)   Breach of Warranty.............................................51
         (E)   Other Defaults Under Loan Documents............................52
         (F)   Change in Control..............................................52
         (G)   Involuntary Bankruptcy; Appointment of Receiver, etc...........52


                                       iv


         (H)   Voluntary Bankruptcy; Appointment of Receiver, etc.............52
         (I)   Liens..........................................................53
         (J)   Judgment, Attachments and Litigation...........................53
         (K)   Dissolution....................................................53
         (L)   Solvency.......................................................53
         (M)   Injunction.....................................................53
         (N)   Invalidity of Loan Documents...................................53
         (O)   Failure of Security............................................53
         (P)   Damage, Strike, Casualty.......................................53
         (Q)   Licenses and Permits...........................................54
         (R)   Forfeiture.....................................................54
         (S)   Merger.........................................................54
         (T)   [AIP Management Agreement/Shareholder's Agreement..............54
         (U)   Intercreditor Agreement........................................54
8.2.     [Intentionally Omitted]..............................................54
8.3.     Acceleration.........................................................54
8.4.     Remedies.............................................................54
8.5.     Appointment of Attorney-in-Fact......................................55
8.6.     Limitation on Duty of Agent and Lenders with Respect to Collateral...55
8.7.     Application of Proceeds..............................................56
8.8.     License of Intellectual Property.....................................56
8.9.     Waivers; Non-Exclusive Remedies......................................56

SECTION 9   AGENT                                                             57
9.1.     Agent................................................................57
         (A)   Appointment....................................................57
         (B)   Nature of Duties...............................................57
         (C)   Rights, Exculpation, Etc.......................................57
         (D)   Reliance.......................................................58
         (E)   Indemnification................................................58
         (F)   ORIX Individually..............................................59
         (G)   Successor Agent................................................59
               (1)   Resignation..............................................59
               (2)   Appointment of Successor.................................59
               (3)   Successor Agent..........................................59
         (H)   Collateral Matters.............................................59
               (1)   Release of Collateral....................................59
               (2)   Confirmation of Authority; Execution of Releases.........60
               (3)   Absence of Duty..........................................60
         (I)   Agency for Perfection..........................................60
         (J)   Exercise of Remedies...........................................61
9.2.     Notice of Default....................................................61
9.3.     Action by Agent......................................................61
9.4.     Amendments, Waivers and Consents.....................................61
         (A)   Percentage of Lenders Required.................................61
         (B)   Specific Purpose or Intent.....................................62
         (C)   Failure to Give Consent; Replacement of Non-Consenting Lender..62


                                       v


9.5.     Assignments..........................................................63
         (A)   Assignments....................................................63
         (B)   [Intentionally Omitted]........................................63
         (C)   No Relief of Obligations; Cooperation;
               Ability to Make LIBOR Loans....................................63
         (D)   Security Interests; Assignment to Affiliates...................63
         (E)   Recording of Assignments.......................................64
9.6.     Set Off and Sharing of Payments......................................64
9.7.     [Intentionally Omitted]..............................................64
9.8.     Settlements, Payments and Information................................64
         (A)   Fee Payments...................................................65
               (1)   [Intentionally Omitted]..................................65
               (2)   [Intentionally Omitted]..................................65
               (3)   Settlement Definitions...................................65
               (4)   Settlement Payments......................................65
         (B)   Term Loan Principal Payments...................................66
         (C)   Return of Payments.............................................66
               (1)   Recovery after Non-Receipt of Expected Payment...........66
               (2)   Recovery of Returned Payment.............................66
9.9.     [Intentionally Omitted]..............................................66

SECTION 10  BORROWING AGENCY                                                  66
10.1.    Borrowing Agency Provisions..........................................66
         (A)   Designation of Borrowing Agent.................................66
         (B)   Indemnifications...............................................66
         (C)   Obligations Absolute...........................................67
         (D)   Waivers........................................................67
10.2.    Waiver of Subrogation................................................68
10.3.    Interdependent Companies.............................................68

SECTION 11  GUARANTY                                                          68
11.1.    Unconditional Guaranty...............................................68
11.2.    Taxes................................................................69
11.3.    Waivers of Notice, Demand, etc.......................................69
11.4.    No Invalidity, Irregularity, etc.....................................69
11.5.    Independent Liability................................................69
11.6.    Indemnity............................................................70
11.7.    Liability Absolute...................................................70
11.8.    Action by Agent Without Notice.......................................71
11.9.    Application of Proceeds..............................................71
11.10.   Continuing Effectiveness.............................................71
         (A)   Reinstatement..................................................71
         (B)   No Marshalling.................................................72
         (C)   Priority of Claims.............................................72
         (D)   Invalidated Payments...........................................72
         (E)   Assignment and Waiver..........................................72
         (F)   Payments to Guarantors.........................................72
11.11.   Enforcement..........................................................73
11.12.   Statute of Limitations...............................................73


                                       vi


11.13.   Interest.............................................................73
11.14.   Currency Conversion..................................................73
11.15.   Acknowledgement......................................................74
11.16.   Continuing Effectiveness.............................................74
11.17.   [Intentionally Omitted]..............................................74

SECTION 12  MISCELLANEOUS                                                     74
12.1.    Expenses and Attorneys' Fees.........................................74
12.2.    Indemnity............................................................75
12.3.    Notices..............................................................75
12.4.    Survival of Representations and Warranties and Certain Agreements....76
12.5.    Indulgence Not Waiver................................................77
12.6.    Marshaling; Payments Set Aside.......................................77
12.7.    Entire Agreement.....................................................77
12.8.    Severability.........................................................77
12.9.    Lenders' Obligations Several; Independent Nature of Lenders' Rights..77
12.10.   Headings.............................................................77
12.11.   APPLICABLE LAW.......................................................78
12.12.   Successors and Assigns...............................................78
12.13.   No Fiduciary Relationship; No Duty; Limitation of Liabilities........78
         (A)   No Fiduciary Relationship......................................78
         (B)   No Duty........................................................78
         (C)   Limitation of Liabilities......................................78
12.14.   CONSENT TO JURISDICTION..............................................78
12.15.   WAIVER OF JURY TRIAL.................................................79
12.16.   Construction.........................................................79
12.17.   Counterparts; Effectiveness..........................................79
12.18.   Confidentiality......................................................80
12.19.   Publication..........................................................80
12.20.   Special Provisions Relating to Collins and its Subsidiaries..........80
12.21.   Intercreditor Agreement .............................................81


                                      vii


                           LOAN AND SECURITY AGREEMENT

         This LOAN AND  SECURITY  AGREEMENT  is dated as of October 31, 2006 and
entered  into  among  CS  ACQUISITION   CORP.,  a  Missouri   corporation   ("CS
Acquisition"),  COLLINS INDUSTRIES,  INC., a Missouri  corporation  ("Collins"),
COLLINS BUS CORPORATION, a Kansas corporation ("Bus"), WHEELED COACH INDUSTRIES,
INC.,  a  Florida  corporation  ("WCI"),   CAPACITY  OF  TEXAS,  INC.,  a  Texas
corporation ("Capacity"), MID BUS, INC., an Ohio corporation ("Mid Bus"), MOBILE
PRODUCTS,  INC., a Kansas corporation  ("Mobile Products",  and together with CS
Acquisition,  Collins,  Bus, WCI,  Capacity,  and Mid Bus, each a "Borrower" and
collectively  "Borrowers"),  the  Guarantors  signatory  hereto,  the  financial
institution(s)  listed  on the  signature  pages  hereof  and  their  respective
successors and assigns (each individually a "Lender" and collectively "Lenders")
and ORIX FINANCE CORP.,  a Delaware  corporation  (in its  individual  capacity,
"ORIX"), for itself as a Lender and as Agent.

         WHEREAS,  Borrowers  desire that  Lenders  extend a credit  facility to
finance a portion of the Merger  Consideration  for the merger of CS Acquisition
with and into  Collins,  with Collins being the  surviving  corporation  of such
merger (the "Merger"),  to refinance  existing  indebtedness of Borrowers and to
provide  working  capital  financing  and to  provide  funds for  other  general
corporate purposes; and

         WHEREAS,  to  secure  each  Loan  Party's  obligations  under  the Loan
Documents,  Loan  Parties are  granting  to Agent,  for the benefit of Agent and
Lenders,  a security  interest  in and lien upon all of Loan  Parties'  real and
personal property; and

         WHEREAS,  each  entity  listed  on  the  signature  pages  hereto  as a
"Guarantor" (each a "Guarantor" and  collectively,  the "Guarantors") is willing
to guaranty all (or part) of the  Obligations  of Borrowers to Agent and Lenders
under the Loan  Documents  and to grant to Agent,  for the  benefit of Agent and
Lenders, a security interest in all real and personal property of such Guarantor
to secure such guaranty;

         NOW,  THEREFORE,  in  consideration of the premises and the agreements,
provisions and covenants  herein  contained,  Borrowers,  Guarantors,  Agent and
Lenders agree as follows:

SECTION 1     DEFINITIONS AND ACCOUNTING TERMS

         1.1. CERTAIN DEFINED TERMS. The capitalized terms not otherwise defined
in this Agreement shall have the meanings set forth below:

         "Additional Mortgaged Property" means all real property owned or leased
by any Loan Party in which, after the Closing Date, Agent requires a mortgage to
secure the Obligations.

         "Affected  Lender" has the meaning  assigned to that term in subsection
2.11.




         "Affiliate"  means any Person  (other  than Agent or any  Lender):  (a)
directly or indirectly controlling, controlled by, or under common control with,
any Loan Party;  (b) directly or indirectly  owning or holding five percent (5%)
or more of any Equity Interest in any Loan Party;  (c) five percent (5%) or more
of whose stock or other Equity  Interest  having  ordinary  voting power for the
election  of  directors  or the  power to  direct  or  cause  the  direction  of
management,  is directly or indirectly  owned or held by any Loan Party;  or (d)
which has a senior officer who is also a senior  officer of any Loan Party.  For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling",  "controlled by" and "under common control with") means the
possession  directly or indirectly of the power to direct or cause the direction
of the  management  and policies of a Person,  whether  through the ownership of
Equity Interests, or by contract or otherwise.

         "Agent"  means ORIX in its capacity as agent for the Lenders  under the
Loan  Documents  and  any  successor  in such  capacity  appointed  pursuant  to
subsection 9.1(G).

         "Agent's Account" means the following Deposit Account of Agent:

                           Mellon Bank, N.A.
                           Pittsburgh, Pennsylvania
                           ABA No.              043-000-261
                           Account Name         ORIX Finance Corp.
                           Account No.          008-0215
                           Reference:           Collins Industries, Inc.

         "Agreement"  means  this  Loan  and  Security  Agreement  as it  may be
amended, restated, supplemented or otherwise modified from time to time.

         "AIP" means AIP IV LLC, a Delaware limited liability company.

         "AIP/CHC" means AIP/CHC  Holdings,  LLC, a Delaware  limited  liability
company.

         "AIP  Management  Agreement"  has the meaning  assigned to that term in
subsection 3(U).

         "Applicable  Margin"  for each type of Loan shall  mean the  applicable
percentage specified below:


TYPE OF LOAN                    APPLICABLE MARGIN         APPLICABLE MARGIN FOR
                               FOR BASE RATE LOANS          LIBOR RATE LOANS
- ------------                    -----------------         ---------------------
Term Loan and any                     4.25%                       6.25%
other Obligations

         "Asset  Disposition"  means the  disposition,  whether by sale,  lease,
transfer, loss, damage, destruction, condemnation or otherwise, of any or all of
the assets of any Loan Party other than (i) sales of  Inventory  in the ordinary
course of  business  and  collections  of  Accounts  arising  out of the sale of
Inventory   in  the  ordinary   course  of  business  and  (ii)  the   Insurance
Monetization.


                                     - 2 -


         "Assignment  and  Acceptance  Agreement"  shall mean an Assignment  and
Acceptance Agreement substantially in the form of Exhibit A.

         "Base  Rate" means a variable  rate of interest  per annum equal to the
higher of (a) the rate of interest  from time to time  published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve  Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor  publication of the Federal  Reserve  System  reporting the Bank Prime
Loan rate or its equivalent,  or (b) the Federal Funds Effective Rate plus fifty
(50) basis points.  The  statistical  release  generally sets forth a Bank Prime
Loan rate for each  Business  Day. The  applicable  Bank Prime Loan rate for any
date not set forth shall be the rate set forth for the last  preceding  date. In
the event the Board of Governors of the Federal Reserve System ceases to publish
a Bank Prime Loan rate or its  equivalent,  the term  "Base  Rate"  shall mean a
variable  rate of interest  per annum equal to the highest of the "prime  rate",
"reference rate", "base rate", or other similar rate announced from time to time
by any of the three  largest  banks  (based on  combined  capital  and  surplus)
headquartered in New York, New York (with the  understanding  that any such rate
may merely be a reference rate and may not  necessarily  represent the lowest or
best rate actually charged to any customer by any such bank).

         "Base Rate Loans" means the Term Loans during any periods that the Term
Loans bear interest at rates determined by reference to the Base Rate.

         "BNS" means BNS Holding, Inc., a Delaware corporation.

         "Borrower" and "Borrowers"  have the meaning  assigned to such terms in
the introductory paragraph of this Agreement, and after the effectiveness of the
Merger shall include Collins as survivor of the Merger.

         "Borrowing Agent" means CS Acquisition,  and after the effectiveness of
the Merger shall mean Collins, as survivor of the Merger.

         "Borrowing  Base  Certificate"  means a  certificate  and schedule duly
executed  by an  officer  of  Borrowing  Agent  appropriately  completed  and in
substantially the form of Exhibit B.

         "Business  Day" means any day  excluding  Saturday,  Sunday and any day
which is a legal holiday under the laws of the States of New York or Michigan or
is a day on which banking  institutions located in any such state are closed, or
for the purposes of LIBOR Loans only, a London Banking Day.

         "Capital   Expenditures"   means,  with  respect  to  any  Person,  all
expenditures for, or contracts for expenditures with respect to any fixed assets
or improvements, or for replacements,  substitutions or additions thereto, that,
in  accordance  with GAAP,  either  would be required to be  capitalized  on the
balance  sheet of such  Person,  or would be  classified  and  accounted  for as
capital expenditures on a statement of cash flows of such Person.

         "Capital Lease" means any lease of any property (whether real, personal
or mixed) that,  in conformity  with GAAP,  should be accounted for as a capital
lease.


                                     - 3 -


         "Cash Interest Expense" means, without duplication, for any period, for
Loan Parties:  interest  expenses  deducted in the  determination  of net income
(excluding  (a)  the  amortization  of  fees  and  costs  with  respect  to  the
transactions  contemplated  by this  Agreement  which have been  capitalized  as
transaction  costs in accordance  with the provisions of subsection 1.3; and (b)
interest paid in kind).

         "Certificate  of  Exemption"  has the meaning  assigned to that term in
subsection 2.9(C).

         "Charges" shall mean all taxes, charges, fees, imposts, levies or other
assessments,  including, without limitation, all net income, gross income, gross
receipts,  sales, use, ad valorem,  value added, transfer,  franchise,  profits,
inventory,  capital stock, license,  withholding,  payroll,  employment,  social
security, unemployment, excise, severance, stamp, occupation and property taxes,
custom  duties,  fees,  assessments,  liens,  claims  and  charges  of any  kind
whatsoever,  together with any interest and any  penalties,  additions to tax or
additional  amounts,  imposed  by any  taxing or other  Governmental  Authority,
domestic  or  foreign   (including,   without   limitation,   the  PBGC  or  any
environmental agency or superfund), upon the Collateral, the Loan Parties or any
of their Affiliates.

         "Closing Date" means October 31, 2006.

         "Collateral"  has  the  meaning  assigned  to that  term in  subsection
2.7(A).

          "Collins"  has the meaning  assigned to that term in the  introductory
paragraph to this Agreement.

         "Commitment"  or  "Commitments"  means the Term Loan Commitment or Term
Loan Commitments.

         "Compliance Certificate" means a certificate duly executed by the chief
executive  officer or chief financial  officer of Borrowing Agent  appropriately
completed and in substantially the form of Exhibit C.

         "Control"  means  "control"  as  defined  in the UCC with  respect to a
particular item of Collateral.

         "Copyright  Security  Agreement" means any Copyright Security Agreement
executed and  delivered by each Loan Party to Agent,  as the same may be amended
and in effect from time to time.

         "Copyrights"  means,  collectively,   all  of  the  following  (a)  all
copyrights,  rights and interests in copyrights, works protectable by copyright,
copyright  registrations and copyright  applications,  including those listed in
the schedules to any Copyright  Security  Agreement;  (b) all renewals of any of
the foregoing; (c) all income, royalties,  damages and payments now or hereafter
due and/or  payable  under any of the  foregoing  or with  respect to any of the
foregoing,   including   damages  or  payments  for  past,   present  or  future
infringements  of any of the foregoing;  (d) the right to sue for past,  present
and  future  infringements  of  any  of  the  foregoing;   and  (e)  all  rights
corresponding to any of the foregoing throughout the world.


                                     - 4 -


         "CS  Acquisition"  has  the  meaning  assigned  to  that  term  in  the
introductory paragraph to this Agreement.

         "Daily  Interest  Amount"  has the  meaning  assigned  to that  term in
subsection 9.8(A)(3).

         "Daily  Interest  Rate"  has  the  meaning  assigned  to  that  term in
subsection 9.8(A)(3).

         "Daily  Loan  Balance"  has  the  meaning  assigned  to  that  term  in
subsection 9.8(A)(3).

         "Default" means a condition,  act or event that,  after notice or lapse
of time or both, would constitute an Event of Default if that condition,  act or
event were not cured or removed within any applicable grace or cure period.

         "Default  Rate" has the  meaning  assigned  to that term in  subsection
2.2(A).

         "Disbursing  Agent" means Mellon  Investor  Services  LLC, a New Jersey
limited liability company.

         "Disbursing  Agent  Agreement"  means  that  certain  Disbursing  Agent
Agreement dated as of October 18, 2006 between Collins and the Disbursing Agent.

         "EBITDA" means, for any period,  without duplication,  the total of the
following for Loan Parties on a  consolidated  basis,  each  calculated for such
period:  (a) net income  determined in accordance with GAAP; plus, to the extent
deducted  in the  calculation  of net  income,  (b)  the sum of (i)  income  and
franchise  taxes paid or accrued  [or any  payments  made under the Tax  Sharing
Agreement];  (ii) interest  expenses,  net of interest income,  paid or accrued;
(iii) amortization and depreciation,  (iv) Pro-Forma Adjustments, (v) Management
Fees and  Expenses,  (vi)  non-cash  stock-based  compensation,  (vii)  non-cash
purchase  accounting  charges,  and (viii)  other  non-cash  charges  (excluding
accruals for cash  expenses made in the ordinary  course of business);  LESS, to
the extent  included in the  calculation  of net income,  (c) the sum of (i) the
income of any  Person  (other  than a Loan  Party) in which a Loan  Party has an
ownership  interest except to the extent such income is received by a Loan Party
in a cash  distribution  during such period;  (ii) gains or losses from sales or
other  dispositions  of assets  (other than  Inventory  in the normal  course of
business);  and (iii) extraordinary or non-recurring gains, net of extraordinary
or non-recurring "cash" losses to the extent such non-recurring "cash" losses do
not exceed the extraordinary or non-recurring gains.

         "Employee  Benefit  Plan" means any  employee  benefit  plan within the
meaning of Section 3(3) of ERISA (a) which is  maintained  for former or current
employees of any Loan Party or any ERISA Affiliate or has at any time within the
preceding 6 years been  maintained  for former or current  employees of any Loan
Party or any current or former ERISA  Affiliate or (b) with respect to which any
Loan  Party or  ERISA  Affiliate  contributes  or may  have  any  obligation  to
contribute or any other liability.

         "Environmental Claims" means claims, liabilities, monetary obligations,
damages,  punitive damages, fines, penalties,  costs, expenses,  investigations,
litigation,   administrative  proceedings,   judgments  or  orders  relating  to
Hazardous Materials.


                                     - 5 -


         "Environmental  Laws"  means any  present or future  federal,  state or
local law, rule,  regulation or order relating to pollution,  waste, disposal or
the  protection  of human health or safety,  plant life or animal life,  natural
resources or the environment.

         "Equity  Contribution"  means,  on or prior to the  Closing  Date,  the
contribution  of new cash  equity to Holdings  and  subsequent  contribution  by
Holdings to CS Acquisition of not less than  $32,500,000  pursuant to the Equity
Documentation,  consisting  of:  (a) not less  than  $29,700,000  from BNS (such
amounts to be provided to BNS by Persons and on terms and conditions  reasonably
satisfactory to Agent),  and (b) not less than $2,800,000 from AIP, in each case
on terms and conditions reasonably satisfactory to Agent.

         "Equity  Documentation"  means the  documentation  governing the Equity
Contribution.

         "Equity Interests" of any Person shall mean any and all shares,  rights
to  purchase,   options,   warrants,   general,  limited  or  limited  liability
partnership interests,  member interests,  participation or other equivalents of
or interest in (regardless  of how  designated)  equity of such Person,  whether
voting or  nonvoting,  including  common  stock,  preferred  stock,  convertible
securities  or any other  "equity  security"  (as such term is  defined  in Rule
3a11-1 of the General  Rules and  Regulations  promulgated  by the SEC under the
Exchange Act).

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended  from  time to  time,  and any  successor  statute  and  all  rules  and
regulations promulgated thereunder.

         "ERISA  Affiliate",  as applied to any Loan Party, means any Person who
is a member of a group which is under common  control  with any Loan Party,  who
together with any Loan Party is treated as a single  employer within the meaning
of Section 414(b) and (c) of the IRC.

         "Event of Default" has the meaning  assigned to that term in subsection
8.1.

         "Excess  Interest" has the meaning  assigned to that term in subsection
2.2(C).

         "Fairness  Opinion" means the opinion issued by George K. Baum Advisors
LLC to the  Special  Committee  of the  Board of  Directors  of  Collins,  dated
September 26, 2006.

         "Federal Funds Effective Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve  System  arranged  by  Federal  funds  brokers,   as  published  on  the
immediately  following  Business  Day by the Board of  Governors  of the Federal
Reserve System as the Federal Funds Rate or Federal Reserve  Statistical Release
H.15(519) entitled "Selected Interest Rates" or any successor publication of the
Federal  Reserve  System  reporting  the  Federal  Funds  Effective  Rate or its
equivalent  or, if such rate is not  published for any Business Day, the average
of the quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.

         "First  Lien  Agent"  means GMAC  Commercial  Finance,  LLC, a Delaware
limited liability company, and its permitted successors and assigns.


                                     - 6 -


         "First Lien  Lenders"  has the meaning  provided in the  definition  of
"First Lien Loan Agreement".

         "First  Lien Loan  Agreement"  means  that  certain  Loan and  Security
Agreement  dated as of the date  hereof by and among  Loan  Parties,  First Lien
Agent and the other  lenders a party  thereto  (the  "First Lien  Lenders"),  as
amended,  restated,  supplemented or otherwise modified from time to time to the
extent permitted under the Intercreditor Agreement.

         "First Lien Debt" means all  Indebtedness  of Borrowers under the First
Lien Loan Documents.

         "First Lien Loan Documents" means the First Lien Loan Agreement and all
related documents, instruments, certificates and agreements.

         "Fiscal  Year" means each twelve (12) month  period  ending on the last
day of October in each year.

         "Fiscal  Year 2006 Tax Refunds"  means any tax refunds  received by any
Loan Party that are related to the Fiscal Year of the Loan Parties ended October
31, 2006.

         "Fixed Charge  Coverage"  means,  for any period,  Operating  Cash Flow
divided by Fixed Charges.

         "Fixed  Charges"  means,  for any period,  and each calculated for Loan
Parties on a consolidated basis for such period (without duplication):  (a) Cash
Interest Expense;  plus (b) scheduled  payments of principal with respect to all
Indebtedness; plus (c) any provision for (to the extent it is greater than zero)
income  or  franchise  taxes  included  in  the  determination  of  net  income,
[including  any payments  under the Tax Sharing  Agreement,  but]  excluding any
provision for deferred taxes;  plus (d) payment of deferred taxes accrued in any
prior  period;   plus  (e)  Restricted  Junior  Payments   (including,   without
limitation,  any Management  Fees and Expenses,  but excluding any payments made
pursuant  to  subsection  7.5(h))  made in cash to the  extent  included  in the
calculation of EBITDA.  Notwithstanding the foregoing, "Fixed Charges" shall not
include any payments of Merger  Consideration or any fees and expenses  relating
to the closing of the Transaction.

         "Foreign  Lender" has the meaning  assigned to that term in  subsection
2.9(C).

         "GAAP" means generally accepted accounting  principles set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the  Financial   Accounting   Standards   Board  that  are   applicable  to  the
circumstances as of the date of determination.

         "Governmental  Authorities" means any federal, state or municipal court
or  other  governmental  department,   commission,   board,  bureau,  agency  or
instrumentality, governmental or quasi-governmental, domestic or foreign.


                                     - 7 -


         "Guarantors"  has the  meaning  assigned  to that term in the  Recitals
section of this Agreement,  and shall include any other Person who may hereafter
guarantee payment or performance of the whole or any part of the Obligations.

         "Hazardous Material" means all or any of the following:  (a) substances
that are  defined  or listed  in,  or  otherwise  classified  pursuant  to,  any
Environmental  Laws  or  regulations  as  "hazardous   substances",   "hazardous
materials",  "hazardous  wastes",  "toxic  substances" or any other  formulation
intended  to  define,  list or  classify  substances  by reason  of  deleterious
properties such as ignitability,  corrosivity,  reactivity,  carcinogenicity, or
toxicity;  (b) oil,  petroleum or  petroleum  derived  substances,  natural gas,
natural gas liquids or synthetic gas and drilling  fluids,  produced  waters and
other wastes associated with the exploration, development or production of crude
oil,  natural gas or  geothermal  resources;  (c) any  flammable  substances  or
explosives  or any  radioactive  materials;  and  (d)  asbestos  in any  form or
electrical  equipment  which  contains any oil or  dielectric  fluid  containing
polychlorinated biphenyls.

         "Holdings" means Collins I Holding Corp., a Delaware corporation.

         "Indebtedness",  as applied to any Person,  means without  duplication:
(a) all indebtedness  for borrowed money; (b) obligations  under leases which in
accordance  with GAAP constitute  Capital  Leases;  (c) notes payable and drafts
accepted   representing   extensions  of  credit  whether  or  not  representing
obligations for borrowed  money;  (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more  than  six (6)  months  from  the date the  obligation  is  incurred  or is
evidenced by a note or similar written instrument;  (e) all indebtedness secured
by any Lien on any property or asset owned or held by that Person  regardless of
whether the indebtedness  secured thereby shall have been assumed by that Person
or is non-recourse  to the credit of that Person;  (f) obligations in respect of
Letters of Credit or similar  instruments;  (g) all  obligations  of such Person
under any foreign  exchange  contract,  currency swap  agreement,  interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from  fluctuations  in currency values
or interest rates;  (h) "earnouts" and similar  payment  obligations and (i) any
advances under any factoring arrangement.

         "Indemnified  Liabilities"  has the  meaning  assigned  to that term in
subsection 12.2.

         "Indemnitees" has the meaning assigned to that term in subsection 12.2.

         "Insufficiency" means, at any time with respect to any Employee Benefit
Plan,  the amount,  if any, of such Employee  Benefit  Plan's  unfunded  benefit
liabilities within the meaning of Section 4001(a)(18) of ERISA.

         "Insurance  Monetization"  means the  receipt  by the Loan  Parties  of
approximately  $500,000 as a result of the  surrender of certain life  insurance
policies as to which Collins is the beneficiary.

         "Intangible   Assets"  means  all  intangible  assets   (determined  in
conformity with GAAP)  including,  without  limitation,  goodwill,  Intellectual
Property, Software, licenses,  organizational costs, deferred amounts, covenants
not to compete, unearned income and restricted funds.


                                     - 8 -


         "Intellectual Property" means, collectively,  all: Copyrights,  Patents
and Trademarks.

         "Intercreditor   Agreement"  means  that  certain   Subordination   and
Intercreditor  Agreement  dated as of the Closing Date  between  Agent and First
Lien Agent.

         "Interest Period" means, in connection with the LIBOR Loan, an interest
period which  Borrowing  Agent shall elect to be  applicable  to the LIBOR Loan,
which Interest  Period shall be either a one (1), two (2), three (3), or six (6)
month period; provided that:

                  (1) the  initial  Interest  Period  for the LIBOR  Loan  shall
commence on the Closing Date;

                  (2)  in  the  case  of  successive   Interest  Periods,   each
successive  Interest  Period shall commence on the day on which the  immediately
preceding Interest Period expires;

                  (3) if an Interest  Period  expiration  date is not a Business
Day,  such  Interest  Period shall expire on the next  succeeding  Business Day;
provided that if any Interest  Period  expiration date is not a Business Day but
is a day of the month after which no further  Business Day occurs in such month,
such Interest Period shall expire on the immediately preceding Business Day;

                  (4) any Interest  Period that begins on the last  Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,  subject to
part (5) below, end on the last Business Day of a calendar month; and

                  (5) no Interest  Period  shall extend  beyond the  Termination
Date.

         "Interest  Rate" has the meaning  assigned  to that term in  subsection
2.2(A).

         "Interest  Ratio" has the meaning  assigned to that term in  subsection
9.8(A)(3).

         "Interest  Settlement  Date" has the  meaning  assigned to that term in
subsection 9.8(A)(4).

         "IRC" means the Internal  Revenue Code of 1986, as amended from time to
time,  and any  successor  statute  and all  rules and  regulations  promulgated
thereunder.

         "IRS" means the United States of America Internal Revenue Service.

         "Issuing  Lender" has the meaning  assigned to that term in  subsection
2.1(G)(2)

         "Lender"  or  "Lenders"  has the  meaning  assigned to that term in the
Recitals section of this Agreement.

         "Letter of  Non-Exemption"  has the  meaning  assigned  to that term in
subsection 2.9(C).

         "Liabilities" shall have the meaning given that term in accordance with
GAAP and shall include, without limitation, Indebtedness.


                                     - 9 -


         "LIBOR" means, for each Interest Period, a rate per annum equal to:

                  (1) offered  rate for  deposits  in U.S.  dollars in an amount
comparable to the amount of the applicable Loan in the London  interbank  market
for the relevant  Interest  Period  which is  published by the British  Bankers'
Association  and  currently  appears on the Telerate  Page 3750 as of 11:00 a.m.
(London  time) on the day which is two (2) Business  Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however,  that if such a rate  ceases  to be  available  to Agent on that or any
other source from the British  Bankers'  Association,  LIBOR shall be equal to a
rate per annum equal to the average rate (rounded upwards, if necessary,  to the
nearest 1/100 of 1%) at which Agent  determines  that U.S.  dollars in an amount
comparable  to the  amount of the  applicable  Loans are being  offered to prime
banks at  approximately  11:00  a.m.  (London  time) on the day which is two (2)
Business  Days  prior  to the  first  day of  such  Interest  Period  for a term
comparable to such Interest Period for settlement in immediately available funds
by leading banks in the London interbank market selected by Agent; divided by

                  (2) a number  equal to one  (1.0)  minus the  maximum  reserve
percentages  (expressed as a decimal fraction)  (including,  without limitation,
basic,  supplemental,  marginal and emergency  reserves under any regulations of
the Board of  Governors  of the  Federal  Reserve  System or other  Governmental
Authority having jurisdiction with respect thereto, as now and from time to time
in effect) for  Eurocurrency  funding  (currently  referred to as  "Eurocurrency
Liabilities"  in Regulation D of such Board) which are required to be maintained
by any Lender by the Board of Governors of the Federal Reserve System; such rate
to be rounded upward to the next whole multiple of  one-sixteenth of one percent
(.0625%).  LIBOR shall be adjusted automatically on and as of the effective date
of any change in any such reserve percentage.

         "LIBOR  Loans"  means the Term Loans  during any periods  that the Term
Loans bear interest at rates determined by reference to LIBOR.

         "Lien"  means any lien  (statutory  or  otherwise),  mortgage,  deed of
trust,  pledge,  security  interest,  charge or encumbrance of any kind, whether
voluntary  or  involuntary  (including  any  conditional  sale  or  other  title
retention agreement,  any lease in the nature thereof, and any agreement to give
any security interest).

         "Loan" or "Loans" means the advance under the Term Loan Commitment.

         "Loan  Documents"  means this  Agreement,  the Pledge  Agreements,  the
Mortgages,  the Notes,  the  Intercreditor  Agreement  and all other  documents,
instruments  and  agreements  executed  by or on  behalf  of any Loan  Party and
delivered  concurrently herewith or at any time hereafter to or for Agent or any
Lender in connection with the Loans, and any other transactions  contemplated by
this Agreement, all as amended, restated,  supplemented or modified from time to
time.

         "Loan Party" means each of the  Borrowers,  each of the  Guarantors and
each  Subsidiary  of any  Loan  Party  which is or  becomes  a party to any Loan
Document.

         "Loan  Parties'  Accountants"  means  McGladrey and Pullen,  LLP, which
selection  shall  not be  modified  during  the term of this  Agreement  without
Agent's prior written consent.


                                     - 10 -


         "Loan  Year"  means  each  period of  twelve  (12)  consecutive  months
commencing on the Closing Date and on each anniversary thereof.

         "London  Banking  Day" means any day on which  dealings  in deposits in
U.S. dollars are transacted in the London Interbank market.

         "Management Equity  Contribution" means the contribution  following the
Closing  Date of up to  $500,000  to the  capital of  Holdings  (and  subsequent
contribution  by  Holdings  to  Collins)  by members of  management  of the Loan
Parties.

         "Management  Fees and Expenses"  means the management fees and expenses
permitted to be paid to AIP and BNS pursuant to subsection 7.5(b) and (c).

         "Material  Adverse Effect" means a material adverse effect upon (a) the
business, operations,  prospects,  properties, assets or condition (financial or
otherwise)  of any  Borrower,  or the Loan  Parties  taken  as a whole,  (b) the
ability of any Loan Party to perform its obligations  under any Loan Document to
which it is a party or of Agent or any Lender to  enforce or collect  any of the
Obligations or (c) a material  impairment of the  enforceability  or priority of
the Agent's Liens with respect to the Collateral.

         "Maximum  Rate" has the  meaning  assigned  to that term in  subsection
2.2(C).

         "Merger"  shall  have the  meaning  set forth in the  recitals  to this
Agreement.

         "Merger  Consideration"  shall mean cash paid by CS  Acquisition to the
shareholders  of Collins as  consideration  for the Merger in an amount equal to
$12.50 per common share of Collins.

         "Merger Documents" means,  collectively,  the (i) Agreement and Plan of
Merger dated as of September 26, 2006 among Collins,  CS  Acquisition  and Steel
Partners  II,  L.P.,  (ii) the  Fairness  Opinion,  (iii) the  Disbursing  Agent
Agreement and (iii) all articles of merger and certificates, related thereto.

         "Mortgage"  means  each of the  mortgages,  deeds of  trust,  leasehold
mortgages,  leasehold deeds of trust,  collateral assignments of leases or other
real estate security  documents  delivered by any Loan Party to Agent, on behalf
of Agent and Lenders, with respect to Mortgaged Property or Additional Mortgaged
Property, all in form and substance reasonably satisfactory to Agent.

         "Mortgage Policies" has the meaning assigned to that term in subsection
5.4(A).

         "Mortgaged Property" means the real property owned by any Loan Party as
described on Schedule 5.4.

         "Multiemployer  Plan" means any plan that is a "multiemployer plan" (as
such term is defined in Section  4001(a)(3) of ERISA) to which any Loan Party or
any ERISA  Affiliate  contributes or accrues an obligation to contribute or with
respect  to which any of them have any  liability,  or has  within  the past six
years had any obligation or liability to make contributions.


                                     - 11 -


         "Multiple  Employer Plan" shall mean an Employee Benefit Plan which has
two or more  contributing  sponsors  (including  any  Loan  Party  or any  ERISA
Affiliate) at least two of whom are not under common control,  as such a plan is
described in Section 4064 of ERISA.

         "Note" or "Notes" means the Term Notes.

         "Notice of  Borrowing"  means a notice duly  executed by an  authorized
representative  of Borrowing  Agent  appropriately  completed and in the form of
Exhibit D.
         "Obligations"  means all  obligations,  liabilities and indebtedness of
every nature of each Loan Party from time to time owed to Agent or to any Lender
under the Loan Documents (whether incurred before or after the Termination Date)
including,  without  limitation,  the principal amount of all debts,  claims and
indebtedness,  accrued and unpaid  interest  and all fees,  costs and  expenses,
whether primary, secondary, direct, contingent, fixed or otherwise,  heretofore,
now and/or from time to time hereafter owing, due or payable including,  without
limitation,  all interest, fees, cost and expenses accrued or incurred after the
filing of any petition  under any  bankruptcy or insolvency  law  (regardless of
whether allowed or allowable in whole or in part as a claim therein).

         "Operating  Cash Flow"  means,  for any period,  (a)  EBITDA;  less (b)
Capital Expenditures net of amounts financed by third parties, including Capital
Leases.

         "ORIX"  has  the  meaning  assigned  to that  term in the  introductory
paragraph of this Agreement.

         "Patent  Security   Agreement"  means  any  Patent  Security  Agreement
executed and  delivered by each Loan Party to Agent,  as the same may be amended
and in effect from time to time.

         "Patents" means collectively all of the following:  (a) all patents and
patent applications including,  without limitation, those listed on any schedule
to any Patent Security  Agreement and the inventions and improvements  described
and claimed therein,  and patentable  inventions;  (b) the reissues,  divisions,
continuations,  renewals,  extensions  and  continuations-in-part  of any of the
foregoing; (c) all income, royalties,  damages and payments now or hereafter due
and/or  payable  under  any of  the  foregoing  or  with  respect  to any of the
foregoing, including, without limitation, damages and payments for past, present
and future infringements of any of the foregoing; (d) the right to sue for past,
present and future  infringements  of any of the  foregoing;  and (e) all rights
corresponding to any of the foregoing throughout the world.

          "PBGC"   shall  mean  the  Pension   Benefits   Guaranty   Corporation
established  pursuant  to Title IV of ERISA,  or any  successor  agency or other
Governmental Authority succeeding to the functions thereof.

         "Pension Benefit Plan" shall mean at any time any employee benefit plan
(including a Multiple  Employer  Plan,  but not a  Multiemployer  Plan) which is
covered  by Title IV of ERISA or is  subject to the  minimum  funding  standards
under Section 412 of the IRC and either (i) is maintained by a Loan Party or any
current or former ERISA Affiliate;  or (ii) has at any time within the preceding
five years been  maintained by a Loan Party or any entity which was at such time


                                     - 12 -

an ERISA  Affiliate or former ERISA Affiliate for employees of any Loan Party or
of any  entity  which  was at such  time an  ERISA  Affiliate  or  former  ERISA
Affiliate.

         "Permitted  Encumbrances" means the following types of Liens: (a) Liens
(other  than  Liens  relating  to  Environmental  Claims  or ERISA)  for  taxes,
assessments or other governmental charges or levies not yet due and payable; (b)
statutory  Liens  of  landlords,  carriers,  warehousemen,  mechanics,  vendors,
materialmen  and other similar  liens imposed by law,  which are incurred in the
ordinary course of business for sums not more than thirty (30) days  delinquent;
(c) Liens  (other than any Lien imposed by ERISA)  incurred or deposits  made in
the  ordinary  course of  business in  connection  with  workers'  compensation,
unemployment   insurance   and  other  types  of  social   security,   statutory
obligations,  surety and appeal bonds, bids, leases, government contracts, trade
contracts,  performance and return-of-money  bonds and other similar obligations
(exclusive  of  obligations  for the  payment  of  borrowed  money);  (d) zoning
restrictions, easements, licenses, reservations, provisions, covenants, waivers,
rights-of-way,  restrictions, minor irregularities of title (and with respect to
leasehold  interests,  mortgages,  obligations,  Liens  and  other  encumbrances
incurred,  created,  assumed or  permitted  to exist and arising by,  through or
under a landlord, ground lessor or owner of the leased property, with or without
consent of the lessee) and other similar charges or encumbrances with respect to
real property not interfering in any material  respect with the ordinary conduct
of the  business  of any Loan  Party and  which do not  secure  obligations  for
payment of money;  (e) Liens for purchase money  obligations,  provided that (i)
the  purchase  of the  asset  subject  to  any  such  Lien  is  permitted  under
subparagraph D of the Financial Covenant Rider, (ii) the Indebtedness secured by
any such Lien is permitted  under  subsection 7.1, and (iii) such Lien encumbers
only the asset so  purchased;  (f) Liens in favor of Agent,  on behalf of itself
and Lenders, (g) Liens set forth on Schedule 7.3(B); (h) precautionary financing
statements  filed in connection  with  operating  leases;  (i) Liens in favor of
First Lien Agent,  on behalf of itself and First Lien  Lenders,  so long as such
Liens are in compliance with the Intercreditor  Agreement; and (j) the Liens and
encumbrances listed on Schedule B of the loan policies issued for the benefit of
Agent  and  delivered  in   connection   with  this   Transaction   (the  "Title
Encumbrances").

         "Person"  means and includes  natural  persons,  corporations,  limited
partnerships,   general  partnerships,   limited  liability  companies,  limited
liability  partnerships,  joint stock companies,  joint ventures,  associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations,  whether or not legal entities,  and governments and agencies and
political subdivisions thereof.

         "Pledge  Agreement"  shall  mean the Pledge  Agreement  dated as of the
Closing Date by and among each Loan Party party  thereto and Agent,  as amended,
restated, supplemented or otherwise modified from time to time.

         "Pro  Forma"  means the  unedited  balance  sheet of Loan  Parties on a
consolidated   basis  as  of  the  Closing  Date  after  giving  effect  to  the
Transaction. The Pro Forma is attached hereto as Schedule 4.4.

         "Pro Forma Adjustments" means: (i) $479,000 for the quarter ended April
30, 2006, (ii) $507,000 for the quarter ended July 31, 2006, (iii) $472,000,  as
well as all  severance  and  transaction  expenses  relating to the merger of CS
Acquisition into Collins which are included in the calculation of net income for


                                     - 13 -


the quarter  ended October 31, 2006 and (iv) for future  periods,  to the extent
included  in the  calculation  of net  income,  the  sum  of (1)  severance  and
transaction  expenses  relating to the merger of CS Acquisition into Collins and
(2) expenditures (including but not limited to retention, severance, relocation,
moving and other project  costs)  incurred by Borrower prior to October 31, 2008
associated with the consolidation of Borrower's facilities and implementation of
Borrower's  operating plan, in an aggregate  amount not in excess of $3,000,000,
provided that (x) the Borrower has determined the need for such  expenditures in
its  reasonable  judgment,   and  (y)  such  expenditures  shall  be  reasonably
acceptable to the First Lien Agent.

         "Pro Rata Share"  means the  percentage  obtained  by dividing  (i) the
Total Term Loan  Commitment of a Lender by (ii) the Total Term Loan  Commitments
of all Lenders,  as such  percentage  may be adjusted by  assignments  permitted
pursuant to subsection 9.5;  provided,  however,  if any Term Loan Commitment is
terminated  pursuant to the terms  hereof,  then "Pro Rata Share"  means (x) the
aggregate  amount of a  Lender's  outstanding  Term  Loans by (y) the  aggregate
amount of all outstanding Term Loans.

         "Projections"  means  the Loan  Parties'  forecasted  consolidated  and
consolidating: (a) balance sheets, (b) profit and loss statements, (c) cash flow
statements,  (d) capitalization  statements and (e) Revolving Loan availability,
all  prepared on a division by  division  and  Subsidiary  by  Subsidiary  basis
consistent  with Loan Parties'  historical  financial  statements and based upon
good faith estimates and  assumptions by Loan Parties  believed to be reasonable
at the time made,  together with appropriate  supporting details and a statement
of underlying assumptions.

         "Register" has the meaning assigned to that term in subsection 9.5(E).

         "Related  Fund" has the  meaning  assigned  to that term in  subsection
9.5(D).

         "Replacement   Lender"  has  the  meaning  assigned  to  that  term  in
subsection 2.11(A).

         "Reportable  Event" shall mean a reportable  event described in Section
4043(c) of ERISA or the regulations  promulgated  thereunder other than an event
for which the requirement to provide notice to the PBGC has been waived.

         "Requisite  Lenders"  means (a) if the  number of Lenders is two (2) or
less,  all of the  Lenders,  and (b) if the  number of Lenders is three or more,
Lenders  holding or being  responsible  for more than fifty percent (50%) of the
sum of the outstanding Loans.

         "Responsible  Officer" means any senior vice president,  executive vice
president, president, chief financial officer or chief accounting officer of any
Loan Party.

         "Restricted   Junior  Payment"   means:   (a)  any  dividend  or  other
distribution, direct or indirect, on account of any Equity Interests of any Loan
Party now or hereafter outstanding, except a dividend payable solely with shares
of the class of stock on which such  dividend  is  declared;  (b) any payment of
Merger  Consideration  after the Closing Date or payment in  connection  with or
relating  to the  extinguishment,  cancellation  or  repurchase  of  any  Equity
Interests  of Collins  that  existed  prior to the  Merger;  (c) any  payment or
prepayment of principal of, premium,  if any, or interest on, or any redemption,


                                     - 14 -


conversion,  exchange, retirement,  defeasance, sinking fund or similar payment,
purchase  or other  acquisition  for value,  direct or  indirect,  of any Equity
Interests of any Loan Party now or hereafter  outstanding,  or the issuance of a
notice of an  intention  to do any of the  foregoing;  (d) any  payment  made to
retire,  or to obtain the surrender  of, any  outstanding  warrants,  options or
other rights to acquire shares of any Equity  Interests of any Loan Party now or
hereafter  outstanding;  (e) any director fee paid to any member of the board of
directors  of any Loan Party who is also an employee of any Loan Party;  (f) any
payment by any Loan Party of any  management,  consulting or similar fees to any
Affiliate,  whether  pursuant to a management  agreement or  otherwise;  (g) any
payment with respect to principal,  interest, fees or other amounts of the First
Lien Debt,  other than as expressly  permitted under the terms of the First Lien
Loan Agreement as in effect on the Closing Date and the Intercreditor Agreement;
and (h)  any  prepayment  of any  other  Indebtedness  not  otherwise  expressly
permitted above.

         "Securities Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

         "Settlement  Date" has the meaning  assigned to that term in subsection
9.8(A)(2).

         "Shareholder's  Agreement" means that certain  Shareholder's  Agreement
dated as of October  31,  2006 by and among  Holdings,  AIP/CH,  BNS and certain
other shareholders of Holdings.

         "Subsidiary"  means,  with  respect  to any  Person,  any  corporation,
association or other  business  entity of which more than fifty percent (50%) of
the  total  voting  power  of  Equity  Interest  (or  equivalent   ownership  or
controlling  interest)  entitled  (without  regard  to  the  occurrence  of  any
contingency) to vote in the election of directors,  managers or trustees thereof
is at the time owned or controlled,  directly or  indirectly,  by that Person or
one or more of the other subsidiaries of that Person or a combination thereof.

         "Tax  Liabilities"  has the meaning assigned to that term in subsection
2.9(A).

         "Tax Sharing  Agreement" means that certain Tax Sharing Agreement dated
as of  October  31,  2006  among  BNS,  Holdings  and the  direct  and  indirect
Subsidiaries of Holdings (without giving effect to any amendment or modification
thereto without the prior written consent of Agent).

         "Term Loan" means the unpaid  balance of the term loan made pursuant to
subsection 2.1(C).

         "Term Loan  Commitment"  means (a) as to any Lender,  the commitment of
such Lender to make its Pro Rata share of the Term Loan in the maximum aggregate
amount set forth on the signature page of this Agreement  opposite such Lender's
signature or in the most recent  Assignment and Acceptance  Agreements,  if any,
executed by such Lender and (b) as to all Lenders,  the aggregate  commitment of
all Lenders to make the Term Loan.

         "Term  Note"  means  each  promissory  note of  Borrowers  in form  and
substance acceptable to Agent, issued to evidence the Term Loan Commitment.


                                     - 15 -


         "Termination  Date" has the meaning assigned to that term in subsection
2.5.

         "Termination  Event" shall mean (i) a Reportable  Event with respect to
any Employee Benefit Plan (other than a Multiemployer Plan); (ii) the withdrawal
of any Loan Party or ERISA Affiliate from any Employee  Benefit Plan (other than
a Multiemployer Plan) during a plan year in which such entity was a "substantial
employer"  as defined in Section  4001(a)(2)  of ERISA;  (iii) the  providing of
notice  of  intent  to  terminate  any  Employee  Benefit  Plan  (other  than  a
Multiemployer  Plan) in a distress  termination  described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate any Employee
Benefit  Plan or  Multiemployer  Plan;  (v) any event or  condition  which would
reasonably be expected to (a) constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer,  any Employee
Benefit Plan (other than a Multiemployer Plan), (b) result in the termination of
a  Multiemployer  Plan  pursuant to Section  4041A of ERISA or (c) result in the
imposition  of any  Lien on the  assets  of any Loan  Party or ERISA  Affiliate,
including by  operation  of Section 4069 of ERISA;  (vi) the partial or complete
withdrawal  within the  meaning of  Sections  4203 and 4205 of ERISA of any Loan
Party or any ERISA Affiliate from a Multiemployer  Plan; or (vii) the payment by
any  Loan  Party  or  ERISA   Affiliate  of  any   withdrawal   liability  to  a
Multi-Employer Plan which would have a Material Adverse Effect.

         "Title   Encumbrances"  has  the  meaning  assigned  to  that  term  in
sub-clause (j) of the definition of "Permitted Encumbrances".

         "Trademark  Security  Agreement" means any Trademark Security Agreement
executed and  delivered by each Loan Party to Agent,  as the same may be amended
and in effect from time to time.

         "Trademarks"  means   collectively  all  of  the  following:   (a)  all
trademarks,  trade  names,  corporate  names,  company  names,  business  names,
fictitious  business names, trade styles,  service marks,  logos, other business
identifiers,  prints and labels on which any of the  foregoing  have appeared or
appear,  all  registrations  and recordings  thereof,  and all  applications  in
connection therewith including, without limitation, those listed on any schedule
to any Trademark Security Agreement;  (b) all renewals thereof;  (c) all income,
royalties, damages and payments now or hereafter due and/or payable under any of
the  foregoing or with  respect to any of the  foregoing  including  damages and
payments for past, present and future infringements of any of the foregoing; (d)
the  right to sue for  past,  present  and  future  infringements  of any of the
foregoing;  (e) all rights  corresponding to any of the foregoing throughout the
world;  and  (f) all  goodwill  associated  with  and  symbolized  by any of the
foregoing.

         "Transaction"  means  the  transactions   contemplated  by  the  Equity
Documents,  the  Merger  Documents,  the Loan  Documents,  the  First  Lien Loan
Documents and the financial accommodations and Loans contemplated herein.

         "Trust Agreement" means, collectively, the Trust Agreement, dated on or
about the  Closing  Date,  among  Borrowers,  First  Lien  Agent,  and the named
Trustee, in form and substance  satisfactory to Agent, providing for the holding
by such trustee on behalf of the Lenders of title documents  relating to chassis
constituting Collateral and periodic reporting relating thereto.


                                     - 16 -


         "UCC" means the Uniform  Commercial Code as in effect from time to time
in the State of New York; provided,  however, to the extent the law of any other
state or other jurisdiction applies to the attachment,  perfection,  priority or
enforcement of any Lien granted to Agent in any of the  Collateral,  "UCC" means
the Uniform Commercial Code as in effect in such other state or jurisdiction for
purposes  of the  provisions  hereof  relating to such  attachment,  perfection,
priority  or  enforcement  of a Lien  in such  Collateral.  To the  extent  this
Agreement  defines the term  "Collateral" by reference to terms used in the UCC,
each of such terms shall have the broadest meaning given to such terms under the
UCC as in effect in any state or other jurisdiction.

         "Undrawn  Availability"  means an amount equal to the Maximum Revolving
Loan Amount less the Revolving Loan.

         1.2. UCC DEFINED  TERMS.  The  following  terms used in this  Agreement
shall have the respective meanings provided for in the UCC: "Accounts", "Account
Debtor",  "Buyer in Ordinary Course of Business",  "Chattel Paper",  "Commercial
Tort  Claim",  "Deposit  Account",  "Documents",   "Electronic  Chattel  Paper",
"Equipment",  "Farm  Products",  "Fixtures",  "General  Intangibles",   "Goods",
"Instruments",   "Inventory",   "Investment   Property",   "Letter  of  Credit",
"Letter-of-Credit Rights",  "Licensee in Ordinary Course of Business",  "Payment
Intangibles",  "Proceeds",  "Record",  "Software",  "Supporting Obligations" and
"Tangible Chattel Paper".

         1.3.  ACCOUNTING TERMS. For purposes of this Agreement,  all accounting
terms not  otherwise  defined  herein shall have the  meanings  assigned to such
terms in  conformity  with  GAAP.  Financial  statements  and other  information
furnished to Agent or any Lender pursuant to subsection 5.1 shall be prepared in
accordance  with  GAAP  (as in  effect  at the  time of such  preparation)  on a
consistent basis. In the event any "Accounting Changes" (as defined below) shall
occur and such changes affect  financial  covenants,  standards or terms in this
Agreement, then Loan Parties and Agent agree to enter into negotiations in order
to amend such  provisions  of this  Agreement  so as to  equitably  reflect such
Accounting  Changes with the desired result that the criteria for evaluating the
financial  condition  of Loan  Parties  shall be the same after such  Accounting
Changes as if such Accounting  Changes had not been made, and until such time as
such an amendment  shall have been  executed  and  delivered by Loan Parties and
Requisite  Lenders,  (A) all  financial  covenants,  standards and terms in this
Agreement shall be calculated and/or construed as if such Accounting Changes had
not been made, and (B) Loan Parties shall prepare  footnotes to each  Compliance
Certificate and the financial statements required to be delivered hereunder that
show the differences between the financial  statements  delivered (which reflect
such  Accounting  Changes)  and the basis  for  calculating  financial  covenant
compliance (without reflecting such Accounting  Changes).  "Accounting  Changes"
means: (a) changes in accounting  principles required by GAAP and implemented by
Loan Parties; (b) changes in accounting principles  recommended by Loan Parties'
Accountants;  and  (c)  changes  in  carrying  value  of Loan  Parties'  assets,
liabilities or equity  accounts  resulting from (i) the  application of purchase
accounting  principles  (A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the
Transaction,  PROVIDED that the  application of purchase  accounting  principles
shall not constitute an Accounting Change to the extent such application and the
changes in the carrying  value of Loan Parties'  assets,  liabilities  or equity
accounts  cause  thereby are  reflected in the Pro Forma and/or the  Projections
delivered on or before the Closing Date or (ii) any other  adjustments  that, in
each case,  were  applicable  to, but not included  in, the Pro Forma.  All such
adjustments  resulting  from  expenditures  made  subsequent to the Closing Date
(including,  but not limited to, capitalization of costs and expenses or payment


                                     - 17 -


of pre-Closing Date liabilities)  shall be treated as expenses in the period the
expenditures  are made and deducted as part of the calculation of EBITDA in such
period.

         1.4.   OTHER   DEFINITIONAL   PROVISIONS.   References  to  "Sections",
"subsections",  "Riders",  "Exhibits",  "Schedules"  and  "Addenda"  shall be to
Sections, subsections, Riders, Exhibits, Schedules and Addenda, respectively, of
this Agreement unless otherwise  specifically provided. Any of the terms defined
in  subsection  1.1 or  otherwise  in this  Agreement  may,  unless the  context
otherwise  requires,  be used in the  singular  or the plural  depending  on the
reference.  In this  Agreement,  words  importing  any gender  include the other
genders;  the words "including,"  "includes" and "include" shall be deemed to be
followed by the words  "without  limitation";  the term "or" has,  except  where
otherwise  indicated,  the inclusive meaning represented by the phrase "and/or";
references to agreements and other  contractual  instruments  shall be deemed to
include subsequent amendments, assignments, and other modifications thereto, but
only to the extent such amendments,  assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document; references
to Persons include their respective  permitted successors and assigns or, in the
case of governmental  Persons,  Persons  succeeding to the relevant functions of
such  Persons;  and all  references  to statutes and related  regulations  shall
include any amendments of same and any successor statutes and regulations.

SECTION 2     LOANS AND COLLATERAL

         2.1. LOANS.

                  (A) [INTENTIONALLY OMITTED].

                  (B) [INTENTIONALLY OMITTED].

                  (C) TERM LOAN.  Each Lender,  severally,  agrees to lend to CS
Acquisition, on the Closing Date, its Pro Rata Share of the Term Loan Commitment
which is in the aggregate  amount of $45,000,000.  The Term Loan shall be funded
in one drawing. Amounts borrowed under this subsection 2.1(C) and repaid may not
be  reborrowed.  The aggregate  outstanding  principal  balance of the Term Loan
shall  be due  and  payable  in  full  in  immediately  available  funds  on the
Termination Date.

                  (D) [INTENTIONALLY OMITTED].

                  (E) NOTES.  Borrowers shall execute and deliver to each Lender
with appropriate insertions Notes to evidence such Lender's Commitments.  In the
event of an assignment under subsection 9.5,  Borrowers shall, upon surrender of
the assigning  Lender's  Notes,  issue new Notes to reflect the interest held by
the assigning Lender and its assignee.

                  (F) [INTENTIONALLY OMITTED].

                  (G) [INTENTIONALLY OMITTED].

                  (H) [INTENTIONALLY OMITTED].


                                     - 18 -


         2.2. INTEREST.

                  (A) RATE OF  INTEREST.  The Loans  and all  other  Obligations
shall bear interest from the date such Loans are made or such other  Obligations
become due to the date paid at a rate per annum equal to (1) in the case of Base
Rate Loans and  Obligations  for which no interest rate basis is specified,  the
Base Rate PLUS the Applicable  Margin and (2) in the case of LIBOR Loans,  LIBOR
PLUS the Applicable Margin  (collectively the "Interest Rate"). Such designation
by  Borrowing  Agent may be changed  from time to time  pursuant  to  subsection
2.2(D).  If on any day the Loan is outstanding and notice has not been delivered
to Agent in accordance with the terms of this Agreement specifying the basis for
determining  the rate of  interest or if LIBOR has been  specified  and no LIBOR
quote is available,  then for that day all Loans shall bear interest  determined
by reference to the Base Rate.

                  After the occurrence and during the continuance of an Event of
Default (1) the Loans and all other Obligations  shall, at the election of Agent
or  Requisite  Lenders,  bear  interest at a rate per annum equal to two percent
(2%) PLUS the  applicable  Interest Rate (the "Default  Rate"),  (2) LIBOR Loans
shall  automatically  convert  to Base Rate  Loans at the end of any  applicable
Interest Period and (3) the Loans may not be converted to LIBOR Loans.

                  (B) COMPUTATION AND PAYMENT OF INTEREST. Interest on the Loans
and all other  Obligations  shall be computed on the daily principal  balance on
the basis of a three  hundred sixty (360) day year for the actual number of days
elapsed. In computing interest on the Loans, the date of funding of the Loans or
the first day of an Interest Period  applicable to the Loans or, with respect to
the Base Rate Loans being converted from LIBOR Loans,  the date of conversion of
the LIBOR Loans to Base Rate Loans,  shall be included;  and the date of payment
of the Loans or the  expiration  date of an Interest  Period  applicable  to the
Loans,  or with respect to Base Rate Loans being  converted to LIBOR Loans,  the
date of  conversion  of the Base Rate Loans to LIBOR  Loans,  shall be excluded;
provided  that if a Loan is repaid on the same day on which it is made,  one (1)
day's  interest  shall be paid on the Loan.  Interest on the Loans and all other
Obligations  shall be  payable to Agent for the  benefit  of Lenders  monthly in
arrears on the first day of each month,  on the date of any prepayment of Loans,
and at maturity, whether by acceleration or otherwise.

                  (C)  INTEREST  LAWS.  Notwithstanding  any  provision  to  the
contrary  contained in this  Agreement or any other Loan  Document,  no Borrower
shall be required to pay, and neither Agent nor any Lender shall be permitted to
collect,  any amount of  interest  in excess of the  maximum  amount of interest
permitted by  applicable  law  ("Excess  Interest").  If any Excess  Interest is
provided for or  determined  by a court of competent  jurisdiction  to have been
provided  for in this  Agreement  or in any other  Loan  Document,  then in such
event:  (1) the  provisions  of this  subsection  shall govern and control;  (2)
neither  any  Borrower  nor any other Loan Party shall be  obligated  to pay any
Excess  Interest;  (3) any  Excess  Interest  that  Agent or any Lender may have
received  hereunder shall be, at such Lender's  option,  (a) applied as a credit
against the  outstanding  principal  balance of the  Obligations  or accrued and
unpaid  interest  (not to exceed  the  maximum  amount  permitted  by law),  (b)
refunded to the payor thereof, or (c) any combination of the foregoing;  (4) the
interest  rate(s)  provided  for herein  shall be  automatically  reduced to the
maximum lawful rate allowed from time to time under applicable law (the "Maximum
Rate"),  and this Agreement and the other Loan Documents shall be deemed to have
been and shall be,  reformed  and modified to reflect  such  reduction;  and (5)


                                     - 19 -


neither  any  Borrower  nor any other Loan Party  shall have any action  against
Agent or any Lender for any damages  arising out of the payment or collection of
any Excess Interest.  Notwithstanding  the foregoing,  if for any period of time
interest on any  Obligations  is  calculated at the Maximum Rate rather than the
applicable  rate under this  Agreement,  and  thereafter  such  applicable  rate
becomes  less  than the  Maximum  Rate,  the rate of  interest  payable  on such
Obligations  shall  remain at the  Maximum  Rate  until each  Lender  shall have
received  the amount of interest  which such Lender would have  received  during
such period on such Obligations had the rate of interest not been limited to the
Maximum Rate during such period.

                  (D)   CONVERSION  OR   CONTINUATION.   Subject  to  the  other
provisions of this  Agreement,  including,  without  limitation,  satisfying the
conditions set forth in Section 3, Borrowing  Agent shall have the option to (1)
convert at any time all outstanding Loans from Base Rate Loans to LIBOR Loans or
(2) upon the expiration of any Interest Period applicable to LIBOR Loans, to (a)
continue  all of the LIBOR  Loans or (b)  convert all of the LIBOR Loans to Base
Rate Loans.  The  succeeding  Interest  Period(s) of the  continued or converted
Loans shall  commence on the last day of the Interest  Period of the Loans to be
continued or  converted;  provided that the Loans may not be continued as, or be
converted into,  LIBOR Loans,  when any Event of Default or Default has occurred
and is continuing.  Any such  conversion or continuation of the Term Loans shall
be of the entire  outstanding  principal  amount under all Term Loans so that at
all times  either (i) all Term Loans are LIBOR  Loans or (ii) all Term Loans are
Base Rate Loans.

                  Borrowing  Agent  shall  deliver  a Notice of  Borrowing  with
respect  to any such  conversion/continuation  to Agent no later  than 1:00 p.m.
(New York City time) at least three (3) Business Days in advance of the proposed
conversion/continuation  date.  The  Notice of  Borrowing  with  respect to such
conversion/continuation shall certify: (1) the proposed  conversion/continuation
date  (which  shall  be  a  Business  Day);  (2)  the  nature  of  the  proposed
conversion/continuation; (3) in the case of conversion to, or a continuation of,
LIBOR Loans,  the  requested  Interest  Period;  (4) that no Default or Event of
Default  has  occurred  and is  continuing  or would  result  from the  proposed
conversion/continuation;  and (5) that all conditions to make Loans as set forth
in Section 3 have been satisfied.

                  In lieu of  delivering a Notice of  Borrowing  with respect to
any such  conversion/continuation,  Borrowing  Agent may give  Agent  telephonic
notice by the required time of any proposed  conversion/continuation  under this
subsection  2.2(D) (in such telephonic  notice  Borrowing Agent shall certify to
the items set forth  above with  respect to the Notice of  Borrowing);  provided
that such telephonic  notice shall be promptly  confirmed in writing by delivery
of a Notice of Borrowing (in form and substance  described  herein) with respect
to  such   conversion/continuation   to  Agent  on  or   before   the   proposed
conversion/continuation  date.  Once  given,  Borrowers  shall  be bound by such
telephonic notice. Upon the expiration of an Interest Period for LIBOR Loans, in
the absence of a new Notice of  Borrowing or a  telephonic  notice  submitted to
Agent not less than three (3)  Business  Days prior to the end of such  Interest
Period, all LIBOR Loans shall be automatically converted to Base Rate Loans.

                  Neither  Agent nor any Lender shall incur any liability to any
Borrower  or any other  Loan  Party in acting  upon any  telephonic  notice or a
Notice of Borrowing  referred to above that Agent believes in good faith to have


                                     - 20 -


been  given by an  officer  or  other  person  authorized  to act on  behalf  of
Borrowers or for otherwise acting in good faith under this subsection 2.2(D).

         2.3. FEES.

                  (A) ARRANGEMENT FEE. On the Closing Date,  Borrowers shall pay
to ORIX, for its own account, an Arrangement Fee in the amount of [INTENTIONALLY
OMITTED]  (representing  [INTENTIONALLY  OMITTED]  of the  aggregate  Term  Loan
Commitment).

                  (B) PREPAYMENT  FEES. If Borrowers pay after  acceleration  or
prepay  all or any  portion  of the  Term  Loans  or  terminate  the  Term  Loan
Commitments,  whether  voluntarily or involuntarily  and whether before or after
acceleration of the  Obligations,  Borrowers shall pay to Agent, for the benefit
of  Lenders  as  liquidated  damages  and  compensation  for the  costs of being
prepared to make funds  available  hereunder an amount  equal to the  Applicable
Percentage  (as defined  below)  multiplied by the principal  amount of the Term
Loans paid after  acceleration  or prepaid;  provided  that,  if  Borrowers  are
required to prepay the Term Loan as a result of a mandatory  prepayment required
pursuant to subsection  2.4(B)(3) of the Loan Agreement,  Borrowers shall not be
obligated to pay such prepayment fee with respect to such mandatory  prepayment.
As used herein,  the term "Applicable  Percentage"  shall mean (x) three percent
(3.0%) in the case of a prepayment or termination prior to the first anniversary
date of the Closing Date,  (y) two percent (2.0%) in the case of a prepayment or
termination  from and after the first  anniversary of the Closing Date and prior
to the  second  anniversary  of the  Closing  Date  and (z) one  percent  (1.0%)
thereafter.  The Loan  Parties  agree  that  the  Applicable  Percentages  are a
reasonable  calculation of Lenders' lost profits in view of the difficulties and
impracticality of determining  actual damages resulting from an early prepayment
of the Term Loan or termination of the Term Loan Commitment.

                  (C) [INTENTIONALLY OMITTED].

                  (D) [INTENTIONALLY OMITTED].

                  (E) [INTENTIONALLY OMITTED].

                  (F) OTHER FEES AND EXPENSES. Borrowers shall pay to Agent, for
its own  account,  all charges  for  returned  items and all other bank  charges
incurred by Agent,  as well as Agent's  standard wire transfer  charges for each
wire transfer made under this Agreement.

                  (G) [INTENTIONALLY OMITTED].

         2.4. PAYMENTS AND PREPAYMENTS.

                  (A) MANNER AND TIME OF PAYMENT.  Any amounts due  hereunder or
under any of the other Loan Documents,  such amount shall be immediately due and
payable  with  interest  thereon  accruing  from the  applicable  due date.  All
payments made by Borrowers with respect to the Obligations shall be made without
deduction,  defense,  setoff or  counterclaim.  All payments to Agent  hereunder
shall,  unless  otherwise  directed by Agent,  be made to Agent's  Account or in
accordance with subsection 4.22. All payments  remitted to Agent's Account shall
be credited to the  Obligations  on the same  Business Day as such  payments are
received by Agent in immediately available funds;  provided,  however,  payments


                                     - 21 -


received  by Agent after 2:00 P.M..  (EST) shall be deemed  received on the next
Business  Day.  Borrowing  Agent shall  notify  Agent by Noon (EST) if Borrowers
intend to make any  voluntary  payment or  repayment of the  Obligations  to the
Agent's Account.

                  (B) MANDATORY PREPAYMENTS.

                      (1) [INTENTIONALLY OMITTED].

                      (2)  PREPAYMENTS  FROM  PROCEEDS  OF  ASSET  DISPOSITIONS.
Promptly,  but in no event later than seven (7) Business  Days after  receipt by
any  Loan  Party of  proceeds  of any  Asset  Dispositions  (including,  without
limitation,  any insurance  proceeds),  which  proceeds  exceed  $250,000 in the
aggregate (it being understood that if the proceeds exceed $250,000,  the entire
amount  and not  just the  portion  above  $250,000  shall  be  subject  to this
subsection  2.4(B)(2)),  and to the extent not prohibited pursuant to subsection
2.4(E) of the First Lien Loan Agreement,  Borrowers shall prepay the Obligations
in an amount equal to the net proceeds (i.e., gross proceeds less the reasonable
costs of such sales or other dispositions and less any Indebtedness for borrowed
money secured by a Lien  described in clause (e) of the  definition of Permitted
Encumbrances)  from  such  Asset  Dispositions.  All such  prepayments  shall be
applied to the Loans in accordance with subsection 2.4(E); PROVIDED, HOWEVER, if
Borrowers  reasonably  expect  the  proceeds  of  any  Asset  Disposition  to be
reinvested within one hundred eighty (180) days to repair or replace such assets
with assets of a similar class, Borrowers may, so long as no Default or Event of
Default shall have occurred and be  continuing,  use such proceeds only for such
repair or  replacement.  If Borrowers  fail to reinvest  such  proceeds for such
purpose  within one hundred eighty (180) days,  Borrowers  shall repay the Loans
with such proceeds in the manner set forth in subsection 2.4(E).

                      (3)  PREPAYMENTS  TO FIRST LIEN  LENDERS  FROM EXCESS CASH
FLOW.  If Borrowers are required to make  prepayments  from Excess Cash Flow (as
defined in the First Lien Loan  Agreement)  under the First Lien Loan Agreement,
the proceeds of such payments  shall be applied to the Loans in accordance  with
subsection 2.4(E) to the extent not prohibited  pursuant to subsection 2.4(E) of
the First Lien Loan Agreement.

                      (4) PREPAYMENTS FROM ISSUANCE OF SECURITIES. Promptly, but
in no event later than seven (7) Business  Days after  receipt by any Loan Party
of the proceeds of the issuance of equity securities (other than proceeds of the
issuance of equity  securities  received on or before the Closing Date),  and to
the extent not prohibited  pursuant to subsection  2.4(E) of the First Lien Loan
Agreement, Borrowers shall prepay the Loans in an amount equal to such proceeds,
net of  underwriting  discounts  and  commissions  and  other  reasonable  costs
associated  therewith.  All such  prepayments  shall be  applied to the Loans in
accordance with subsection 2.4(E).

                      (5)  PREPAYMENTS  FROM TAX REFUNDS.  Immediately  upon the
receipt by any Loan Party of the proceeds of any tax refunds,  and to the extent
not prohibited  pursuant to subsection  2.4(E) of the First Lien Loan Agreement,
Borrowers  shall prepay the Loans in an amount equal to such proceeds.  All such
prepayments shall be applied to the Loans in accordance with subsection 2.4(E).


                                     - 22 -


                      (6) PREPAYMENTS FROM PAYMENTS RECEIVED FROM THE DISBURSING
AGENT.  Immediately  upon the  receipt  by any Loan  Party of any cash  proceeds
received from the Disbursing Agent under the Disbursing Agent Agreement,  and to
the extent not prohibited  pursuant to subsection  2.4(E) of the First Lien Loan
Agreement, Borrowers shall prepay the Loans in an amount equal to such proceeds.
All such prepayments shall be applied to the Loans in accordance with subsection
2.4(E).

                  (C) VOLUNTARY  PREPAYMENTS AND  REPAYMENTS.  Borrowers may, at
any time  upon not less than  three (3)  Business  Days  prior  notice to Agent,
prepay the Loans. Any prepayment of the Obligations permitted in this subsection
2.4(C) shall be subject to the payment of all fees set forth in  subsection  2.3
and the payment of any amounts owing pursuant to subsection  2.12 resulting from
such prepayment.

                  (D) PAYMENTS ON BUSINESS DAYS. Whenever any payment to be made
hereunder  shall be stated to be due on a day that is not a  Business  Day,  the
payment may be made on the next  succeeding  Business Day and such  extension of
time shall be included in the  computation of the amount of interest or fees due
hereunder.

                  (E)  APPLICATION OF PREPAYMENT  PROCEEDS.  With respect to the
prepayments described in subsections  2.4(B)(2),  2.4(B)(4) and 2.4(B)(5),  such
prepayments  shall be  applied  in payment  of the  Obligations  as Agent  shall
determine in its sole discretion.

         2.5. TERM OF THIS  AGREEMENT.  This Agreement  shall be effective until
the earlier of (a) October 31, 2011 and (b) the  acceleration of all Obligations
pursuant to subsection  8.3 (the  "Termination  Date").  The  Commitments  shall
terminate (unless earlier  terminated  pursuant to the terms hereunder) upon the
Termination  Date and all Obligations  shall become  immediately due and payable
without notice or demand. Notwithstanding any termination, until all Obligations
have been  fully paid and  satisfied,  Agent,  on behalf of itself and  Lenders,
shall be entitled to retain security interests in and liens upon all Collateral,
and even after payment of all Obligations hereunder,  each Borrower's obligation
to  indemnify  Agent and each Lender in  accordance  with the terms hereof shall
continue.

         2.6.  STATEMENTS.  Agent shall render a monthly statement of account to
Borrowing  Agent  within  twenty  (20) days  after the end of each  month.  Such
statement of account shall  constitute an account stated unless  Borrowing Agent
makes  written  objection  thereto  within  thirty  (30) days from the date such
statement  is mailed to  Borrowing  Agent.  Agent shall  record in its books and
records,  including  computer  records,  (a) all  Loans,  interest  charges  and
payments  thereof,  (b) the charging and payment of all fees, costs and expenses
and (c) all other debits and credits pursuant to this Agreement.  The balance in
the loan accounts shall constitute presumptive evidence,  absent manifest error,
of the accuracy of the information  contained therein;  provided,  however, that
any  failure by Agent to so record  shall not limit or affect  any Loan  Party's
obligation to pay.

         2.7. GRANT OF SECURITY INTEREST.

                  (A) GRANT OF LIENS IN THE  COLLATERAL.  To secure the  payment
and  performance  of  the  Obligations,   including  all  renewals,  extensions,
restructurings  and  refinancings  of any or all of the  Obligations,  each Loan


                                     - 23 -


Party hereby grants to Agent, for the benefit of Agent and Lenders, a continuing
security  interest in, lien and mortgage in and to, right of setoff  against and
collateral  assignment of all of such Loan  Parties'  personal and real property
and all rights to such  personal and real  property,  in each case,  whether now
owned or existing or  hereafter  acquired  or arising  and  regardless  of where
located  (all being  collectively  referred to as the  "Collateral")  including,
without  limitation,  all: (1) Accounts;  (2) Chattel Paper; (3) Commercial Tort
Claims,  including those specified on Schedule 2.7(A);  (4) Deposit Accounts and
cash and other monies and property of any Loan Party in the  possession or under
the  control  of  Agent,  or  any  Lender;  (5)  Documents  (including,  without
limitation,  all  manufacturers'  certificates  or  statements  of origin);  (6)
Equipment;   (7)  Fixtures;  (8)  General  Intangibles  (including  Intellectual
Property);  (9)  Goods;  (10)  Instruments;   (11)  Inventory;  (12)  Investment
Property; (13) Letter-of-Credit  Rights and Supporting  Obligations;  (14) other
personal  property  whether  or not  subject  to the  UCC;  and  (15)  Mortgaged
Property; together with all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain  information  relating to any of the property described
above or are  otherwise  necessary  or  helpful  in the  collection  thereof  or
realization  thereon;  and  Proceeds  and products of all or any of the property
described above.

                  (B)  LOAN  PARTIES  REMAIN  LIABLE.  Anything  herein  to  the
contrary  notwithstanding:  (a) each Loan Party shall  remain  liable  under the
contracts  and  agreements  included in the  Collateral  to the extent set forth
therein to perform  all of its duties  and  obligations  thereunder  to the same
extent as if this  Agreement or the other Loan  Documents had not been executed;
(b) the exercise by Agent of any of the rights under this Agreement or the other
Loan  Documents  shall not release  any Loan Party from any of their  respective
duties or obligations to the parties under the contracts and agreements included
in the Collateral; (c) neither Agent nor any Lender shall have any obligation or
liability  under the  contracts  and  agreements  included in the  Collateral by
reason of this  Agreement or the other Loan  Documents,  nor shall Agent nor any
Lender be  obligated  to perform  any of the  obligations  or duties of any Loan
Party  thereunder  or to take any action to  collect  or  enforce  any claim for
payment  assigned  under this  Agreement  or the other Loan  Documents;  and (d)
neither  Agent nor any Lender  shall have any  liability in contract or tort for
any Loan Party's acts or omissions.

         2.8. YIELD PROTECTION.

                  (A) CAPITAL ADEQUACY AND OTHER  ADJUSTMENTS.  In the event any
Lender shall have determined that the adoption after the date hereof of any law,
treaty,  governmental (or  quasi-governmental)  rule,  regulation,  guideline or
order regarding capital adequacy,  reserve  requirements or similar requirements
or compliance by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements  (whether or not having the force of law and whether or not failure
to comply  therewith  would be unlawful)  from any central bank or  governmental
agency or body having  jurisdiction  does or shall have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender or any corporation  controlling such Lender and thereby reducing the rate
of return on such Lender's or such corporation's capital as a consequence of its
obligations  hereunder,  then  Borrowers  shall  within  fifteen (15) days after
notice and demand from such Lender (together with the certificate referred to in
the next  sentence  and with a copy to Agent) pay to Agent,  for the  account of
such Lender,  additional  amounts  sufficient to compensate such Lender for such


                                     - 24 -


reduction.  A certificate as to the amount of such cost and showing the basis of
the  computation of such cost submitted by such Lender to Borrowing Agent shall,
absent manifest error, be final, conclusive and binding for all purposes.

                  (B) INCREASED LIBOR FUNDING COSTS.  If, after the date hereof,
the introduction of, change in or interpretation  of any law, rule,  regulation,
treaty or directive would impose or increase reserve requirements (other than as
taken into account in the definition of LIBOR) or otherwise increase the cost to
any Lender of making or maintaining a LIBOR Loan, then Borrowers shall from time
to time within  fifteen  (15) days after  notice and demand  from such  affected
Lenders (together with the certificate referred to in the next sentence and with
a copy to  Agent)  pay to  Agent,  for the  account  of such  affected  Lenders,
additional  amounts  sufficient  to compensate  such Lenders for such  increased
cost. A  certificate  as to the amount of such cost and showing the basis of the
computation of such cost submitted by such affected  Lenders to Borrowing  Agent
and Agent shall, absent manifest error, be final, conclusive and binding for all
purposes.

         2.9. TAXES.

                  (A) NO DEDUCTIONS. Any and all payments or reimbursements made
hereunder shall be made free and clear of and without  deduction for any and all
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto (all such taxes, levies,  imposts,  deductions,  charges or
withholdings and all liabilities with respect thereto referred to herein as "Tax
Liabilities";  excluding, however, taxes imposed on the net income of any Lender
or Agent by the  jurisdiction  under the laws of which  Agent or such  Lender is
organized  or doing  business  or any  political  subdivision  thereof and taxes
imposed  on its net  income by the  jurisdiction  of  Agent's  or such  Lender's
applicable lending office or any political subdivision). If any Loan Party shall
be required by law to deduct any such Tax Liabilities  from or in respect of any
sum payable  hereunder  to Agent or any Lender,  then the sum payable  hereunder
shall be  increased  as may be  necessary  so that,  after  making all  required
deductions,  Agent or such Lender  receives an amount  equal to the sum it would
have received had no such deductions been made.

                  (B) CHANGES IN TAX LAWS. In the event that,  subsequent to the
Closing  Date,  (1) any  changes  in any  existing  law,  regulation,  treaty or
directive or in the  interpretation  or  application  thereof,  (2) any new law,
regulation,  treaty or directive  enacted or any  interpretation  or application
thereof, or (3) compliance by a Lender with any request or directive (whether or
not  having  the  force  of law)  from any  Governmental  Authority,  agency  or
instrumentality:

                                    (a)  does  or  shall  subject  Agent  or any
Lender to any tax of any kind  whatsoever  with respect to this  Agreement,  the
other  Loan  Documents  or any Loans  made  hereunder,  or  change  the basis of
taxation of payments to Agent or such Lender of principal, fees, interest or any
other amount payable  hereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income  taxes,  imposed  generally  by federal,  state or
local taxing  authorities  with respect to interest or  commitment or other fees
payable  hereunder  or changes in the rate of tax on the  overall  net income of
Agent or such Lender); or


                                     - 25 -


                                    (b)  does or  shall  impose  on Agent or any
Lender any other condition or increased cost in connection with the transactions
contemplated  hereby  or  participations  herein;  and the  result of any of the
foregoing  is to  increase  the  cost to  Agent  or such  Lender  of  making  or
continuing  any Loan  hereunder,  as the case may be,  or to reduce  any  amount
receivable hereunder;

then, in any such case,  Borrowers  shall  promptly pay to Agent or such Lender,
upon its notice and demand, any additional amounts necessary to compensate Agent
or such  Lender,  on an after-tax  basis,  for such  additional  cost or reduced
amount  receivable,  as  determined by Agent or such Lender with respect to this
Agreement or the other Loan Documents.  If Agent or any Lender becomes  entitled
to claim any additional  amounts pursuant to this subsection,  it shall promptly
notify  Borrowing Agent of the event by reason of which Agent or such Lender has
become so  entitled  (with any such  Lender  concurrently  notifying  Agent).  A
certificate  as to any  additional  amounts  payable  pursuant to the  foregoing
sentence  submitted  by Agent or any Lender to  Borrowing  Agent  shall,  absent
manifest error, be final, conclusive and binding for all purposes.

                  (C) FOREIGN LENDERS. Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement are exempt from United States withholding tax or
are  subject  to  United  States  withholding  tax at a  reduced  rate  under an
applicable  statute or tax treaty shall provide to Borrowing Agent and Agent (1)
a properly  completed and executed  Internal Revenue Service Form W-8BEN or Form
W-8ECI or other  applicable  form,  certificate  or document  prescribed  by the
Internal  Revenue Service of the United States of America  certifying as to such
Foreign  Lender's  entitlement  to such exemption or reduced rate of withholding
with respect to payments to be made to such Foreign Lender under this Agreement,
(a  "Certificate  of  Exemption"),  or (2) a letter from any such Foreign Lender
stating  that it is not  entitled  to any  such  exemption  or  reduced  rate of
withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender under this
Agreement  and within  fifteen (15) days after a reasonable  written  request of
Borrowing Agent or Agent from time to time thereafter,  each Foreign Lender that
becomes a Lender under this  Agreement  shall provide a Certificate of Exemption
or a Letter of Non-Exemption to Borrowing Agent and Agent.

                      If a  Foreign  Lender is  entitled  to an  exemption  with
respect to payments to be made to such Foreign  Lender under this  Agreement (or
to a  reduced  rate of  withholding)  and  does not  provide  a  Certificate  of
Exemption to Borrowing  Agent and Agent within the time periods set forth in the
preceding  paragraph,  Loan Parties shall  withhold  taxes from payments to such
Foreign  Lender at the  applicable  statutory  rates and no Loan Party  shall be
required  to pay  any  additional  amounts  as a  result  of  such  withholding;
provided,  however,  that all such withholding shall cease upon delivery by such
Foreign Lender of a Certificate of Exemption to Borrowing Agent and Agent.

                  (D) MITIGATION.  If any Borrower is required to pay additional
amounts to any Lender or the Agent  pursuant  to  SUBSECTION  (A) OR (B) of this
Section,  then such Lender shall use reasonable  efforts  (consistent with legal
and regulatory restrictions) to change the jurisdiction of its lending office so
as to  eliminate  any  such  additional  payment  by  such  Borrower  which  may
thereafter  accrue,  if  such  change  in the  judgment  of such  Lender  is not
otherwise materially disadvantageous to such Lender.


                                     - 26 -


         2.10.  REQUIRED  TERMINATION AND PREPAYMENT.  If on any date any Lender
shall  have  reasonably  determined  (which  determination  shall be  final  and
conclusive and binding upon all parties) that the making or  continuation of its
LIBOR Loans has become  unlawful or  impossible  by compliance by such Lender in
good faith with any law,  governmental rule, regulation or order (whether or not
having the force of law and whether or not failure to comply  therewith would be
unlawful),  then, and in any such event,  that Lender shall promptly give notice
(by  telephone  confirmed  in  writing)  to  Borrowing  Agent  and Agent of that
determination.  Subject to prior  prepayment of LIBOR Loans as  contemplated  by
subsection  2.12,  the  obligation  of such Lender to make or maintain its LIBOR
Loans  during  any  such  period  shall  be  terminated  at the  earlier  of the
termination  of the Interest  Period then in effect or when  required by law and
Borrowers  shall no later than the  termination of the Interest Period in effect
at the time any such determination  pursuant to this subsection 2.10 is made or,
earlier when required by law,  repay or prepay all LIBOR Loans together with all
interest accrued thereon or convert all LIBOR Loans to Base Rate Loans.

         2.11. OPTIONAL  PREPAYMENT/REPLACEMENT  OF LENDERS. Within fifteen (15)
days after receipt by Borrowing Agent of: (a) written notice and demand from any
Lender  for  payment  of  additional  costs as  provided  in  subsection  2.8 or
subsection  2.9, or (b) written  notice of any Lender's  inability to make LIBOR
Loans as provided in subsection 2.10, (any such Lender demanding such payment or
having  such  inability  being  referred  to  herein as an  "Affected  Lender"),
Borrowing  Agent may, at its option notify Agent and such Affected Lender of its
intention  to take one of the actions set forth herein in  subparagraphs  (A) or
(B) below.

                  (A) REPLACEMENT OF AN AFFECTED  LENDER.  Borrowers may obtain,
at  Borrowers'  expense,  a  replacement  Lender  ("Replacement  Lender") for an
Affected Lender,  which Replacement  Lender shall be reasonably  satisfactory to
Agent. In the event Borrowers obtain a Replacement Lender that will purchase all
outstanding  Obligations owed to such Affected Lender and assume its Commitments
hereunder within ninety (90) days following notice of Borrowers' intention to do
so, the Affected  Lender shall sell and assign its Loans and Commitments to such
Replacement  Lender  in  accordance  with  the  provisions  of  subsection  9.5;
provided,  however,  Borrowers have (1) reimbursed  such Affected Lender for any
administrative  fee  payable  by such  Affected  Lender  to  Agent  pursuant  to
subsection 9.5 and, (2) in any case where such replacement  occurs as the result
of a  demand  for  payment  of  certain  costs  pursuant  to  subsection  2.8 or
subsection  2.9,  paid all  increased  costs for which such  Affected  Lender is
entitled to under subsection 2.8 or subsection 2.9 through the date of such sale
and assignment; or

                  (B) PREPAYMENT OF AN AFFECTED LENDER.  Borrowers may prepay in
full all outstanding  Obligations  owed to an Affected Lender and terminate such
Affected  Lender's  Commitments.   Borrowers  shall,  within  ninety  (90)  days
following  notice of their  intention to do so,  prepay in full all  outstanding
Obligations  owed to such Affected  Lender,  including  such  Affected  Lender's
increased costs for which it is entitled to  reimbursement  under this Agreement
through  the  date of such  prepayment  and  terminate  such  Affected  Lender's
Commitments.

         2.12.  COMPENSATION.  Borrowers shall promptly compensate Agent for the
benefit of Lenders (Agent's  calculation of such amounts shall,  absent manifest
error,  be  conclusive  and binding  upon all parties  hereto),  for any losses,
expenses and  liabilities  including,  without  limitation,  any loss (including


                                     - 27 -

interest paid) sustained by such Lender in connection with the  re-employment of
funds: (a) if for any reason (other than a default by any Lender) a borrowing of
any  LIBOR  Loan  does not  occur on a date  specified  therefor  in a Notice of
Borrowing or a telephonic  request of borrowing by Borrowing  Agent;  (b) if any
prepayment  of  LIBOR  Loans  occurs  on a date  that is not the last day of the
applicable  Interest  Period  (regardless  of the source of such  prepayment and
whether voluntary, by acceleration or otherwise); (c) if any prepayment of LIBOR
Loans is not made on any date  specified  in a  notice  of  prepayment  given by
Borrowers;  or (d) as a  consequence  of any other default by Borrowers to repay
their LIBOR Loans when required by the terms of this Agreement.

         2.13.  BOOKING OF LIBOR LOANS.  Each Lender may make, carry or transfer
LIBOR  Loans at, to, or for the  account  of,  any of its branch  offices or the
office of an affiliate of such Lender.

         2.14. ASSUMPTIONS CONCERNING FUNDING OF LIBOR LOANS. Calculation of all
amounts  payable to each Lender  under  subsection  2.12 shall be made as though
each Lender had actually  funded its relevant LIBOR Loan through the purchase of
a LIBOR  deposit  bearing  interest at LIBOR in an amount equal to the amount of
that LIBOR Loan and having maturity  comparable to the relevant  Interest Period
and through  the  transfer of such LIBOR  deposit  from an offshore  office to a
domestic office in the United States of America; provided,  however, each Lender
may fund each of its  LIBOR  Loans in any  manner it sees fit and the  foregoing
assumption  shall be utilized only for the  calculation of amounts payable under
subsection 2.12.

         2.15.  ENDORSEMENT;  INSURANCE CLAIMS. Each Borrower hereby constitutes
and appoints Agent and all Persons  designated by Agent for that purpose as such
Borrower's true and lawful  attorney-in-fact,  with power in the place and stead
of such Borrower and in the name of such Borrower (a) to endorse such Borrower's
name to any of the items of payment or proceeds  described  in  subsection  4.22
below and all proceeds of Collateral that come into Agent's  possession or under
Agent's  control,  including  without  limitation,  with  respect to any drafts,
Instruments,  Documents  and Chattel  Paper,  and (b) after the  occurrence  and
during the  continuance  of an Event of  Default  to  obtain,  adjust and settle
insurance  claims,  which are required to be paid to Agent. Each Borrower hereby
ratifies  and  approves  all  acts of  Agent  made  or  taken  pursuant  to this
subsection  2.15. Both the appointment of Agent as each Borrower's  attorney and
Agent's rights and powers are coupled with an interest and are  irrevocable,  so
long  as  any  of  the  Commitments  hereunder  shall  be in  effect  and  until
indefeasible payment in full, in cash, of all Obligations.

SECTION 3     CONDITIONS TO LOANS

         3.1. CLOSING DATE.3.2. The obligations of Agent and each Lender to make
Loans on the Closing  Date are subject to  satisfaction  of all of the terms and
conditions  set forth  below and the  accuracy  of all the  representations  and
warranties  of Borrowers  and the other Loan Parties set forth herein and in the
other Loan Documents:

                  (A) CLOSING DELIVERIES. Agent shall have received, in form and
substance  reasonably  satisfactory  to Agent,  all documents,  instruments  and
information  identified on the transaction checklist attached hereto as Schedule
3.1(A) and all other agreements,  notes, certificates,  orders,  authorizations,
financing statements,  mortgages and other documents which Agent may at any time
reasonably request.


                                     - 28 -


                  (B) SECURITY INTERESTS. Agent shall have received satisfactory
evidence that all security  interests and liens granted to Agent for the benefit
of Agent and Lenders pursuant to this Agreement or the other Loan Documents have
been duly  perfected and  constitute  first  priority  liens on the  Collateral,
subject only to Permitted Encumbrances.

                  (C) CLOSING  DATE  AVAILABILITY.  After  giving  effect to the
consummation of the transactions  contemplated hereunder on the Closing Date and
the payment by  Borrowers  of all costs,  fees and  expenses  relating  thereto,
Undrawn Availability under the First Lien Loan Agreement plus the Borrowers cash
on hand shall not be less than $10,000,000.

                  (D)  REPRESENTATIONS  AND WARRANTIES.  The representations and
warranties contained herein and in the Loan Documents shall be true, correct and
complete in all  material  respects  on and as of the  Closing  Date to the same
extent as though made on and as of that date,  except for any  representation or
warranty  limited by its terms to a specific  date and taking  into  account any
amendments to the Schedules or Exhibits as a result of any  disclosures  made by
Loan Parties to Agent after the Closing Date and approved by Agent.

                  (E) FEES.  Borrowers  shall have paid all fees due to Agent or
any Lender and payable on the Closing Date.

                  (F) NO DEFAULT. No event shall have occurred and be continuing
or would result from funding the Loan that would  constitute an Event of Default
or a Default.

                  (G)  PERFORMANCE  OF  AGREEMENTS.  Each Loan Party  shall have
performed in all material  respects all  agreements and satisfied all conditions
which any Loan  Document  provides  shall be  performed  by it on or before  the
Closing Date.

                  (H) NO PROHIBITION. No order, judgment or decree of any court,
arbitrator or  Governmental  Authority shall purport to enjoin or restrain Agent
or any Lender from making any Loans.

                  (I) NO  LITIGATION.  There  shall  not be  pending  or, to the
knowledge of any Loan Party,  threatened,  any action,  charge,  claim,  demand,
suit,  proceeding,  petition,  governmental  investigation  or  arbitration  by,
against or affecting any Loan Party or any of its  Subsidiaries  or any property
of any Loan  Party or any of its  Subsidiaries  that has not been  disclosed  to
Agent by Loan Parties in writing,  and there shall have occurred no  development
in  any  such  action,  charge,  claim,  demand,  suit,  proceeding,   petition,
governmental  investigation  or arbitration  that, in the reasonable  opinion of
Agent, would reasonably be expected to have a Material Adverse Effect.

                  (J) DELIVERY OF MERGER  DOCUMENTS.  Agent has received or will
receive on the Closing Date, complete copies of all Merger Documents  (including
all exhibits,  schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any) and all amendments  thereto,  waivers relating thereto
and other side letters or agreements  affecting the terms  thereof.  Each of the
foregoing  shall be in form and substance  reasonably  satisfactory to Agent and
none of such documents and agreements  shall have been amended or  supplemented,


                                     - 29 -


nor shall any of the provisions  thereof have been waived,  except pursuant to a
written  agreement or instrument  which has  heretofore  been  delivered to, and
approved  in  writing  by,  Agent.  Each  of  the  conditions  precedent  to the
consummation  of the  Merger as set  forth in the  Merger  Documents  (excluding
receipt of the Merger  Consideration)  shall have been satisfied in all material
respects to the reasonable  satisfaction  of the Agent,  and not waived,  except
with the consent of the Agent,  and the  Certificate  of Merger  shall have been
filed with, and pre-cleared by, the Secretary of State of Missouri. Shareholders
holding at least 66-2/3% of the Equity  Interests of Collins (on a fully diluted
basis)  shall have voted in favor of the Merger and not elected to exercise  any
appraisal or similar rights.

                  (K) FIRST LIEN DEBT. Agent has received or will receive on the
Closing Date complete  copies of the First Lien Loan  Documents  (including  all
exhibits,  schedules  and  disclosure  letters  referred to therein or delivered
pursuant thereto, if any) and all amendments  thereto,  waivers relating thereto
and other side letters or  agreements  affecting the terms  thereof.  All of the
foregoing  shall be in form and substance  reasonably  satisfactory to Agent and
none of such documents and agreements  shall have been amended or  supplemented,
nor shall have any of the provisions  thereof been waived,  except pursuant to a
written  agreement or  instrument  which as  heretofore  been  delivered to, and
approved in writing by, Agent. The  transactions  contemplated by the First Lien
Loan Documents shall have been  consummated in accordance with the terms thereof
including  and First  Lien  Agent  shall  have  entered  into the  Intercreditor
Agreement with Agent.

                  (L) EQUITY CONTRIBUTION. Agent has received or will receive on
the  Closing  Date  complete  copies  of the  Equity  Documents  (including  all
exhibits,  schedules  and  disclosure  letters  referred to therein or delivered
pursuant thereto, if any) and all amendments  thereto,  waivers relating thereto
and other side letters or  agreements  affecting the terms  thereof.  All of the
foregoing  shall be in form and substance  reasonably  satisfactory to Agent and
none of such documents and agreements  shall have been amended or  supplemented,
nor shall have any of the provisions  thereof been waived,  except pursuant to a
written  agreement or  instrument  which as  heretofore  been  delivered to, and
approved in writing  by,  Agent.  The  transactions  contemplated  by the Equity
Documents  shall have been  consummated  in  accordance  with the terms  thereof
including,  without  limitation,  the  receipt by CS  Acquisition  of gross cash
proceeds of not less than $32,500,000 and CS Acquisition shall have utilized the
full amount of such gross cash  proceeds to make  payments  owing in  connection
with the Transaction  prior to the utilization by CS Acquisition of any proceeds
of Loans for such purpose.

                  (M) COLLATERAL  AUDIT.  Agent shall have received a collateral
audit  conducted  by  it or  its  representatives  of  Loan  Parties'  business,
operations, financial condition, assets and systems with results satisfactory to
Agent.

                  (N) MANAGEMENT  MEETINGS.  Agent or its representatives  shall
have had the opportunity to meet with Loan Parties'  management to discuss their
business,  its  business  plan,  any issues  raised by the  collateral  audit or
appraisals,  or other  matters  that may arise in  connection  with  Agent's due
diligence efforts.


                                     - 30 -


                  (O)  ENVIRONMENTAL  AUDIT AND  ASSESSMENT.  Agent  shall  have
received an  environmental  audit report in scope and substance  satisfactory to
Agent prepared by an environmental  engineering firm acceptable to Agent. Agent,
in  its  sole  discretion,  shall  be  satisfied  that  there  are  no  existing
environmental  liabilities  that  may  have a  Material  Adverse  Effect  on the
prospects of any Loan Party.

                  (P)  INSURANCE.  Agent  shall have  received  certificates  of
insurance, insurance policies or binders for insurance with respect to each Loan
Party in types and amounts,  under terms and  conditions  satisfactory  to Agent
with  appropriate  endorsements  naming  Agent as loss payee  and/or  additional
insured, as appropriate.

                  (Q)  FINANCIAL  INFORMATION.  Agent and each Lender shall have
received an updated  business plan and financial  and other  information,  as it
shall reasonably require with respect to each Loan Party, the foregoing to be in
form and substance satisfactory to Agent.

                  (R) MATERIAL  ADVERSE  CHANGE.  Since October 31, 2005,  there
shall have been no material adverse change in the business,  operations, assets,
properties,  liabilities,  profits,  prospects or financial position of the Loan
Parties taken as a whole as determined by the Agent in its sole discretion.

                  (S)  FEDERAL AND  MISSOURI  STATE LAW  COMPLIANCE.  The Merger
Documents  and the  transactions  contemplated  thereby  shall  comply  with all
applicable contract and securities laws (including,  without limitation, federal
and Missouri state securities and corporate laws and regulations).

                  (T) SOLVENCY. Each Loan Party shall have demonstrated to Agent
that after giving effect to the Transactions,  such Loan Party is solvent,  able
to meet its  obligations as they mature and has sufficient  capital to enable it
to operate its business.

                  (U)  MANAGEMENT  AGREEMENT.  Collins  shall have  entered into
management services agreements with (x) AIP (the "AIP Management Agreement") and
(y) BNS, which agreements  shall be in form and substance  satisfactory to Agent
in its sole discretion.

                  (V)  STRUCTURE  OF  LOAN   PARTIES.   Each  Loan  Party's  tax
assumptions,  capital,  organization,  ownership  and legal  structure  shall be
satisfactory  to Agent and not impair the  ability of Agent to enforce its claim
against  the  Collateral  and all  Collateral,  except  as  otherwise  expressly
provided  in this  Agreement,  must be freely  pledgeable  as  security  for the
Obligations.

                  (W) FEDERAL  COMPLIANCE.  No Loan Party is  sanctioned  or has
received  notice that it is under  investigation  under any  Federal  regulation
governing foreign asset control, or any other comparable statute or regulation.

                  (X) INTERCREDITOR AGREEMENTS. Agent shall have entered into an
intercreditor  agreement  with  any  holder  of a Lien  in any  chassis  that is
Collateral,  establishing  the  priority of the Lien in such  Collateral  to the
satisfaction of Agent and Lenders.

                  (Y) REPAYMENT OF EXISTING  INDEBTEDNESS.  All  Indebtedness of
any Loan Party not expressly  permitted  hereunder shall have been terminated or
contemporaneously  paid in full  (other  than  the  Indebtedness  set  forth  on


                                     - 31 -


Schedule 3.1(Y),  which shall be defeased in a manner satisfactory to Agent) and
any Liens on the assets of any Loan Party securing such Indebtedness  shall have
been  terminated.  Agent shall have  received  evidence,  in form and  substance
reasonably  satisfactory  thereto, with respect to all Indebtedness set forth on
Schedule  3.1(Y) that the Loan Parties  have (i) directed the trustee  under the
relevant  Indebtedness to deliver an "irrevocable  notice of redemption" to each
holder  of such  Indebtedness  in  accordance  with the  terms of the  documents
governing such Indebtedness,  stating that such Indebtedness will be redeemed no
later than the 30th day  following  the Closing  Date,  (y)  effected a covenant
defeasance  and (z)  irrevocably  deposited  cash with the  trustee  under  such
Indebtedness  sufficient  to  effect  the  redemption  of all such  Indebtedness
(including any accrued and unpaid  interest  through the  applicable  redemption
date) in accordance with the terms thereof.

                  (Z) TRUST  AGREEMENT.  Agent  shall  have  received  the Trust
Agreement, duly executed and delivered by the parties thereto.

                  (AA)  WARRANTY  PLANS.  Collins  shall have  provided  Agent a
copies  of its  standard  warranty  plans,  which  plans  shall  be in form  and
substance reasonably satisfactory to Agent.

         3.2. [INTENTIONALLY OMITTED].

SECTION 4     REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS

         To induce Agent and each Lender to enter into the Loan Documents and to
make the Loans, each Loan Party represents,  warrants and covenants to Agent and
each  Lender that the  following  statements  are and will be true,  correct and
complete on the Closing  Date after giving  effect to  Transaction  and,  unless
specifically  limited,  shall  remain  so for so long as any of the  Commitments
hereunder shall be in effect and until indefeasible payment in full, in cash, of
all Obligations:

         4.1. ORGANIZATION, POWERS, CAPITALIZATION.

                  (A)  ORGANIZATION  AND POWERS.  Each of the Loan Parties is an
entity duly organized,  validly  existing and in good standing under the laws of
its  jurisdiction of organization and qualified to do business in all states and
other jurisdictions where such qualification is required except where failure to
be so  qualified  could not  reasonably  be expected to have a Material  Adverse
Effect.  Each of the Loan Parties has all  requisite  power and authority to own
and operate  its  properties,  to carry on its  business  as now  conducted  and
proposed  to be  conducted  and to enter  into each Loan  Document.  The name of
(within  the  meaning  of  Section  9-503  of  the  UCC)  and   jurisdiction  of
organization  of each Loan  Party is set  forth on  Schedule  4.1(A).  The chief
executive  office of each Loan  Party is  located at the  address  indicated  on
Schedule 4.1(A).  Each Loan Party's  organizational  identification  numbers, if
any, are identified on Schedule 4.1(A).

                  (B)  CAPITALIZATION.  The authorized  capital stock of each of
the Loan  Parties and its  respective  Subsidiaries  is as set forth on Schedule
4.1(B), including all preemptive or other outstanding rights, options, warrants,
conversion rights or similar  agreements or  understandings  for the purchase or
acquisition  from  any  Loan  Party  of any  shares  of  capital  stock or other


                                     - 32 -


securities or equity  interests of any such entity.  All issued and  outstanding
shares of capital  stock or other  equity  interests of each of the Loan Parties
are duly  authorized and validly  issued,  fully paid,  nonassessable,  free and
clear of all Liens  other  than  those (x) in favor of Agent for the  benefit of
Agent and Lenders and (y) in favor of First Lien Agent, for the benefit of First
Lien Agent and the First Lien  Lenders,  so long as such Liens are in compliance
with the Intercreditor Agreement, and such shares were issued in compliance with
all  applicable  state and federal laws  concerning  the issuance of securities.
Each Loan Party will  promptly  notify  Agent of any change in its  ownership or
organizational structure.

         4.2. AUTHORIZATION OF BORROWING,  NO CONFLICT.  Each Loan Party has the
power and authority to incur the Obligations and to grant security  interests in
the Collateral. On the Closing Date, the execution,  delivery and performance of
the Loan  Documents  by each Loan Party  signatory  thereto  will have been duly
authorized by all necessary  corporate and  shareholder  action.  The execution,
delivery and performance by each Loan Party of each Loan Document to which it is
a party  and the  consummation  of the  transactions  contemplated  by the  Loan
Documents by each Loan Party do not contravene any applicable law, the corporate
charter  or bylaws or other  organizational  documents  of any Loan Party or any
material agreement or order by which any Loan Party or any Loan Party's property
is bound and will not (x) result in or require the creation or imposition of any
Lien of any nature  whatsoever  upon any properties or assets of any Loan Party,
other than Permitted  Encumbrances,  or (y) require any approval of the interest
holders of any Loan  Party or any  approval  or consent of any Person  under any
material  contractual  obligation  of any Loan  Party,  other than  consents  or
approvals  that have been  obtained and that are still in force and effect.  The
Loan  Documents are the legally valid and binding  obligations of the applicable
Loan  Parties  respectively,  each  enforceable  against  the Loan  Parties,  as
applicable, in accordance with their respective terms.

         4.3.  FINANCIAL  CONDITION.  All financial  statements  concerning Loan
Parties  furnished  by or on  behalf  of Loan  Parties  to Agent  or any  Lender
pursuant  to  this  Agreement  have  been  prepared  in  accordance   with  GAAP
consistently  applied  throughout  the  periods  involved  (except as  disclosed
therein) and present fairly the financial  condition of the Loan Parties covered
thereby as at the dates  thereof  and the  results of their  operations  for the
periods  then ended.  The Pro Forma was  prepared by Loan  Parties  based on the
unaudited  balance  sheet  of  Collins  dated  September  30,  2006  as  if  the
Transaction had been consummated. The Projections delivered by Loan Parties will
be prepared in light of the past operations of the business of Loan Parties, and
such  Projections  will  represent  the good faith  estimate of Loan Parties and
their  senior  management,  as  of  the  date  such  Projections  are  delivered
concerning  the most  probable  course  of their  business  as of the date  such
Projections are delivered.  The Loan Parties shall not be required to update the
Projections  following their  delivery,  other than any requirement set forth in
the Reporting Rider to deliver Projections for a subsequent period.

         4.4.  INDEBTEDNESS  AND  LIABILITIES.  As of the Closing  Date, no Loan
Party has (a) any Indebtedness  except as reflected on the Pro Forma; or (b) any
Liabilities  other  than as  reflected  on the Pro Forma or as  incurred  in the
ordinary course of business following the date of the Pro Forma. Borrowing Agent
shall promptly deliver copies of all notices given or received by any Loan Party
or any of  their  Affiliates  with  respect  to  noncompliance  with any term or
condition  related  to the  First  Lien  Debt or other  Indebtedness,  and shall
promptly  notify Agent of any  potential or actual Event of Default with respect
to the First Lien Debt or other Indebtedness.


                                     - 33 -


         4.5. COLLATERAL WARRANTIES AND COVENANTS.

                  (A) ACCOUNTS  WARRANTIES  AND  COVENANTS.  Except as otherwise
disclosed to Agent in writing,  as to each of Loan Party's existing Accounts and
each of its hereafter  arising Accounts that: at the time of its creation,  such
Account  is  a  valid,   bona  fide   obligation,   representing  an  undisputed
indebtedness  incurred by the Account Debtor (and any other Person  obligated on
such  Account)  for  property  actually  sold  and  delivered  or  for  services
completely  rendered;  there  are no  defenses,  setoffs,  offsets,  claims,  or
counterclaims,  genuine or otherwise,  against such Account  except as otherwise
included in a Loan  Party's  reserves  and  disclosed in writing to Agent on the
accounts  receivable  schedules delivered by Loan Parties to Agent; such Account
does not  represent a sale to a Subsidiary or an  Affiliate,  or a  consignment,
sale or return or a bill and hold  transaction;  the amount  represented by Loan
Parties  to  Agent as owing by each  Account  Debtor  (and by each of the  other
Persons  obligated on such Account) is, or will be, the correct amount  actually
and  unconditionally  owing,  to the  knowledge  of any Loan Party no  agreement
exists  permitting  any other  deduction or discount  other than  agreements set
forth on Schedule 4.5(A);  the applicable Loan Party is the lawful owner of such
Account and has the right to assign the same to Agent,  for the benefit of Agent
and Lenders (other than to the extent  assignment of such Account may be limited
by the Federal  Assignment  of Claims Act of 1940 as amended (31 U.S.C.  Section
3727 et seq.) or any  applicable  statute  or  municipal  ordinance  of  similar
purpose  and  effect);  such  Account is free of all Liens,  other than those in
favor of (x) Agent, on behalf of itself and Lenders and (y) First Lien Agent, on
behalf  of itself  and the  First  Lien  Lenders,  so long as such  Liens are in
compliance with the Intercreditor Agreement,  and such Account constitutes,  the
legally valid and binding  obligation of the applicable  Account Debtor (and any
other  Person  obligated on such  Account) and is due and payable in  accordance
with its terms.

                  (B) INVENTORY  WARRANTIES AND  COVENANTS.  Except as otherwise
disclosed to Agent in writing, all of each Loan Party's Inventory is of good and
merchantable quality, free from any defects that would reasonably be expected to
have a Material Adverse Effect,  such Inventory is not subject to any licensing,
patent,  trademark,  trade name or  copyright  agreement  with any  Person  that
restricts such Loan Party's  ability to  manufacture  and/or sell the Inventory.
The  completion  and  manufacturing  process of such Inventory by a Person other
than a Loan Party would be permitted under any contract to which a Loan Party is
a party or to which the Inventory is subject. None of any Loan Party's Inventory
has been or will be produced in  violation of the Fair Labor  Standards  Act and
subject to the so-called "hot goods" provisions contained in Title 29 U.S.C. 215
or in violation of any other law. All  inventory  and products  owned by Persons
other than a Loan Party and located on any premises owned,  leased or controlled
by a Loan Party,  shall be separately and  conspicuously  identified as such and
shall be  segregated  from such  Loan  Party's  own  Inventory  located  at such
premises.

                  (C) EQUIPMENT  WARRANTIES AND  COVENANTS.  Each Loan Party has
maintained  and shall cause all of its Equipment to be maintained  and preserved
in good  working  order,  ordinary  wear and tear  excepted,  and all  necessary
replacements  of and  repairs  thereto  shall  be  made so that  the  value  and
operating efficiency of the Equipment shall be maintained and preserved. None of
any Loan  Party's  Equipment  is  covered  by any  certificate  of title and the
applicable  Loan Party shall promptly notify Agent to the extent such Loan Party
obtains any  Equipment  covered by any  certificate  of title.  Upon  request of
Agent,  each Loan Party shall promptly  deliver to Agent or to First Lien Agent,
as bailee for Agent, any and all  certificates of title,  applications for title
or similar  evidence of ownership of all of its  Equipment and shall cause Agent
to be named as lienholder on any such  certificate of title or other evidence of
ownership.  Each Loan Party shall  promptly  inform Agent of any additions to or


                                     - 34 -


deletions  from the  Equipment  and no Loan Party shall permit any such items to
become  Fixtures to real estate  other than real estate  subject to mortgages or
deeds of trust in favor of Agent, for the benefit of itself and Lenders.

                  (D) CHATTEL PAPER WARRANTIES AND COVENANTS.  As of the Closing
Date, no Loan Party holds any Chattel Paper and does not anticipate  holding any
Chattel Paper in the ordinary course of their  business.  To the extent any Loan
Party  holds or  obtains  any  Chattel  Paper,  the  applicable  Loan Party will
promptly (i) deliver to Agent or to First Lien Agent,  as bailee for Agent,  all
Tangible   Chattel  Paper  duly  endorsed  and   accompanied  by  duly  executed
instruments  of transfer or  assignment,  all in form and  substance  reasonably
satisfactory  to Agent and (ii) provide Agent or First Lien Agent, as bailee for
Agent, with Control of all Electronic  Chattel Paper, by having Agent identified
as the assignee of the Records(s)  pertaining to the single  authoritative  copy
thereof and  otherwise  complying  with the  applicable  elements of Control set
forth in the UCC.  Borrowing  Agent  will also  deliver  to Agent  all  security
agreements  securing  any  Chattel  Paper and execute  UCC  financing  statement
amendments  assigning to Agent any UCC  financing  statements  filed by any Loan
Party in  connection  with such security  agreements.  Each Loan Party will mark
conspicuously all Chattel Paper with a legend, in form and substance  reasonably
satisfactory to Agent, indicating that such Chattel Paper is subject to the Lien
of Agent.

                  (E) INSTRUMENTS WARRANTIES AND COVENANTS. Each Loan Party will
deliver to Agent or to First Lien Agent, as bailee for Agent, all Instruments it
holds or obtains duly endorsed and  accompanied by duly executed  instruments of
transfer or assignment,  all in form and substance  reasonably  satisfactory  to
Agent.  Each Loan  Party  will also  deliver  to Agent all  security  agreements
securing  any  Instruments  and  execute  UCC  financing  statement   amendments
assigning  to Agent any UCC  financing  statements  filed by each Loan  Party in
connection with such security agreements.

                  (F) INVESTMENT  PROPERTY  WARRANTIES AND COVENANTS.  Each Loan
Party will take any and all  actions  necessary  (or  required or  requested  by
Agent), from time to time, to (i) cause Agent or First Lien Agent, as bailee for
Agent, to obtain exclusive Control of any Investment Property owned by each Loan
Party in a  manner  reasonably  acceptable  to Agent  and (ii)  obtain  from any
issuers of such Investment  Property and such other Persons,  for the benefit of
Agent,  written  confirmation of Agent's  Control over such Investment  Property
upon terms and conditions reasonably acceptable to Agent

                  (G) LETTERS OF CREDIT  WARRANTIES AND COVENANTS.  If requested
by Agent,  each Loan Party will  deliver  to Agent or to First  Lien  Agent,  as
bailee  for  Agent,  all  Letters  of  Credit  under  which a Loan  Party is the
beneficiary  or is  otherwise  entitled to receive  proceeds  duly  endorsed and
accompanied by duly executed instruments of transfer or assignment,  all in form
and  substance  reasonably  satisfactory  to Agent.  Each Loan  Party  will also
deliver to Agent all security agreements securing any such Letters of Credit and
execute UCC financing statement  amendments assigning to Agent any UCC financing
statements filed by any Loan Party in connection with such security  agreements.


                                     - 35 -


Each  Loan  Party  will  take any and all  actions  necessary  (or  required  or
requested by Agent),  from time to time, to cause Agent or First Lien Agent,  as
bailee for Agent, to obtain  exclusive  Control of any  Letter-of-Credit  Rights
owned by any Loan Party in a manner acceptable to Agent.

                  (H) GENERAL  INTANGIBLES  WARRANTIES AND COVENANTS.  Each Loan
Party shall use its best efforts to obtain any  consents,  waivers or agreements
necessary to enable  Agent to exercise  remedies  hereunder  and under the other
Loan  Documents with respect to any of any Loan Party's rights under any General
Intangibles, including each Loan Party's rights as a licensee of custom designed
computer software.

                  (I) INTELLECTUAL PROPERTY WARRANTIES AND COVENANTS.  Each Loan
Party  owns,  is  licensed  to use or  otherwise  has  the  right  to  use,  all
Intellectual  Property  used in or necessary  for the conduct of its business as
currently  conducted,  and all  such  Intellectual  Property  is  identified  on
Schedule  4.5(I).  Except  as  set  forth  on  Schedule  4.5(I),  there  are  no
restrictions  on any Loan  Party's  right to create a Lien in such  Intellectual
Property nor in Agent's right to perfect and enforce such Lien.  Each Loan Party
shall concurrently  herewith deliver to Agent each Copyright Security Agreement,
Patent  Security  Agreement  and  Trademark  Security  Agreement  and all  other
documents,  instruments  and other items as may be  necessary  for Agent to file
such agreements with the U.S. Copyright Office and the U.S. Patent and Trademark
Office.  The  Copyrights,  Patents  and  Trademarks  listed  on  the  respective
schedules to each of the Copyright Security Agreement, Patent Security Agreement
and Trademark Security Agreement  constitute all of the Patents,  Trademarks and
government  registered  Copyrights  owned  by any Loan  Party.  If,  before  the
Obligations are  indefeasibly  paid in full, in cash, any Loan Party acquires or
becomes  entitled to any new or  additional  Patents,  Trademarks  or  federally
registered  Copyrights,  or rights thereto,  such Loan Party shall give to Agent
prompt written notice  thereof,  and shall amend the schedules to the respective
security  agreements  or enter into new or  additional  security  agreements  to
include any such new Patents,  Trademarks or government  registered  Copyrights.
Each Loan  Party  shall:  (a)  prosecute  diligently  any  copyright,  patent or
trademark application at any time pending; (b) make application for registration
or issuance of all new copyrights,  patents and trademarks as reasonably  deemed
appropriate  by such Loan Party;  (c)  preserve  and  maintain all rights in the
Intellectual  Property  material to the  operation  of the  business of the Loan
Parties;  and (d) use its best  efforts  to  obtain  any  consents,  waivers  or
agreements  necessary to enable  Agent to exercise its remedies  with respect to
the  Intellectual  Property.  No Loan Party shall abandon any material  right to
file a  copyright,  patent or  trademark  application  nor shall any Loan  Party
abandon any material  pending  copyright,  patent or trademark  application,  or
Copyright,  Patent or Trademark  without the prior written consent of Agent. All
government  registered  Intellectual  Property owned by any Loan Party is valid,
subsisting  and   enforceable   and  all  filings   necessary  to  maintain  the
effectiveness of such registrations have been made. The execution,  delivery and
performance  of this  Agreement  by any Loan Parties will not violate or cause a
default  under any of the  Intellectual  Property or any agreement in connection
therewith.

                  (J) COMMERCIAL  TORT CLAIMS  WARRANTIES AND COVENANTS.  Except
for matters disclosed on Schedule 2.7(A), no Loan Party owns any Commercial Tort
Claims.  Each Loan  Party  shall  advise  Agent  promptly  upon such Loan  Party
becoming aware that it owns any additional  Commercial Tort Claims. With respect
to any new Commercial  Tort Claim,  the  applicable  Loan Party will execute and


                                     - 36 -


deliver such documents as Agent deems  necessary to create,  perfect and protect
Agent's security interest in such Commercial Tort Claim.

                  (K) DEPOSIT ACCOUNTS;  BANK ACCOUNTS WARRANTIES AND COVENANTS.
Schedule  4.5(K) sets forth the account  numbers  and  locations  of all Deposit
Accounts or other bank accounts of each Loan Party.

                  (L) BAILEES.  Except as disclosed on Schedule 4.5(L),  none of
the  Collateral is in the  possession of any  consignee,  bailee,  warehouseman,
agent or  processor.  No  Collateral  shall at any time be in the  possession or
control of any  warehouse,  bailee or any of Loan Parties'  agents or processors
without  Agent's  prior  written  consent  and  unless  Agent,  if Agent  has so
requested,  has received  warehouse  receipts or bailee lien waivers  reasonably
satisfactory  to Agent prior to the  commencement of such possession or control.
If any  Collateral is at any time in the possession or control of any warehouse,
bailee or any of Loan Parties' agents or processors, such Loan Party shall, upon
the request of Agent, notify such warehouse,  bailee,  agent or processor of the
Liens in favor of Agent,  for the benefit of Agent and Lenders,  created hereby,
shall  instruct  such Person to hold all such  Collateral  for  Agent's  account
subject to Agent's instructions,  and shall obtain such Person's acknowledgement
that it is holding the Collateral for Agent's benefit.

                  (M) COLLATERAL DESCRIPTION; USE OF COLLATERAL. Each Loan Party
will furnish to Agent, from time to time upon request,  statements and schedules
further  identifying,  updating,  and  describing  the Collateral and such other
information,  reports  and  evidence  concerning  the  Collateral,  as Agent may
reasonably  request,  all in reasonable detail. No Loan Party will use or permit
any  Collateral  to be used  unlawfully  or in  violation  of any  provision  of
applicable law, or any policy of insurance covering any of the Collateral.

                  (N) COLLATERAL FILING REQUIREMENTS;  COLLATERAL RECORDS.  None
of the  Collateral  is of a type in which Liens may be  registered,  recorded or
filed under,  or notice thereof given under,  any federal  statute or regulation
except for  Collateral  described  on the  schedules to the  Copyright  Security
Agreement,  the Patent Security Agreement and the Trademark Security  Agreement.
Each Loan Party  shall  promptly  notify  Agent in writing  upon  acquiring  any
interest  hereafter  in  Collateral  that  is of a  type  where  a  Lien  may be
registered,  recorded of filed under, or notice thereof given under, any federal
statute or  regulation.  Each Loan Party shall keep full and accurate  books and
records  relating to the Collateral and shall stamp or otherwise mark such books
and records in such manner as Agent may reasonably  request to indicate  Agent's
Liens in the Collateral, for the benefit of Agent and Lenders.

                  (O) FEDERAL  CLAIMS.  Together  with the  reports  required by
subparagraph (5) of the Reporting  Rider,  each Loan Party shall notify Agent of
any Collateral  which  constitutes a claim against the United States of America,
or any State or  municipal  government  or any  department,  instrumentality  or
agency  thereof,  the  assignment  of which claim is  restricted  by law. If the
aggregate  amount of  Collateral  which  constitutes  a claim against the United
States of  America,  or any State or  municipal  government  or any  department,
instrumentality  or agency thereof,  the assignment of which claim is restricted
by law,  exceeds  $7,500,000,  then upon the  request of Agent,  each Loan Party
shall take such steps as may be necessary to comply with any applicable  federal
assignment of claims laws and other comparable laws.


                                     - 37 -


                  (P) AGENT  AUTHORIZED.  Each Loan Party hereby authorizes and,
until such time as the Obligations are indefeasibly paid in full, in cash, shall
continue  to  authorize  Agent to file  one or more  financing  or  continuation
statements, and amendments thereto (or similar documents required by any laws of
any  applicable  jurisdiction),  relating  to all or any part of the  Collateral
without the  signature of such Loan Party and hereby  specifically  ratifies all
such actions previously taken by Agent.

                  (Q)  Invoices.  No Borrower  will use any invoices  other than
invoices in the form delivered to Agent prior to the Closing Date without giving
Agent 30 days' prior notice of the  intended use of a different  form of invoice
together with a copy of such  different  form.  Upon the request of Agent,  each
Borrower  shall  deliver  to  Agent,  at  such  Borrower's  expense,  copies  of
customers'  invoices or the equivalent,  original shipping and delivery receipts
or other proof of delivery,  customers' statements,  customer address lists, the
original  copy  of  all  documents,  including  without  limitation,   repayment
histories  and present  status  reports,  relating  to  Accounts  and such other
documents and information relating to the Accounts as Agent shall specify.

         4.6. NAMES AND  LOCATIONS.  Schedule 4.6 sets forth (a) all legal names
and all other names (including trade names, fictitious names and business names)
under  which any Loan  Party  currently  conducts  business,  or has at any time
during the past five years conducted business,  (b) the name of any entity which
any Loan Party has  acquired in whole or in part or from whom any Loan Party has
acquired a  significant  amount of assets  within the past five  years,  (c) the
location of each Loan  Party's  principal  place of  business,  (d) the state or
other  jurisdiction of organization for each Loan Party and sets forth each Loan
Party's organizational identification number or specifically designates that one
does not exist, (e) the location of each Loan Party's books and records, (f) the
location  of all  other  offices  of each  Loan  Party,  and (g) all  Collateral
locations  (designating Inventory and Equipment locations and indicating between
owned,  leased,  warehouse,  storage,  and processor  locations).  The locations
designated  on  Schedule  4.6 are the Loan  Parties'  sole  locations  for their
respective  businesses  and the  Collateral.  Each Loan Party will give Agent at
least thirty (30) days advance  written  notice of any: (a) change of name or of
any new trade name or fictitious  business name of any Loan Party, (b) change of
principal place of business of any Loan Party, (c) change in the location of any
Loan Party's books and records or the Collateral,  (d) new location for any Loan
Party's books and records or the Collateral,  or (e) changes in any Loan Party's
state or other jurisdiction of organization or its organizational identification
number.

         4.7. TITLE TO PROPERTIES;  LIENS. Each Loan Party has good,  sufficient
and  legal  title to,  or  interest  in,  all of the  Collateral  (and any other
material properties and assets, if any) and will have good, sufficient and legal
title of all after-acquired  Collateral (and any other  after-acquired  material
properties and assets, if any), in each case, free and clear of all Liens except
for the Permitted  Encumbrances.  Agent has a valid,  perfected and,  except for
Liens set forth in clauses  (a),  (c),  (d),  (e) and (j) of the  definition  of
Permitted  Encumbrances,  first priority Liens in the  Collateral,  securing the
payment of the  Obligations,  and such Liens are  entitled to all of the rights,
priorities and benefits  afforded by the UCC or other  applicable law as enacted
in any relevant  jurisdiction  which relates to perfected  Liens. The applicable
Loan Party owns good and marketable, indefeasible fee simple title to all of the
real estate described on Schedule 4.7(a-1) hereto as owned by it and has a valid
leasehold  interest in all of the real  estate  described  on Schedule  4.7(a-2)
hereto  as  leased  by it,  in each  case  free and  clear of all Liens or other
encumbrances of any kind,  except as described in Schedule  4.7(a-1) or 4.7(a-2)
as  applicable  and  subject  to  clauses  (a),  (d),  (g),  (h)  and (j) of the
definition of Permitted  Encumbrances.  Schedules  4.7(a-1) and 4.7(a-2)  hereto
correctly identify as of the Closing Date (x) each parcel of real property owned


                                     - 38 -


by each Loan Party,  together in each case with an accurate  street  address and
description of the use of such parcel,  (y) each parcel of real property  leased
by or to a Loan Party, together in each case with an accurate street address and
description  of the use of such  parcel,  and (z) each  other  interest  in real
property  owned,  leased or  granted to or held by a Loan  Party.  Except as set
forth on Schedules 4.7(a-1) and 4.7(a-2):

                           (i) no  structure  owned or  leased  by a Loan  Party
                  fails to  conform  in any  material  respect  with  applicable
                  ordinances, regulations, zoning laws and restrictive covenants
                  (including  in any such  case  and  without  limitation  those
                  relating to  environmental  protection)  nor  encroaches  upon
                  property of others,  nor is any such real property  encroached
                  upon by  structures  of others in any case in any manner  that
                  would have or could be reasonably  expected to have a Material
                  Adverse  Effect on the  Agent's or  Lenders'  interest  in any
                  material Collateral located on the premises or otherwise would
                  have or would be reasonably  likely to have a Material Adverse
                  Effect;

                           (ii)  no  charges  or  violations  have  been  filed,
                  served,  made or  threatened,  to the  knowledge  of any  Loan
                  Party,  against or relating to any such  property or structure
                  or any of the  operations  conducted  at any such  property or
                  structure,  as a result of any violation or alleged  violation
                  of  any  applicable  ordinances,  requirements,   regulations,
                  zoning laws or  restrictive  covenants  (including in any such
                  case and without  limitation  those relating to  environmental
                  protection) or as a result of any encroachment on the property
                  of others  where the  effect  of same  would  have or could be
                  reasonably  expected to have a Material  Adverse Effect on the
                  Agent's  or  Lenders'  interest  in  any  material  Collateral
                  located on the  premises or  otherwise  would have or would be
                  reasonably likely have a Material Adverse Effect;

                           (iii) other than pursuant to applicable laws,  rules,
                  regulations or ordinances, covenants that run with the land or
                  provisions  in  the   applicable   leases,   there  exists  no
                  restriction  on the use,  transfer or  mortgaging  of any such
                  property, subject to Title Encumbrances;

                           (iv) the applicable Loan Party has adequate permanent
                  rights of ingress to and egress from any such property used by
                  it for the operations conducted thereon;

                           (v)  except  as  expressly  set  forth  in the  lease
                  agreements  to  which  such  property  relates,  there  are no
                  developments  affecting  any of the real property or interests
                  therein  pending  or  threatened  which  might  reasonably  be
                  expected to curtail or interfere in any material  respect with
                  the use of such  property for the purposes for which it is now
                  used; and


                                     - 39 -


                           (vi) No Loan Party has any option in, or any right or
                  obligation to acquire any interest in, any real property;

                  Except  as set  forth in  Schedule  4.7(a-1)  or  4.7(a-2)  as
applicable,  the applicable Loan Party owns and has good and marketable title to
all the owned  properties and assets  reflected on its most recent balance sheet
and valid  leasehold  interests  in the  property it leases  subject to no Liens
(other  than  Liens  described  in clauses  (a),  (d),  (g),  (h) and (j) of the
definition of Permitted Encumbrances), and all such leases are in full force and
effect and the applicable Loan Party enjoys peaceful and undisturbed  possession
under all such leases.

         4.8.  LITIGATION;  ADVERSE  FACTS.  There are no judgments  outstanding
against any Loan Party or affecting  any property of any Loan Party nor is there
any action,  charge,  claim, demand, suit,  proceeding,  petition,  governmental
investigation  or  arbitration  now  pending  or, to the best  knowledge  of any
Responsible  Officer,  threatened  against  or  affecting  any Loan Party or any
property  of any Loan Party which  would  reasonably  be expected to result in a
Material  Adverse  Effect.  Promptly  upon  any  Responsible  Officer  obtaining
knowledge of (a) the institution of any action, suit,  proceeding,  governmental
investigation or arbitration against or affecting any Loan Party or any property
of any Loan Party not  previously  disclosed in writing by Loan Parties to Agent
or (b) any material  development in any action, suit,  proceeding,  governmental
investigation  or arbitration at any time pending  against or affecting any Loan
Party or any  property of any Loan Party which would  reasonably  be expected to
have a Material  Adverse  Effect,  the applicable  Loan Party will promptly give
notice thereof to Agent in writing and provide such other  information as may be
reasonably available to enable Agent and its counsel to evaluate such matter.

         4.9. PAYMENT OF TAXES. All material tax returns and reports of any Loan
Party  required  to be filed  by any of them  have  been  timely  filed  and are
complete and accurate in all material respects. All taxes, assessments, fees and
other governmental charges which are due and payable by any Loan Party have been
paid when  due;  provided  that no such tax need be paid if such  Loan  Party is
contesting same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such Loan Party has established appropriate reserves
as shall be required in conformity  with GAAP.  As of the Closing Date,  none of
the income tax returns of any Loan Party are under audit and Loan Parties  shall
promptly  notify Agent in the event that any of Loan Parties' tax returns become
the  subject of an audit.  No tax liens have been filed  against any Loan Party.
The charges, accruals and reserves on the books of each Loan Party in respect of
any taxes or other  governmental  charges are in accordance with GAAP. Each Loan
Party has executed IRS Form 8821designating Agent as such Loan Party's appointee
to receive directly from the IRS, on an on-going basis, certain tax information,
notices and other written  communication and each Loan Party authorizes Agent to
file such Form 8821 with the IRS.  Each  Loan  Party's  respective  federal  tax
identification number is set forth on Schedule 4.9.

         4.10.  PERFORMANCE  OF  AGREEMENTS.  No Loan Party is in default in the
performance,  observance or fulfillment of any of the obligations,  covenants or
conditions contained in any material contractual  obligation of any such Person,
and no condition  exists that, with the giving of notice or the lapse of time or
both,  would  constitute  such a default.  Each Loan Party shall promptly notify
Agent  of (a) the  occurrence  of any  default  or  breach  under  any  material
contractual  obligation of any Loan Party,  (b) the  termination of any material
contractual  obligation of any Loan Party,  or (c) the amendment or modification


                                     - 40 -


of any material contractual obligation of any Loan Party. Loan Parties shall not
amend or modify  any  material  contractual  obligation  of any Loan  Party in a
manner that would  reasonably be expected to be  materially  adverse to Agent or
any Lender without Agent's prior written consent.

         4.11. EMPLOYEE BENEFIT PLANS. Each Loan Party, each ERISA Affiliate and
Employee  Benefit  Plan  is in  compliance,  and  will  continue  to  remain  in
compliance,  in all material  respects with all applicable  provisions of ERISA,
the IRC and all other  applicable laws and the  regulations and  interpretations
thereof with respect to all Employee  Benefit Plans.  No material  liability has
been incurred or will be incurred by any Loan Party or any ERISA Affiliate which
remains unsatisfied for any funding obligation,  taxes or penalties with respect
to any Employee  Benefit Plan. Each Loan Party and each ERISA Affiliate has made
and shall continue to make all contributions  required to be made by such Person
to each Employee  Benefit Plan when due. No Loan Party or ERISA  Affiliate shall
establish any new Employee  Benefit Plan or amend any existing  Employee Benefit
Plan  if  the  liability   (contingent  or  otherwise)  or  increased  liability
(contingent or otherwise)  resulting from such  establishment or amendment could
be material.

         No prohibited  transaction  (within the meaning of Section 406 of ERISA
or Section  4975 of the IRC) has occurred  with respect to any Employee  Benefit
Plan (other than a Multiemployer  Plan) subject to Part 4 of Subtitle B of Title
I of ERISA which could result in material liabilities to any Loan Party.

         No Termination Event has occurred, is planned or is reasonably expected
to occur,  and no  condition or event  currently  exists or is expected to occur
that could result in any such Termination Event. Except as set forth in Schedule
4.11, no Employee Benefit Plan has incurred any "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA or Section 412 of the IRC),  whether
or not waived.  No Pension  Benefit Plan has incurred any  "accumulated  funding
deficiency"  (within  the  meaning of Section 302 of ERISA or Section 412 of the
IRC),  whether or not waived.  The  aggregate  "projected  benefit  obligations"
(within the meaning of Statement of Financial Accounting Standards 87) under all
Pension  Benefit  Plans  (other  than  Multiemployer  Plans) do not  exceed  the
aggregate fair market value of the assets of such Pension  Benefit Plans by more
than $250,000,  in each case as of the latest actuarial  valuation date for such
Pension  Benefit  Plans  (determined  in  accordance  with  the  same  actuarial
assumptions  and methods as those used by the Pension  Benefit Plans' actuary in
its valuation of such Pension Benefit Plans as of such valuation  date). No Loan
Party or ERISA  Affiliate  has any  contingent  liabilities  with respect to any
post-retirement  benefits under any employee  welfare  benefit plan,  other than
liability for continuation  coverage  described in Part 6 of Title I of ERISA or
disclosed on Schedule 4.11.

         No Loan Party nor any ERISA  Affiliate has  incurred,  or is reasonably
expected to incur any material  withdrawal  liability  (within the meaning given
such term under Part I of Subtitle E of Title IV of ERISA) to any  Multiemployer
Plan. No Loan Party or any ERISA  Affiliate has received any  notification  that
any Multiemployer Plan is in reorganization or has been terminated,  partitioned
or reorganized within the meaning of Title IV of ERISA, and, to the best of each
Loan Party's knowledge,  no Multiemployer  Plan is reasonably  expected to be in
reorganization  or to be  terminated,  partitioned  or  reorganized  within  the
meaning of Title IV of ERISA.


                                     - 41 -


         4.12.  BROKER'S FEES. Except as set forth on Schedule 4.12, no broker's
or  finder's  fee or  commission  will be  payable  with  respect  to any of the
transactions contemplated hereby.

         4.13. ENVIRONMENTAL  COMPLIANCE.  Except as set forth on Schedule 4.13,
each Loan Party is and shall continue to remain in material  compliance with all
applicable  Environmental  Laws. Except as set forth on Schedule 4.13, there are
no  claims,  liabilities,  Liens,  investigations,   litigation,  administrative
proceedings,  whether pending or threatened,  or judgments or orders relating to
any  Hazardous  Materials  asserted  or  threatened  against  any Loan  Party or
relating to any real property currently or formerly owned, leased or operated by
any Loan Party.

         4.14.  SOLVENCY.  From and after the date of this Agreement,  each Loan
Party:  (a) owns assets the fair  saleable  value of which are greater  than the
total amount of its  liabilities  (including  contingent  liabilities);  (b) has
capital that is not unreasonably  small in relation to its business as presently
conducted or any contemplated or undertaken transaction; and (c) does not intend
to incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.

         4.15.  DISCLOSURE.  No  representation  or  warranty  of any Loan Party
contained in this Agreement, the financial statements, the other Loan Documents,
or any other document,  certificate or written  statement  furnished to Agent or
any  Lender by or on behalf of any such  Person for use in  connection  with the
Loan  Documents  contains any untrue  statement  of a material  fact or omitted,
omits  or will  omit to state a  material  fact  necessary  in order to make the
statements   contained  herein  or  therein  not  misleading  in  light  of  the
circumstances  in which the same were made.  There is no material  fact known to
any Loan Party that has had or could have a Material Adverse Effect and that has
not  been  disclosed  herein  or  in  such  other  documents,  certificates  and
statements  furnished  to Agent or any  Lender  for use in  connection  with the
transactions contemplated hereby.

         4.16.  INSURANCE.  Each Loan  Party  maintains  and shall  continue  to
maintain  adequate  insurance  policies and shall provide Agent with evidence of
such  insurance  coverage  for  public  liability,   property  damage,   product
liability, and business interruption with respect to its business and properties
and the business and  properties of its  Subsidiaries  against loss or damage of
the kinds  customarily  carried or maintained  by  corporations  of  established
reputation engaged in similar businesses and in amounts acceptable to Agent. The
Loan  Parties  shall  maintain  and at all times  after the  Closing  Date shall
continue to  maintain  an  environmental  insurance  policy with  respect to its
properties  reasonably  acceptable  to Agent  in such  amount  as is  reasonably
acceptable to Agent, it being agreed that the environmental  insurance policy in
effect on the Closing Date is acceptable  to Agent.  Each Loan Party shall cause
Agent at all times to be named as loss payee on all insurance  policies relating
to any  Collateral  and shall cause Agent at all times to be named as additional
insured  under all  liability  policies  (including,  without  limitation,  with
respect  to the  environmental  insurance  policy),  in each  case  pursuant  to
appropriate  endorsements in form and substance reasonably satisfactory to Agent
and shall collaterally  assign to Agent, for itself and on behalf of Lenders, as
security for the payment of the Obligations all business interruption  insurance
of each Loan Party. No notice of cancellation  has been received with respect to
such policies and each Loan Party is in compliance with all conditions contained
in such policies.  Any proceeds received from any policies of insurance relating
to any Collateral shall be applied to the Obligations as set forth in subsection
2.4(B)(2).  Each Loan  Party  shall  provide  Agent  evidence  of the  insurance


                                     - 42 -


coverage and of the  assignments  and  endorsements  required by this  Agreement
immediately  upon request by Agent and upon renewal of any existing  policy.  If
any Loan  Party  elects to  change  insurance  carriers,  policies  or  coverage
amounts,  such Loan Party shall notify Agent and provide  Agent with evidence of
the updated insurance coverage and of the assignments and endorsements  required
by this  Agreement.  In the event any Loan  Party  fails to  provide  Agent with
evidence of the insurance coverage required by this Agreement, Agent may, but is
not required to, purchase  insurance at Loan Parties' expense to protect Agent's
and the Lender's interests in the Collateral.  This insurance may, but need not,
protect Loan Parties' interests. The coverage purchased by Agent may not pay any
claim made by any Loan Party or any claim that is made against any Loan Party in
connection  with the  Collateral.  Loan Parties may later  cancel any  insurance
purchased by Agent,  but only after providing Agent with evidence that each Loan
Party has obtained  insurance as required by this Agreement.  If Agent purchases
insurance for the Collateral,  each Loan Party will be responsible for the costs
of that insurance, including interest thereon and other charges imposed on Agent
in connection  with the placement of the insurance,  until the effective date of
the cancellation or expiration of the insurance,  and such costs may be added to
the  Obligations.  The  costs  of the  insurance  may be more  than  the cost of
insurance Borrower is able to obtain on its own.

         4.17.  COMPLIANCE WITH LAWS;  GOVERNMENT  AUTHORIZATIONS;  CONSENTS. No
Loan Party is in  violation  of any law,  ordinance,  rule,  regulation,  order,
policy,  guideline or other requirement of (a) any Governmental Authority in all
jurisdictions  in  which  any  Loan  Party is now  doing  business,  and (b) any
government  authority otherwise having jurisdiction over the conduct of any Loan
Party  or any of  its  respective  businesses,  or the  ownership  of any of its
respective  properties,  which violation would subject any Loan Party, or any of
their  respective  officers to  criminal  liability  or have a Material  Adverse
Effect and no such violation has been alleged.  Each Loan Party will comply with
the requirements of all applicable laws, ordinances, rules, regulations, orders,
policies,  guidelines or other requirements of (a) any Governmental Authority as
now in effect and which may be imposed  in the  future in all  jurisdictions  in
which any Loan Party is now doing  business or may hereafter be doing  business,
and (b) any government  authority otherwise having jurisdiction over the conduct
of any Loan Party or any of its respective  businesses,  or the ownership of any
of its respective properties,  except to the extent the noncompliance with which
would not have a Material Adverse Effect.  No  authorization,  approval or other
action by, and no notice to or filing with, any domestic or foreign Governmental
Authority or regulatory  body or consent of any other Person is required for (a)
the grant by each Loan Party of the Liens granted  hereby or for the  execution,
delivery or  performance  of this  Agreement or the other Loan Documents by each
Loan Party;  (b) the  perfection of the Liens granted hereby and pursuant to any
other  Loan  Documents  (except  for filing UCC  financing  statements  with the
appropriate  jurisdiction  and filing any Patent Security  Agreement,  Trademark
Security  Agreement and Copyright  Security  Agreement  with the U.S.  Copyright
Office and the U.S.  Patent and Trademark  Office,  as  applicable);  or (c) the
exercise by Agent of its rights and remedies  hereunder (except as may have been
taken by or at the direction of a Loan Party or Agent).

         4.18.  EMPLOYEE  MATTERS.  Except as set forth on Schedule 4.18, (a) no
Loan Party nor any of such Loan Party's  employees is subject to any  collective
bargaining  agreement,  (b) no petition for  certification  or union election is
pending  with  respect  to the  employees  of any  Loan  Party  and no  union or


                                     - 43 -


collective  bargaining unit has sought such  certification  or recognition  with
respect  to the  employees  of any Loan  Party  and (c)  there  are no  strikes,
slowdowns,  work stoppages or controversies pending or, to the best knowledge of
any Responsible Officer after due inquiry, threatened between any Loan Party and
its respective employees, other than employee grievances arising in the ordinary
course  of  business,  which  would  reasonably  be  expected  to  have,  either
individually or in the aggregate, a Material Adverse Effect. Except as set forth
on Schedule 4.18, no Loan Party is subject to an employment contract.

         4.19. GOVERNMENTAL  REGULATION.  None of the Loan Parties is subject to
regulation  under the Public  Utility  Holding  Company Act of 1935, the Federal
Power  Act or the  Investment  Company  Act of 1940 or to any  federal  or state
statute or regulation  limiting its ability to incur  indebtedness  for borrowed
money.

         4.20. ACCESS TO ACCOUNTANTS AND MANAGEMENT.  Each Loan Party authorizes
Agent and Lenders to discuss the financial condition and financial statements of
each Loan Party with Loan Parties'  Accountants  upon reasonable  notice to Loan
Parties of its intention to do so, and authorizes  Loan Parties'  Accountants to
respond to all of Agent's inquiries. Agent and each Lender may, with the consent
of Agent,  which will not be  unreasonably  denied,  confer at reasonable  times
during normal  business  hours with Loan  Parties'  senior  management  directly
regarding Loan Parties' business, operations and financial condition.

         4.21. INSPECTION. Each Loan Party shall permit Agent and any authorized
representatives  designated by Agent to visit and inspect any of the  properties
of any Loan Party,  including  their financial and accounting  records,  and, in
conjunction  with such  inspection,  to make copies and take extracts  therefrom
(all to be subject to subsection 12.18), and to discuss their affairs,  finances
and business  with their  officers and any Loan  Parties'  Accountants,  at such
reasonable  times during normal business hours and as often as may be reasonably
requested.  Each  Lender  may with  the  consent  of  Agent,  which  will not be
unreasonably denied, accompany Agent on any such visit or inspection.

         4.22. [INTENTIONALLY OMITTED].

         4.23.  PAYMENT OF TAXES BY AGENT.  If any of the Collateral  includes a
charge for any tax payable to any  governmental  tax authority,  Agent is hereby
authorized  (but in no event  obligated)  in its  discretion  to pay the  amount
thereof to the proper taxing  authority for the account of any Loan Party and to
charge the Loan Party's  account  therefore.  The  Borrowing  Agent shall notify
Agent if any Collateral include any tax due to any such taxing authority and, in
the  absence of such  notice,  the Agent shall have the right to retain the full
proceeds  of such  Collateral  and shall not be liable for any taxes that may be
due from any Loan Party by reason of the sale of any of the Collateral.

         4.24. AMENDMENT OF SCHEDULE.  Each Loan Party may amend any one or more
of the  Schedules  referred in this Section 4 (subject to prior notice to Agent,
as applicable) and any  representation,  warranty,  or covenant contained herein
which  refers  to any such  Schedule  shall  from and after the date of any such
amendment  refer to such Schedule as so amended;  provided  however,  that in no
event shall the amendment of any such Schedule  constitute a waiver by Agent and


                                     - 44 -


Lenders of any  Default  or Event of Default  that  exists  notwithstanding  the
amendment of such Schedule.

SECTION 5     REPORTING AND OTHER AFFIRMATIVE COVENANT

         Each  Loan  Party  covenants  and  agrees  that,  so long as any of the
Commitments  hereunder shall be in effect and until payment in full, in cash, of
all  Obligations,  each Loan Party  shall  perform,  and shall cause each of its
Subsidiaries to perform, all covenants in this Section 5.

         5.1. FINANCIAL STATEMENTS AND OTHER REPORTS.  Loan Parties will deliver
to Agent and each Lender (unless  specified to be delivered solely to Agent) the
financial statements and other reports contained in the Reporting Rider attached
hereto.

         5.2. MAINTENANCE OF PROPERTIES.  Each Loan Party will maintain or cause
to be  maintained  in good  repair,  working  order and  condition  all material
properties  used in the business of each Loan Party and will make or cause to be
made all appropriate repairs, renewals and replacements thereof.

         5.3.  FURTHER  ASSURANCES.  Each Loan Party  shall,  from time to time,
execute  such  guaranties,  financing  or  continuation  statements,  documents,
security  agreements,  reports  and other  documents  or  deliver  to Agent such
instruments,  certificates  of  title,  mortgages,  deeds  of  trust,  or  other
documents as Agent at any time may  reasonably  request to evidence,  perfect or
otherwise implement the guaranties and security for repayment of the Obligations
provided for in the Loan Documents.

         5.4. MORTGAGES; TITLE INSURANCE; SURVEYS.

                  (A) TITLE  INSURANCE.  On the Closing  Date (or within  thirty
(30)  days  following  delivery  of any  Mortgage  with  respect  to  Additional
Mortgaged  Property),  Loan  Parties  shall  deliver or cause to be delivered to
Agent ALTA lender's title insurance policies issued by title insurers reasonably
satisfactory  to Agent (the  "Mortgage  Policies")  in form and substance and in
amounts  reasonably  satisfactory to Agent assuring Agent that the Mortgages are
valid and enforceable first priority mortgage liens on the respective  Mortgaged
Property or  Additional  Mortgaged  Property,  free and clear of all defects and
encumbrances  except Permitted  Encumbrances.  The Mortgage Policies shall be in
form and  substance  reasonably  satisfactory  to Agent  and  shall  include  an
endorsement insuring against the effect of future advances under this Agreement,
for mechanics' liens and for any other matter that Agent may reasonably request.
In the case of each  leasehold  constituting  Mortgaged  Property or  Additional
Mortgaged  Property,  Agent shall have received such estoppel letters,  consents
and waivers from the landlords and  non-disturbance  agreements from any holders
of mortgages or deeds of trust on such real estate as may have been requested by
Agent, which letters shall be in form and substance  reasonably  satisfactory to
Agent.

                  (B)  ADDITIONAL  MORTGAGED  PROPERTY.  Loan  Parties  shall as
promptly  as  possible  (and in any event  within  thirty  (30) days  after such
designation)  deliver to Agent a fully executed Mortgage,  in form and substance
reasonably  satisfactory  to Agent  together with title  insurance  policies and
surveys on any Additional Mortgaged Property designated by Agent.


                                     - 45 -


                  (C) SURVEYS.  On or before the Closing Date (or within  thirty
(30)  days  following  delivery  of any  Mortgage  with  respect  to  Additional
Mortgaged  Property),  Loan  Parties  shall  deliver or cause to be delivered to
Agent current surveys,  certified by a licensed surveyor,  for all real property
that is the subject of the  Mortgage  Policies  including  Additional  Mortgaged
Property  for which a  Mortgage  Policy is  issued.  All such  surveys  shall be
sufficient to allow the issuer of the mortgage  policy to issue an ALTA lender's
policy.

                  (D) ADDITIONAL REAL PROPERTY DELIVERIES. Each Loan Party shall
furnish to Agent for the benefit of the  Lenders,  on or before the Closing Date
(or within thirty (30) days  following  delivery of any Mortgage with respect to
Additional Mortgaged Property),  at the expense of the Loan Parties, in addition
to the  items  set  forth  in  Section  5.4(A),(B)  and (C) or under  any  other
provision  hereof,  (i) such  other  certificates  and  documents  as Agent  may
reasonably  request and which are customary in financing of this type, (ii) with
respect to any real property to be subject to a Mortgage,  appraisals  for owned
real  property as shall be requested by Agent,  and (iii) flood  insurance  with
respect to any real  property  subject to any  Mortgage to the extent such flood
insurance can be obtained by the Loan Parties on commercially  reasonable terms;
provided,  however,  that, at the cost and expense of the Loan Parties, the Loan
Parties  shall in any event  maintain  and  shall  furnish  to the  Agent  flood
insurance  with  respect to any real  property  subject to any  Mortgage  to the
extent  flood  insurance  with  respect to such real  property is required to be
maintained  by  applicable  law (whether  such law is  applicable to any Lender,
including,  without  limitation,  by reason of such Mortgage,  any Loan Party or
otherwise).  This  Section  5.4 shall  not be deemed to allow any Loan  Party to
acquire any property if otherwise prohibited by this Agreement.

         5.5.  USE OF  PROCEEDS  AND MARGIN  SECURITY.  Borrowers  shall use the
proceeds of all Loans for proper business purposes (as described in the recitals
to this Agreement)  consistent  with all applicable  laws,  statutes,  rules and
regulations.  No  portion  of the  proceeds  of any  Loan  shall be used for the
purpose of purchasing or carrying  margin stock within the meaning of Regulation
U, or in any manner that might cause the  borrowing or the  application  of such
proceeds to violate  Regulation T or Regulation X or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the Exchange Act.

         5.6. MAINTENANCE OF PROPERTIES. The Loan Parties shall, and shall cause
their respective  Subsidiaries to, maintain and preserve all of their respective
properties (excluding Equipment which is subject to Section 4.5(C) hereof) which
are necessary or useful in the proper  conduct of their business in good working
order and  condition,  ordinary wear,  tear,  and casualty  excepted and make or
cause to be made all  appropriate  repairs,  renewals and  replacements  thereof
(except where the failure to do so would not reasonably be expected to result in
a Material Adverse  Effect),  and comply at all times with the provisions of all
material  leases to which it is a party as lessee,  so as to prevent any loss or
forfeiture thereof or thereunder. Each Loan Party will maintain and preserve its
existence, rights, privileges, permits, licenses,  authorizations and approvals,
and become or remain duly qualified and in good standing in each jurisdiction in
which the character of the  properties  owned or leased by such Loan Party or in
which the transaction of its business makes such qualification necessary.

         5.7. [INTENTIONALLY OMITTED].


                                     - 46 -


         5.9.  ADDITIONAL  COLLATERAL.  The Loan Parties  acknowledge that it is
their intention to provide the Agent with a Lien on all the property of the Loan
Parties  (personal,  real and mixed),  whether now owned or  hereafter  acquired
(other  than as  agreed  to in  writing  by the  Agent),  subject  only to Liens
permitted  hereunder.  Loan Parties shall from time to time promptly  notify the
Agent of the acquisition by any Loan Party of any material property in which the
Agent does not then hold a perfected Lien (other than as agreed to in writing by
the Agent),  or the creation or existence of any such property,  and such person
shall,  upon request by the Agent,  promptly execute and deliver to the Agent or
cause to be executed  and  delivered to the Agent  pledge  agreements,  security
agreements,  mortgages or other like  agreements  with respect to such property,
together with such other  documents,  certificates,  opinions of counsel and the
like as the Agent shall reasonably request in connection therewith,  in form and
substance satisfactory to the Agent, such that the Agent shall receive valid and
perfected  first priority Liens (subject to the Permitted  Encumbrances)  on all
such property  (including property which, on the Closing Date, is not subject to
a Lien in favor of the  Agent).  In  addition,  in the event that any Loan Party
acquires  or  owns  any  material  trademarks,   copyrights,  patents  or  other
intellectual  property,  the Loan  Parties  shall  notify the Agent  promptly in
writing and shall  execute,  or cause the execution of a security  agreement and
other  documents  with  respect   thereto  in  form  and  substance   reasonably
satisfactory to the Agent.

SECTION 6     FINANCIAL COVENANTS

         Loan Parties  covenant and agree that so long as any of the Commitments
remain in  effect  and  until  indefeasible  payment  in full,  in cash,  of all
Obligations,  Loan  Parties  shall  comply  with  and  shall  cause  each of its
Subsidiaries  to comply with all covenants  contained in the Financial  Covenant
Rider.

SECTION 7     NEGATIVE COVENANTS

         Each  Loan  Party  covenants  and  agrees  that  so  long as any of the
Commitments remain in effect and until indefeasible payment in full, in cash, of
all  Obligations,  each  Loan  Party  shall not and will not  permit  any of its
Subsidiaries to:

         7.1.  INDEBTEDNESS  AND  LIABILITIES.  Directly or  indirectly  create,
incur,  assume,  guaranty,  or otherwise become or remain directly or indirectly
liable, on a fixed or contingent basis, with respect to any Indebtedness except:
(a) the Obligations;  (b)  intercompany  Indebtedness  among the Borrowers;  (c)
intercompany  Indebtedness  of one or more  Guarantors to one or more Borrowers,
not to exceed $2,000,000 outstanding at any time in the aggregate; provided that
such  Indebtedness is subordinated in right of payment to the  Obligations;  (d)
Indebtedness  (excluding  Capital  Leases)  not  to  exceed  $1,000,000  in  the
aggregate at any time outstanding, either unsecured or secured by purchase money
Liens  permitted by Section 7.3; (e)  Indebtedness  under Capital  Leases not to
exceed  $5,000,000  outstanding at any time in the aggregate;  (f)  Indebtedness
pursuant to the First Lien Loan Documents, not to exceed the Maximum Senior Debt
Amount  (as  defined  in the  Intercreditor  Agreement),  and  (g)  Indebtedness
existing on the Closing Date and identified on Schedule 7.1. No Loan Party will,
incur  any  Liabilities  except  for  Indebtedness  permitted  herein  and trade
payables and normal  accruals in the ordinary course of business not yet due and
payable or with respect to which any Loan Party is  contesting in good faith the
amount or  validity  thereof  by  appropriate  proceedings  and then only to the
extent that such Loan Party has  established  adequate  reserves  therefor under
GAAP.


                                     - 47 -


         7.2. GUARANTIES.  Except (i) as provided under the Loan Documents, (ii)
for  guarantees of the First Lien Debt pursuant to the First Lien Loan Documents
(to  the  extent  permitted  by the  Intercreditor  Agreement),  and  (iii)  for
endorsements  of  instruments or items of payment for collection in the ordinary
course of business,  no Loan Party will guaranty,  endorse,  or otherwise in any
way become or be responsible  for any  obligations of any other Person,  whether
directly or  indirectly by agreement to purchase the  indebtedness  of any other
Person or through the purchase of goods, supplies or services, or maintenance of
working  capital or other balance sheet  covenants or  conditions,  or by way of
stock purchase, capital contribution,  advance or loan for the purpose of paying
or discharging any indebtedness or obligation of such other Person or otherwise.

         7.3. TRANSFERS, LIENS AND RELATED MATTERS.

                  (A) TRANSFERS. Sell, assign (by operation of law or otherwise)
or  otherwise  dispose  of,  or grant  any  option  with  respect  to any of the
Collateral,  except that each Loan Party may (1) in the  ordinary  course of its
business, sell Inventory to a Buyer in Ordinary Course of Business and license a
General  Intangible to a Licensee in Ordinary  Course of Business;  and (2) make
Asset  Dispositions  of equipment  and real  property,  if all of the  following
conditions are met: (a) the market value of assets sold or otherwise disposed of
in any  single  transaction  or series of related  transactions  does not exceed
$2,000,000,  the aggregate market value of assets sold or otherwise  disposed of
in any Fiscal Year does not exceed  $3,000,000 and the aggregate market value of
assets sold or  otherwise  disposed  of after the  Closing  Date does not exceed
$6,000,000;  (b) the consideration received is at least equal to the fair market
value of such assets; (c) the sole  consideration  received is cash; (d) the net
proceeds of such Asset  Disposition  are applied as required by subsection  2.4;
(e) after giving effect to the sale or other  disposition of the assets included
within the Asset  Disposition  and the  repayment  of the  Obligations  with the
proceeds  thereof,  Loan Parties on a consolidated  basis are in compliance on a
pro forma basis with the  covenants set forth in the  Financial  Covenant  Rider
recomputed for the most recently ended month for which  information is available
and is in  compliance  with all other  terms and  conditions  contained  in this
Agreement;  and (f) no Default  or Event of  Default  shall then exist or result
from  such  sale  or  other  disposition.  Notwithstanding  the  foregoing,  the
Transaction shall be permitted.

                  (B) LIENS.  Except for  Permitted  Encumbrances,  directly  or
indirectly create,  incur, assume or permit to exist any Lien on or with respect
to any of the Collateral or any proceeds, income or profits therefrom.

                  (C) NO NEGATIVE  PLEDGES.  Enter into or assume any  agreement
(other than (i) the Loan Documents or (ii) the First Lien Loan Documents (to the
extent  not  in  violation  of the  Intercreditor  Agreement))  prohibiting  the
creation or  assumption of any Lien upon its  properties or assets,  whether now
owned or hereafter acquired.

                  (D)  NO  RESTRICTIONS  ON  SUBSIDIARY  DISTRIBUTIONS  TO  LOAN
PARTIES. Except as provided (i) herein and (ii) in the First Lien Loan Documents
(to the extent not in violation  of the  Intercreditor  Agreement),  directly or


                                     - 48 -


indirectly  create or otherwise cause or suffer to exist or become effective any
consensual  encumbrance  or  restriction  of any kind on the ability of any such
Subsidiary to: (1) pay dividends or make any other  distribution  on any of such
Subsidiary's  capital stock owned by a Loan Party; (2) pay any indebtedness owed
to a Loan  Party or any other  Subsidiary  of a Loan  Party;  (3) make  loans or
advances  to a Loan  Party  or any  other  Subsidiary  of a Loan  Party;  or (4)
transfer any of its  property or assets to a Loan Party or any other  Subsidiary
of a Loan Party.

         7.4.  INVESTMENTS AND LOANS.  Make or permit to exist investments in or
loans to any other Person,  except:  (a) cash in aggregate  amount not to exceed
$1,000,000  held in  Deposit  Accounts  maintained  in the  ordinary  course  of
business,  so long as such  Deposit  Accounts  are subject to a deposit  account
control agreement unless otherwise agreed to by Agent; (b) loans and advances to
employees for moving,  entertainment,  travel and other similar  expenses in the
ordinary course of business in an aggregate  outstanding amount not in excess of
$500,000  at  any  time,  and  (c)  as   contemplated  in  connection  with  the
Transaction.

         7.5. RESTRICTED PAYMENTS.  Directly or indirectly declare,  order, pay,
make or set apart any sum for any  Restricted  Junior  Payment,  except that (a)
Loan Parties may make Restricted  Payments with respect to their common stock to
the extent necessary to permit Loan Parties to pay the  Obligations/or the First
Lien Debt (to the extent Loan Parties are  permitted to make such  payments with
respect to the First Lien Debt under the Intercreditor  Agreement) and to permit
Loan Parties to pay expenses  incurred in the ordinary  course of business,  (b)
Loan  Parties may make  payments of any  sponsor  management  fees not to exceed
$1,500,000 in the aggregate in any fiscal year,  with (i) $1,000,000  payable to
AIP annually and (ii) $500,000  payable to BNS annually,  but only to the extent
no Default or Event of Default is then existing or would be created thereby, (c)
Loan Parties may make  payments of up to $250,000 in the  aggregate per annum to
AIP and BNS, in respect of out of pocket  expenses;  (d) Holdings may repurchase
its Equity Interests from directors,  executive officers,  members of management
or  employees  of  Holdings  and its  Subsidiaries  upon the death,  disability,
retirement or  termination of such  directors,  executive  officers,  members of
management  or  employees,  so long as no  Default  or Event of  Default is then
existing or would be created  thereby and the aggregate  amount of cash expended
by Holdings  does not exceed  $500,000 in any fiscal year of Holdings;  (e) Loan
Parties may make payments required under the Tax Sharing Agreement (as in effect
on the Closing  Date);  (f) Loan Parties may pay the fees payable on the Closing
Date to AIP and Steel Partners II, L.P., which have previously been disclosed in
writing to Agent;  (g) Loan  Parties may make  payments of Merger  Consideration
after the Closing Date with amounts released from the Closing Date Reserve under
the First Lien Loan Agreement or amounts  received from the Disbursing Agent and
applied to the First Lien Debt  pursuant to  subsection  2.4(B)(6)  of the First
Lien Loan Agreement to the extent that such amounts shall have been reserved for
immediately prior to such payment pursuant to subsection  2.4(B)(6) of the First
Lien Loan  Agreement,  PROVIDED that  notwithstanding  the foregoing,  after the
release of any such reserve  under  subsection  2.4(B)(6) of the First Lien Loan
Agreement, Loan Parties may still make such payments of Merger Consideration, so
long as (i) no Default or Event of Default is then  existing or would be created
thereby and (ii) either,  (x) the  aggregate  amount of all such payments do not
exceed $750,000,  or (y) to the extent the aggregate amount of all such payments
exceed $750,000, solely with respect to the amount of such payments in excess of
$750,000 in the  aggregate,  after giving  effect to any such payment  Borrowers
have at least  $7,500,000  of  Undrawn  Availability  under the First  Lien Loan


                                     - 49 -


Agreement;  and (h) Loan Parties may make up to  $2,000,000  in the aggregate of
payments  in  connection  with or relating to the  repurchase,  cancellation  or
extinguishment  of the Equity  Interests of Collins  that  existed  prior to the
Merger,  so long as no Default or Event of Default is then  existing or would be
created  thereby and after giving effect to any such payment  Borrowers  have at
least $7,500,000 of Undrawn Availability under the First Lien Loan Agreement.

         7.6. RESTRICTION ON FUNDAMENTAL CHANGES. (a) Enter into any transaction
of merger or consolidation  (other than the Merger);  (b) liquidate,  wind-up or
dissolve itself (or suffer any liquidation or  dissolution);  (c) convey,  sell,
lease,  sublease,  transfer or  otherwise  dispose of, in one  transaction  or a
series of  transactions,  all or any substantial part of its business or assets,
or the capital stock of any of its Subsidiaries,  whether now owned or hereafter
acquired PROVIDED,  HOWEVER,  the Guarantors (other than Holdings) may (i) merge
with and into  each  other  and/or  into  Borrowers,  so long as the  applicable
Borrower is the surviving  entity,  or (ii) convey all or  substantially  all of
their assets to each other or to any entity wholly owned,  in the aggregate,  by
the Loan Parties, or (iii) liquidate, wind-up or dissolve, so long as any assets
of such Guarantor are transferred to another Loan Party,  provided that, in each
case of the foregoing instances,  the Loan Parties shall give the Agent at least
30 days  notice  thereof  prior to any such  merger,  conveyance  of  assets  or
liquidation,  wind-up or dissolution and,  provided  further,  immediately after
such merger, conveyance,  liquidation,  wind-up or dissolution, the Loan Parties
would not, as a result of such  transaction,  breach any other  obligation under
any  Loan  Documents;  or  (d)  acquire  by  purchase  or  otherwise  all or any
substantial  part of the  business  or assets  of, or stock or other  beneficial
ownership of, any Person.

         7.7. CHANGES RELATING TO FIRST LIEN DEBT.  Change or amend the terms of
the First Lien Loan Documents if such change or amendment is not permitted under
the Intercreditor Agreement.

         7.8. TRANSACTIONS WITH AFFILIATES.  Directly or indirectly,  enter into
or permit to exist any transaction (including the purchase,  sale or exchange of
property  or the  rendering  of any  service)  with  any  Affiliate  or with any
officer,  director or employee of any Loan Party, except for transactions in the
ordinary course of any Loan Party's  business and upon fair and reasonable terms
which are fully  disclosed to Agent and Lenders and which are no less  favorable
to Loan Parties than it would  obtain in a comparable  arm's length  transaction
with an unaffiliated Person.

         7.9.  CONDUCT OF BUSINESS.  From and after the Closing Date,  engage in
any business other than businesses of the type engaged in by Loan Parties on the
Closing Date.

         7.10.  TAX  CONSOLIDATIONS.  File  or  consent  to  the  filing  of any
consolidated income tax return with any Person other than the other Loan Parties
or BNS;  provided that in the event any Loan Party files a  consolidated  return
with any such  Person  (including  BNS),  such Loan  Party's  contribution  with
respect to taxes as a result of the filing of such consolidated return shall not
be greater,  nor the receipt of tax benefits less, than they would have been had
such Loan Party not filed a consolidated return with such Person.


                                     - 50 -


         7.11.  SUBSIDIARIES.  Other than the Subsidiaries set forth on Schedule
7.11 and except as  contemplated to occur on or prior to the Closing Date by the
terms  of  the  Merger   Documents,   establish,   create  or  acquire  any  new
Subsidiaries.

         7.12. FISCAL YEAR; TAX DESIGNATION. Change its Fiscal Year; or elect to
be designated as an entity other than a C corporation as defined in IRC.

         7.13. PRESS RELEASE;  PUBLIC OFFERING  MATERIALS.  Disclose the name of
Agent or any Lender in any press release or in any  prospectus,  proxy statement
or other  materials  filed with any  governmental  entity  relating  to a public
offering  of the  capital  stock of any Loan Party  except as may be required by
law.

         7.14. [INTENTIONALLY OMITTED].

         7.15.  IRS FORM 8821.  Revoke IRS Form 8821  designating  Agent as Loan
Parties'  appointee  to receive  directly  from the IRS, on an  on-going  basis,
certain tax information, notices and other written communication or fail to take
actions  necessary to renew such Form 8821 prior to its  expiration for all time
periods prior to the Termination Date.

SECTION 8     DEFAULT, RIGHTS AND REMEDIES

         8.1. EVENT OF DEFAULT.  "Event of Default" shall mean the occurrence or
existence of any one or more of the following  (for each  subsection a different
grace or cure period may be specified,  if no grace or cure period is specified,
such occurrence or existence constitutes an immediate Event of Default):

                  (A) PAYMENT. Failure to make payment of any of the Obligations
when due; or

                  (B) DEFAULT IN OTHER AGREEMENTS. (1) Failure of any Loan Party
to pay when due any  principal  or  interest on the First Lien Debt or any other
Indebtedness  (other than the  Obligations) or (2) breach or default of any Loan
Party with respect to the First Lien Loan  Documents  or any other  Indebtedness
(other than the  Obligations)  and such failure  continues beyond any applicable
grace period;  if such failure to pay, breach or default  entitles the holder to
cause  such  Indebtedness  having an  individual  principal  amount in excess of
$250,000 or having an aggregate principal amount in excess of $500,000 to become
or be  declared  due prior to its stated  maturity,  or (3) breach of any of the
provisions of the Merger Documents; or

                  (C) BREACH OF CERTAIN PROVISIONS. Failure of any Loan Party to
perform or comply with any term or condition contained in subparagraphs (1), (2)
and (3) of the Reporting Rider and subsections  5.3, 5.4 or 5.5, or contained in
Section 4, Section 6, Section 7 or the Financial Covenants Rider; or

                  (D)  BREACH  OF  WARRANTY.   Any   representation,   warranty,
certification  or other statement made by any Loan Party in any Loan Document or
in any  statement  or  certificate  at any time given by such  Person in writing
pursuant  or in  connection  with any  Loan  Document  is false in any  material
respect on the date made; or


                                     - 51 -


                  (E)  OTHER  DEFAULTS  UNDER  LOAN  DOCUMENTS.  Any Loan  Party
defaults in the  performance  of or compliance  with any term  contained in this
Agreement  other than  those  otherwise  set forth in this  subsection  8.1,  or
defaults in the  performance  of or  compliance  with any term  contained in the
other Loan  Documents and such default is not remedied or waived within  fifteen
(15) days after notice from Agent, or Requisite  Lenders,  to Borrowing Agent of
such default; or

                  (F) CHANGE IN CONTROL. (1) the consummation of any transaction
(including any merger or consolidation) the result of which is that any "person"
or "group" (as such terms are defined for purposes of the Securities Act), other
than Steel  Partners II, L.P.  ("Steel") or one of its Affiliates of which Steel
owns at least 20% of the Equity  Interests of each class of Equity  Interests of
such Affiliate, becomes the owner, directly or indirectly, of 35% or more of the
issued  and  outstanding  Equity  Interests  of BNS;  (2)  Steel  ceases  to (i)
beneficially own and control, directly or indirectly, at least 20% of the Equity
Interests of each class of Equity  Interests of BNS entitled  (without regard to
the  occurrence of any  contingency)  to vote for the election of the members of
the board of directors of BNS or (ii) have at least two  representatives  on the
board of directors of BNS; (3) BNS ceases to (i)  beneficially  own and control,
directly  or  indirectly,  at least 80% of the  issued  and  outstanding  Equity
Interests of each class of Equity Interests of Holdings entitled (without regard
to the occurrence of any contingency) to vote for the election of the members of
the board of directors of Holdings or (ii) have the right to elect or appoint at
least four of the five members of the board of directors of Holdings; (4) AIP/CH
ceases to beneficially own and control,  directly or indirectly, at least 15% of
the issued and outstanding Equity Interests of each class of Equity Interests of
Holdings  entitled (without regard to the occurrence of any contingency) to vote
for the  election  of the members of the board of  directors  of  Holdings;  (5)
Holdings  ceases to own 100% of the Equity  Interests  of  Collins;  (6) Collins
ceases to own 100% of the  Equity  Interests  of any of its  direct or  indirect
Subsidiaries or (7) any "Change of Control" occurs under, and as defined in, the
First Lien Loan Documents; or

                  (G) INVOLUNTARY BANKRUPTCY;  APPOINTMENT OF RECEIVER, ETC. (1)
A court enters a decree or order for relief with respect to any Loan Party in an
involuntary  case under any applicable  bankruptcy,  insolvency or other similar
law now or  hereafter  in effect,  which  decree or order is not stayed or other
similar relief is not granted under any applicable  federal or state law; or (2)
the  continuance  of any of the  following  events  for sixty  (60) days  unless
dismissed,  bonded or discharged:  (a) an involuntary case is commenced  against
any Loan Party, under any applicable bankruptcy, insolvency or other similar law
now or  hereafter  in  effect;  or  (b) a  receiver,  liquidator,  sequestrator,
trustee, custodian or other fiduciary having similar powers over any Loan Party,
or over all or a substantial part of their respective property, is appointed; or

                  (H) VOLUNTARY  BANKRUPTCY;  APPOINTMENT OF RECEIVER,  ETC. (1)
Any Loan Party  commences  a  voluntary  case under any  applicable  bankruptcy,
insolvency or other  similar law now or hereafter in effect,  or consents to the
entry of an order for relief in an  involuntary  case or to the conversion of an
involuntary  case to a  voluntary  case  under any such law or  consents  to the
appointment of or taking  possession by a receiver,  trustee or other  custodian
for all or a substantial  part of its property;  or (2) any Loan Party makes any
assignment  for the benefit of  creditors;  or (3) the board of directors of any
Loan Party adopts any resolution or otherwise  authorizes  action to approve any
of the actions referred to in this subsection 8.1(H); or


                                     - 52 -


                  (I) LIENS.  Any lien,  levy or assessment is filed or recorded
with  respect  to or  otherwise  imposed  upon all or any  material  part of the
Collateral  or the  assets  of  any  Loan  Party  by the  United  States  or any
department or instrumentality  thereof or by any state, county,  municipality or
other  governmental  agency (other than Permitted  Encumbrances)  and such lien,
levy or assessment is not stayed,  vacated,  paid or discharged  within ten (10)
days; or

                  (J) JUDGMENT,  ATTACHMENTS AND LITIGATION. Any money judgment,
writ or warrant of attachment, or similar process involving (1) an amount in any
individual  case in excess of $500,000 or (2) an amount in the  aggregate at any
time in excess of $1,000,000 (in either case not adequately covered by insurance
as to which the insurance company has acknowledged coverage) is entered or filed
against  any  Loan  Party  or  any  of  their  respective   assets  and  remains
undischarged,  unvacated, unbonded or unstayed for a period of thirty (30) days,
but in any event not later than five (5) days prior to the date of any  proposed
sale thereunder;  or an event occurs or circumstance  arises with respect to any
litigation  involving  the Loan  Parties  which  could have a  Material  Adverse
Effect; or

                  (K)  DISSOLUTION.  Any  order,  judgment  or decree is entered
against any Loan Party  decreeing the dissolution or split up of such Loan Party
and such order remains undischarged or unstayed for a period in excess of twenty
(20)  days,  but in any event not later  than five (5) days prior to the date of
any proposed dissolution or split up; or

                  (L)  SOLVENCY.  Any  Loan  Party  ceases  to  be  solvent  (as
represented  by such Loan Party in  subsection  4.14) or admits in  writing  its
present or prospective inability to pay its debts as they become due; or

                  (M) INJUNCTION.  Any Loan Party is enjoined,  restrained or in
any way prevented by the order of any court or any  administrative or regulatory
agency from  conducting  all or any material part of its business and such order
continues for thirty (30) days or more; or

                  (N)  INVALIDITY OF LOAN  DOCUMENTS.  Any of the Loan Documents
for any  reason,  other than a partial or full  release in  accordance  with the
terms  thereof,  ceases to be in full force and effect or is declared to be null
and void, or any Loan Party denies that it has any further  liability  under any
Loan Documents to which it is party, or gives notice to such effect; or

                  (O)  FAILURE  OF  SECURITY.  Agent,  on behalf  of itself  and
Lenders,  does not have or ceases to have a valid and perfected  first  priority
security interest in the Collateral (subject, as to priority, to Liens described
in  clauses  (b),   (c),  (e)  and/or  (i)  of  the   definition   of  Permitted
Encumbrances),  in each case,  for any reason other than the failure of Agent or
any Lender to take any action within its control; or

                  (P) DAMAGE, STRIKE, CASUALTY. Any material damage to, or loss,
theft or destruction of, any Collateral,  whether or not insured, or any strike,
lockout, labor dispute,  embargo,  condemnation,  act of God or public enemy, or
other casualty which causes,  for more than fifteen (15) consecutive days beyond
the coverage  period of any  applicable  business  interruption  insurance,  the
cessation or  substantial  curtailment  of revenue  producing  activities at any
facility  of  Borrower  or  any  of  its  Subsidiaries  if  any  such  event  or
circumstance would reasonably be expected to have a Material Adverse Effect; or


                                     - 53 -


                  (Q) LICENSES AND PERMITS.  The loss,  suspension or revocation
of, or failure to renew, any license or permit now held or hereafter acquired by
any Loan Party, if such loss,  suspension,  revocation or failure to renew would
reasonably be expected to have a Material Adverse Effect; or

                  (R)  FORFEITURE.  There is filed  against  any Loan  Party any
civil  or  criminal  action,  suit or  proceeding  under  any  federal  or state
racketeering  statute (including,  without limitation,  the Racketeer Influenced
and Corrupt  Organization Act of 1970), which action,  suit or proceeding (1) is
not dismissed  within one hundred twenty (120) days; and (2) would reasonably be
expected to result in the  confiscation or forfeiture of any material portion of
the Collateral; or

                  (S) MERGER.  Any of the Merger  Documents ceases to be in full
force and effect or is declared  null and void or the Merger is not  consummated
on the Closing Date; or

                  (T) AIP MANAGEMENT  AGREEMENT/SHAREHOLDER'S  AGREEMENT. Either
the AIP Management Agreement or the Shareholder's Agreement ceases to be in full
force and effect or is declared  null and void or any material  provision of the
AIP Management  Agreement or the Shareholder's  Agreement is amended without the
prior written consent of Agent; or

                  (U) INTERCREDITOR AGREEMENT. Any breach or violation by a Loan
Party of the Intercreditor  Agreement,  or if a court of competent  jurisdiction
issues an order  finding  that any material  provision  of any of the  foregoing
agreement is invalid, illegal or unenforceable.

         8.2. [INTENTIONALLY OMITTED].

         8.3.  ACCELERATION.  Upon  the  occurrence  of  any  Event  of  Default
described in the foregoing  subsections  8.1(G) or 8.1(H), all Obligations shall
automatically become immediately due and payable,  without presentment,  demand,
protest or other  requirements  of any kind,  all of which are hereby  expressly
waived by each Loan Party, and the Commitments shall thereupon  terminate.  Upon
the occurrence and during the  continuance of any other Event of Default,  Agent
may, and upon demand by Requisite  Lenders shall, by written notice to Borrowing
Agent,  declare all or any portion of the  Obligations to be, and the same shall
forthwith  become,  immediately  due  and  payable  and  the  Commitments  shall
thereupon terminate.

         8.4.  REMEDIES.  If any Event of  Default  shall have  occurred  and be
continuing, in addition to and not in limitation of any other rights or remedies
available  to Agent and Lenders at law or in equity,  Agent may,  and shall upon
the request of  Requisite  Lenders,  exercise in respect of the  Collateral,  in
addition  to all other  rights and  remedies  provided  for herein or  otherwise
available to it, all the rights and remedies of a secured party on default under
the UCC (whether or not the UCC applies to the affected Collateral) and may also
(a) require Loan Parties to, and each Loan Party hereby  agrees that it will, at
its expense and upon  request of Agent  forthwith,  assemble  all or part of the
Collateral  as directed by Agent and make it available to Agent at a place to be
designated  by Agent which is reasonably  convenient  to both  parties;  and (b)
without notice or demand or legal  process,  enter upon any premises of any Loan
Party and take possession of the Collateral. Each Loan Party agrees that, to the
extent notice of sale of the Collateral or any part thereof shall be required by
law, at least ten (10) days notice to  Borrowing  Agent of the time and place of
any public  disposition or the time after which any private  disposition  (which


                                     - 54 -


notice shall include any other information  required by law) is to be made shall
constitute  reasonable  notification.  At  any  disposition  of  the  Collateral
(whether  public or private),  if permitted by law,  Agent or any Lender may bid
(which  bid may be,  in  whole  or in  part,  in the  form  of  cancellation  of
indebtedness)  for the purchase,  lease,  or licensing of the  Collateral or any
portion  thereof  for the  account of Agent or such  Lender.  Agent shall not be
obligated  to make  any  disposition  of  Collateral  regardless  of  notice  of
disposition  having been  given.  Each Loan Party  shall  remain  liable for any
deficiency.  Agent may  adjourn any public or private  disposition  from time to
time by announcement at the time and place fixed therefor,  and such disposition
may,  without further  notice,  be made at the time and place to which it was so
adjourned.  Agent is not obligated to make any  representations or warranties in
connection with any disposition of the  Collateral.  To the extent  permitted by
law, each Loan Party hereby specifically  waives all rights of redemption,  stay
or appraisal,  which it has or may have under any law now existing or hereafter,
enacted.  Agent shall not be required to proceed  against any Collateral but may
proceed against one or more Loan Parties directly.

         8.5.   APPOINTMENT   OF   ATTORNEY-IN-FACT.   Each  Loan  Party  hereby
constitutes and appoints Agent as such Loan Party's  attorney-in-fact  with full
authority in the place and stead of such Loan Party and in the name of such Loan
Party,  Agent or  otherwise,  from time to time in Agent's  discretion  while an
Event of Default is continuing to take any action and to execute any  instrument
that Agent may deem  necessary or advisable to  accomplish  the purposes of this
Agreement,  including: (a) to ask, demand, collect, sue for, recover,  compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the  Collateral;  (b) to enforce the  obligations of any
Account  Debtor or other  Person  obligated  on the  Collateral  and enforce the
rights of any Loan Party with  respect to such  obligations  and to any property
that  secures  such  obligations;  (c) to file any  claims or take any action or
institute  any  proceedings  that Agent may deem  necessary or desirable for the
collection of or to preserve the value of any of the  Collateral or otherwise to
enforce the rights of Agent and Lenders with  respect to any of the  Collateral;
(d) to pay or  discharge  taxes or Liens  levied  or placed  upon or  threatened
against  the  Collateral,  the  legality  or  validity  thereof  and the amounts
necessary  to  discharge  the  same  to be  determined  by  Agent  in  its  sole
discretion,  and such  payments  made by Agent to  become  Obligations,  due and
payable  immediately  without  demand;  (e) to sign and  endorse  any  invoices,
freight  or express  bills,  bills of lading,  storage  or  warehouse  receipts,
assignments,  verifications  and notices in connection  with  Accounts,  Chattel
Paper or General Intangibles and other Documents relating to the Collateral; and
(f)  generally  to take any act  required of any Loan Party  under  Section 4 or
Section 5 of this Agreement,  and to sell, transfer,  pledge, make any agreement
with  respect  to or  otherwise  deal  with any of the  Collateral  as fully and
completely as though Agent were the absolute owner thereof for all purposes, and
to do, at Agent's option and Loan Parties' expense,  at any time or from time to
time,  all acts and things that Agent deems  necessary  to protect,  preserve or
realize upon the  Collateral.  Each Loan Party hereby  ratifies and approves all
acts of Agent made or taken pursuant to this  subsection 8.5. The appointment of
Agent as each Loan Party's  attorney  and Agent's  rights and powers are coupled
with  an  interest  and  are  irrevocable,  so  long  as any of the  Commitments
hereunder shall be in effect and until indefeasible payment in full, in cash, of
all Obligations.

         8.6.   LIMITATION  ON  DUTY  OF  AGENT  AND  LENDERS  WITH  RESPECT  TO
COLLATERAL. Beyond the safe custody thereof, Agent and each Lender shall have no
duty with respect to any  Collateral in its  possession (or in the possession of
any agent or bailee) or with respect to any income  thereon or the  preservation


                                     - 55 -


of rights against prior parties or any other rights  pertaining  thereto.  Agent
shall  be  deemed  to  have  exercised   reasonable  care  in  the  custody  and
preservation  of the  Collateral in its possession if the Collateral is accorded
treatment  substantially  equal to that which Agent  accords  its own  property.
Neither  Agent nor any  Lender  shall be liable or  responsible  for any loss or
damage to any of the Collateral,  or for any diminution in the value thereof, by
reason of the act or  omission of any  warehouse,  carrier,  forwarding  agency,
consignee,  broker or other agent or bailee selected by Loan Parties or selected
by Agent in good faith.

         8.7. APPLICATION OF PROCEEDS.  Notwithstanding anything to the contrary
contained in this  Agreement,  upon the occurrence and during the continuance of
an Event of Default,  (a) each Loan Party irrevocably waives the right to direct
the application of any and all payments at any time or times thereafter received
by  Agent  from or on  behalf  of any  Loan  Party,  and  Agent  shall  have the
continuing  and  exclusive  right to apply and to reapply  any and all  payments
received at any time or times after the occurrence and during the continuance of
an Event of Default  against  the  Obligations  in such manner as Agent may deem
advisable  notwithstanding  any  previous  application  by Agent  and (b) in the
absence of a specific  determination by Agent with respect thereto, the proceeds
of any sale of, or other  realization  upon,  all or any part of the  Collateral
shall be applied: first, to all fees, costs and expenses incurred by or owing to
Agent and then any  Lender  with  respect  to this  Agreement,  the  other  Loan
Documents  or the  Collateral;  second,  to accrued  and unpaid  interest on the
Obligations  (including  any  interest  which  but  for  the  provisions  of any
bankruptcy or insolvency law would have accrued on such amounts);  third, to the
principal  amounts of the  Obligations  outstanding  in a manner as Agent  shall
determine in its sole discretion;  and fourth,  to any other  Obligations of any
Loan Party owing to Agent or any Lender  under the Loan  Documents.  Any balance
remaining  shall be delivered to Borrowing  Agent or to whomever may be lawfully
entitled to receive  such balance or as a court of  competent  jurisdiction  may
direct.

         8.8. LICENSE OF INTELLECTUAL PROPERTY.  Each Loan Party hereby assigns,
transfers and conveys to Agent, for the benefit of Agent and Lenders,  effective
upon the occurrence of any Event of Default hereunder,  the non-exclusive  right
and  license to use all  Intellectual  Property  owned or used by any Loan Party
together with any goodwill associated therewith,  all to the extent necessary to
enable Agent to realize on the  Collateral  and any successor or assign to enjoy
the  benefits  of the  Collateral.  This right and  license  shall  inure to the
benefit of all successors,  assigns and transferees of Agent and its successors,
assigns and  transferees,  whether by  voluntary  conveyance,  operation of law,
assignment,  transfer,  foreclosure,  deed in lieu of  foreclosure or otherwise.
Such right and license is granted  free of charge and,  except to the extent the
failure to obtain such consent would result in a Material  Adverse Effect,  does
not require the consent of any other Person.

         8.9. WAIVERS;  NON-EXCLUSIVE  REMEDIES. No failure on the part of Agent
or any Lender to exercise,  and no delay in exercising  and no course of dealing
with  respect to, any right  under this  Agreement  or the other Loan  Documents
shall operate as a waiver thereof;  nor shall any single or partial  exercise by
Agent or any Lender of any right under this Agreement or any other Loan Document
preclude  any other or further  exercise  thereof or the  exercise  of any other
right.  The rights in this Agreement and the other Loan Documents are cumulative
and shall in no way limit any other remedies provided by law.


                                     - 56 -


SECTION 9     AGENT

         9.1. AGENT.

                  (A)  APPOINTMENT.  Each Lender hereto and,  upon  obtaining an
interest in any Loan,  transferee  or other  assignee of any Lender  irrevocably
appoints,  designates  and  authorizes  ORIX as Agent to take  such  actions  or
refrain from taking such action as its agent on its behalf and to exercise  such
powers  hereunder  and under the other Loan  Documents  as are  delegated by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto.  Neither the Agent nor any of its  directors,  officers,  employees  or
agents  shall  be  liable  for any  action  so  taken.  The  provisions  of this
subsection 9.1 are solely for the benefit of Agent and Lenders and no Loan Party
shall  have any rights as a third  party  beneficiary  of any of the  provisions
hereof.  In performing  its  functions  and duties under this  Agreement and the
other Loan  Documents,  Agent  shall act solely as agent of Lenders and does not
assume  and  shall  not be  deemed  to have  assumed  any  obligation  toward or
relationship  of  agency or trust  with or for any  Borrower  or any other  Loan
Party.  Agent  may  perform  any of its  duties  hereunder,  or  under  the Loan
Documents, by or through its agents or employees.

                  (B) NATURE OF DUTIES. Agent shall have no duties,  obligations
or responsibilities except those expressly set forth in this Agreement or in the
Loan Documents.  The duties of Agent shall be mechanical and  administrative  in
nature.  Agent shall not have by reason of this Agreement a fiduciary,  trust or
agency  relationship with or in respect of any Lender, any Borrower or any other
Loan Party.  Nothing in this Agreement or any of the Loan Documents,  express or
implied,  is  intended  to or  shall be  construed  to  impose  upon  Agent  any
obligations in respect of this Agreement or any of the Loan Documents  except as
expressly set forth herein or therein.  Each Lender shall make its own appraisal
of the credit worthiness of each Loan Party, and shall have independently  taken
whatever  steps it considers  necessary to evaluate the financial  condition and
affairs of Loan Parties, and Agent shall have no duty or responsibility,  either
initially  or on a  continuing  basis,  to provide any Lender with any credit or
other  information  with  respect  thereto  (other  than as  expressly  required
herein),  whether coming into its  possession  before the Closing Date or at any
time or times thereafter.  If Agent seeks the consent or approval of any Lenders
to the taking or refraining from taking any action  hereunder,  then Agent shall
send notice thereof to each Lender.  Agent shall promptly notify each Lender any
time that the  Requisite  Lenders have  instructed  Agent to act or refrain from
acting pursuant hereto.

                  (C) RIGHTS,  EXCULPATION,  ETC.  Neither  Agent nor any of its
officers,  directors,  employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the Loan Documents, or
in connection  herewith or  therewith,  except that Agent shall be liable to the
extent of its own gross  negligence  or willful  misconduct  as  determined by a
court of competent jurisdiction. Agent shall not be liable for any apportionment
or  distribution  of  payments  made  by  it in  good  faith  and  if  any  such
apportionment  or distribution  is subsequently  determined to have been made in
error,  the sole  recourse  of any Lender to whom  payment was due but not made,
shall be to recover  from other  Lenders  any payment in excess of the amount to
which they are determined to be entitled (and such other Lenders hereby agree to
return to such Lender any such  erroneous  payments  received by them).  Neither
Agent  nor any of its  agents or  representatives  shall be  responsible  to any
Lender for any recitals, statements, representations or warranties herein or for


                                     - 57 -


the   execution,    effectiveness,    genuineness,   validity,   enforceability,
collectibility, or sufficiency of this Agreement or any of the Loan Documents or
the transactions  contemplated  thereby,  or for the financial  condition of any
Loan Party.  Agent shall not be required to make any inquiry  concerning  either
the  performance or observance of any of the terms,  provisions or conditions of
this  Agreement or any of the Loan  Documents or the financial  condition of any
Loan Party,  or the  existence or possible  existence of any Default or Event of
Default. Agent may at any time request instructions from Lenders with respect to
any actions or approvals  which by the terms of this  Agreement or of any of the
Loan Documents  Agent is permitted or required to take or to grant,  and if such
instructions  are  promptly  requested,  Agent shall be  absolutely  entitled to
refrain  from taking any action or to  withhold  any  approval  and shall not be
under any liability  whatsoever to any Person for refraining  from any action or
withholding  any approval  under any of the Loan  Documents  until it shall have
received such  instructions  from Requisite Lenders or all or such other portion
of the Lenders as shall be prescribed by this  Agreement.  Without  limiting the
foregoing,  no Lender shall have any right of action whatsoever against Agent as
a result of Agent acting or refraining  from acting under this  Agreement or any
of the other Loan  Documents in accordance  with the  instructions  of Requisite
Lenders in the absence of an express  requirement  for a greater  percentage  of
Lender approval hereunder for such action.

                  (D) RELIANCE. Agent shall be under no duty to examine, inquire
into, or pass upon the validity, effectiveness or genuineness of this Agreement,
any other Loan Document, or any instrument,  document or communication furnished
pursuant hereto or in connection herewith.  Agent shall be entitled to rely, and
shall  be  fully  protected  in  relying,  upon  any  written  or oral  notices,
statements,  certificates, orders or other documents or any telephone message or
other communication  (including any writing, fax, telecopy or telegram) believed
by it in good faith to be genuine and correct and to have been  signed,  sent or
made by the proper  Person,  and with respect to all matters  pertaining to this
Agreement or any of the Loan  Documents and its duties  hereunder or thereunder.
Agent shall be entitled  to rely upon the advice of legal  counsel,  independent
accountants, and other experts selected by Agent in its sole discretion.

                  (E)  INDEMNIFICATION.  Lenders will  reimburse  and  indemnify
Agent for and against any and all  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits,  costs,  expenses  (including,  without
limitation,  reasonable attorneys' fees and expenses), advances or disbursements
of any kind or  nature  whatsoever  which may be  imposed  on,  incurred  by, or
asserted  against Agent in any way relating to or arising out of this  Agreement
or any of the Loan  Documents or any action taken or omitted by Agent under this
Agreement or any of the Loan Documents,  in proportion to each Lender's Pro Rata
Share,  but  only  to the  extent  that  any of the  foregoing  is not  promptly
reimbursed by Loan Parties; provided, however, no Lender shall be liable for any
portion of such liabilities,  obligations,  losses, damages, penalties, actions,
judgments,  suits,  costs,  expenses,  advances or disbursements  resulting from
Agent's  gross  negligence  or  willful  misconduct  as  determined  by a  final
non-appealable judgment by a court of competent  jurisdiction.  If any indemnity
furnished  to  Agent  for  any  purpose  shall,  in the  opinion  of  Agent,  be
insufficient  or become  impaired,  Agent may call for additional  indemnity and
cease, or not commence,  to do the acts indemnified against, even if so directed
by Lenders or Requisite Lenders,  until such additional  indemnity is furnished.
The  obligations  of Lenders  under this  subsection  9.1(E)  shall  survive the
payment in full of the Obligations and the termination of this Agreement.



                                     - 58 -


                  (F) ORIX INDIVIDUALLY. With respect to its Commitments and the
Loans made by it,  ORIX shall have and may  exercise  the same rights and powers
hereunder and is subject to the same  obligations  and liabilities as and to the
extent set forth herein for any other Lender.  The terms "Lenders" or "Requisite
Lenders" or any  similar  terms  shall,  unless the  context  clearly  otherwise
indicates,  include  ORIX in its  individual  capacity as a Lender or one of the
Requisite Lenders. ORIX, either directly or through strategic affiliations,  may
lend money to, acquire equity or other ownership  interests in, provide advisory
services to and generally engage in any kind of banking, trust or other business
with  any Loan  Party as if it were not  acting  as Agent  pursuant  hereto  and
without  any duty to account  therefor  to  Lenders.  ORIX,  either  directly or
through strategic affiliations, may accept fees and other consideration from any
Loan Party for services in connection  with this Agreement or otherwise  without
having to account for the same to Lenders.  Each Lender  acknowledges  that ORIX
may purchase  certain  equity  interests in certain Loan Parties and each Lender
(x)  consents  thereto and (y) waives any actual  and/or  potential  conflict of
interest or other  claims with respect to ORIX as Agent and as a Lender and as a
holder of an equity interest in certain Loan Parties.

                  (G) SUCCESSOR AGENT.

                           (1)   RESIGNATION.   Agent   may   resign   from  the
performance  of all its agency  functions  and duties  hereunder  at any time by
giving at least thirty (30)  Business  Days' prior  written  notice to Borrowing
Agent and the Lenders. Such resignation shall take effect upon the acceptance by
a successor Agent of appointment as provided below.

                           (2) APPOINTMENT OF SUCCESSOR. Upon any such notice of
resignation  pursuant to subsection  9.1(G)(1)  above,  Requisite  Lenders shall
appoint a successor Agent which,  unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to Loan Parties. If a successor Agent
shall not have been so  appointed  within said thirty (30)  Business Day period,
the  retiring  Agent,  upon  notice to  Borrowing  Agent,  shall then  appoint a
successor  Agent who shall serve as Agent until such time,  if any, as Requisite
Lenders appoint a successor Agent as provided above.

                           (3)  SUCCESSOR  AGENT.  Upon  the  acceptance  of any
appointment  as Agent  under  the Loan  Documents  by a  successor  Agent,  such
successor  Agent  shall  thereupon  succeed  to and become  vested  with all the
rights,  powers,  privileges and duties of the retiring Agent,  and the retiring
Agent  shall be  discharged  from its  duties  and  obligations  under  the Loan
Documents.  After any retiring  Agent's  resignation as Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions  taken or omitted to
be taken by it while it was Agent.

                  (H) COLLATERAL MATTERS.

                           (1) RELEASE OF COLLATERAL. Lenders hereby irrevocably
authorize  Agent,  at its option  and in its  discretion,  to  release  any Lien
granted  to or held by Agent upon any  Collateral  (a) upon  termination  of the
Commitments and upon payment and  satisfaction  of all  Obligations  (other than
contingent  indemnification  obligations  to the  extent no claims  giving  rise
thereto have been asserted); or (b) constituting property being sold or disposed
of if the applicable  Loan Party certifies to Agent that the sale or disposition
is made in compliance  with the provisions of this Agreement (and Agent may rely
in good faith conclusively on any such certificate, without further inquiry). In


                                     - 59 -


addition, with the consent of Requisite Lenders, Agent may release Liens granted
to or held by Agent upon any Collateral  having a book value of not greater than
ten percent  (10%) of the total book value of all  Collateral,  as determined by
Agent,  either in a single  transaction or in a series of related  transactions;
provided, however, in no event will Agent, acting under the authority granted to
it pursuant to this sentence,  release during any calendar year Liens granted to
or held by Agent  upon any  Collateral  having a total  book  value in excess of
twenty percent (20%)of the total book value of all Collateral,  as determined by
Agent.

                           (2) CONFIRMATION OF AUTHORITY; EXECUTION OF RELEASES.
Without in any manner limiting Agent's  authority to act without any specific or
further  authorization  or  consent  by  Lenders  (as set  forth  in  subsection
9.1(H)(1)  above),  each Lender  agrees to confirm in writing,  upon  request by
Agent or Borrowing Agent, the authority to release any Collateral conferred upon
Agent under  clauses (a) and (b) of  subsection  9.1(H)(1).  To the extent Agent
agrees to  release  any Lien  granted  to or held by Agent as  authorized  under
subsection 9.1(H)(1),  (a) Agent is hereby irrevocably authorized by Lenders to,
execute such  documents as may be necessary to evidence the release of the Liens
granted to Agent,  for the benefit of Agent and Lenders,  upon such  Collateral;
provided, however, that Agent shall not be required to execute any such document
on terms which,  in Agent's  opinion,  would expose Agent to liability or create
upon Agent any  obligation or entail any  consequence  other than the release of
such Liens without  recourse or warranty,  and (b) Loan Parties shall provide at
least  ten (10)  Business  Days  prior  written  notice of any  request  for any
document  evidencing  such release of the Liens and Loan Parties  agree that any
such release shall not in any manner discharge, affect or impair the Obligations
or any  Liens  granted  to  Agent  on  behalf  of  Agent  and  Lenders  upon (or
obligations of any Loan Party, in respect of) all interests retained by any Loan
Party,  including,  without  limitation,  the proceeds of any sale, all of which
shall continue to constitute  part of the property  covered by this Agreement or
the Loan Documents.

                           (3) ABSENCE OF DUTY.  Agent shall have no  obligation
whatsoever to any Lender or any other Person to assure that the property covered
by this Agreement or the Loan Documents  exists or is owned by any Loan Party or
is cared for,  protected  or insured  or has been  encumbered  or that the Liens
granted to Agent on behalf of Agent and Lenders  herein or pursuant  hereto have
been  properly or  sufficiently  or lawfully  created,  perfected,  protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care,  disclosure or fidelity,  or to
continue  exercising,  any of the  rights,  authorities  and  powers  granted or
available to Agent in this Agreement or in any of the Loan  Documents,  it being
understood and agreed that in respect of the property  covered by this Agreement
or the Loan Documents or any act,  omission or event related thereto,  Agent may
act in any manner it may deem appropriate, in its discretion,  given Agent's own
interest in property  covered by this  Agreement or the Loan Documents as one of
the Lenders and that Agent shall have no duty or liability  whatsoever to any of
the other Lenders;  provided,  however,  that Agent shall exercise the same care
which it would in dealing with loans for its own account.

                  (I)  AGENCY  FOR  PERFECTION.  Agent  and each  Lender  hereby
appoint  each  other  Lender  as agent for the  purpose  of  perfecting  Agent's
security  interest in assets which,  in accordance  with the Uniform  Commercial
Code in any applicable jurisdiction,  can be perfected by possession or Control.
Should any Lender (other than Agent) obtain possession of any such assets,  such
Lender shall notify Agent thereof,  and, promptly upon Agent's request therefor,


                                     - 60 -


shall deliver such assets to Agent or in accordance  with Agent's  instructions.
The Agent may file such  proofs of claim or  documents  as may be  necessary  or
advisable  in order to have the claims of the Agent and the  Lenders  (including
any claim for the reasonable compensation,  expenses, disbursements and advances
of the Agent and the Lenders,  their respective  agents,  financial advisors and
counsel), allowed in any judicial proceedings relative to any Loan Party, or any
of their respective  creditors or property,  and shall be entitled and empowered
to collect,  receive and  distribute  any monies,  securities or other  property
payable  or  deliverable  on any such  claims.  Any  custodian  in any  judicial
proceedings  relative to any Loan Party is hereby  authorized  by each Lender to
make payments to the Agent and, in the event that the Agent shall consent to the
making of such payments directly to the Lenders,  to pay to the Agent any amount
due for the reasonable compensation, expenses, disbursements and advances of the
Agent, its agents, financial advisors and counsel, and any other amounts due the
Agent.  Nothing contained in this Agreement or the other Loan Documents shall be
deemed to  authorize  the Agent to authorize or consent to or accept or adopt on
behalf of any  Lender any plan of  reorganization,  arrangement,  adjustment  or
composition  affecting  the Loans,  or the rights of any holder  thereof,  or to
authorize  the Agent to vote in  respect  of the claim of any Lender in any such
proceeding, except as specifically permitted herein.

                  (J) EXERCISE OF REMEDIES.  Each Lender agrees that it will not
have any right  individually to enforce or seek to enforce this Agreement or any
Loan Document or to realize upon any  collateral  security for the  Obligations,
unless  instructed to do so by Agent,  it being  understood and agreed that such
rights and remedies may be exercised only by Agent.

         9.2. NOTICE OF DEFAULT.

                  Agent shall not be deemed to have  knowledge  or notice of the
occurrence of any Default or Event of Default except with respect to defaults in
the payment of principal, interest and fees required to be paid to Agent for the
account of Lenders,  unless  Agent  shall have  received  written  notice from a
Lender or Borrowing Agent  referring to this Agreement,  describing such Default
or Event of Default and stating that such notice is a "notice of default". Agent
will notify each Lender of its receipt of any such notice.

         9.3. ACTION BY AGENT.

                  Agent shall take such  action  with  respect to any Default or
Event of Default as may be  requested by Requisite  Lenders in  accordance  with
Section 8. Unless and until Agent has received any such request,  Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to any Default or Event of Default as it shall deem advisable or in
the best interests of Lenders.

         9.4. AMENDMENTS, WAIVERS AND CONSENTS.

                  (A)  PERCENTAGE  OF  LENDERS  REQUIRED.  Except  as  otherwise
provided  herein  or  in  any  of  the  other  Loan  Documents,   no  amendment,
modification,  termination  or waiver of any provision of this  Agreement or any
other Loan  Document,  or consent to any departure by any Loan Party  therefrom,
shall in any event be  effective  unless the same shall be in writing and signed
by Requisite  Lenders (or, Agent, if expressly set forth herein or in any of the
other Loan Documents) and the applicable Loan Party;  provided however,  that no


                                     - 61 -


amendment,  modification,  termination,  waiver or consent  with  respect to the
Intercreditor  Agreement shall be effective  unless in writing and signed by the
Agent,   with  the  consent  of  the  Requisite   Lenders,   and  no  amendment,
modification,  termination,  waiver or  consent  shall be  effective,  unless in
writing and signed by all Lenders, to do any of the following:  (1) increase any
of the  Commitments;  (2) reduce the principal of or the rate of interest on any
Loan or reduce  the fees  payable  with  respect  to any Loan;  (3)  extend  the
Termination  Date or the  scheduled due date for all or any portion of principal
of the Loans or any  interest  or fees due  hereunder  or under  any other  Loan
Document;  (4) amend  the  definition  of the term  "Requisite  Lenders"  or the
percentage  of Lenders  which shall be  required  for Lenders to take any action
hereunder;  (5) amend or waive this  subsection  9.4 or the  definitions  of the
terms  used in  this  subsection  9.4  insofar  as the  definitions  affect  the
substance of this  subsection 9.4; (6) release  Collateral  (except if the sale,
disposition or release of such Collateral is permitted  under  subsection 7.3 or
subsection  9.1 or  under  any  other  Loan  Document);  or (8)  consent  to the
assignment,  delegation or other transfer by any Loan Party of any of its rights
and obligations under any Loan Document;  provided,  further, that no amendment,
modification,  termination,  waiver or consent affecting the rights or duties of
Agent  under  this  Section 9 or under any Loan  Document  shall in any event be
effective,  unless in writing  and signed by Agent,  in  addition to the Lenders
required to take such action. Any amendment,  modification,  termination, waiver
or consent effected in accordance with this Section 9 shall be binding upon each
Lender or future Lender and, if signed by a Loan Party, on such Loan Party.

                  (B) SPECIFIC PURPOSE OR INTENT. Each amendment,  modification,
termination,  waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No amendment, modification,
termination,  waiver or consent  shall be required for Agent to take  additional
Collateral.

                  (C) FAILURE TO GIVE  CONSENT;  REPLACEMENT  OF  NON-CONSENTING
LENDER. In the event Agent requests the consent of a Lender and does not receive
a written  consent or denial  thereof  within ten (10)  Business Days after such
Lender's receipt of such request, then such Lender will be deemed to have denied
the giving of such  consent.  If, in  connection  with any  proposed  amendment,
modification,  termination  or waiver of any of the provisions of this Agreement
requiring the consent or approval of all Lenders under this  subsection 9.4, the
consent of ORIX and of  Requisite  Lenders is obtained but the consent of one or
more other Lenders whose consent is required is not obtained,  then either Agent
or Borrowers  shall have the right, so long as all such  non-consenting  Lenders
are either  replaced or prepaid as  described  in clauses  (1) or (2) below,  to
either (1)  replace  the  non-consenting  Lenders  with one or more  Replacement
Lenders  pursuant  to  subsection  2.11(A),  as if such  Lender were an Affected
Lender thereunder,  but only so long as each such Replacement Lender consents to
the proposed  amendment,  modification,  termination or waiver, or (2) prepay in
full  the   Obligations  of  the   non-consenting   Lenders  and  terminate  the
non-consenting  Lenders'  Commitments pursuant to subsection 2.11(B), as if such
Lender were an Affected Lender thereunder.

                  Notwithstanding  anything in this  subsection  9.4,  Agent and
Loan Parties,  without the consent of either  Requisite  Lenders or all Lenders,
may execute  amendments to this Agreement and the Loan Documents,  which consist
solely of the making of typographical corrections.


                                     - 62 -


         9.5. ASSIGNMENTS.

                  (A)  ASSIGNMENTS.  Each  Lender  may  assign  its  rights  and
delegate its  obligations  under this  Agreement;  provided,  however,  (1) such
Lender  (other than ORIX) shall first  obtain the written  consent of Agent and,
provided that no Event of Default shall then exist and be continuing,  Borrowing
Agent,  neither  of which  shall be  unreasonably  withheld,  (2) the  amount of
Commitments  and Loans of the assigning  Lender being assigned shall in no event
be less  than the  lesser  of (a)  $5,000,000  or (b) the  entire  amount of the
Commitments  and Loans of such assigning  Lender and (3)(a) each such assignment
shall  be of a pro  rata  portion  of all  such  assigning  Lender's  Loans  and
Commitments hereunder,  and (b) the parties to such assignment shall execute and
deliver to Agent for  acceptance  and  recording  a  Assignment  and  Acceptance
Agreement  together with (i) a processing and recording fee of $3,500 payable by
the assigning Lender to Agent and (ii) each of the Notes originally delivered to
the assigning Lender.  The  administrative  fee referred to in clause (3) of the
preceding  sentence  shall not apply to an assignment of a security  interest in
all or any portion of a Lender's  rights under this  Agreement or the other Loan
Documents,  as described in clause (1) of subsection  9.5(D) below. Upon receipt
of all of the foregoing,  Agent shall notify  Borrowing Agent of such assignment
and  Borrowers  shall comply with their  obligations  under the last sentence of
subsection 2.1(D). In the case of an assignment authorized under this subsection
9.5,  the  assignee  shall be  considered  to be a "Lender"  hereunder  and Loan
Parties hereby  acknowledge  and agree that any  assignment  will give rise to a
direct obligation of Loan Parties to the assignee. The assigning Lender shall be
relieved of its obligations to make Loans hereunder with respect to the assigned
portion of its Commitment.

                  (B) [INTENTIONALLY OMITTED].

                  (C) NO RELIEF OF  OBLIGATIONS;  COOPERATION;  ABILITY  TO MAKE
LIBOR LOANS.  Except as otherwise provided in subsection 9.5(A) no Lender shall,
as between Loan Parties and that Lender,  be relieved of any of its  obligations
hereunder as a result of any sale,  assignment,  transfer or negotiation of, all
or any part of the Loans or other  Obligations owed to such Lender.  Each Lender
may furnish any  information  concerning  Loan Parties in the possession of that
Lender from time to time to its  assignees  (including  prospective  assignees).
Loan Parties agree that they will use their best efforts to assist and cooperate
with Agent and any Lender in any manner  reasonably  requested  by Agent or such
Lender to effect an assignment described above,  including,  without limitation,
assistance in the preparation of appropriate  disclosure  documents or placement
memoranda. Notwithstanding anything contained in this Agreement to the contrary,
so long as the Requisite  Lenders shall remain capable of making LIBOR Loans, no
Person shall become a Lender  hereunder unless such Person shall also be capable
of making LIBOR Loans.

                  (D)   SECURITY    INTERESTS;    ASSIGNMENT   TO    AFFILIATES.
Notwithstanding any other provision set forth in this Agreement,  any Lender may
at any time following written notice to Agent (1) pledge the Obligations held by
it or create a security  interest in all or any portion of its rights under this
Agreement or the other Loan Documents in favor of any Person; provided,  however
(a) no such pledge or grant of security  interest  to any Person  shall  release
such Lender from its obligations  hereunder or under any other Loan Document and
(b) the  acquisition  of  title to such  Lender's  Obligations  pursuant  to any
foreclosure or other exercise of remedies by such Person shall be subject to the


                                     - 63 -


provisions  of this  Agreement  and the other  Loan  Documents  in all  respects
including,  without limitation,  any consent required by subsection 9.5; and (2)
subject to complying with the  provisions of subsection  9.5 (A),  assign all or
any portion of its funded  loans to an assignee  which is a  Subsidiary  of such
Lender or its  parent  company,  to one or more other  Lenders,  or to a Related
Fund. For purposes of this paragraph,  a "Related Fund" shall mean, with respect
to any Lender,  a fund or other  investment  vehicle that invests in  commercial
loans and is  managed  by such  Lender or by the same  investment  advisor  that
manages such Lender or by an Affiliate of such investment advisor.

                  (E)  RECORDING  OF  ASSIGNMENTS.  Agent shall  maintain at its
office in  Dallas,  Texas a copy of each  Assignment  and  Acceptance  Agreement
delivered to it and a register for the recordation of the names and addresses of
Lenders, and the commitments of, and principal amount of the Loans owing to each
Lender  pursuant  to the terms  hereof from time to time (the  "Register").  The
entries in the  Register  shall be  presumptive  evidence of the amounts due and
owing to Lender in the absence of manifest error.  Loan Parties,  Agent and each
Lender may treat each Person whose name is recorded in the Register  pursuant to
the terms hereof as a Lender  hereunder for all purposes of this Agreement.  The
Register shall be available for inspection by Borrowing Agent and any Lender, at
any reasonable time upon reasonable prior notice.

         9.6. SET OFF AND SHARING OF PAYMENTS.  In addition to any rights now or
hereafter  granted under applicable law and not by way of limitation of any such
rights,  upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby  authorized by each Loan Party at any time or from time to
time, with reasonably  prompt subsequent notice to Borrowing Agent (any prior or
contemporaneous  notice  being  hereby  expressly  waived)  to  set  off  and to
appropriate  and to apply any and all (a) balances held by such Lender at any of
its offices for the account of Loan Parties (regardless of whether such balances
are then due to Loan Parties),  and (b) other property at any time held or owing
by such  Lender  to or for the  credit  or for the  account  of any Loan  Party,
against and on account of any of the  Obligations;  except that no Lender  shall
exercise any such right without the prior written  consent of Agent.  Any Lender
exercising  its right to set off shall  purchase for cash (and the other Lenders
shall  sell)  interests  in each of such  other  Lender's  Pro Rata Share of the
Obligations  as would be  necessary  to cause all Lenders to share the amount so
set off with each other  Lender in  accordance  with their  respective  Pro Rata
Shares. Each Loan Party agrees, to the fullest extent permitted by law, that any
Lender may  exercise  its right to set off with  respect to amounts in excess of
its Pro Rata  Share of the  Obligations  and upon  doing so shall  deliver  such
amount  so set off to Agent  for the  benefit  of Agent  and of all  Lenders  in
accordance with their Pro Rata Shares.

         9.7. [INTENTIONALLY OMITTED].

         9.8. SETTLEMENTS, PAYMENTS AND INFORMATION.

                  (A) FEE PAYMENTS.

                           (1) [INTENTIONALLY OMITTED].

                           (2) [INTENTIONALLY OMITTED].


                                     - 64 -


                           (3)  SETTLEMENT  DEFINITIONS.  For  purposes  of this
subsection  9.8(A),  the following  terms and conditions  will have the meanings
indicated:

                                    (a)  "Daily  Loan  Balance"  means an amount
calculated as of the end of each calendar day by subtracting  (i) the cumulative
principal  amount  paid by Agent to a Lender  on a Loan  from the  Closing  Date
through and including  such calendar  day,  from (ii) the  cumulative  principal
amount on a Loan  advanced by such Lender to Agent on that Loan from the Closing
Date through and including such calendar day.

                                    (b) "Daily  Interest  Rate"  means an amount
calculated  by dividing the interest  rate payable to a Lender on a Loan (as set
forth in  subsection  2.2) as of each calendar day by three hundred sixty (360).

                                    (c) "Daily Interest  Amount" means an amount
calculated  by  multiplying  the Daily Loan Balance of a Loan by the  associated
Daily Interest Rate on that Loan.

                                    (d)   "Interest   Ratio"   means  a   number
calculated  by dividing the total  amount of the interest on a Loan  received by
Agent with  respect to the  immediately  preceding  month by the total amount of
interest on that Loan due from Borrower during the immediately preceding month.

                           (4) SETTLEMENT PAYMENTS. On the first Business Day of
each month  ("Interest  Settlement  Date"),  Agent will  advise  each  Lender by
telephone,  fax or telecopy of the amount of such Lender's share of interest and
fees on each of the  Loans  as of the  end of the  last  day of the  immediately
preceding month.  Provided that such Lender has made all payments required to be
made by it under this Agreement, Agent will pay to such Lender, by wire transfer
to such Lender's  account (as specified by such Lender on the signature  page of
this Agreement or the applicable Assignment and Acceptance Agreement, as amended
by such  Lender  from time to time  after the date  hereof or in the  applicable
Assignment and Acceptance Agreement) not later than 3:00 p.m. New York City time
on the next Business Day following the Interest  Settlement  Date, such Lender's
share of interest and fees on each of the Loans. Such Lender's share of interest
on each Loan will be  calculated  for that  Loan by  adding  together  the Daily
Interest  Amounts  for each  calendar  day of the prior  month for that Loan and
multiplying the total thereof by the Interest Ratio for that Loan. Such Lender's
share of all fees paid to Agent for the  benefit of Lenders  hereunder  shall be
paid and calculated based on such Lender's  Commitment with respect to the Loans
on which such fees are  associated.  To the extent  Agent does not  receive  the
total amount of any fee owing by  Borrowers  under this  Agreement,  each amount
payable by Agent to a Lender  under this  subsection  9.8(A)(4)  with respect to
such fee shall be reduced on a pro rata basis.  Any funds  disbursed or received
by Agent  pursuant  to this  Agreement,  including,  without  limitation,  under
subsections 9.7 and 9.9, prior to the Settlement  Date for such  disbursement or
payment shall be deemed  advances or  remittances  by ORIX, in its capacity as a
Lender,  for  purposes  of  calculating  interest  and  fees  pursuant  to  this
subsection 9.8(A)(4).

                  (B) TERM LOAN  PRINCIPAL  PAYMENTS.  Provided that such Lender
has made all payments  required to be made by it under this Agreement,  payments
of principal of the Term Loan will be settled on the date of receipt if received
by  Agent  on the  first  Business  Day of a  month  and  on  the  Business  Day


                                     - 65 -


immediately  following the date of receipt if received on any day other than the
first Business Day of a month.

                  (C) RETURN OF PAYMENTS.

                           (1) RECOVERY AFTER  NON-RECEIPT OF EXPECTED  PAYMENT.
If Agent  pays an amount  to a Lender  under  this  Agreement  in the  belief or
expectation  that a related  payment  has been or will be received by Agent from
any Loan Party and such  related  payment is not  received by Agent,  then Agent
will be entitled  to recover  such  amount  from such  Lender  without  set-off,
counterclaim or deduction of any kind together with interest  thereon,  for each
day from and including  the date such amount is made  available by Agent to such
Lender to but  excluding  the date of repayment to Agent,  at the greater of the
Federal Funds  Effective Rate and a rate  determined by Agent in accordance with
banking industry rules on interbank compensation.

                           (2) RECOVERY OF RETURNED PAYMENT. If Agent determines
at any time that any  amount  received  by Agent  under this  Agreement  must be
returned  to any  Loan  Party  or  paid  to any  other  Person  pursuant  to any
requirement of law, court order or otherwise,  then,  notwithstanding  any other
term or condition of this  Agreement,  Agent will not be required to  distribute
any portion thereof to any Lender. In addition,  each Lender will repay to Agent
on demand any portion of such amount that Agent has  distributed to such Lender,
together  with interest at such rate, if any, as Agent is required to pay to any
Loan Party or such other Person,  without set-off,  counterclaim or deduction of
any kind.

         9.9. [INTENTIONALLY OMITTED].

SECTION 10    BORROWING AGENCY

         10.1. BORROWING AGENCY PROVISIONS.

                  (A)  DESIGNATION  OF BORROWING  AGENT.  Each  Borrower  hereby
irrevocably  designates Borrowing Agent to be its attorney and agent and in such
capacity  to borrow,  sign and  endorse  notes,  and  execute  and  deliver  all
instruments,  documents,  writings  and  further  assurances  now  or  hereafter
required  hereunder,  on  behalf  of such  Borrower  or  Borrowers,  and  hereby
authorizes Agent to pay over or credit all loan proceeds hereunder in accordance
with the request of Borrowing Agent.

                  (B) INDEMNIFICATIONS.  The handling of this credit facility as
a co-borrowing  facility with a Borrowing  Agent in the manner set forth in this
Agreement  is solely as an  accommodation  to  Borrowers  and at their  request.
Neither  Agent nor any Lender  shall incur  liability  to  Borrowers as a result
thereof. To induce Agent and the Lenders to do so and in consideration  thereof,
each Borrower hereby  indemnifies Agent and each Lender and holds Agent and each
Lender  harmless  from and against any and all  liabilities,  expenses,  losses,
damages and claims of damage or injury  asserted  against Agent or any Lender by
any Person  arising from or incurred by reason of the handling of the  financing
arrangements of Borrowers as provided herein, reliance by Agent or any Lender on
any request or  instruction  from  Borrowing  Agent or any other action taken by
Agent or any  Lender  with  respect  to this  Subsection  10.1(B)  except due to
willful  misconduct or gross (not mere) negligence by the indemnified  party (as
determined  by a court  of  competent  jurisdiction  in a  final  non-appealable
judgment).


                                     - 66 -


                  (C) OBLIGATIONS  ABSOLUTE.  All Obligations shall be joint and
several,  and  each  Borrower  shall  make  payment  upon  the  maturity  of the
Obligations by acceleration  or otherwise,  and such obligation and liability on
the  part  of each  Borrower  shall  in no way be  affected  by any  extensions,
renewals  and  forbearance  granted  by Agent or any  Lender to any Loan  Party,
failure of Agent or any Lender to give any  Borrower  notice of borrowing or any
other  notice,  any  failure  of Agent or any Lender to pursue or  preserve  its
rights  against  any Loan  Party,  the  release  by Agent or any  Lender  of any
Collateral now or thereafter acquired from any Loan Party, and such agreement by
each Loan Party to pay upon any notice issued pursuant  thereto is unconditional
and  unaffected  by prior  recourse  by Agent or any  Lender to the  other  Loan
Parties or any Collateral for such Loan Party's Obligations or the lack thereof,
irrespective of the validity,  regularity or enforceability of this Agreement or
any other circumstances whatsoever.

                  (D) WAIVERS.  Except as otherwise  expressly  provided in this
Agreement,  each  Borrower  hereby  waives notice of acceptance of its joint and
several  liability,  notice  of any  Loan  issued  under  or  pursuant  to  this
Agreement,  notice of the occurrence of any Default, Event of Default, or of any
demand for any payment  under this  Agreement,  notice of any action at any time
taken  or  omitted  by  Agent  or  Lenders  under  or in  respect  of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent  permitted  by  applicable  law,  all  demands,  notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement).  Each Borrower hereby assents to, and waives notice
of, any  extension  or  postponement  of the time for the  payment of any of the
Obligations,  the  acceptance  of any  payment  of any of the  Obligations,  the
acceptance of any partial payment thereon,  any waiver,  consent or other action
or  acquiescence  by Agent or  Lenders  at any time or times in  respect  of any
default  by any  Borrower  in  the  performance  or  satisfaction  of any  term,
covenant,   condition  or  provision  of  this  Agreement,  any  and  all  other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking,  addition,  substitution or release, in whole or in part, at any
time or times,  of any  security  for any of the  Obligations  or the  addition,
substitution or release, in whole or in part, of any Borrower.  Without limiting
the  generality of the foregoing,  each Borrower  assents to any other action or
delay in  acting  or  failure  to act on the part of  Agent or any  Lender  with
respect to the  failure by any  Borrower  to comply  with any of its  respective
Obligations, including any failure strictly or diligently to assert any right or
to pursue any  remedy or to comply  fully with  applicable  laws or  regulations
thereunder,  which might,  but for the provisions of this Section afford grounds
for  terminating,  discharging  or relieving any Borrower,  in whole or in part,
from any of its Obligations  under this Section,  it being the intention of each
Borrower that, so long as any of the Obligations  hereunder remain  unsatisfied,
the  Obligations  of each  Borrower  under this Section  shall not be discharged
except by  performance  and then only to the  extent  of such  performance.  The
Obligations  of each  Borrower  under this Section  shall not be  diminished  or
rendered   unenforceable  by  any  winding  up,   reorganization,   arrangement,
liquidation,  reconstruction or similar  proceeding with respect to any Borrower
or Agent or any  Lender.  Each  Borrower  represents  and  warrants to Agent and
Lenders that such Borrower is currently  informed of the financial  condition of
Borrowers and of all other  circumstances  which a diligent inquiry would reveal
and which bear upon the risk of  nonpayment  of the  Obligations.  Each Borrower
further represents and warrants to Agent and Lenders that such Borrower has read
and understands  that terms and conditions of the Loan Documents.  Each Borrower
hereby covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance


                                     - 67 -


of the Obligations.  Each Borrower waives all rights and defenses arising out of
an election of  remedies  by Agent or any Lender,  even though that  election of
remedies,  such as a  nonjudicial  foreclosure  with  respect to security  for a
guaranteed  obligation,  has  destroyed  Agent's  or  such  Lender's  rights  of
subrogation and  reimbursement  against such Borrower.  Each Borrower waives all
rights and defenses  that such  Borrower may have  because the  Obligations  are
secured by real property.  This means, among other things: (i) Agent may collect
from such  Borrower  without  first  foreclosing  on any  Collateral  pledged by
Borrowers,  and  (ii) if  Agent  forecloses  on any  real  property  pledged  by
Borrowers:  (A) the amount of the  Obligations  may be reduced only by the price
for  which  that  Collateral  is  sold  at the  foreclosure  sale,  even  if the
Collateral is worth more than the sale price,  (B) Agent and Lenders may collect
from such Borrower even if Agent or Lenders, by foreclosing on the real property
Collateral,  has  destroyed any right such Borrower may have to collect from the
other Borrowers.  This is an unconditional and irrevocable  waiver of any rights
and defenses such Borrower may have because the  Obligations are secured by real
property.

         10.2.  WAIVER OF SUBROGATION.  Each Loan Party expressly waives any and
all rights of subrogation,  reimbursement,  indemnity, exoneration, contribution
of any other claim which such Loan Party may now or  hereafter  have against the
other Loan  Parties or other  Person  directly  or  contingently  liable for the
Obligations  hereunder,  or against or with  respect to the other Loan  Parties'
property  (including,  without limitation,  any property which is Collateral for
the  Obligations),  arising from the existence or performance of this Agreement,
until termination of this Agreement and repayment in full of the Obligations.

         10.3.  Interdependent  Companies.  The Borrowers  acknowledge and agree
that they are a part of an integrated, interdependent group of companies that on
a regular  basis make  intercompany  loans to one another and that the Agent and
Lenders are relying upon the joint and several  obligations  of the Borrowers in
providing  the  financing  accommodations  described  herein  and would not have
provided such accommodations  without such joint and several undertakings of all
of the Borrowers.

SECTION 11    GUARANTY

         11.1.  UNCONDITIONAL  GUARANTY.  Each Guarantor hereby  unconditionally
guarantees,  as a  primary  obligor  and not  merely as a  surety,  jointly  and
severally  with each other  Guarantor when and as due,  whether at maturity,  by
acceleration,  by  notice  of  prepayment  or  otherwise,  the due and  punctual
performance of all Obligations of each other party hereto.  Without limiting the
generality of the  foregoing,  each  Guarantor's  liability  shall extend to all
amounts  that  constitute  part  of the  Obligations  and  would  be owed by the
Borrowers to the Agent or the Lenders  under any Loan  Document but for the fact
that  they  are  unenforceable  or  not  allowable  due to  the  existence  of a
bankruptcy,  reorganization or similar proceeding involving any Loan Party. Each
payment made by any Guarantor  pursuant to this Guaranty shall be made in lawful
money of the United States in immediately  available  funds, (a) without set-off
or counterclaim  and (b) free and clear of and without  deduction or withholding
for or on account  of any  present  and future  Charges  and any  conditions  or
restrictions resulting in Charges and all penalties, interest and other payments
on or in respect  thereof (except for Charges based on the overall net income of
Agent or a Lender)  ("Tax" or "Taxes")  unless  Guarantor is compelled by law to
make payment subject to such Taxes.


                                     - 68 -


         11.2.  TAXES.  All Taxes in respect  of this  Guaranty  or any  amounts
payable or paid under this Guaranty  shall be paid by Guarantor  when due and in
any event prior to the date on which penalties  attach  thereto.  Each Guarantor
will indemnify  Agent and each of the Lenders against and in respect of all such
Taxes. Without limiting the generality of the foregoing, if any Taxes or amounts
in respect thereof must be deducted or withheld from any amounts payable or paid
by any Guarantor hereunder,  such Guarantor shall pay such additional amounts as
may be necessary to ensure that the Agent and each of the Lenders receives a net
amount  equal  to the full  amount  which it would  have  received  had  payment
(including of any additional  amounts  payable under this Section 11.2) not been
made  subject to such  Taxes.  Within  thirty  (30) days of each  payment by any
Guarantor  hereunder  of Taxes or in  respect  of Taxes,  such  Guarantor  shall
deliver  to Agent  satisfactory  evidence  (including  originals,  or  certified
copies, of all relevant receipts) that such Taxes have been duly remitted to the
appropriate authority or authorities.

         11.3. WAIVERS OF NOTICE, DEMAND, ETC. Each Guarantor hereby absolutely,
unconditionally  and  irrevocably  waives (i) promptness,  diligence,  notice of
acceptance,  notice of  presentment  of payment and any other notice  hereunder,
(ii) demand of payment, protest, notice of dishonor or nonpayment, notice of the
present and future amount of the  Obligations  and any other notice with respect
to the Obligations,  (iii) any requirement that the Agent or any Lender protect,
secure,  perfect or insure any security interest or Lien or any property subject
thereto or exhaust any right or take any action against any other Loan Party, or
any Person or any  Collateral,  (iv) any other action,  event or precondition to
the  enforcement  hereof  or the  performance  by  each  such  Guarantor  of the
Obligations, and (v) any defense arising by any lack of capacity or authority or
any other  defense of any Loan Party or any notice,  demand or defense by reason
of cessation from any cause of Obligations other than payment and performance in
full of the  Obligations  by the Loan  Parties  and any  defense  that any other
guarantee or security was or was to be obtained by Agent.

         11.4. NO INVALIDITY,  IRREGULARITY,  ETC. No invalidity,  irregularity,
voidableness,  voidness  or  unenforceability  of  this  Agreement  or any  Loan
Document or any other agreement or instrument relating thereto, or of all or any
part of the  Obligations  or of any collateral  security  therefor shall affect,
impair or be a defense hereunder.

         11.5. INDEPENDENT  LIABILITY.  The Guaranty hereunder is one of payment
and performance, not collection, and the obligations of each Guarantor hereunder
are  independent of the  Obligations  of the other Loan Parties,  and a separate
action or actions may be brought and prosecuted against any Guarantor to enforce
the terms and  conditions  of this  Section  11.5,  irrespective  of whether any
action is brought  against any other Loan Party or other  Persons or whether any
other Loan Party or other Persons are joined in any such action or actions. Each
Guarantor  waives  any right to  require  that any resort be had by Agent or any
Lender to any security held for payment of the  Obligations or to any balance of
any  deposit  account or credit on the books of any Agent or any Lender in favor
of any Loan Party or any other  Person.  No  election  to proceed in one form of
action or  proceedings,  or against any  Person,  or on any  Obligations,  shall
constitute  a waiver of Agent's  right to proceed in any other form of action or
proceeding  or against any other  Person  unless  Agent has  expressed  any such
waiver in writing.  Without limiting the generality of the foregoing,  no action
or proceeding  by Agent against any Loan Party under any document  evidencing or
securing indebtedness of any Loan Party to Agent shall diminish the liability of
any Guarantor  hereunder,  except to the extent Agent receives actual payment on


                                     - 69 -


account of Obligations by such action or proceeding,  notwithstanding the effect
of any such election,  action or proceeding upon the right of subrogation of any
Guarantor in respect of any Loan Party.

         11.6. INDEMNITY.  As an original and independent  obligation under this
Guaranty,  each Guarantor  shall (a) indemnify the Agent and each of the Lenders
and keep the  Agent  and each of the  Lenders  indemnified  against  all  costs,
losses,  expenses and liabilities of whatever kind resulting from the failure by
any  party  to make  due  and  punctual  payment  of any of the  Obligations  or
resulting  from  any  of the  Obligations  being  or  becoming  void,  voidable,
unenforceable  or  ineffective   against  Borrowers   (including,   but  without
limitation,  all legal and other  costs,  Charges and  expenses  incurred by the
Agent and each of the Lenders,  or any of them in connection  with preserving or
enforcing,  or  attempting  to  preserve  or  enforce,  its  rights  under  this
Guaranty),  except to the  extent  that any of the same  results  from the gross
negligence or willful  misconduct by Agent or any Lender;  and (b) pay on demand
the amount of such costs, losses,  expenses and liabilities whether or not Agent
or any of the Lenders have  attempted to enforce any rights against any Borrower
or any other Person or otherwise.

         11.7.  LIABILITY  ABSOLUTE.  The liability of each Guarantor  hereunder
shall be absolute,  unlimited and  unconditional and shall not be subject to any
reduction,  limitation,  impairment,  discharge or  termination  for any reason,
including,   without  limitation,  any  claim  of  waiver,  release,  surrender,
alteration  or  compromise,  and shall not be subject  to any claim,  defense or
setoff,  counterclaim,  recoupment  or  termination  whatsoever by reason of the
invalidity, illegality or unenforceability of any other Obligation or otherwise.
Without  limiting the  generality  of the  foregoing,  the  obligations  of each
Guarantor  shall not be discharged or impaired,  released,  limited or otherwise
affected by:

                           (i) any  change  in the  manner,  place  or  terms of
                  payment or performance,  and/or any change or extension of the
                  time  of  payment  or  performance  of,  release,  renewal  or
                  alteration  of,  or  any  new   agreements   relating  to  any
                  Obligation,  any security therefor,  or any liability incurred
                  directly or indirectly in respect  thereof,  or any rescission
                  of,  or  amendment,  waiver or other  modification  of, or any
                  consent  to  departure   from,  this  Agreement  or  any  Loan
                  Document,  including any increase in the Obligations resulting
                  from the  extension  of  additional  credit to any Borrower or
                  otherwise;

                           (ii) any sale, exchange,  release,  surrender,  loss,
                  abandonment,  realization  upon any property by  whomsoever at
                  any  time  pledged  or  mortgaged  to  secure,   or  howsoever
                  securing,  all or any of the  Obligations,  and/or  any offset
                  there  against,   or  failure  to  perfect,  or  continue  the
                  perfection of, any Lien in any such property,  or delay in the
                  perfection  of any such Lien, or any amendment or waiver of or
                  consent to departure from any other guaranty for all or any of
                  the Obligations;

                           (iii)  the  failure  of the  Agent or any  Lender  to
                  assert any claim or demand or to  enforce  any right or remedy
                  against  any  Borrower  or any other  Loan  Party or any other
                  Person  under the  provisions  of this  Agreement  or any Loan


                                     - 70 -


                  Document or any other  document  or  instrument  executed  and
                  delivered in connection herewith or therewith;

                           (iv) any settlement or compromise of any  Obligation,
                  any security therefor or any liability (including any of those
                  hereunder)  incurred directly or indirectly in respect thereof
                  or hereof,  and any subordination of the payment of all or any
                  part thereof to the payment of any obligation  (whether due or
                  not) of any Loan Party to  creditors  of any Loan Party  other
                  than any other Loan Party;

                           (v) any  manner  of  application  of  Collateral,  or
                  proceeds  thereof,  to all or any of the  Obligations,  or any
                  manner of sale or other  disposition of any Collateral for all
                  or any of the  Obligations  or any  other  assets  of any Loan
                  Party; and

                           (vi) any other agreements or circumstance  (including
                  any statute of limitations) of any nature  whatsoever that may
                  or might in any manner or to any  extent  vary the risk of any
                  Guarantor,  or  that  might  otherwise  at  law  or in  equity
                  constitute  a defense  available  to, or a  discharge  of, the
                  Guaranty hereunder and/or the obligations of any Guarantor, or
                  a defense  to, or  discharge  of,  any Loan Party or any other
                  Person or party hereto or the  Obligations  or otherwise  with
                  respect to the Loans or other financial  accommodations to any
                  Borrower pursuant to this Agreement and/or the Loan Documents.

         11.8. ACTION BY AGENT WITHOUT NOTICE. The Agent shall have the right to
take any action set forth in Section 8.4 without notice to or the consent of any
Guarantor and each  Guarantor  expressly  waives any right to notice of, consent
to,  knowledge of and  participation  in any  agreements  relating to any of the
above or any other present or future event relating to Obligations whether under
this  Agreement  or  otherwise  or any right to challenge or question any of the
above and waives any defenses of such Guarantor which might arise as a result of
such actions.

         11.9.  APPLICATION OF PROCEEDS.  Agent may at any time and from time to
time (whether prior to or after the revocation or termination of this Agreement)
without  the  consent of, or notice to, any  Guarantor,  and  without  incurring
responsibility to any Guarantor or impairing or releasing the Obligations, apply
any sums by whomsoever paid or howsoever realized to any Obligations  regardless
of what Obligations remain unpaid.

         11.10. CONTINUING EFFECTIVENESS.

                  (A)  REINSTATEMENT.  The Guaranty  provisions herein contained
shall continue to be effective or be reinstated, as the case may be, if claim is
ever made upon the Agent or any Lender for  repayment  or recovery of any amount
or  amounts  received  by such  Person in  payment  or on  account of any of the
Obligations  and such  Person  repays all or part of said  amount for any reason
whatsoever,  including, without limitation, by reason of any judgment, decree or
order of any court or administrative  body having  jurisdiction over such Person
or the respective property of each, or any settlement or compromise of any claim
effected by such Person with any such claimant  (including any Loan Party);  and
in such event each  Guarantor  hereby  agrees  that any such  judgment,  decree,


                                     - 71 -


order,  settlement or compromise  or other  circumstances  shall be binding upon
such Guarantor, notwithstanding any revocation hereof or the cancellation of any
note or other instrument evidencing any Obligation,  and each Guarantor shall be
and remain  liable to the Agent  and/or the  Lenders for the amount so repaid or
recovered  to the same  extent  as if such  amount  had  never  originally  been
received by such Person(s).

                  (B) NO MARSHALLING. Agent shall not be required to marshal any
assets in favor of any Guarantor, or against or in payment of Obligations.

                  (C)  PRIORITY  OF CLAIMS.  No  Guarantor  shall be entitled to
claim  against any present or future  security held by Agent from any Person for
Obligations  in  priority to or equally  with any claim of Agent,  or assert any
claim for any  liability  of any Loan Party to any  Guarantor  in priority to or
equally with claims of Agent for Obligations, and no Guarantor shall be entitled
to compete with Agent with respect to, or to advance any equal or prior claim to
any security held by Agent for Obligations.

                  (D) INVALIDATED  PAYMENTS. If any Loan Party makes any payment
to Agent, which payment is wholly or partly subsequently  invalidated,  declared
to be  fraudulent  or  preferential,  set aside or  required to be repaid to any
Person  under any  federal  or  provincial  statute  or at  common  law or under
equitable  principles,  then to the  extent  of  such  payment,  the  Obligation
intended to be paid shall be revived and  continued  in full force and effect as
if the payment had not been made,  and the resulting  revived  Obligation  shall
continue to be guaranteed, uninterrupted, by each Guarantor hereunder.

                  (E)  ASSIGNMENT  AND WAIVER.  All  present  and future  monies
payable by any Loan Party to any  Guarantor,  whether  arising out of a right of
subrogation  or  otherwise,  are  assigned  to Agent for its benefit and for the
ratable  benefit of the Lenders as security  for such  Guarantor's  liability to
Agent and the Lenders  hereunder and,  except (so long as no Default or Event of
Default has occurred and is continuing)  for monies payable by any Loan Party to
any  Guarantor in the ordinary  course of business,  each  Guarantor  waives any
right to demand any and all present and future monies  payable by any Loan Party
to such  Guarantor,  whether arising out of a right of subrogation or otherwise.
Except to the extent prohibited otherwise by this Agreement, all monies received
by any  Guarantor  from any Loan Party shall be held by such  Guarantor as agent
and trustee for Agent.  This assignment and waiver shall only terminate when the
Obligations  are  paid in  full  in  cash  and  this  Agreement  is  irrevocably
terminated.

                  (F) PAYMENTS TO GUARANTORS.  Each Loan Party acknowledges this
assignment and waiver and, except as otherwise set forth herein,  agrees to make
no payments,  except (so long as no Default or Event of Default has occurred and
is  continuing)  in  the  ordinary  course  of  business  consistent  with  past
practices,  to any Guarantor  without the prior written  consent of Agent.  Each
Loan Party agrees to give full effect to the provisions hereof.

         11.11.  ENFORCEMENT.  Upon the occurrence and during the continuance of
any  Event of  Default,  Agent may and upon  written  request  of the  Requisite
Lenders  shall,  without  notice to or demand  upon any Loan  Party or any other
Person,  declare any obligations of such Guarantor hereunder immediately due and
payable,  and shall be entitled to enforce the  obligations  of each  Guarantor.
Upon such declaration by Agent,  Agent and the Lenders are hereby  authorized at
any  time  and  from  time to time to set  off and  apply  any and all  deposits


                                     - 72 -


(general or special, time or demand,  provisional or final) at any time held and
other  indebtedness  at any time  owing by  Agent or the  Lenders  to or for the
credit or the account of any Guarantor against any and all of the obligations of
each Guarantor now or hereafter existing hereunder,  whether or not Agent or the
Lenders  shall have made any demand  hereunder  against any other Loan Party and
although such  obligations may be contingent and unmatured.  The rights of Agent
and  the  Lenders  hereunder  are in  addition  to  other  rights  and  remedies
(including  other rights of set-off) which Agent and the Lenders may have.  Upon
such  declaration by Agent,  with respect to any claims (other than those claims
referred to in the immediately preceding paragraph) of any Guarantor against any
Loan Party (the "Claims"),  Agent shall have the full right on the part of Agent
in its own name or in the name of such  Guarantor  to collect and  enforce  such
Claims  by legal  action,  proof  of debt in  bankruptcy  or  other  liquidation
proceedings,  vote in any  proceeding  for the  arrangement of debts at any time
proposed, or otherwise,  Agent and each of its officers being hereby irrevocably
constituted  attorneys-in-fact  for  each  Guarantor  for  the  purpose  of such
enforcement  and for the purpose of endorsing in the name of each  Guarantor any
instrument for the payment of money.  Each Guarantor will receive as trustee for
Agent and will pay to Agent  forthwith  upon receipt  thereof any amounts  which
such  Guarantor  may receive from any Loan Party on account of the Claims.  Each
Guarantor agrees that at no time hereafter will any of the Claims be represented
by any notes, other negotiable instruments or writings, except and in such event
they  shall  either be made  payable to Agent,  or if payable to any  Guarantor,
shall  forthwith be endorsed by such Guarantor to Agent.  Each Guarantor  agrees
that no payment on account of the Claims or any security  interest therein shall
be created,  received,  accepted or retained during the continuance of any Event
of Default nor shall any  financing  statement be filed with respect  thereto by
any Guarantor.

         11.12.  STATUTE OF  LIMITATIONS.  Any  acknowledgment  or new  promise,
whether by payment of principal or interest or otherwise and whether by any Loan
Party or others with respect to any of the Obligations  shall, if the statute of
limitations  in favor of any  Guarantor  against the Agent or the Lenders  shall
have commenced to run, toll the running of such statute of  limitations  and, if
the  period of such  statute of  limitations  shall have  expired,  prevent  the
operation of such statute of limitations.

         11.13. INTEREST. All amounts due, owing and unpaid from time to time by
any Guarantor  hereunder shall bear interest at the interest rate per annum then
chargeable  with respect to Base Rate Loans (without  duplication of interest on
the underlying Obligation).

         11.14.  CURRENCY CONVERSION.  Without limiting any other rights in this
Agreement,  if for the  purposes  of  obtaining  judgment  in any  court  in any
jurisdiction with respect to this Guaranty or any other Loan Document it becomes
necessary to convert into the currency of such  jurisdiction  (herein called the
"Judgment  Currency")  any amount due  hereunder in any currency  other than the
Judgment  Currency,  then  conversion  shall  be  made at the  rate of  exchange
prevailing  on the Business Day before the day on which  judgment is given.  For
this  purpose,  "rate of exchange"  means the rate at which Agent would,  on the
relevant date at or about 12:00 noon (New York City time), be prepared to sell a
similar  amount of such  currency in New York,  New York  against  the  Judgment
Currency. In the event that there is a change in the rate of exchange prevailing
between the  Business  Day before the day on which the judgment is given and the
date of payment of the amount due,  Guarantor will, on the date of payment,  pay
such  additional  amounts (if any) as may be necessary to ensure that the amount


                                     - 73 -


paid on such date is the amount in the Judgment Currency which when converted at
the rate of  exchange  prevailing  on the date of payment is the amount then due
under this  Guaranty  or any other Loan  Document  in such other  currency.  Any
additional  amount due from Guarantor  under this Section 11.15 will be due as a
separate debt and shall not be affected by judgment being obtained for any other
sums  due  under  or in  respect  of this  Agreement  or any of the  other  Loan
Documents.

         11.15.  ACKNOWLEDGEMENT.  Each Guarantor acknowledges receipt of a copy
of each of this Agreement and the other Loan Documents.  Each Guarantor has made
an independent  investigation of the Loan Parties and of the financial condition
of the Loan Parties. Neither Agent nor any Lender has made and neither Agent nor
any  Lender  does  make any  representations  or  warranties  as to the  income,
expense,  operation,  finances or any other matter or thing  affecting  any Loan
Party nor has Agent or any Lender made any  representations  or warranties as to
the amount or nature of the  Obligations of any Loan Party to which this Section
11 applies as specifically  herein set forth, nor has Agent or any Lender or any
officer, agent or employee of Agent or any Lender or any representative thereof,
made any other oral  representations,  agreements or  commitments of any kind or
nature,   and  each  Guarantor  hereby  expressly   acknowledges  that  no  such
representations  or  warranties  have  been  made and such  Guarantor  expressly
disclaims reliance on any such representations or warranties.

         11.16.  CONTINUING  EFFECTIVENESS.  The  provisions  of this Section 11
shall  remain in effect  until the  indefeasible  payment in full in cash of all
Obligations and irrevocable  termination of this  Agreement.  Payments  received
from Guarantors  pursuant to this Section 11 shall be applied in accordance with
Section 8.7 of this Agreement.

         11.17. [INTENTIONALLY OMITTED].

SECTION 12    MISCELLANEOUS

         12.1.  EXPENSES AND ATTORNEYS'  FEES.  Whether or not the  transactions
contemplated hereby shall be consummated, each Loan Party agrees to promptly pay
all  fees,   costs  and  expenses   incurred  in  connection  with  any  matters
contemplated  by or arising out of this  Agreement  or the other Loan  Documents
including the following,  and all such fees, costs and expenses shall be part of
the  Obligations,  payable on demand and  secured by the  Collateral:  (a) fees,
costs and expenses incurred by Agent (including  reasonable  attorneys' fees and
expenses,  the  allocated  costs of  Agent's  internal  legal  staff and fees of
environmental  consultants,  accountants  and other  professionals  retained  by
Agent)  incurred in  connection  with the  examination,  review,  due  diligence
investigation, documentation and closing of the financing arrangements evidenced
by the Loan Documents; (b) fees, costs and expenses incurred by Agent (including
reasonable attorneys' fees and expenses, the allocated costs of Agent's internal
legal  staff  and  fees of  environmental  consultants,  accountants  and  other
professionals  retained  by  Agent)  incurred  in  connection  with the  review,
negotiation,    preparation,    documentation,    execution,   syndication   and
administration  of the Loan Documents,  the Loans, and any amendments,  waivers,
consents,   forbearances  and  other  modifications   relating  thereto  or  any
subordination or intercreditor  agreements,  including reasonable  documentation
charges  assessed  by Agent  for  amendments,  waivers,  consents  and any other
documentation  prepared by Agent's  internal  legal staff;  (c) fees,  costs and
expenses (including  reasonable  attorneys' fees and allocated costs of internal
legal  staff)  incurred  by Agent or any  Lender  in  creating,  perfecting  and
maintaining  perfection  of Liens in favor of  Agent,  on  behalf  of Agent  and
Lenders;  (d) fees,  costs and  expenses  incurred by Agent in  connection  with
forwarding to Borrowers the proceeds of Loans including  Agent's or any Lenders'
standard wire  transfer fee; (e) fees,  costs,  expenses  (including  reasonable
attorneys' fees and allocated costs of internal legal staff) of Agent or any


                                     - 74 -


Lender and costs of settlement  incurred in collecting upon or enforcing  rights
against the  Collateral  or incurred in any action to enforce this  Agreement or
the other Loan Documents or to collect any payments due from any Borrower or any
other Loan Party under this  Agreement or any other Loan Document or incurred in
connection  with any  refinancing or  restructuring  of the credit  arrangements
provided  under  this  Agreement,  whether in the  nature of a  "workout"  or in
connection with any insolvency or bankruptcy proceedings or otherwise.

         12.2.  INDEMNITY.  In addition  to the payment of expenses  pursuant to
subsection 12.1,  whether or not the transactions  contemplated  hereby shall be
consummated,  each Loan Party agrees to  indemnify,  pay and hold Agent and each
Lender, and the officers, directors,  employees, agents, consultants,  auditors,
persons  engaged by Agent or any Lender,  to evaluate or monitor the Collateral,
affiliates and attorneys of Agent, Lender and such holders  (collectively called
the   "Indemnitees")   harmless  from  and  against  any  and  all  liabilities,
obligations,  losses, damages,  penalties,  actions,  judgments,  suits, claims,
costs,  expenses and disbursements of any kind or nature  whatsoever  (including
the fees and  disbursements  of counsel for such  Indemnitees in connection with
any   investigative,   administrative  or  judicial   proceeding   commenced  or
threatened,  whether or not such Indemnity  shall be designated a party thereto)
that may be imposed on, incurred by, or asserted against that Indemnity,  in any
manner relating to or arising out of this Agreement or the other Loan Documents,
the  consummation  of the  transactions  contemplated  by  this  Agreement,  the
statements  contained in the commitment  letters,  if any, delivered by Agent or
any Lender, Agent's and each Lender's agreement to make the Loans hereunder, the
use or intended  use of the  proceeds of any of the Loans or the exercise of any
right or remedy  hereunder or under the other Loan Documents  (the  "Indemnified
Liabilities");  provided  that no Loan  Party  shall have any  obligation  to an
Indemnitee  hereunder with respect to Indemnified  Liabilities  arising from the
gross  negligence or willful  misconduct  of that  Indemnitee as determined by a
final non-appealable judgment by a court of competent jurisdiction.

         12.3.  NOTICES.  Unless otherwise  specifically  provided  herein,  all
notices shall be in writing addressed to the respective party as set forth below
and may be personally  served,  faxed,  telecopied or sent by overnight  courier
service or United  States  mail and shall be deemed to have been  given:  (a) if
delivered in person, when delivered; (b) if delivered by fax or telecopy, on the
date of  transmission if transmitted on a Business Day before 4:00 p.m. New York
City time or, if not, on the next  succeeding  Business Day; (c) if delivered by
overnight  courier,  two  (2)  days  after  delivery  to such  courier  properly
addressed;  or (d) if by U.S. Mail,  four (4) Business Days after  depositing in
the United States mail, with postage prepaid and properly addressed.

              If to Borrowing Agent
              or any Loan Party:        Collins Industries, Inc.
                                        15 Compound Drive
                                        Hutchinson, Kansas 67502-4349
                                        Attention: Corporate Secretary
                                        Fax/Telecopy No.: (620) 663-1630


                                     - 75 -


              With a copy to:           Olshan Grundman Frome Rosenzweig & Wolosky LLP
                                        Park Avenue Tower
                                        65 East 55th Street
                                        New York, New York 10022
                                        Attention: Adam W. Finerman, Esq.
                                        Fax/Telecopy No.: (212) 451-2222

              If to Agent or to ORIX:   ORIX Finance Corp.
                                        1717 Main Street, Suite 1100
                                        Dallas, Texas 75201
                                        Attn: Robert Stobo
                                        Fax/Telecopy No.: (214) 237-2356

              With a copy to:           ORIX Finance Corp.
                                        1717 Main Street, Suite 1100
                                        Dallas, Texas 75201
                                        Attn:  Ann Erickson
                                        Fax/Telecopy No.: (214) 237-2352

                                        and

                                        Kasowitz, Benson, Torres & Friedman LLP
                                        1633 Broadway
                                        New York, New York 10019
                                        Attn: Michael D. Rosenbloom, Esq.
                                        Fax/Telecopy No.: (212) 506-1800

         If to any Lender:  Its address  indicated on the signature page hereto,
in an Assignment and Acceptance  Agreement or in a notice to Agent and Borrowing
Agent or to such other  address  as the party  addressed  shall have  previously
designated by written notice to the serving party, given in accordance with this
subsection 12.3.

         12.4.   SURVIVAL  OF   REPRESENTATIONS   AND   WARRANTIES  AND  CERTAIN
AGREEMENTS.  All  agreements,  representations  and warranties made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
hereunder.  Notwithstanding  anything in this Agreement or implied by law to the
contrary,  the  agreements of each Loan Party,  Agent,  and Lenders set forth in
subsections 9.1(E),  12.1, 12.2, 12.6, 12.11, 12.14, and 12.15 shall survive the
payment of the Loans and the termination of this Agreement.

         12.5.  INDULGENCE NOT WAIVER. No failure or delay on the part of Agent,
any Lender or any  holder of any Note in the  exercise  of any  power,  right or
privilege  hereunder  or under  any  Note  shall  impair  such  power,  right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial  exercise of any such power,  right or privilege
preclude  other or  further  exercise  thereof or of any other  right,  power or
privilege.


                                     - 76 -


         12.6.  MARSHALING;  PAYMENTS  SET ASIDE.  Neither  Agent nor any Lender
shall be under any  obligation  to marshal any assets in favor of any Loan Party
or any other party or against or in payment of any or all of the Obligations. To
the extent that any Loan Party  makes a payment or payments to Agent  and/or any
Lender or Agent and/or any Lender  enforces its security  interests or exercises
its rights of setoff,  and such  payment or  payments  or the  proceeds  of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or  preferential,  set aside and/or  required to be repaid to a
trustee,  receiver or any other party under any bankruptcy law, state or federal
law,  common law or equitable  cause,  then to the extent of such recovery,  the
Obligations or part thereof originally intended to be satisfied,  and all Liens,
rights and remedies  therefor,  shall be revived and continued in full force and
effect as if such  payment had not been made or such  enforcement  or setoff had
not occurred.

         12.7.  ENTIRE  AGREEMENT.  This  Agreement and the other Loan Documents
embody the entire  agreement  among the parties  hereto and  supersede all prior
commitments, agreements, representations, and understandings, whether written or
oral,  relating to the subject matter  hereof,  and may not be  contradicted  or
varied by evidence of prior,  contemporaneous,  or subsequent oral agreements or
discussions of the parties hereto.

         12.8. SEVERABILITY.  The invalidity,  illegality or unenforceability in
any  jurisdiction of any provision in or obligation  under this Agreement or the
other  Loan  Documents  shall not  affect or impair the  validity,  legality  or
enforceability of the remaining  provisions or obligations under this Agreement,
or the other Loan Documents.

         12.9.  LENDERS'  OBLIGATIONS  SEVERAL;  INDEPENDENT  NATURE OF LENDERS'
RIGHTS.  The  obligation  of each Lender  hereunder is several and not joint and
neither  Agent  nor any  Lender  shall  be  responsible  for the  obligation  or
Commitment  of any other Lender  hereunder.  In the event that any Lender at any
time should fail to make a Loan as herein provided, the Lenders, or any of them,
at their sole option, may make the Loan that was to have been made by the Lender
so failing to make such Loan.  Nothing  contained  in any Loan  Document  and no
action taken by Agent or any Lender  pursuant  hereto or thereto shall be deemed
to constitute  Lenders to be a partnership,  an association,  a joint venture or
any other kind of entity.  The  amounts  payable at any time  hereunder  to each
Lender shall be a separate and independent  debt,  and,  provided Agent fails or
refuses to exercise  any  remedies  against any Loan Party after  receiving  the
direction of the Requisite Lenders, each Lender shall be entitled to protect and
enforce its rights  arising out of this  Agreement and it shall not be necessary
for any other Lender to be joined as an additional  party in any  proceeding for
such purpose.

         12.10. HEADINGS.  Section and subsection headings in this Agreement are
included  herein for  convenience  of reference  only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.

         12.11.  APPLICABLE  LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE  WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK  (WITHOUT  REGARD TO CONFLICTS OF LAWS  PRINCIPLES  BUT  INCLUDING  AND
GIVING EFFECT TO SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL  OBLIGATIONS
LAW),  EXCEPT TO THE EXTENT ANY SUCH OTHER LOAN DOCUMENT  EXPRESSLY  SELECTS THE
LAW OF ANOTHER  JURISDICTION  AS GOVERING LAW THEREOF,  IN WHICH CASE THE LAW OF
SUCH OTHER JURISDICTION SHALL GOVERN.


                                     - 77 -


         12.12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their  respective  successors and
assigns,  provided,  however, no Loan Party may assign its rights or obligations
hereunder without the written consent of Lenders.

         12.13. NO FIDUCIARY RELATIONSHIP; NO DUTY; LIMITATION OF LIABILITIES.

                  (A) NO FIDUCIARY RELATIONSHIP.  No provision in this Agreement
or in any of the other  Loan  Documents  and no course of  dealing  between  the
parties shall be deemed to create any  fiduciary  duty by Agent or any Lender to
any Loan Party.

                  (B) NO DUTY. All attorneys, accountants, appraisers, and other
professional  Persons and consultants retained by Agent or any Lender shall have
the right to act  exclusively  in the interest of Agent or such Lender and shall
have no duty of  disclosure,  duty of  loyalty,  duty of care,  or other duty or
obligation of any type or nature whatsoever to any Loan Party or any of any Loan
Party's shareholders or any other Person.

                  (C) LIMITATION OF  LIABILITIES.  Neither Agent nor any Lender,
nor any affiliate, officer, director, shareholder,  employee, attorney, or agent
of Agent or any Lender shall have any  liability  with respect to, and each Loan
Party hereby waives, releases, and agrees not to sue any of them upon, any claim
for any special,  indirect,  incidental,  or  consequential  damages suffered or
incurred  by any Loan Party in  connection  with,  arising out of, or in any way
related to, this  Agreement  or any of the other Loan  Documents,  or any of the
transactions  contemplated by this Agreement or any of the other Loan Documents.
Each Loan  Party  hereby  waives,  releases,  and agrees not to sue Agent or any
Lender  or any of  Agent's  or any  Lender's  affiliates,  officers,  directors,
employees,  attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan  Documents,  or any of the  transactions  contemplated by this
Agreement or any of the transactions contemplated hereby.

         12.14. CONSENT TO JURISDICTION.  EACH LOAN PARTY HEREBY CONSENTS TO THE
JURISDICTION  OF ANY STATE OR  FEDERAL  COURT  LOCATED  WITHIN THE COUNTY OF NEW
YORK,  STATE  OF NEW  YORK AND  IRREVOCABLY  AGREES  THAT,  SUBJECT  TO  AGENT'S
ELECTION,  ALL  ACTIONS  OR  PROCEEDINGS  ARISING  OUT OF OR  RELATING  TO  THIS
AGREEMENT OR THE OTHER LOAN  DOCUMENTS  SHALL BE LITIGATED IN SUCH COURTS.  EACH
LOAN PARTY EXPRESSLY  SUBMITS AND CONSENTS TO THE  JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON  CONVENIENS.  EACH LOAN PARTY  HEREBY
WAIVES PERSONAL  SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE
OF PROCESS MAY BE MADE UPON  BORROWING  AGENT BY CERTIFIED OR  REGISTERED  MAIL,
RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWING AGENT, AT THE ADDRESS SET FORTH
IN THIS  AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE
SAME HAS BEEN POSTED.  IN ANY  LITIGATION,  TRIAL,  ARBITRATION OR OTHER DISPUTE
RESOLUTION  PROCEEDING  RELATING  TO THIS  AGREEMENT  OR ANY OF THE  OTHER  LOAN


                                     - 78 -


DOCUMENTS, ALL DIRECTORS,  OFFICERS,  EMPLOYEES AND AGENTS OF EACH LOAN PARTY OR
OF ITS  AFFILIATES  SHALL BE DEEMED TO BE EMPLOYEES  OR MANAGING  AGENTS OF SUCH
LOAN PARTY FOR  PURPOSES  OF ALL  APPLICABLE  LAW OR COURT RULES  REGARDING  THE
PRODUCTION  OF WITNESSES BY NOTICE FOR TESTIMONY  (WHETHER IN A  DEPOSITION,  AT
TRIAL OR OTHERWISE). EACH LOAN PARTY AGREES THAT AGENT'S OR ANY LENDER'S COUNSEL
IN ANY SUCH DISPUTE  RESOLUTION  PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS
AS IF UNDER  CROSS-EXAMINATION  AND THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM
MAY BE USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE  DEPOSITION.  EACH LOAN
PARTY IN ANY EVENT WILL USE ALL  COMMERCIALLY  REASONABLE  EFFORTS TO PRODUCE IN
ANY SUCH DISPUTE RESOLUTION PROCEEDING,  AT THE TIME AND IN THE MANNER REQUESTED
BY AGENT OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE,  ELECTRONIC
OR OTHER FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE.

         12.15.  WAIVER OF JURY TRIAL.  EACH LOAN  PARTY,  AGENT AND EACH LENDER
HEREBY  WAIVE THEIR  RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
EACH  LOAN  PARTY,  AGENT AND EACH  LENDER  ACKNOWLEDGE  THAT  THIS  WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,  THAT EACH HAS RELIED
ON THE WAIVER IN ENTERING INTO THIS  AGREEMENT AND THE OTHER LOAN  DOCUMENTS AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE  DEALINGS.
EACH LOAN PARTY,  AGENT AND EACH LENDER  WARRANT AND REPRESENT THAT EACH HAS HAD
THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL,  AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

         12.16.  CONSTRUCTION.  Each  Loan  Party,  Agent and each  Lender  each
acknowledge  that it has had the benefit of legal  counsel of its own choice and
has been  afforded an  opportunity  to review this  Agreement and the other Loan
Documents  with its legal  counsel.  This Agreement and the other Loan Documents
shall be construed as if jointly drafted by Loan Parties, Agent and each Lender.

         12.17. COUNTERPARTS;  EFFECTIVENESS. This Agreement and any amendments,
waivers, consents, or supplements may be executed via telecopier or facsimile or
other  electronic  method of transmission  in any number of counterparts  and by
different  parties  hereto  in  separate  counterparts,  each of  which  when so
executed  and  delivered  shall  be  deemed  an  original,   but  all  of  which
counterparts  together  shall  constitute  one and  the  same  instrument.  This
Agreement shall become  effective upon the execution of a counterpart  hereof by
each of the parties hereto.

         12.18.  CONFIDENTIALITY.  Agent and each Lender agree to exercise their
best efforts to keep confidential any non-public  information delivered pursuant
to the Loan Documents and identified as such by Loan Parties and not to disclose
such information to Persons other than to: its respective affiliates,  officers,
directors and employees;  or its potential assignees ; or Persons employed by or


                                     - 79 -


engaged  by  Agent,  a  Lender  or  a  Lender's  assignees  including,   without
limitation,  attorneys, auditors,  professional consultants, rating agencies and
portfolio management services. The confidentiality  provisions contained in this
subsection  shall not apply to  disclosures  (a) required to be made by Agent or
any Lender to any regulatory or governmental agency or pursuant to legal process
or (b) consisting of general  portfolio  information  that does not identify any
Loan Party.  The  obligations of Agent and Lenders under this  subsection  12.18
shall  supersede  and replace  the  obligations  of Agent and Lenders  under any
confidentiality agreement in respect of this financing executed and delivered by
Agent or any Lender  prior to the date  hereof.  In no event  shall Agent or any
Lender be  obligated  or  required  to return any  materials  furnished  by Loan
Parties;  provided,  however, each potential assignee shall be required to agree
that if it does not become an assigneeit shall return all materials furnished to
it by Loan Parties in connection herewith.

Notwithstanding the foregoing,  and notwithstanding any other express or implied
agreement or understanding to the contrary, each of the parties hereto and their
respective  employees,  representatives,  and other  agents  are  authorized  to
disclose the tax treatment and tax  structure of these  transactions  to any and
all persons,  without  limitation  of any kind.  Each of the parties  hereto may
disclose all  materials of any kind  (including  opinions or other tax analyses)
insofar  as  they  relate  to  the  tax  treatment  and  tax  structure  of  the
transactions  contemplated by the Loan Documents.  This  authorization  does not
extend to disclosure of any other information including (without limitation) (a)
the identities of participants or potential participants in the transactions (b)
the existence or status of any  negotiations,  (c) any pricing  other  financial
information or (d) any other term or detail not related to the tax treatment and
tax structure of the transactions contemplated by the Loan Documents.

         12.19.  PUBLICATION.  Each Loan Party  consents to the  publication  by
Agent of a tombstone or similar  advertising  material relating to the financing
transactions  contemplated by this  Agreement;  provided,  however,  Agent shall
provide  a draft  of any such  tombstone  or  similar  advertising  material  to
Borrowing Agent for review prior to the publication  thereof.  Agent and Lenders
reserve the right to provide industry trade organizations  information necessary
and customary for inclusion in league table measurements.

         12.20.  SPECIAL  PROVISIONS  RELATING TO COLLINS AND ITS  SUBSIDIARIES.
Notwithstanding  anything to the  contrary  contained  in this  Agreement or any
other  Loan  Document,  neither  Collins  nor  any of  its  direct  or  indirect
Subsidiaries  shall be bound by the terms of this  Agreement  or any other  Loan
Document,  or  be  a  "Borrower",  "Guarantor"  or  "Loan  Party"  hereunder  or
thereunder until the  consummation of the Merger,  PROVIDED that Collins and its
direct and indirect Subsidiaries shall be considered  "Borrowers",  "Guarantors"
or "Loan Parties", as applicable,  solely for the purposes of any representation
or warranty contained in this Agreement or any other Loan Document, and any such
representation  or  warranty  with  respect to Collins or its direct or indirect
Subsidiaries  shall be deemed made to Agent and Lenders,  jointly and severally,
by Holdings and CS  Acquisition  until the  consummation  of the Merger at which
time Collins and each of its  Subsidiaries  that is a Loan Party hereunder shall
be deemed to have made each such  representation  and warranty directly to Agent
and Lenders.

         12.21.  INTERCREDITOR  AGREEMENT.  This  Agreement  is  subject  to the
Subordination and Intercreditor  Agreement,  dated as of October 31, 2006, among
each Loan Party (as defined below),  ORIX Finance Corp.,  as Subordinated  Agent


                                     - 80 -


and GMAC Commercial  Finance Corp., as Senior Agent,  under which this Agreement
and each Loan Party's  obligations  hereunder are subordinated in the manner set
forth  therein to the prior  payment of certain  obligations  to the  holders of
Senior Indebtedness as defined therein.




                                     - 81 -


         Witness the due  execution  hereof by the  respective  duly  authorized
officers of the undersigned as of the date first written above.


                                         CS ACQUISITION CORP., as a Borrower

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------


                                         COLLINS I HOLDING CORP., as a Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------


                                         ORIX FINANCE CORP., as Agent and as a
                                         Lender

                                         By: /s/ Christopher L. Smith
                                             -----------------------------------
                                         Title: Authorized Representative
                                                --------------------------------

                                         Term Loan Commitment: $45,000,000.00




                  [SIGNATURE PAGES CONTINUE ON FOLLOWING PAGE]


         Upon the consummation of the Merger,  each signatory hereto agrees that
it shall be bound as a Borrower and/or  Guarantor under this Agreement,  and all
references to "Borrower", "Borrowers",  "Guarantor",  "Guarantors", "Loan Party"
or  "Loan  Parties"  contained  in  this  Agreement  or any of  the  other  Loan
Documents, shall thereafter be deemed to include each signatory hereto.

                                         COLLINS INDUSTRIES, INC., as a Borrower

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------


                                         COLLINS BUS CORPORATION, as a Borrower
                                         and a Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------


                                         WHEELED COACH INDUSTRIES, INC., as a
                                         Borrower and a Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------


                                         CAPACITY OF TEXAS, INC., as a Borrower
                                         and a Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------




                  [SIGNATURE PAGES CONTINUE ON FOLLOWING PAGE]


                                         MID BUS, INC., as a Borrower and a
                                         Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------


                                         MOBILE PRODUCTS, INC., as a Borrower
                                         and a Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------


                                         COLLINS AMBULANCE CORP., as a Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------


                                         WHEELED COACH ENTERPRISES, INC., as a
                                         Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------




                  [SIGNATURE PAGES CONTINUE ON FOLLOWING PAGE]

                                     - 2 -


                                         MOBILE-TECH CORPORATION, as a Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------


                                         WORLD TRANS, INC., as a Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------


                                         BRUTZER CORPORATION, as a Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------


                                         COLLINS FINANCIAL SERVICES, INC., as a
                                         Guarantor

                                         By: /s/ Kenneth Dabrowski
                                             -----------------------------------
                                         Title: Chief Executive Officer
                                                --------------------------------
                                         FEIN:
                                               ---------------------------------




                                     - 3 -


                                    EXHIBITS

A.  Assignment and Acceptance Agreement
B.  Borrowing Base Certificate
C.  Compliance  Certificate
D.  Notice of Borrowing
E.  Inventory Report
F.  Reconciliation Report




                                    SCHEDULES

1.1(A)    Foreign Account Debtors
2.7(A)    Commercial Tort Claims
3.1(A)    List of Closing Documents
3.1(Y)    Indebtedness to be Defeased
4.1(A)    Chief Executive Office and Organizational Identification Number
4.1(B)    Capitalization of Loan Parties
4.4       Pro Forma
4.5(A)    Deductions and Discounts
4.5(I)    Intellectual Property
4.5(K)    Deposit Accounts
4.5(L)    Bailees
4.6       Business and Trade Names  (Present  and Past Five Years);  Location of
          Principal Place of Business,  Books and Records and Collateral;  State
          (other Jurisdiction) of Organization and Organizational Identification
          Number
4.7(a-1)  Owned Real Properties
4.7(a-2)  Leased Real Properties
4.9       Federal Tax Identification Numbers
4.11      Employee Benefit Plans
4.12      Broker's or Finder's Fees
4.13      Environmental Matters
4.18      Employee Matters
5.4       Mortgaged Property
7.1       Indebtedness
7.11      Subsidiaries
7.3(B)    Other Liens




                                     RIDERS


A.  Reporting Rider
B.  Financial Covenants Rider




                                 REPORTING RIDER

         This  Reporting  Rider  is  attached  and  made a part of that  certain
Revolving Credit, Term Loan and Security Agreement, dated as of October 31, 2006
and entered into among CS Acquisition Corp.,  Collins Industries,  Inc., certain
Affiliates, ORIX Finance Corp., as Agent, and certain Lenders.

         1. ANNUAL FINANCIAL  STATEMENTS.  Furnish Agent within ninety (90) days
after the end of each  fiscal  year of Loan  Parties,  financial  statements  of
Holdings  and  its  Subsidiaries  on  a  consolidating  and  consolidated  basis
including, but not limited to, statements of income and stockholders' equity and
cash flow  from the  beginning  of the  current  fiscal  year to the end of such
fiscal  year  and the  balance  sheet  as at the end of such  fiscal  year,  all
prepared  in  accordance  with GAAP  applied  on a basis  consistent  with prior
practices,  and in reasonable detail and reported upon without  qualification by
the Loan Parties'  Accountants The report of the Loan Parties' Accountants shall
be accompanied by a statement of the Loan Parties'  Accountants  certifying that
(i) they have  caused  the Loan  Agreement  to be  reviewed,  (ii) in making the
examination upon which such report was based either no information came to their
attention which to their knowledge  constituted an Event of Default or a Default
under this Agreement or any related  agreement or, if such  information  came to
their  attention,  specifying any such Default or Event of Default,  its nature,
when it occurred and whether it is continuing,  and such report shall contain or
have appended thereto calculations which set forth Loan Parties' compliance with
the covenant  set forth on the  Financial  Covenants  Rider.  In  addition,  the
reports  shall be  accompanied  by a  certificate  of each  Loan  Party's  Chief
Financial Officer which shall state that, based on an examination  sufficient to
permit him to make an informed statement, no Default or Event of Default exists,
or, if such is not the case,  specifying  such Default or Event of Default,  its
nature, when it occurred,  whether it is continuing and the steps being taken by
Loan  Parties  with  respect  to such  event,  and such  certificate  shall have
appended thereto  calculations which set forth Loan Parties' compliance with the
covenants set forth on the Financial Covenants Rider.

         2. [INTENTIONALLY OMITTED].

         3. MONTHLY FINANCIAL STATEMENTS.  Furnish Agent within thirty (30) days
after the end of each month,  an  unaudited  balance  sheet of Holdings  and its
Subsidiaries on a consolidated and consolidating basis and unaudited  statements
of  income  and  stockholders'   equity  and  cash  flow  of  Holdings  and  its
Subsidiaries on a consolidated and  consolidating  basis  reflecting  results of
operations  from the  beginning  of the fiscal year to the end of such month and
for such month, prepared on a basis consistent with prior practices and complete
and correct in all material  respects,  subject to normal and recurring year end
adjustments  that  individually  and in the  aggregate  are not  material to the
business of Loan  Parties.  Each such  balance  sheet,  statement  of income and
stockholders'  equity and statement of cash flow shall set forth a comparison of
the figures for (w) the current  fiscal period and (x) the current  year-to-date
with the figures for (y) the same fiscal period and  year-to-date  period of the
immediately preceding fiscal year and (z) the projections for such fiscal period
and  year-to-date  period  delivered  pursuant to item 12 hereof.  The financial
statements  shall be accompanied by a certificate of Holdings'  Chief  Financial
Officer,  which shall state that,  based on an examination  sufficient to permit
him to make an informed statement, no Default or Event of Default exists, or, if
such is not the case,  specifying such Default or Event of Default,  its nature,
when it  occurred,  whether it is  continuing  and the steps being taken by Loan




Parties with respect to such event and,  such  certificate  shall have  appended
thereto calculations which set forth Loan Parties' compliance with the covenants
set forth on the Financial Covenants Rider.

         4. BORROWING BASE CERTIFICATE.  Deliver to Agent a simultaneous copy of
any  Borrowing  Base  Certificate  delivered to First Lien Agent under the First
Lien Loan Documents.

         5.  COLLATERAL  REPORTS.  Deliver to Agent on or before  the  fifteenth
(15th)  day of each  month as and for the prior  month (a)  accounts  receivable
agings,  (b) accounts payable agings,  and (c) Inventory  reports.  In addition,
each Loan Party shall  deliver to Agent at such  intervals as Agent may require:
(i) confirmatory assignment schedules, (ii) copies of Customer's invoices, (iii)
evidence of shipment or  delivery,  and (iv) such further  schedules,  documents
and/or  information  regarding the  Collateral  as Agent may require  including,
without limitation, trial balances and test verifications.  Agent shall have the
right to confirm and verify all Accounts by any manner and through any medium it
considers advisable and do whatever it may deem reasonably  necessary to protect
its interests hereunder. The items to be provided under items (4) and (5) hereof
are to be in form  reasonably  satisfactory  to Agent and  executed by Borrowing
Agent and delivered to Agent from time to time solely for Agent's convenience in
maintaining records of the Collateral,  and Borrowing Agent's failure to deliver
any of such items to Agent  shall not  affect,  terminate,  modify or  otherwise
limit Agent's Lien with respect to the Collateral.

         6. DISCLOSURE OF MATERIAL  MATTERS.  Immediately upon learning thereof,
report to Agent all matters  materially  affecting the value,  enforceability or
collectibility of any portion of the Collateral  including,  without limitation,
any Loan Party's reclamation or repossession of, or the return to any Loan Party
of, a material amount of goods or claims or disputes asserted by any Customer or
other obligor.

         7. [INTENTIONALLY OMITTED].

         8.  MATERIAL  OCCURRENCES.  Promptly  notify  Agent in writing upon the
occurrence of (a) any Event of Default or Default with such notice  stating that
it is a "Notice of Default";  (b) any event of default under the First Lien Loan
Documents;  (c) any event  which with the giving of notice or lapse of time,  or
both,  would constitute an event of default under the First Lien Loan Documents;
(d) any event,  development or circumstance  whereby any financial statements or
other reports furnished to Agent fail in any material respect to present fairly,
in  accordance  with GAAP  consistently  applied,  the  financial  condition  or
operating  results of any Loan Party as of the date of such statements;  (e) any
accumulated  retirement  plan  funding  deficiency  which,  if  such  deficiency
continued  for two plan years and was not  corrected as provided in Section 4971
of the IRC, could subject any Loan Party to a tax imposed by Section 4971 of the
IRC;  (f) each and every  default by any Loan Party  which  might  result in the
acceleration  of the  maturity  of any  Indebtedness,  including  the  names and
addresses of the holders of such  Indebtedness  with respect to which there is a
default  existing  or with  respect to which the  maturity  has been or could be
accelerated, and the amount of such Indebtedness;  and (g) any other development
in the business or affairs of any Loan Party which could  reasonably be expected
to have a Material  Adverse  Effect;  in each case describing the nature thereof
and the action Loan Parties propose to take with respect thereto.




         9. LITIGATION. Promptly notify Agent in writing of any litigation, suit
or administrative  proceeding affecting any Loan Party, whether or not the claim
is covered by insurance, and of any suit or administrative proceeding,  which in
any such case would reasonably be expected to have a Material Adverse Effect.

         10. OTHER REPORTS. Furnish Agent as soon as available, but in any event
concurrently  with the  issuance  thereof,  (i) with  copies  of such  financial
statements,  material reports and material returns as each Loan Party shall send
to its stockholders and (ii) copies of all notices, reports or other information
sent pursuant to the First Lien Loan Documents.

         11.  ADDITIONAL   INFORMATION.   Furnish  Agent  with  such  additional
information  as Agent  shall  reasonably  request  in order to  enable  Agent to
determine  whether  the terms,  covenants,  provisions  and  conditions  of this
Agreement have been complied with by Loan Parties including,  without limitation
and  without  the  necessity  of  any  request  by  Agent,  (a)  copies  of  all
environmental  audits and reviews,  (b) at least thirty (30) days prior thereto,
notice of any Loan Party's opening of any new office or place of business or any
Loan  Party's  closing  of any  existing  office or place of  business,  and (c)
promptly upon any Loan Party's learning thereof,  notice of any labor dispute to
which any Loan Party may become a party, any strikes or walkouts relating to any
of its plants or other  facilities,  and the expiration of any labor contract to
which any Loan Party is a party or by which any Loan Party is bound.

         12. PROJECTED  OPERATING BUDGET.  Furnish Agent, prior to the beginning
of each  fiscal year of  Holdings,  commencing  with the fiscal year  commencing
November 1, 2007, a month by month projected  operating  budget and cash flow of
Holdings and its Subsidiaries on a consolidated and consolidating basis for such
fiscal year (including an income statement for each month and a balance sheet as
at the end of the last month in each fiscal  quarter),  such  projections  to be
accompanied by a certificate  signed by the President or Chief Financial Officer
of each Loan Party to the effect that such projections have been prepared on the
basis of sound  financial  planning  practice  consistent  with past budgets and
financial  statements  and that  such  officer  has no reason  to  question  the
reasonableness  of any  material  assumptions  on which  such  projections  were
prepared.

         13. VARIANCES FROM OPERATING BUDGET.  Furnish Agent,  concurrently with
the delivery of the financial statements referred to in item 1 hereof, a written
report summarizing all material variances from budgets submitted by Loan Parties
pursuant to item 12 hereof and a  discussion  and  analysis by  management  with
respect to such variances.

         14. NOTICE OF SUITS,  ADVERSE EVENTS.  Furnish Agent with prompt notice
of (i) any lapse or other termination of any Consent issued to any Loan Party by
any Governmental Authority or any other Person that is material to the operation
of any Loan Party's business,  (ii) any refusal by any Governmental Authority or
any other  Person to renew or extend any such  Consent;  and (iii) copies of any
periodic  or  special  reports  filed by any Loan  Party  with any  Governmental
Authority  or  Person,  if such  reports  indicate  any  material  change in the
business,  operations,  affairs or  condition  of any Loan  Party,  or if copies
thereof are  requested  by Agent or any Lender,  and (iv) copies of any material
notices and other communications from any Governmental Authority or Person which
specifically relate to any Loan Party.




         15. ERISA NOTICES AND REQUESTS.  Furnish Agent with  immediate  written
notice  in the event  that (i) any Loan  Party or any  member of the  Controlled
Group  knows or has  reason  to know  that a  Termination  Event  has  occurred,
together with a written  statement  describing  such  Termination  Event and the
action,  if any,  which  such Loan Party or member of the  Controlled  Group has
taken, is taking,  or proposes to take with respect thereto and, when known, any
action taken or threatened by the IRS,  Department of Labor or PBGC with respect
thereto,  (ii) any Loan Party or any member of the Controlled Group knows or has
reason to know that a  prohibited  transaction  (as defined in  Sections  406 of
ERISA  and 4975 of the IRC)  has  occurred  together  with a  written  statement
describing  such  transaction and the action which such Loan Party or any member
of the  Controlled  Group has taken,  is taking or proposes to take with respect
thereto,  (iii) a funding waiver request has been filed with respect to any Plan
together with all communications received by any Loan Party or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establishment of any new Plan or the commencement of
contributions  to any  Plan  to  which  any  Loan  Party  or any  member  of the
Controlled Group was not previously contributing shall occur, (v) any Loan Party
or any member of the  Controlled  Group shall  receive from the PBGC a notice of
intention  to terminate a Plan or to have a trustee  appointed  to  administer a
Plan,  together  with  copies of each such  notice,  (vi) any Loan  Party or any
member of the  Controlled  Group shall  receive  any  favorable  or  unfavorable
determination  letter from the IRS regarding the  qualification  of a Plan under
Section 401(a) of the IRC,  together with copies of each such letter;  (vii) any
Loan  Party  or any  member  of the  Controlled  Group  shall  receive  a notice
regarding the imposition of withdrawal  liability,  together with copies of each
such notice;  (viii) any Loan Party or any member of the Controlled  Group shall
fail to make a required  installment or any other required payment under Section
412 of the IRC on or before the due date for such  installment or payment;  (ix)
any  Loan  Party  or any  member  of  the  Controlled  Group  knows  that  (a) a
Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of
a Multiemployer Plan intends to terminate a Multiemployer  Plan, or (c) the PBGC
has  instituted  or will  institute  proceedings  under Section 4042 of ERISA to
terminate a Multiemployer Plan.

         16.  ENVIRONMENTAL  REPORTS.  Furnish  Agent,   concurrently  with  the
delivery of the financial statements referred to in items 1 and 3 hereof, with a
certificate  signed by the President of each Loan Party stating,  to the best of
his  knowledge,  that each Loan Party is in compliance in all material  respects
with all federal, state and local laws relating to environmental  protection and
control and occupational  safety and health. To the extent any Loan Party is not
in compliance  with the foregoing  laws,  the  certificate  shall set forth with
specificity all areas of non-compliance  and the proposed action Loan Party will
implement in order to achieve full compliance.

         17.  CHASSIS STATUS  REPORT.  Borrowers  shall furnish Agent as soon as
available,  but in any event concurrently with the receipt by Borrowers thereof,
with copies of all  notices,  reports or other  information  sent by the trustee
under the Trust Agreement to Borrowers or the First Lien Lenders.

         18. ADDITIONAL  DOCUMENTS.  Execute and deliver to Agent, upon request,
such  documents  and  agreements  as Agent  may,  from time to time,  reasonably
request to carry out the purposes, terms or conditions of this Agreement.




                            FINANCIAL COVENANTS RIDER

         This Financial  Covenants  Rider is attached and made a part of that certain Loan and Security  Agreement,
dated as of October 31,  2006 and entered  into among CS  Acquisition  Corp.,  Collins  Industries,  Inc.,  certain
Affiliates of Collins Industries, Inc., ORIX Finance Corp., as Agent, and certain Lenders.

         A. MINIMUM  EBITDA.  Holdings and its  Subsidiaries  on a  consolidated
basis shall at all times maintain EBITDA of at least the amounts set forth below
for each rolling  twelve (12) month period ending on the last day of each fiscal
quarter set forth below.

                Fiscal Quarter Ending                        Amount
                ---------------------                        ------

                  January 31, 2007                         $21,000,000
                   April 30, 2007                          $18,000,000
                    July 31, 2007                          $17,000,000
                  October 31, 2007                         $16,000,000
                  January 31, 2008                         $17,000,000
                   April 30, 2008                          $17,500,000
       July 31, 2008 and the last day of each              $18,000,000
         fiscal quarter ending thereafter

         B. TOTAL  LEVERAGE.  Holdings and its  Subsidiaries  on a  consolidated
basis  shall  not  permit  the  ratio  of (a)  Holdings'  and its  Subsidiaries'
Indebtedness  on a consolidated  basis,  to (b) Holdings' and its  Subsidiaries'
EBITDA for the trailing twelve months on a consolidated  basis,  each calculated
as of the last day of any fiscal  quarter set forth below to be greater than the
ratio set forth below for such periods:

                Fiscal Quarter Ending                          Ratio
                ---------------------                          -----

                  January 31, 2007                          4.75 to 1.0
                   April 30, 2007                           4.75 to 1.0
                    July 31, 2007                           4.75 to 1.0
                  October 31, 2007                          4.75 to 1.0
                  January 31, 2008                          4.50 to 1.0
                   April 30, 2008                           4.50 to 1.0
                    July 31, 2008                           4.25 to 1.0
                  October 31, 2008                          4.25 to 1.0
                  January 31, 2009                          4.00 to 1.0
                   April 30, 2009                           4.00 to 1.0
                    July 31, 2009                           4.00 to 1.0
                  October 31, 2009                          4.00 to 1.0
                  January 31, 2010                          3.75 to 1.0
                   April 30, 2010                           3.75 to 1.0
                    July 31, 2010                           3.75 to 1.0




                  October 31, 2010                          3.75 to 1.0
    January 31, 2011 and the last day of each              3.50 to 1.00
       fiscal quarter ending thereafter

         C. CAPITAL  EXPENDITURE  LIMITS.  The  aggregate  amount of all Capital
Expenditures,   (excluding,   in  each  case,  expenditures  for  trade-ins  and
replacement of assets to the extent funded with casualty insurance  proceeds) of
Holdings and its  Subsidiaries  on a consolidated  basis in any Fiscal Year will
not exceed the amount set forth below for each period set forth below.

                       Period                                 Amount
                       ------                                 ------

                  Fiscal Year 2007                          $5,500,000

             Fiscal Year 2008 and each                      $5,000,000
           Fiscal Year ending thereafter

         D.  FIXED  CHARGE   COVERAGE.   Holdings  and  its  Subsidiaries  on  a
consolidated  basis shall not permit their Fixed Charge Coverage for the rolling
twelve (12) month period ending on the last day of each fiscal quarter set forth
below to be less than the ratio set forth below for such periods, PROVIDED that,
notwithstanding the foregoing, for the purposes of determining Fixed Charges (x)
for  the  period  ending  January  31,  2007,  sub-clauses  (a)  and  (c) of the
definition  of Fixed  Charges  (I.E.,  Cash  Interest  Expense  and  income  and
franchise  taxes) shall each be  determined  by taking the actual  amounts under
such  sub-clauses for the three month period ending on such date and multiplying
such amounts by 4, (y) for the period ending April 30, 2007, sub-clauses (a) and
(c) of the definition of Fixed Charges (I.E.,  Cash Interest  Expense and income
and franchise taxes) shall each be determined by taking the actual amounts under
such  sub-clauses  for the six month period ending on such date and  multiplying
such amounts by 2 and (z) for the period ending July 31, 2007,  sub-clauses  (a)
and (c) of the  definition of Fixed  Charges  (I.E.,  Cash Interest  Expense and
income  and  franchise  taxes)  shall  each be  determined  by taking the actual
amounts under such sub-clauses for the nine month period ending on such date and
(i) dividing each such amount by 3 and then (ii) multiplying each such amount by
4.

                Fiscal Quarter Ending                          Ratio
                ---------------------                          -----

                  January 31, 2007                          1.15 to 1.0
                   April 30, 2007                           1.15 to 1.0
                    July 31, 2007                           1.15 to 1.0
                  October 31, 2007                          1.15 to 1.0
                  January 31, 2008                          1.25 to 1.0
                   April 30, 2008                           1.25 to 1.0
                    July 31, 2008                           1.25 to 1.0
                  October 31, 2008                          1.25 to 1.0
                  January 31, 2009                          1.35 to 1.0
                   April 30, 2009                           1.35 to 1.0
                    July 31, 2009                           1.35 to 1.0
                  October 31, 2009                          1.35 to 1.0
    January 31, 2010 and the last day of each               1.50 to 1.0
         fiscal quarter ending thereafter

EX-10.05

                                                                    Exhibit 10.5

                          MANAGEMENT SERVICES AGREEMENT

         THIS MANAGEMENT  SERVICES  AGREEMENT (this  "AGREEMENT") is dated as of
October 31, 2006, between Collins Industries,  Inc., a Missouri corporation (the
"COMPANY") and BNS Holding, Inc., a Delaware corporation ("BNS").

                                   BACKGROUND

         Subject to the terms and  conditions  of this  Agreement,  the  Company
desires to retain BNS to provide certain management  services to the Company and
its subsidiaries.

                              TERMS AND CONDITIONS

         In consideration of the mutual covenants contained herein and intending
to be legally bound hereby, the parties agree as follows:

         1.       MANAGEMENT  SERVICES.  BNS shall provide  general  management,
financial  and  other  corporate  advisory  services  to  the  Company  and  its
subsidiaries.  These  management  services  shall be performed by the  officers,
employees or agents of BNS as it may  determine in its  discretion  from time to
time.

         2.       FEES AND EXPENSES.

                  (a) The Company shall pay to BNS an annual management fee (the
"MANAGEMENT  FEE") of Five Hundred Thousand Dollars  ($500,000).  The Management
Fee shall be payable  quarterly in arrears on each April 30, July 31, October 31
and  January  31  during  the Term (as  defined  in  Section  8,  below) of this
Agreement.

                  (b) The Company shall promptly, when requested,  reimburse BNS
for all reasonable out-of-pocket expenses incurred in the ordinary course by BNS
in connection with BNS's obligations hereunder.

                  (c) Notwithstanding anything to the contrary contained herein,
the Company shall accrue but not pay the  Management Fee if (i) any such payment
would  violate,  breach or  otherwise  constitute  a default (or any event which
might  with the lapse of time or the  giving of  notice  or both,  constitute  a
default)  under any of the  financing  agreements  of the  Company  or Collins I
Holding Corp.  ("CHC"),  or (ii) BNS instructs the Company not to pay all or any
portion of the Management Fee during any fiscal year.

         3.       INDEMNIFICATION.  To the extent  permitted by law, the Company
shall  protect,  hold  harmless and  indemnify  BNS from and against any and all
liability,  obligations,  losses,  claims and damages whatsoever and expenses in
connection therewith including, without limitation,  reasonable counsel fees and
expenses, penalties and interest arising out of or as the result of the entering
into of this Agreement except to the extent,  and only to the extent,  that such



liability or claim is the result of the willful  misconduct or gross  negligence
of BNS.

         4.       INDEPENDENT  CONTRACTOR;  NO JOINT VENTURE.  BNS is performing
services  hereunder  as  an  independent   contractor  (and  not  as  an  agent,
representative  or  employee  of the  Company)  and BNS is not and  shall not be
deemed to be a co-venturer with, or partner of, the Company in any respect.

         5.       ENTIRE AGREEMENT;  AMENDMENT.  This Agreement  constitutes the
entire  agreement  and  understanding  between the parties  with  respect to the
subject  matter  hereof.  This  Agreement  may be  amended or  modified,  or any
provision  hereof may be waived,  provided that such  amendment or waiver is set
forth in a writing  executed by the  parties.  No courses of dealing  between or
among any persons having any interest in this Agreement will be deemed effective
to  modify,  amend or  discharge  any part of this  Agreement  or any  rights or
obligations of any person under or by reason of this Agreement.

         6.       NO  ASSIGNMENT.  Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto without
the prior  written  consent of the other parties  hereto;  PROVIDED that BNS may
assign all of its rights  and  obligations  hereunder  to any  affiliate  of BNS
without the consent of the Company; and, PROVIDED FURTHER, that BNS may, without
the  consent  of the  Company,  assign  any or all of its  rights,  but  not its
obligations,  hereunder  to  any  lender  providing  financing  to  BNS  or  its
affiliates.

         7.       BINDING  EFFECT.  In the event of assignment of this Agreement
pursuant to Section 6 hereunder,  this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their successors and permitted assigns.

         8.       TERM. The Term of this Agreement shall commence on November 1,
2006 and shall terminate on the earlier of (i) the tenth anniversary of the date
hereof,  and (ii) the consummation of the sale of all (but not less than all) of
the  outstanding  capital  stock  of  the  Company  or  CHC,  or  the  statutory
arrangement,  consolidation  or  merger of the  Company  or CHC with or into any
person, or the sale,  lease,  assignment or transfer of all or substantially all
of  the  assets  of  the  Company  or  any  of  its  significant   subsidiaries.
Notwithstanding  the foregoing,  this Agreement shall always remain in effect to
the extent that any money is owed under sections 2 or 3 of this Agreement.

         9.       GOVERNING  LAW. The validity,  performance,  construction  and
effect of this Agreement  shall be governed by and construed in accordance  with
the internal law of the State of New York.

         10.  NOTICES.  All  notices,   requests,   claims,  demands  and  other
communications  hereunder  shall be in  writing  and shall be given by  personal
delivery,  by reputable  overnight  courier or by mail  (registered or certified
mail,  postage prepaid,  return receipt  requested) to the respective parties as
follows:


                                       2


         If to BNS:

                  BNS Holding, Inc.
                  25 Enterprise Center
                   Middletown, RI 02842
                  Telecopy: (401) 848-6444
                  Attention: Michael Warren, President and Chief Executive Officer


         If to the Company:

                  Collins Industries, Inc.
                  180 State Street, Suite 240
                  Southlake, Texas  76092
                  Telecopy:  (817)-310 0907
                  Attention: Randall Swift, Chief Operating Officer

or to such other address as any party hereto may,  from time to time,  designate
in a written  notice given in like  manner.  Notices will be deemed to have been
given hereunder when delivered  personally,  five days after deposit in the U.S.
mail and one  business  day after  deposit  with a reputable  overnight  courier
service.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
                            [SIGNATURE PAGE FOLLOWS]


                                       3


         IN  WITNESS  WHEREOF,  each  of the  parties  hereto  has  caused  this
Agreement to be executed as of the day and year first above written.

                                            COLLINS INDUSTRIES, INC.

                                            By: /s/ John Becker
                                                --------------------------------
                                                Name: John Becker
                                                Title: Vice President


                                            BNS HOLDING, INC.

                                            By: /s/ Michael Warren
                                                --------------------------------
                                                Name: Michael Warren
                                                Title: President

EX-10.06

                                                                    Exhibit 10.6

         This Warrant and the securities issuable upon exercise hereof
         have not been registered  under the Securities Act of 1933 or
         the securities laws of any other  jurisdiction and may not be
         transferred  in  violation  of any such  laws,  the rules and
         regulations thereunder or the provisions of this Warrant.


                                     WARRANT

                           To Purchase Common Stock of

                             COLLINS I HOLDING CORP.



         Warrant No. 1

                       No. of Common Shares: Up to 38,304




                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----
     SECTION 1.   DEFINITIONS                                                  2

     SECTION 2.   EXERCISE OF WARRANT                                          5

     SECTION 3.   TRANSFER, DIVISION AND COMBINATION                           7

     SECTION 4.   ADJUSTMENTS                                                  8

     SECTION 5.   NOTICES TO WARRANT HOLDERS                                  10

     SECTION 6.   NO IMPAIRMENT                                               11

     SECTION 7.   RESERVATION AND AUTHORIZATION OF COMMON STOCK;
                  REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL
                  AUTHORITY                                                   12

     SECTION 8.    TAKING OF RECORD STOCK AND WARRANT TRANSFER BOOKS          12

     SECTION 9.   RESTRICTIONS ON TRANSFERABILITY                             12

     SECTION 10.  LOSS OR MUTILATION                                          13

     SECTION 11.  OFFICE OF THE COMPANY                                       13

     SECTION 12.  HOLDER NOT DEEMED STOCKHOLDER                               13

     SECTION 13.  MISCELLANEOUS                                               13

     EXHIBITS

     Exhibit A - Subscription Form
     Exhibit B - Assignment Form


No. of Common Shares: Up to 38,304
Warrant No. 1


                                       ii


                                     WARRANT

                           To Purchase Common Stock of

                             COLLINS I HOLDING CORP.

                  THIS  IS  TO  CERTIFY  THAT  BNS  HOLDING,  INC.,  a  Delaware
corporation,  or registered assigns,  is entitled,  after the Effective Date (as
hereinafter defined) and prior to the Expiration Date (as hereinafter  defined),
to  purchase  from  COLLINS  I  HOLDING  CORP.,  a  Delaware   corporation  (the
"Company"),  up to 38,304 shares of the Company's  Common Stock (as  hereinafter
defined),  which number of shares shall be subject to adjustment as provided for
herein,  at a purchase  price per share  equal to the Current  Warrant  Price as
hereinafter  defined,  all on the  terms  and  conditions  and  pursuant  to the
provisions hereinafter set forth.

SECTION 1   DEFINITIONS

         As used in this  Warrant,  the  following  terms  have  the  respective
meanings set forth below:

                  "AFFILIATE"  shall mean any Person  (as  hereinafter  defined)
that  controls,  is controlled  by, or is under common  control with,  any other
Person.  For the purposes of this  definition,  "control" of a Person shall mean
the  possession,  directly or indirectly,  of the power to direct the management
and policies of such Person whether through the ownership of voting  securities,
by contract or otherwise.

                  "ANNIVERSARY  DATE"  shall mean the tenth  anniversary  of the
issue date of this Warrant.

                  "BUSINESS  DAY" shall  mean any day that is not a Saturday  or
Sunday  or a day on which  banks in the  State  of New York are  required  to be
closed.

                  "CLOSING  DATE"  shall  mean the date on which the  deliveries
required to properly  exercise this Warrant  pursuant to Section  2.1(b) of this
Warrant have been made.

                  "COMMISSION"  shall  mean the  United  States  Securities  and
Exchange   Commission  or  the  principal  United  States  federal  agency  then
administering the Securities Act or other United States federal securities laws.

                  "COMMON STOCK" shall mean (except where the context  otherwise
indicates)  the common  stock of the  Company,  par value  one-tenth of one cent
($.001) per share, as constituted on the date hereof,  and any shares of capital
stock of the Company into which such common stock may thereafter be changed, and
shall also include (i) shares of the Company's  capital stock of any other class
(regardless of how denominated)  issued to the holders of shares of Common Stock


                                  2


upon any  reclassification  thereof  which is not  preferred  as to dividends or
assets over any other class of shares of the  Company's  capital stock and which
is not subject to mandatory  redemption  and (ii) shares of the capital stock of
any  successor,  resulting,  surviving or acquiring  corporation  (as defined in
Section 4.2) received by or  distributed  to the holders of common shares of the
Company in the circumstances contemplated by Section 4.2.

                  "CORPORATION" shall mean Collins Industries,  Inc., a Missouri
corporation.

                  "CURRENT WARRANT PRICE" on any date shall be the par value per
share of the Common Stock on such date.

                  "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended,  or any similar  United States  federal  statute,  and the rules and
regulations of the Commission in effect from time to time thereunder.

                  "EXERCISE  PERIOD" shall have the meaning set forth in Section
2.1.

                  "EXERCISE  QUANTITY" means the lesser of (i) [38,304] and (ii)
the number of shares of Warrant  Stock the  Transfer  of which  pursuant  to the
Triggering  Event giving rise to the exercise of the Warrant results in proceeds
to the Holder that,  together with all other Investment Return Proceeds,  causes
the Internal Rate of Return to equal, but not exceed, eight percent (8%).

                  "EXPIRATION   DATE"   shall  mean  the   earlier  of  (i)  the
Anniversary  Date  and  (ii)  the  effective  date  or  consummation  date  of a
Triggering Event.

                  "HOLDER"  shall mean the Person in whose name the  Warrant set
forth  herein is  registered  on the books of the  Company  maintained  for such
purpose.

                  "INTERNAL  RATE  OF  RETURN"  means  the  semi  annual,   bond
equivalent  discount  rate  which,  when  used to value  all  Investment  Return
Payments,  and  taking  into  account  the  dates on which  such  payments  were
received, results in such Investment Return Payments having a value equal to the
purchase price of the Original Shares.

                  "INVESTMENT   RETURN   PAYMENTS"  shall  mean  all  dividends,
distributions  and payments received by the Holders with respect to the Original
Shares and the Warrant Stock, including,  without limitation,  payments received
in  connection  with the  Triggering  Event  giving rise to the  exercise of the
Warrant.

                  "MAJORITY   HOLDERS"   shall  mean  the  holders  of  Warrants
exercisable  for in  excess of 50% of the  aggregate  number of shares of Common
Stock then purchasable upon exercise of all Warrants.


                                       3


                  "OTHER  PROPERTY"  shall have the meaning set forth in Section
4.2.

                  "ORIGINAL  SHARES"  shall  mean the  shares  of  Common  Stock
purchased by BNS Holding, Inc. pursuant to the Stock Purchase Agreement.

                  "PERSON"  shall  mean any legal  entity or  person,  including
without  limitation,   an  individual,   a  partnership,   a  joint  venture,  a
corporation, a company, a trust, an estate, an unincorporated  organization or a
government or any department or agency thereof.

                  "RULE 144" shall mean the rule of such number  promulgated  by
the Commission under the Securities Act and any successor rule thereto.

                  "SECURITIES  ACT" shall mean the  Securities  Act of 1933,  as
amended,  or any  similar  United  States  federal  statute,  and the  rules and
regulations of the Commission in effect from time to time thereunder.

                  "STOCKHOLDERS' AGREEMENT" means the Stockholders' Agreement of
even date herewith by and among the Company,  Collins Industries,  Inc., AIP/CHC
Holdings, LLC, BNS Holding, Inc., and the "Employees" as defined and referred to
therein.

                  "STOCK  PURCHASE  AGREEMENT"  shall mean the Agreement of even
date herewith by and between the Company and BNS Holding, Inc.

                  "TRANSACTION  PRICE"  means the price  per  share  payable  or
distributable with respect to the Common Stock in connection with the Triggering
Event giving rise to the exercise of this Warrant.

                  "TRANSFER"  shall  mean  any  disposition  of any  Warrant  or
Warrant Stock or of any interest in either, which would constitute a sale, trade
or distribution thereof within the meaning of the Securities Act.

                  "TRANSFER  NOTICE" shall have the meaning set forth in Section
9.2.

                  "TRIGGERING EVENT" shall mean (A) any Sale of the Company,  as
such term is defined in the  Stockholders'  Agreement,  or (B) the  liquidation,
dissolution or winding-up of the Company.

                  "TRIGGER  PERIOD"  shall mean any period  beginning on the day
Holder receives, or should have received,  notice of a Triggering Event pursuant
to Section 5.3 and ending on the  effective  date or  consummation  date of such
Triggering Event.


                                       4


                  "WARRANT"  and  "WARRANTS"  shall  mean this  Warrant  and all
warrants  issued upon transfer,  division or combination  of, or in substitution
for, any thereof.  All Warrants  shall at all times be identical as to terms and
conditions and date, except as to the number of shares of Common Stock for which
they may be exercised.

                  "WARRANT  PRICE"  shall  mean an amount  equal to the  product
obtained by multiplying (i) the number of shares of Common Stock being purchased
upon  exercise  of this  Warrant  pursuant  to Section  2.1, by (ii) the Current
Warrant Price as of the date of such exercise.

                  "WARRANT   STOCK"  shall  mean  the  shares  of  Common  Stock
purchased by the holders of the Warrants upon the exercise thereof.

SECTION 2   EXERCISE OF WARRANT

         2.1      MANNER OF EXERCISE.
         2.2

         (a) From and after the date  hereof and until 5:00 P.M.  (New York City
time) on the Expiration Date (the "Exercise  Period"),  Holder may exercise this
Warrant for the number of shares of Common Stock equal to the Exercise  Quantity
on any Business  Day that falls  within both the  Exercise  Period and a Trigger
Period.  This Warrant  shall  terminate in the event that (A) notice is given to
Holder of a  Triggering  Event  pursuant to Section 5.3, (B) this Warrant is not
exercised in  accordance  with the terms hereof prior to such  Triggering  Event
becoming effective or being  consummated,  and (C) such Triggering Event becomes
effective or is consummated.

         (b) In order to exercise  this Warrant,  as a whole or in part,  Holder
shall  deliver to the  Company  at its  principal  office,  15  Compound  Drive,
Hutchinson,  Kansas 67502, or at the office or agency  designated by the Company
pursuant  to  Sections  12 and 16.2,  or at the  location  of the closing of the
Triggering  Event  giving rise to such  exercise,  as specified in the notice of
such Triggering Event delivered to Holder pursuant to Section 5.3, (i) a written
notice of Holder's election to exercise this Warrant, which notice shall specify
the  number  of shares of  Warrant  Stock to be  purchased  or  included  in the
transaction   constituting  a  Triggering  Event  (such  written  notice  to  be
substantially in the form of Exhibit A hereto and duly executed by Holder or its
agent or  attorney),  (ii)  payment of the  Warrant  Price by, at such  Holder's
option (a) a wire  transfer in  immediately  available  funds to an account in a
bank  located in New York  designated  by the  Company for such  purpose,  (b) a
certified or official  bank check  payable to the order of the  Company,  or (c)
surrender of certificates then held  representing,  or deduction from the number


                                       5


of shares of Common Stock issuable upon exercise of this Warrant, that number of
shares of Common Stock which has an aggregate  Transaction  Price on the date of
exercise equal to the Warrant Price and (iii) this Warrant.

         (c) Upon receipt of the documents and payment required by the preceding
paragraph  2.1(b),  the Company shall,  as promptly as  practicable,  and in any
event prior to the Triggering  Event giving rise to the exercise of the Warrant,
execute or cause to be executed and deliver or cause to be delivered to Holder a
certificate  or  certificates  representing  the  aggregate  number  of  shares,
including  fractional shares, of Warrant Stock issuable upon such exercise.  The
stock  certificate or certificates so delivered shall be in such denomination or
denominations as such Holder shall reasonably request in the notice and shall be
registered  in the name of Holder  or,  subject to Section 9, such other name or
names as shall be designated in the notice.

         (d) This  Warrant  shall be  deemed  to have  been  exercised  and such
certificate or certificates  shall be deemed to have been issued, and Holder or,
subject  to Section  2.2  hereof,  any other  Person so  designated  to be named
therein shall be deemed to have become a holder of record of such shares for all
purposes,  as of the date the notice,  together  with the cash  and/or  check or
checks, in the form and amount required by this Section 2.1 and this Warrant, is
received by the Company as described  above and all taxes required to be paid by
Holder,  if any,  pursuant to Section  2.2 prior to the  issuance of such shares
have been paid.

         2.2  PAYMENT  OF  TAXES.  The  Company  shall  pay all  taxes and other
governmental  charges that may be imposed with respect to, the original issue or
delivery  of all shares of Warrant  Stock  issuable  upon the  exercise  of this
Warrant  pursuant to the terms  hereof,  unless such tax or charge is imposed by
law upon  Holder,  in which case such taxes or charges  shall be paid by Holder.
The  Company  shall not be required  to pay any tax or other  charge  imposed in
connection  with any transfer of this Warrant or involved in the issuance of any
certificate  for shares of Warrant Stock  issuable upon exercise of this Warrant
in any name other than that of Holder, and in such case the Company shall not be
required to transfer the Warrant or issue or deliver any stock certificate until
such  tax or  other  charge  has been  paid or it has  been  established  to the
satisfaction of the Company that no such tax or other charge is due.

         2.3 CONTINUED VALIDITY. A holder of shares of Warrant Stock issued upon
the  exercise  of this  Warrant,  in whole or in part  (other  than a holder who
acquires  such  shares  after the same have been  publicly  sold  pursuant  to a
Registration  Statement under the Securities Act, or sold pursuant to Rule 144),
shall continue to be entitled or bound with respect to such shares to all rights
or  obligations  to which it would have been  entitled or bound as Holder  under
Sections 2.4, 9 and 13 of this Warrant.


                                       6


         2.4  RESTRICTIONS  ON  WARRANT  STOCK.  Holder  agrees  that,  upon any
exercise  of this  Warrant,  the Warrant  Stock  acquired by such Holder will be
subject to the terms and  conditions  applicable to BNS  Securities set forth in
the Stockholders' Agreement.

         2.5 NO ADDITIONAL RIGHTS RIGHTS CUMULATIVE. Neither the Company nor any
Affiliate nor any stockholder  involved in any proposed  transaction that is the
subject of a  Triggering  Event  shall  have any  obligation  to the  Holders to
consummate  any such  proposed  transaction  once an  agreement  or agreement in
principle or decision to proceed with respect thereto is reached, whether on the
terms first  proposed  or revised,  or to include any such Holder in, or apprise
any such Holder of, any negotiations or discussions concerning any such proposed
transaction among the prospective parties thereto,  except as expressly provided
herein and in the Stockholders' Agreement.

SECTION 3   TRANSFER,  DIVISION AND  COMBINATION

         3.1  TRANSFER.  Subject to  compliance  with  Sections 2.2, 3.5, and 9,
transfer of this Warrant and all rights hereunder,  as a whole or in part, shall
be  registered  on the books of the Company to be  maintained  for such purpose,
upon surrender of this Warrant at the principal  office of the Company  referred
to in Section 2.1 or the office or agency  designated by the Company pursuant to
Section 11, together with a written assignment of this Warrant  substantially in
the form of Exhibit B hereto  duly  executed  by Holder or its agent or attorney
and funds  sufficient to pay any transfer  taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall,
subject to Section  3.5 and  Section 9,  execute  and  deliver a new  Warrant or
Warrants  in the  name of the  assignee  or  assignees  and in the  denomination
specified in such  instrument of  assignment,  and shall issue to the assignor a
new Warrant  evidencing  the portion of this Warrant not so  assigned,  and this
Warrant  shall  promptly  be  cancelled.  A Warrant,  if  properly  assigned  in
compliance  with Section 3.5 and Section 9, may be exercised by a new Holder for
the purchase of shares of Warrant Stock without having a new Warrant issued.


                                       7


         3.2  DIVISION  AND  COMBINATION.  Subject to Section 3.5 and Section 9,
this Warrant may be divided or combined with other  Warrants  upon  presentation
hereof at the aforesaid office or agency of the Company, together with a written
notice  specifying the names and  denominations  in which new Warrants are to be
issued,  signed by Holder or its agent or attorney.  Subject to compliance  with
Section 3.1 and with Section 9, as to any transfer which may be involved in such
division or combination,  the Company shall execute and deliver a new Warrant or
Warrants  in  exchange  for the Warrant or Warrants to be divided or combined in
accordance with such notice.

         3.3 EXPENSES.  The Company shall prepare,  issue and deliver at its own
expense  (other than  transfer  taxes) the new  Warrant or  Warrants  under this
Section 3.

         3.4  MAINTENANCE  OF BOOKS.  The  Company  agrees to  maintain,  at its
aforesaid  office or agency,  books for the registration and the registration of
transfer of the Warrants.

         3.5  RESTRICTIONS  ON TRANSFER.  This Warrant and Warrant  Stock may be
transferred  in  accordance  with Section 9 hereto.  Any  attempted  transfer in
violation of the provisions of this Section 3.5 shall be null and void.

         3.6

SECTION 4   ADJUSTMENTS

         The  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable  shall be  subject to  adjustment  from time to time as set forth in
this Section 4.

         4.1 STOCK DIVIDENDS,  SUBDIVISIONS AND COMBINATIONS. If at any time the
Company shall:

         4.2

                  (a) take a record of the  holders of its Common  Stock for the
         purpose of  entitling  them to receive a dividend  payable in, or other
         distribution of, shares of Common Stock,


                                       8


                  (b)  subdivide its  outstanding  shares of Common Stock into a
         larger number of shares of Common Stock, or

                  (c)  combine  its  outstanding  shares of Common  Stock into a
         smaller number of shares of Common Stock,

then the number of shares of Common Stock for which this Warrant is  exercisable
immediately  after the  occurrence  of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number of
shares of Common Stock for which this Warrant is exercisable  immediately  prior
to the  occurrence  of such event would own or be entitled to receive  after the
happening of such event.

         4.2   REORGANIZATION,   RECLASSIFICATION,   CONSOLIDATION,   MERGER  OR
DISPOSITION  OF  ASSETS.  In case the  Company  shall  reorganize  its  capital,
reclassify  its capital  stock,  consolidate  or merge with another  corporation
(where there is a change in or distribution  with respect to the Common Stock of
the Company), or sell, transfer or otherwise dispose of all or substantially all
its property, assets or business to another corporation, where this Warrant does
not cease to be exercisable  pursuant to Section 2.1 or terminate as a result of
such   transaction   and,   pursuant  to  the  terms  of  such   reorganization,
reclassification,  consolidation,  merger or  disposition  of assets,  shares of
common stock of the successor, resulting, surviving or acquiring corporation, or
any  cash,  shares  of stock or  other  securities  or  property  of any  nature
whatsoever  (including  warrants or other  subscription  or purchase  rights) in
addition to or in lieu of common stock of the successor, resulting, surviving or
acquiring  corporation ("Other Property"),  are to be received by or distributed
to the holders of Common Stock of the  Company,  then each Holder shall have the
right thereafter to receive, upon exercise of such Warrant, the number of shares
of common stock of the successor,  resulting, surviving or acquiring corporation
or of the  Company  and Other  Property  receivable  upon or as a result of such
reorganization, reclassification, consolidation, merger or disposition of assets
by a holder of the number of shares of Common  Stock for which  this  Warrant is
exercisable immediately prior to such event. In case of any such reorganization,
reclassification, consolidation, merger or disposition of assets, the successor,
resulting,  surviving or acquiring  corporation,  if any, shall expressly assume
the due and punctual  observance and  performance of each and every covenant and
condition of this  Warrant to be  performed  and observed by the Company and all
the obligations and liabilities hereunder,  subject to such modifications as may
be deemed  appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for  adjustments  of shares of the Common Stock
for which this Warrant is  exercisable  which shall be as nearly  equivalent  as
practicable to the  adjustments  provided for in this Section 4. For purposes of
this  Section  4.2  "common  stock of the  successor,  resulting,  surviving  or
acquiring  corporation"  shall  include stock of such  corporation  of any class
which is not  preferred  as to dividends or assets over any other class of stock
of such  corporation  and which is not  subject  to  redemption  and shall  also
include any evidences of indebtedness, shares of stock or other securities which


                                       9


are convertible into or exchangeable for any such stock,  either  immediately or
upon the arrival of a specified  date or the happening of a specified  event and
any warrants or other rights to  subscribe  for or purchase any such stock.  The
foregoing  provisions  of this Section 4.2 shall  similarly  apply to successive
reorganizations,  reclassifications,  consolidations, mergers or dispositions of
assets.

SECTION 5   NOTICES TO WARRANT HOLDERS

         5.1  NOTICE OF  ADJUSTMENTS.  Whenever  the  number of shares of Common
Stock for which this  Warrant  is  exercisable  shall be  adjusted  pursuant  to
Section 4, the Company shall  forthwith  prepare a certificate to be executed by
the chief financial  officer (or if there is no acting chief financial  officer,
the chief executive officer) of the Company setting forth, in reasonable detail,
the event  requiring the adjustment and the method by which such  adjustment was
calculated,  specifying  the  number of shares  of Common  Stock for which  this
Warrant is exercisable and (if such adjustment was made pursuant to Section 4.2)
describing  the number and kind of any other  shares of stock or Other  Property
for which this Warrant is  exercisable,  and any change in the purchase price or
prices thereof,  after giving effect to such  adjustment or change.  The Company
shall promptly  cause a signed copy of such  certificate to be delivered to each
Holder in accordance  with Section 13.2. The Company shall keep at its office or
agency  designated  pursuant to Section 11 copies of all such  certificates  and
cause the same to be  available  for  inspection  at said office  during  normal
business  hours  by  any  Holder  or  any  prospective  purchaser  of a  Warrant
designated by a Holder thereof.

         5.2 NOTICE OF  CERTAIN  CORPORATE  ACTION.  In case the  Company  shall
propose  (a) to pay any  dividend  payable  in  securities  of any  class to the
holders  of  its  Common  Stock,  (b)  to  effect  any  capital  reorganization,
consolidation   or  merger  or  (c)  to  effect  the  voluntary  or  involuntary
dissolution,  liquidation or winding-up of the Company, the Company shall within
ten days send the Holders a notice of such proposed action,  which shall specify
the  record  date on which a  record  is to be taken  for the  purposes  of such
dividend,  distribution or rights, or the date such issuance or event is to take
place and the date of  participation  therein by the holders of Common Stock, if
any such date is to be fixed,  and shall  briefly  indicate  the  effect of such
action on the Common  Stock and on the  number  and kind of any other  shares of
stock and on other  property,  if any,  and the number of shares of Common Stock
and other property,  if any,  purchasable  upon exercise of each Warrant and the
Current  Warrant  Price  after  giving  effect to any  adjustment  which will be
required as a result of such  action.  Such notice shall be given as promptly as
possible  and, in the case of any action  covered by clause (a) above,  at least


                                       10


ten (10) Business Days prior to the record date for  determining  holders of the
Common  Stock for  purposes  of such  action  and, in the case of any other such
action,  at least twenty (20)  Business  Days prior to the date of the taking of
such  proposed  action or the date of  participation  therein by the  holders of
Common Stock, whichever shall be the earlier.

         5.3 NOTICE OF TRIGGERING EVENT. The Company shall notify each Holder of
any definitive  agreement that would result in a Triggering Event not later than
five (5)  Business  Days after the  execution  thereof but in no event less than
twenty  (20)  Business  Days prior to the  effectuation  of any such  Triggering
Event,  stating the nature and terms of the Triggering  Event so that the Holder
is reasonably  informed as to the nature and terms of the Triggering  Event, the
date on which any such Triggering Event is expected to become effective, and the
location of the closing of such Triggering Event;  PROVIDED,  HOWEVER,  that the
Company  shall  only be  required  to give  written  notice of any change in the
material  terms of such  Triggering  Event five (5)  Business  Days prior to the
effectuation  of  such  Triggering  Event;  FURTHER  PROVIDED,   HOWEVER,   that
notwithstanding anything to the contrary contained herein, the Company shall not
be obligated to provide notice of any Triggering Event to the Holders unless and
until it  shall  reasonably  believe  that  disclosure  of the  existence  of an
agreement in principle  respecting  the  transaction  that is the subject of the
Triggering  Event would not impair or  jeopardize  the ability of the parties to
consummate such transaction on the terms proposed.

SECTION 6   NO IMPAIRMENT

         6.1 NO  AVOIDANCE  OF  TERMS.  The  Company  shall  not by any  action,
including, without limitation, amending its articles of incorporation or through
any reorganization,  transfer of assets,  consolidation,  merger or arrangement,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such  actions as may be  necessary  or  appropriate  to
protect the rights of Holder against impairment. Without limiting the generality
of the  foregoing,  the Company will take all such action as may be necessary or
appropriate  in order that the Company may validly and legally  issue fully paid
and non-assessable shares of Common Stock upon the exercise of this Warrant.


                                       11


SECTION 7   RESERVATION AND AUTHORIZATION OF COMMON STOCK;  REGISTRATION WITH OR
            APPROVAL OF ANY GOVERNMENTAL AUTHORITY

         From and after the date hereof,  the Company shall at all times reserve
and keep  available  for issue upon the exercise of Warrants  such number of its
authorized  but unissued  shares of Common Stock as will be sufficient to permit
the  exercise in full of all  outstanding  Warrants.  All shares of Common Stock
which  shall be so  issuable,  when issued  upon  exercise  of this  Warrant and
payment therefor in accordance with the terms of this Warrant, shall be duly and
validly issued and fully paid and  nonassessable,  and not subject to preemptive
rights except as may be provided for herein.

         Before  taking any action  which would result in an  adjustment  in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current  Warrant  Price,  the Company  shall obtain all such  authorizations  or
exemptions  thereof,  or consents  thereto,  as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

SECTION 8   TAKING OF RECORD STOCK AND WARRANT TRANSFER BOOKS

         In the case of all dividends or other  distributions  by the Company to
the holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders,  the Company will in each such
case take such a record and will take such record as of the close of business on
a Business  Day.  The Company will not at any time,  except upon  consolidation,
merger,  dissolution,  arrangement or winding up of the Company, close its stock
transfer  books or  Warrant  transfer  books so as to  result in  preventing  or
delaying the valid exercise or transfer of any Warrant.

SECTION 9   RESTRICTIONS ON TRANSFERABILITY

         The Warrants and the Warrant Stock shall be subject to all of the terms
and conditions, including restrictions on Transfer, applicable to BNS Securities
pursuant to the Stockholders' Agreement.

         9.1


                                       12


SECTION 10  LOSS OR MUTILATION

         Upon  receipt by the  Company  from any Holder of  evidence  reasonably
satisfactory  to it of the  ownership  of and the loss,  theft,  destruction  or
mutilation of this Warrant and indemnity  reasonably  satisfactory  to it and in
case of mutilation  upon  surrender and  cancellation  hereof,  the Company will
execute and deliver in lieu  thereof a new Warrant of like tenor to such Holder;
PROVIDED,  HOWEVER,  that,  in the case of  mutilation,  if permitted by law, no
indemnity shall be required if this Warrant in identifiable  form is surrendered
to the Company for cancellation.

SECTION 11  OFFICE OF THE COMPANY

         As long as any of the Warrants  remain  outstanding,  the Company shall
maintain an office or agency  (which may be the principal  executive  offices of
the Company)  where the Warrant may be presented for exercise,  registration  of
transfer, or division or combination as provided in this Warrant.

SECTION 12  HOLDER NOT DEEMED STOCKHOLDER

         Prior to the exercise of the  Warrants,  no Holder,  as such,  shall be
entitled  to any rights of a  stockholder  of the  Company,  including,  without
limitation,  the right to vote, to receive dividends or other distributions,  to
exercise  any  preemptive  right  or  to  receive  any  notice  of  meetings  of
stockholders  or any notice of any  proceedings  of the Company except as may be
specifically provided for in Sections 2, 5, 9 or otherwise herein.

SECTION 13  MISCELLANEOUS

         13.1  NONWAIVER  AND  EXPENSES.  No course of  dealing  or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company fails to make, when due, any payments provided for hereunder,  or
fails to comply with any other provision of this Warrant,  the Company shall pay
to Holder such amounts as shall be sufficient to cover any reasonable  costs and
expenses including,  but not limited to, reasonable  attorneys' fees,  including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights,  powers or remedies
hereunder.


                                       13


         13.2 NOTICE GENERALLY. Any notice, demand, request, consent,  approval,
declaration,  delivery or other  communication  hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either  delivered in person with receipt  acknowledged or sent by registered
or certified  mail,  return receipt  requested,  postage  prepaid,  addressed as
follows:

         13.3

                  (a) If to any Holder or holder of Warrant  Stock,  at its last
         known address appearing on the books of the Company maintained for such
         purpose.

                  (b) If to the Company at:

                           Collins I Holding Corp.
                           c/o BNS Holding, Inc.
                           25 Enterprise Center
                           Middletown, RI 02842
                           Attention: Michael Warren, President and
                           Chief Executive Officer
                           Fax:     (401) 848-6444

or at such  other  address  as may be  substituted  by  notice  given as  herein
provided.  The giving of any notice required  hereunder may be waived in writing
by the party  entitled to receive such notice.  Every notice,  demand,  request,
consent, approval, declaration,  delivery or other communication hereunder shall
be  deemed to have  been  duly  given or served on the date on which  personally
delivered,  with receipt  acknowledged,  five Business Days after the same shall
have been  deposited in the United  States mail  (registered  or certified  with
return receipt requested), two Business Days after the same shall have been sent
by express  courier  service and on the same  Business Day when sent before 5:00
P.M.,  recipient's  time,  and the next  Business  Day when sent later than such
time,  after same shall be sent by  facsimile  transmission  or telex,  provided
receipt thereof is  acknowledged.  Failure or delay in delivering  copies of any
notice, demand, request, approval, declaration,  delivery or other communication
to the  person  designated  above to  receive a copy  shall in no way  adversely
affect the effectiveness of such notice, demand, request, approval, declaration,
delivery or other communication.

         13.4  REMEDIES Subject to any limitations on remedies contained in this
Agreement,  nothing  contained herein is intended or shall be construed to limit
the remedies  which any party may have against the other  related to the Warrant
and Warrant Stock in the event of a breach of or default  under this  Agreement,
it being intended that any remedies shall be cumulative and not exclusive.


                                       14


         13.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections 3.1,
3.5 and 9, this  Warrant  and the rights  evidenced  hereby  shall  inure to the
benefit of and be binding upon the  successors of the Company and the successors
and permitted assigns of Holder.  The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this  Warrant,  and shall
be enforceable by any such Holder.

         13.6 AMENDMENT.  This Warrant and all other Warrants may be modified or
amended or the provisions  hereof waived with the written consent of the Company
and the  Majority  Holders,  provided  that no such  Warrant  may be modified or
amended to reduce the number of shares of Common Stock for which such Warrant is
exercisable  or to increase the price at which such shares may be purchased upon
exercise of such Warrant  (before  giving  effect to any  adjustment as provided
therein) without the prior written consent of the Holder thereof.

         13.7  SEVERABILITY.  Each provision of this Warrant is declared to be a
separate  and  distinct  covenant  and  to be  severable  from  all  other  such
provisions hereof;  wherever  possible,  each provision of this Warrant shall be
interpreted  in such manner as to be effective and valid under  applicable  law,
but if any  provision of this Warrant  shall be  prohibited  by or invalid under
applicable  law,  such  provision  shall be  ineffective  to the  extent of such
prohibition or invalidity,  without invalidating the remainder of such provision
or the remaining provisions of this Warrant.

         13.8 HOLDER'S OBLIGATIONS. By acceptance of this Warrant, Holder agrees
to be bound by the provisions of this Warrant.

         13.9  HEADINGS.   The  headings  used  in  this  Warrant  are  for  the
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

         13.10  GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF DELAWARE  APPLICABLE  THEREIN WITHOUT REGARD TO THE PROVISIONS  THEREOF
RELATING TO CONFLICT OF LAWS.


                                       15


         13.11 ENTIRE AGREEMENT.  This Warrant, the Stock Purchase Agreement and
the  Stockholders'  Agreement  constitute  the entire  agreement  respecting the
subject  matter  hereof and  hereby  supersede  any and all other  negotiations,
understandings,  written and verbal  agreements  relating to the subject  matter
hereof.


                                       16


         IN WITNESS  WHEREOF,  the Company  has caused  this  Warrant to be duly
executed and its corporate seal to be impressed hereon.

                                        COLLINS I HOLDING CORP.

                                        By: /s/ Dino Cusumano
                                            ------------------------------------
                                            Name: Dino Cusumano
                                                  ------------------------------
                                            Title: Vice President
                                                   -----------------------------

                                       17


                                  EXHIBIT A

                                  SUBSCRIPTION FORM

                                  [To be executed only upon exercise of Warrant]

         The undersigned  registered owner of this Warrant irrevocably exercises
this  Warrant for the  purchase  of shares of Common  Stock of COLLINS I HOLDING
CORP.,  and herewith makes payment  therefor,  all at the price and on the terms
and conditions  specified in this Warrant and requests that certificates for the
shares of Common Stock hereby  purchased  (and any  securities or other property
issuable  upon  such  exercise)  be  issued  in the  name  of and  delivered  to
_______________________________________         whose         address         is
______________________________________ and, if such shares of Common Stock shall
not  include  all of the shares of Common  Stock  issuable  as  provided in this
Warrant, that a new Warrant of like tenor and date for the balance of the shares
of Common Stock issuable hereunder be delivered to the undersigned.

Guarantee of Signature:
                        -----------------------------
                        (Name of Registered Owner)

By:
    ----------------------
Name:
      ---------------------  -------------------------------
                             (Signature of Registered Owner)
Title:
       -------------------

                                        ----------------------------------------
                                        (Street Address)

                                        ----------------------------------------
                                        (City) (State) (Zip Code)

NOTICE:  The signature on this  subscription  must  correspond  with the name as
         written  upon  the face of the  within  Warrant  in  every  particular,
         without alteration or enlargement or any change whatsoever.


                                       B-1


                                  EXHIBIT B

                                  ASSIGNMENT FORM


         FOR VALUE  RECEIVED the  undersigned  registered  owner of this Warrant
hereby  sells,  assigns and transfers  unto the Assignee  named below all of the
rights of the  undersigned  under this  Warrant,  with  respect to the number of
shares of Common Stock set forth below:

                                        No. of Shares of
Name and Address of Assignee              Common Stock
- ----------------------------              ------------









and   does   hereby   irrevocably   constitute   and   appoint   _______________
attorney-in-fact  to  register  such  transfer on the books of COLLINS I HOLDING
CORP.  maintained  for the  purpose,  with  full  power of  substitution  in the
premises.

Dated:
       -------------------  -------------------------------
                            Print Name

                            -------------------------------
                            Signature

                            -------------------------------
                            Witness

NOTICE:  The  signature  on this  assignment  must  correspond  with the name as
         written  upon  the face of the  within  Warrant  in  every  particular,
         without alteration or enlargement or any change whatsoever.


                                       B-2

EX-10.07

                                                                    Exhibit 10.7

THE SHARES  SUBSCRIBED FOR HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF
1933, AS AMENDED,  OR QUALIFIED  UNDER ANY STATE  SECURITIES LAWS AND MAY NOT BE
RESOLD OR TRANSFERRED  WITHOUT (1) REGISTRATION AND QUALIFICATION  THEREUNDER OR
AN APPLICABLE  EXEMPTION FOR SUCH RESALE OR TRANSFER,  AND (2) THE PRIOR CONSENT
OF  THE  COMPANY  AND  COMPLIANCE  WITH  OTHER   PROCEDURES  SET  FORTH  IN  THE
STOCKHOLDERS' AGREEMENT.

Investor:         BNS Holding, Inc., a Delaware corporation

No. of Units:     26,400

                             SUBSCRIPTION AGREEMENT

1.       SUBSCRIPTION FOR UNITS

         1.1 The above listed Investor hereby subscribes to purchase the number
units (the "Units") set forth at the top of this page in Collins I Holding
Corp., a Delaware corporation (the "Company"). Each unit shall consist of one
(1) share of common stock, par value $0.001 per share (the "Common Shares") and
a warrant at an exercise price of $0.001 per share and convertible to 1.4509
Common Shares (the "Issued Warrants"). The Investor acknowledges that the Common
Shares are subject to that certain Stockholders' Agreement, dated as of October
31, 2006, by and among the Company and its stockholders (the "Stockholders'
Agreement") and that the Issued Warrants are subject to that certain warrant
issued by the Company to the Investor dated as of October 31, 2006 (the
"Warrant"). Terms used but not specifically defined in this Agreement have the
same meanings given them in the Stockholders' Agreement.

         1.2 The Investor is delivering to you, along with this executed
Subscription Agreement (the "Agreement"), a wire transfer in the sum of
Twenty-Nine Million Seven Hundred Thousand Dollars ($29,700,000).

         1.3 The Investor understands that this subscription constitutes an
irrevocable offer to purchase Units which may not be revoked by it without the
written consent of the Company. The execution and delivery of this Agreement
will not constitute an agreement between the Company and the Investor until this
Agreement is specifically accepted in writing by a duly authorized officer on
behalf of the Company.

2.       REPRESENTATIONS AND INVESTMENT STANDARDS

         The Investor represents and warrants to the Company and agents that:

         2.1 The Investor understands and has fully considered for purposes of
this investment that (a) the Company has no financial or operating history; (b)
the Units involve risk of total loss of its investment; (c) any anticipated
income tax or other legal consequences may not be available and may be adversely
affected by the adoption of new or amended laws, interpretations, rulings,
regulations or policies; and (d) there are substantial restrictions on the
transferability of the Units, there will be no public market for the Units and,
consequently, any attempt to liquidate its investment in the Company may be
difficult or impossible. The Investor has received, read and understood a copy
of the Stockholders' Agreement. The Investor also acknowledges that the




Company's sole investment purpose is to invest in assets of Collins Industries,
Inc., a Missouri corporation ("Collins") and that in making its decision to
invest in the Company the Investor has conducted its own due diligence of
Collins. The Investor also acknowledges that it has had an opportunity to
discuss Collin's business, management and financial affairs with its management
and to obtain any additional information which the Investor has deemed necessary
or appropriate for deciding whether or not to purchase the Units in the Company.
The Investor accepts full responsibility for inquiring into all matters relating
to the Company which may be important to make an investment decision.

         2.2 The Investor acknowledges that no representations or warranties,
oral or written, have been made by the Company or any agent or affiliate thereof
except as set forth in this Agreement. The Investor understands that no private
placement memorandum or other disclosure document is being prepared in
connection with the offer and sale of Units, and that this may increase its risk
of investing in the Company.

         2.3 The Investor understands that the Company will rely upon the
statements it has made in this Agreement in determining whether to accept its
subscription.

         2.4 The Investor is capable of evaluating the merits and risks of the
purchase of the Units and protecting its own interests in connection therewith,
and has sufficient knowledge and experience in financial and business matters
such that it is capable of utilizing the information made available to it in
connection with the offering of the Units, of evaluating the merits and risks of
an investment in the Units and of making an informed investment decision with
respect to Collins.

         2.5 The Investor understands that the transfer of Common Shares is
subject to substantial restrictions under the Stockholders' Agreement; that,
because the Common Shares have not been registered under the Securities Act of
1933 (the "Act") or qualified under applicable state securities laws, the Common
Shares cannot be sold unless they are subsequently registered under the Act and
qualified under applicable state securities laws, or unless resale is exempt
from registration and qualification thereunder; and that it must bear the
economic risk of ownership of the Common Shares for an indefinite period of
time.

         2.6 The funds used for this investment are legally subject to the
Investor's management and control.

         2.7 The Investor has not been contacted concerning the offer of Units
by means of any general solicitation or advertising such as any advertisement,
article, notice or other communication published in any newspaper, magazine, or
similar media, or broadcast over television or radio, or any seminar or meeting
whose attendees were invited by general solicitation or advertising.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY:

         The Company represents and warrants:

         3.1 The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the state of Delaware, and has all
corporate powers required to carry on its business as now conducted. The Company
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary.


                                     - 2 -


         3.2 The issuance, sale and delivery of the Common Shares that are being
purchased by the Investors hereunder, and the reservation for issuance of the
shares underlying the Issued Warrants and the Warrants (the "Reserved Shares")
have been duly authorized by all required corporate action on the part of the
Company, and when issued, sold, and delivered in accordance with the terms
hereof for the consideration expressed herein, will be duly and validly issued,
fully paid and non-assessable. The Reserved Shares have been duly and validly
reserved for issuance and, upon issuance in accordance with the terms of the
Certificate of Incorporation and Bylaws of the Company, shall be duly and
validly issued, fully paid, and non-assessable. The Common Shares issued
hereunder (and the Reserved Shares) will be free and clear from any liens or
encumbrances other than those created by, or imposed upon, the holders thereof
through no action of the Company, other than restrictions on transfer under
state and/or federal securities laws and restrictions set forth herein. Issuance
of the Common Shares and the Reserved Shares will be free of statutory and
contractual preemptive rights. Upon the purchase of the shares by Investor, the
Company will have thirty-two thousand five hundred (32,500) shares of Common
Stock issued and outstanding.

         3.3 The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized, and no additional corporate or stockholder action is required
for the approval of this Agreement. This Agreement has been duly executed and
delivered and constitutes the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.

         3.4 The execution, delivery and performance by the Company of this
Agreement, and the consummation of the transactions contemplated by the Company
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority.

         3.5 The execution, delivery and performance by the Company of this
Agreement, and the consummation by the Company of the transactions contemplated
hereby do not and will not (a) contravene or conflict with the Certificate and
By-laws or any material agreement to which the Company is a party or by which it
is bound; (b) contravene or conflict with or constitute a material violation of
any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to the Company; (c) constitute a default (or would
constitute a default with notice or lapse of time or both) under or give rise to
a right of termination, cancellation or acceleration or loss of any benefit
under any material agreement, contract or other instrument binding upon the
Company or under any material license, franchise, permit or other similar
authorization held by the Company; or (d) result in the creation or imposition
of any Lien (as defined below) on any asset of the Company. For purposes of this
Agreement, the term "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, claim or encumbrance of any kind in respect
of such asset.

4.       INVESTOR QUALIFICATIONS

         The Investor understands that the representations contained below are
made for the purpose of qualifying the Investor as an accredited investor as
that term is defined by the Securities and Exchange Commission for the purpose
of inducing a sale of securities to the Investor. The undersigned hereby
represents that:


                                     - 3 -


         4.1 The undersigned has been duly formed, is validly existing and is in
good standing under the laws of the jurisdiction of its formation, with full
power and authority to enter into the transactions contemplated by this
Agreement.

         4.2 This Agreement has been duly and validly authorized, executed and
delivered and, if executed and delivered on behalf of the Company, will
constitute the valid, binding and enforceable agreement of the undersigned.

         4.3 If the undersigned has been formed, reformed or recapitalized for
the specific purpose of purchasing the Units, or if the undersigned entity has
sought or is required to seek approval by or additional funds from its
beneficial owners in connection with this investment, then the undersigned shall
cause each shareholder, partner, or owner of a beneficial interest to complete
and return a copy of this Subscription Agreement.

5.       AGREEMENTS OF INVESTOR

         5.1 THE UNDERSIGNED AGREES THAT ALL OF ITS REPRESENTATIONS, STATEMENTS,
AGREEMENTS AND PROMISES SET FORTH IN THIS AGREEMENT CONSTITUTE LEGALLY BINDING
OBLIGATIONS WHICH SURVIVE ITS ADMISSION TO THE COMPANY. IF THERE IS ANY MATERIAL
CHANGE IN THE INFORMATION SET FORTH IN THIS AGREEMENT, THE INVESTOR WILL
IMMEDIATELY FURNISH SUCH REVISED OR CORRECTED INFORMATION TO THE COMPANY.

         5.2 The Investor is acquiring the Units for own account for investment
and not with a view to the resale or other transfer of such Units or any
interest therein.

         5.3 The Investor agrees to be bound by this Agreement, the
Stockholders' Agreement and the Warrant.

         5.4 The Investor agrees to indemnify, defend and hold harmless the
Company from any loss, damage or liability (including attorneys' fees and other
expenses) due to or arising out of any breach of any of its representations or
promises contained in this Agreement.

         5.5 Subject to procedures and restrictions on transferability of Units
under the Stockholders' Agreement or the Warrant, the Investor agrees not to
assign or otherwise transfer this Agreement or any interest therein.

         5.6 The Investor hereby agrees that it shall keep confidential and
shall not disclose to any third-party any information directly or indirectly
disclosed to it regarding Collins, except where such disclosure is required by
applicable securities laws.

6.       GENERAL

         6.1 All notices or other communications given or made hereunder shall
be in writing and shall be delivered or mailed, postage prepaid, to the
respective parties at the addresses set forth in the Subscription Agreement or
may be sent by email at the email address set forth below or by facsimile to any
phone number provided by the parties hereto. Each party may change its address
by notice given in accordance with this paragraph. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.


                                     - 4 -


         6.2 The Company agrees to indemnify, defend and hold harmless Investor
from any loss, damage or liability (including attorneys' fees and other
expenses) due to or arising out of any breach of any of its representations or
promises contained in this Agreement

         6.3 This Subscription Agreement shall be construed under the laws of
the State of Delaware applicable to contracts made between residents of, and to
be performed in, Delaware.

         6.4 Whenever the context so requires, the use of the singular shall be
deemed to include the plural and vice versa. Each gender shall be deemed to
include the other gender, and each shall include a corporation, partnership,
trust or other legal entity whenever the context so requires.

         6.5 If any provision of this Subscription Agreement shall be held
invalid or unenforceable, the remaining provisions of this Agreement shall
continue in effect.

           [The remainder of this page was intentionally left blank.]


                                     - 5 -


         IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on the 31st day of October, 2006.

Name of Investor:                       BNS HOLDING, INC.

                                        By /s/ Michael Warren
                                           -------------------------------------
                                           Michael Warren, President and
                                           Chief Executive Officer

                                           25 Enterprise Center

                                           Middletown, RI 02842

                                           Fax:    (401) 848-6444


AGREED AND ACCEPTED AS OF THE DATE SET FORTH ABOVE:

Collins I Holding Corp.

By: /s/ John Becker
    -----------------------------
Name: John Becker
      ---------------------------
Title: Vice President
       --------------------------

EX-10.08

                                                                    Exhibit 10.8


                          PLEDGE AND SECURITY AGREEMENT

          PLEDGE AND  SECURITY  AGREEMENT,  dated as of October  30,  2006 (this
"Agreement"), between BNS Holding, Inc., a Delaware corporation ("Pledgor"), and
Steel Partners II, L.P., a Delaware limited partnership ("Secured Party").

                                   WITNESSETH:

          WHEREAS,   Secured  Party  and  Pledgor,  have  entered  into  a  Loan
Agreement, dated as of the date hereof (the "Loan Agreement");

          WHEREAS,  it is a condition to Secured Party's  obligations  under the
Loan Agreement that this Agreement be duly executed and delivered; and

          WHEREAS,  Pledgor and Secured Party wish to enter into this  Agreement
in order to secure the  obligations  of Pledgor under the Loan  Documents  (such
obligations,  together with any obligations of Pledgor under this Agreement, the
"Obligations").

          NOW THEREFORE, in consideration of the premises and for other good and
valuable   consideration   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto agree as follows:

     1.   DEFINITIONS.  Capitalized terms used but not defined herein shall have
the meanings provided therefor in the Loan Agreement.

     2.   SECURITY  INTEREST.  Pledgor  hereby  pledges  to  Secured  Party,  as
security  for the  Obligations,  and  grants to Secured  Party a first  priority
continuing  security  interest  in,  lien on and right of  set-off  against  the
following described property (collectively referred to as the "Collateral"):

          (i)   all  right,  title and  interest  in, to and  under,  all of the
     property and assets  currently owned or owing to, or hereafter  acquired or
     arising in favor of, Pledgor, wherever located,  including, but not limited
     to, all accounts, deposit accounts, chattel paper, instruments,  documents,
     securities,  contract rights,  receivables,  equipment,  goods,  inventory,
     investment property, goodwill, general intangibles,  intellectual property,
     patents, patent applications,  trademarks,  trademark  applications,  trade
     names, copyrights,  copyright applications,  Internet domain names, service
     marks, trade secrets, know-how, technology,  software, hardware, commercial
     tort claims,  warranties and guarantees,  as any of the foregoing terms may
     be  defined  in the New York  Uniform  Commercial  Code  (the  "UCC"),  and
     including any products,  proceeds (including  insurance proceeds) or income
     derived therefrom, whether by disposition or otherwise; together with



          (ii)  the securities  described in Schedule I hereto (such securities,
     together with any additional securities  constituting  Collateral described
     in subsection (iii) below, the "Pledged Securities"); and

          (iii) the products, proceeds and accessions of any of the foregoing.

     3.   DELIVERY OF  COLLATERAL.  Pledgor  agrees that all Pledged  Securities
shall be evidenced by certificates and all such certificates  shall be delivered
to Secured Party in New York c/o Olshan Grundman Frome Rosenzweig & Wolosky LLP,
Park  Avenue  Tower,  65 East  55th  Street,  New  York,  New York  10022.  Such
certificates  shall  be  endorsed  either  to  Secured  Party  or in blank by an
effective  endorsement  within the  meaning of the UCC and shall be in  suitable
form for transfer by delivery or  accompanied  by duly executed stock powers and
any other  instruments of transfer  reasonably  requested by Secured Party.  All
other property  comprising part of the Collateral shall be accompanied by proper
instruments  of  assignment  duly  executed  by  Pledgor,  and by any such other
instruments or documents as Secured Party may reasonably  request.  Certificates
evidencing  the Pledged  Securities  shall be delivered in accordance  with this
Section 3 upon the execution hereof.

     4.   REPRESENTATIONS  AND  AGREEMENTS OF PLEDGOR.  Pledgor  represents  and
agrees that:

          (a)  Except for (i) the security  interest granted hereby and (ii) any
restriction  on  transfer  under  the  Federal  or State  securities  laws  (the
"Permitted  Encumbrances"),  Pledgor is, and as to Collateral acquired after the
date hereof  Pledgor will be, the owner and holder of the  Collateral  free from
any adverse claim, security interest, encumbrance, lien, charge, or other right,
title or interest of any person. Pledgor agrees that at all times the Collateral
will be and remain free of all such adverse claims, security interests, or other
liens or encumbrances, other than any Permitted Encumbrance. Pledgor will defend
the  Collateral  against  all  claims  and  demands  (other  than any  Permitted
Encumbrance)  of all  persons  at any time  claiming  the  same or any  interest
therein.

          (b)  Upon execution of this Agreement and delivery to Secured Party of
certificates  evidencing  the Pledged  Securities in accordance  with Section 3,
Secured Party will have a valid and perfected first priority  security  interest
therein. Upon the filing of financing statements relating to the Collateral with
the Office of the  Secretary  of State of  Delaware,  Secured  Party will have a
valid and perfected first priority security interest in all other Collateral (to
the extent a  security  interest  therein  may be  perfected  by the filing of a
financing statement).

          (c)  Pledgor has not  heretofore  signed any  financing  statement  or
security  agreement  which covers any of the  Collateral,  and no such financing
statement  or security  agreement is now on file in any public  office.  Pledgor
will not enter into or execute any security agreement or any financing statement
covering the  Collateral,  other than those  security  agreements  and financing
statements in favor of Secured Party  hereunder,  and Pledgor  agrees that there
will not be on file in any public office any  financing  statement or statements
(or any documents or papers filed as such) covering the  Collateral,  other than
financing statements in favor of Secured Party hereunder, unless in any case the
prior written consent of Secured Party shall have been obtained.

                                       2


          (d)  Pledgor has full legal  capacity  and lawful  authority  to enter
into this  Agreement and to grant to Secured Party the first  priority  security
interest in the Collateral as herein  provided and all corporate or other action
on  the  part  of  Pledgor  requisite  for  the  due  execution,  delivery,  and
performance of this Agreement has been duly and effectively taken.

          (e)  The  execution,  delivery  and  performance  hereof  are  not  in
contravention  of any agreement or undertaking to which Pledgor is a party or by
which Pledgor,  or its property,  is bound and will not result in the imposition
of any security interest or lien on any other property of Pledgor.

     5.   RIGHTS OF SECURED PARTY AND PLEDGOR RELATED TO COLLATERAL.

          (a)  Secured Party may from time to time  following the  occurrence of
an Event of Default with respect to Pledgor:

          (i)   transfer any of the Collateral into the name of Secured Party or
     its nominee;

          (ii)  notify  parties  obligated  on  any of the  Collateral  to  make
     payment to Secured Party of any amounts due or to become due thereunder;

          (iii) enforce   collection  of  any  of  the  Collateral  by  suit  or
     otherwise;  surrender,  release or  exchange  all or any part  thereof,  or
     compromise  or extend or renew for any period  (whether  or not longer than
     the original period) any obligation of any nature of any party with respect
     thereto;  and exercise all other rights of Pledgor in any of the Collateral
     (including,  without  limitation,  the  right  to  vote or  exercise  other
     consensual interests in the Collateral); and/or

          (iv)  take possession or control of any proceeds of the Collateral.

          (b)  Until the  occurrence  of an "Event of  Default  with  respect to
Pledgor"  (as  defined  in  Section 7 below),  Pledgor  shall  have the right to
receive  all income  from or  interest  on the  Collateral,  other than any such
income or interest which would be prohibited by the Loan Agreement, (such income
or  interest  distributed  by way of a dividend or  otherwise  shall be promptly
delivered to Secured Party to be held as additional  Collateral  hereunder (such
delivery  to be in the  manner  contemplated  by  Section  3  above)).  Upon the
occurrence  of an Event of Default  with  respect to Pledgor,  Pledgor  will not
demand or receive any income from or interest on the Collateral,  and if Pledgor
receives any such income or interest without any demand by it, the same shall be
held by Pledgor in trust for Secured Party in the same medium in which received,
shall not be  commingled  with any assets of Pledgor and shall be  delivered  to
Secured Party in the form received,  properly endorsed to permit collection, not
later than the second Business Day following the day of its receipt.

          (c)  So long as no Event of Default with respect to Pledgor shall have
occurred,  Pledgor  shall be entitled  to exercise  any and all voting and other
consensual  rights  pertaining  to the  Collateral  or any part  thereof for any
purpose not inconsistent with the terms or purpose of this Agreement or the Loan
Agreement  (and Secured  Party shall  exercise  any voting and other  consensual


                                       3


rights  it may  have  pertaining  to  the  Collateral  in  accordance  with  any
instructions of Pledgor in that regard).

          (d)  In the event  Secured  Party  shall pay any  taxes,  assessments,
interests,  costs,  penalties or expenses  incident to or in connection with the
collection of the  Collateral or protection or  enforcement of the Collateral or
any  security  therefor,  Pledgor,  upon demand of Secured  Party,  shall pay to
Secured  Party the full  amount  thereof  with  interest  thereon  from the date
expended by Secured  Party until  repaid at a rate per annum (based on a 360-day
year for the actual number of days involved) equal to 15%.

          (e)  Pledgor  shall  not sell,  assign,  alienate,  exchange,  convey,
transfer,   hypothecate  or  otherwise   dispose  of  or  encumber  the  Pledged
Securities,  or cause  Collins I  Holding  Corp.,  a  Delaware  corporation,  to
dissolve or liquidate, without the prior written consent of Secured Party.

     6.   FURTHER  ASSURANCES;  SECURED PARTY AS AGENT.  Pledgor  agrees to take
such  actions  and to  execute  such  stock or bond  powers  and  such  other or
different  writings as Secured  Party may  reasonably  request (and  irrevocably
authorizes  Secured  Party to  execute  such  writings  as  Pledgor's  agent and
attorney-in-fact)  to create,  preserve,  perfect or  validate  Secured  Party's
security  interest in the Collateral,  or to enable Secured Party to exercise or
enforce  its  rights  under  this  Agreement  with  respect  to the  Collateral,
including  (without  limitation)  the right to receive,  indorse and collect all
instruments made payable to Pledgor representing any dividend,  interest payment
or other  distribution  in respect of the  Collateral or any part thereof except
for those  distributions  which the Pledgor is  entitled  to retain  pursuant to
Section 5(b).

     7.   EVENTS OF DEFAULT. The occurrence of any Event of Default with respect
to Pledgor  pursuant to any of the Loan  Documents or a breach by Pledgor of the
Obligations,  shall  constitute  an "Event of Default  with  respect to Pledgor"
hereunder.

     8.   RIGHTS AND REMEDIES OF SECURED PARTY UPON DEFAULT.  (A) If an Event of
Default with respect to Pledgor shall have occurred:

          (i)   Secured Party shall have and may exercise with  reference to the
     Collateral and the  Obligations  any or all of the rights and remedies of a
     secured party under the UCC, and as otherwise  granted  herein or under any
     other  applicable  law or any other  agreement  now or  hereafter in effect
     executed by Pledgor, including,  without limitation, the right and power to
     sell,  at public or private  sale or sales,  or  otherwise  dispose  of, or
     otherwise  utilize  the  Collateral  and any part or parts  thereof  in any
     manner authorized or permitted under the UCC after default by a debtor, and
     to apply the  proceeds  in  accordance  with  Section  10  hereof.  Without
     limiting  the  foregoing,  Secured  Party  shall  have  the  right  to take
     possession of all or any part of the Collateral and of all books,  records,
     papers  and  documents  of Pledgor or in  Pledgor's  possession  or control
     relating  to the  Collateral  which  are not  already  in  Secured  Party's
     possession.  To the extent permitted by law,  Pledgor  expressly waives any
     notice of sale or other  disposition of the Collateral and all other rights
     or remedies of Pledgor or formalities prescribed by law relative to sale or
     disposition  of the  Collateral or exercise of any other right or remedy of
     Secured Party existing after default hereunder;  and to the extent any such


                                       4


     notice is required and cannot be waived, Pledgor agrees that if such notice
     is given in the manner provided in Section 14 hereof at least five (5) days
     before the time of the sale or  disposition,  such  notice  shall be deemed
     reasonable  and shall  fully  satisfy  any  requirement  for giving of said
     notice. Secured Party shall not be obligated to make any sale of Collateral
     regardless  of notice of sale having been given.  Secured Party may adjourn
     any public or private sale.

          (ii)  Upon notice by Secured  Party to Pledgor,  Secured  Party or its
     nominee or nominees shall have the sole and exclusive right to exercise all
     voting and  consensual  powers  pertaining  to the  Collateral  or any part
     thereof and may  exercise  such powers in such manner as Secured  Party may
     elect. To extent that the terms and conditions of that certain Stockholders
     Agreement  dated as of October 30, 2006 by and among Collins  Holding,  its
     Stockholders and Collins  Industries,  Inc. (the "Stockholders  Agreement")
     provide that any rights that would  otherwise be exercisable by the Secured
     Party under this  Agreement  may only be exercised by the Pledgor,  Pledgor
     agrees to exercise such rights in accordance with the written directions of
     Secured Party given in accordance with this Section 8(a)(ii).

          (iii) All rights to  marshalling  of assets of Pledgor,  including any
     such right with respect to the Collateral, are hereby waived by Pledgor.

          (iv)  All  recitals  in any  instrument  of  assignment  or any  other
     instrument  executed by Secured Party  incident to sale,  lease,  transfer,
     assignment or other disposition,  lease or utilization of the Collateral or
     any part thereof under this Section 8(a) shall be full proof of the matters
     stated  therein and no other proof shall be  requisite  to  establish  full
     legal  propriety of the sale or other  action taken by Secured  Party or of
     any fact, condition or thing incident thereto and all prerequisites of such
     sale or other action or of any fact,  condition or thing  incident  thereto
     shall be presumed conclusively to have been performed or to have occurred.

          (b)  Secured  Party  shall never be under any  obligation  to collect,
attempt to collect, protect or enforce the Collateral,  which Pledgor agrees and
undertakes  to do at  Pledgor's  expense,  but  Secured  Party  may do so in its
discretion at any time after the  occurrence of an Event of Default with respect
to Pledgor.  All expenses  (including,  without limitation,  attorneys' fees and
expenses)  incurred or paid by Secured Party in  connection  with or incident to
any such  collection or attempt to collect the  Collateral or actions to protect
or enforce the  Collateral  shall be borne by the Pledgor or  reimbursed  by the
Pledgor to Secured Party upon demand.

          (c)  The  Secured  Party will act in good faith and in a  commercially
reasonable manner in the exercise of any of its rights and remedies hereunder.

     9.   SPECIAL  PROVISIONS.  Pledgor  hereby  acknowledges  that  the sale by
Secured Party of any Pledged  Securities  resulting  from an exercise by Secured
Party of its rights hereunder must be made in compliance with the Securities Act
of 1933 (the  "Securities  Act"),  as well as any  applicable  Blue Sky or other
state  securities  laws that may  impose  limitations  as to the manner in which
Secured  Party  or  any  other  person  may  dispose  of   securities.   Pledgor
acknowledges that any sale or disposition contemplated pursuant hereto may be at


                                       5


prices  and on terms less  favorable  to  Secured  Party  than those  obtainable
through a public sale without any applicable restrictions,  and, notwithstanding
such circumstances, Pledgor agrees that any such sale or other disposition shall
be deemed to have been made in a commercially  reasonable manner.  Secured Party
shall have no  obligation  to engage in public sales and no  obligation to delay
the sale of any Collateral for any period of time; and Pledgor waives any claims
against  Secured  Party  arising by reason of the fact that the price that might
have been obtainable in a public sale was greater than the price obtained in any
such sale or  disposition  pursuant  hereto,  even if Secured  Party accepts the
first offer received and does not offer the Collateral to more than one offeree.

     10.  APPLICATION OF PROCEEDS. In the event Secured Party sells or otherwise
disposes of the Collateral in the course of exercising the remedies provided for
in this  Agreement,  any amounts  held,  realized  or received by Secured  Party
pursuant to the provisions hereof,  including the proceeds of the sale of any of
the  Collateral  or any part  thereof,  shall be applied by Secured  Party first
toward  the  payment of any costs and  expenses  incurred  by  Secured  Party in
enforcing  this  Agreement,  in realizing on or protecting any Collateral and in
enforcing or collecting  any  Obligations  or any guaranty  thereof,  including,
without limitation,  the actual attorneys' fees and expenses incurred by Secured
Party,  all of which costs and expenses  Pledgor agrees to pay, and then to such
other  Obligations in such order as Secured Party may elect. Any amounts and any
Collateral  remaining after such  application and after payment to Secured Party
of  satisfaction of all of the Obligations in full shall be paid or delivered to
Pledgor,  its successor or assigns, or as a court of competent  jurisdiction may
direct.

     11.  CARE OF  COLLATERAL.  Secured Party shall be deemed to have  exercised
reasonable  care  in the  custody  and  preservation  of the  Collateral  in its
possession if the Collateral is accorded treatment  substantially  equal to that
which Secured Party accords its own property,  it being  understood that Secured
Party shall not have any  responsibility  for (i)  ascertaining or taking action
with  respect to calls,  conversions,  exchanges,  maturities,  tenders or other
matters  relative  to any  Collateral,  whether or not  Secured  Party has or is
deemed to have knowledge of such matters,  or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Collateral.  Prior to an
Event  of  Default,   Secured  Party  agrees  to  follow  Pledgor's   reasonable
instructions  in  connection  with any action  with  respect to the  Collateral,
provided  that such action is not  prohibited  hereby and such action  would not
impair the value or liquidity of the Collateral (or the relationship between the
Collateral and the Obligations).

     12.  TERMINATION.   This  Agreement  and  the  security   interest  created
hereunder shall terminate upon such date on which all the Obligations  have been
paid in full. Upon termination  hereof,  Secured Party shall execute and deliver
to Pledgor all  documents  which Pledgor  shall  reasonably  request to evidence
termination of such security  interest and shall return  physical  possession of
any Collateral then held by Secured Party to Pledgor;  provided,  however,  that
all indemnities of Pledgor contained in this Agreement shall survive, and remain
in full force and effect  regardless of the termination of the security interest
or  this  Agreement.  Notwithstanding  the  foregoing,  this  Agreement  and the
security  interest  granted  hereunder  shall be  reinstated  if at any time any
payment or delivery pursuant to an Obligation, in whole or in part, is rescinded
or must  otherwise  be returned by Secured  Party under the  application  of the
Bankruptcy  Code or any other Debtor Law, all as though such payment or delivery
had not been made.

                                       6


     13.  ADDITIONAL  INFORMATION.  Pledgor agrees to furnish Secured Party from
time to time with  such  additional  information  and  copies of such  documents
relating to this Agreement and the  Collateral,  as Secured Party may reasonably
request.

     14.  NOTICES.  Any  communication,  notice or demand to be given  hereunder
shall be given in accordance with the Loan Agreement.

     15.  INDEMNITY AND EXPENSES. Pledgor agrees to indemnify Secured Party from
and  against  any and all  claims,  losses  and  liabilities  growing  out of or
resulting from this Agreement (including, without limitation, enforcement of any
rights  under this  Agreement,  and any claims or demands of any  persons at any
time claiming the Collateral or any interest therein),  except claims, losses or
liabilities   resulting  from  Secured  Party's  gross   negligence  or  willful
misconduct.   Pledgor  agrees  to  pay  on  demand  all  out-of-pocket  expenses
(including  the reasonable  fees and expenses of Secured  Party's legal counsel,
experts and agents) in any way relating to the  enforcement or protection of the
rights of Secured Party hereunder.

     16.  NO WAIVER;  CUMULATIVE RIGHTS. No failure on the part of Secured Party
to exercise,  and no delay in exercising,  any right,  remedy or power hereunder
shall operate as a waiver thereof,  nor shall any single or partial  exercise by
Secured  Party of any right,  remedy or power  hereunder  preclude  any other or
future  exercise  of any other  right,  remedy or power.  Each and every  right,
remedy and power hereby  granted to Secured  Party or allowed it by law or other
agreement  shall  be  cumulative  and not  exclusive  of any  other,  and may be
exercised by Secured Party from time to time.

     17.  APPLICABLE  LAW. This Agreement and the rights and  obligations of the
parties  hereunder  shall be governed by, and construed in accordance  with, the
laws of the State of New York  applicable to contracts  made and to be performed
entirely within such state.

     18.  ASSIGNMENT; BINDING EFFECT; BENEFIT. The rights and obligations of the
parties  under this  Agreement  are not  assignable  without  the prior  written
consent of the other parties, except that Secured Party may assign all or any of
its  rights  and  benefits  hereunder,  and  may  delegate  all  or  any  of its
obligations  or  liabilities  (whether by  assignment,  merger,  liquidation  or
otherwise),  and upon any such  assignment,  Secured Party's  rights,  benefits,
obligations  and  liabilities  shall   automatically   cease.   Subject  to  the
immediately  preceding  sentence,  this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.  Nothing in this  Agreement,  expressed or implied,  is intended to
confer on any person other than the parties and their respective  successors and
assigns, any rights, remedies,  obligations or liabilities under or by reason of
this Agreement.

     19.  EXECUTION  IN  COUNTERPARTS.  This  Agreement  may be  executed in any
number  of  counterparts,   each  of  which  shall  be  an  original,  but  such
counterparts shall together constitute but one and the same instrument.



                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       7



 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as
                        of the date first above written.



                                              BNS HOLDING, INC.


                                              By: /s/ Michael Warren
                                                  ------------------------------
                                              Name:  Michael Warren
                                              Title: President & CEO




                                              STEEL PARTNERS II, L.P.

                                              By:   Steel Partners, L.L.C.
                                                    General Partner


                                              By: /s/ Warren G. Lichtenstein
                                                  ------------------------------
                                              Name:  Warren G. Lichtenstein
                                              Title: Managing Member




                                       8



                                   SCHEDULE I

                               PLEDGED SECURITIES



     26,400 shares of Collins I Holding Corp., a Delaware corporation, $0.01 par
value per share, represented by certificate number 2 in the name of BNS Holding,
Inc.








                                       9

EX-10.09

                                                                   Exhibit 10.09


                                    EXHIBIT A
                                    ---------

                                      NOTE
                                      ----


$14,000,000                                                     October 30, 2006

                  FOR VALUE RECEIVED,  the undersigned (the "Borrower"),  HEREBY
PROMISES TO PAY to the order of Steel  Partners II, L.P. (the  "Lender"),  on or
before the Maturity  Date (as such term is defined in the Loan  Agreement),  the
principal  sum of  Fourteen  Million  and  No/100  Dollars  ($14,000,000.00)  in
accordance with the terms and provisions of that certain Loan Agreement dated as
of October 30, 2006 by and between the  Borrower  and the Lender (as same may be
amended,  modified,  increased,  supplemented and/or restated from time to time,
the "Loan  Agreement";  capitalized  terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Loan Agreement).

                  The outstanding  principal balance of this Note, together with
all  accrued  and  unpaid  interest  thereon,  shall be due and  payable  on the
Maturity  Date.  The Borrower  promises to pay interest on the unpaid  principal
balance of this Note from the Issue Date until the principal  balance thereof is
paid in full. Interest shall accrue on the outstanding principal balance of this
Note from and including the Issue Date to but not including the Maturity Date at
the  rate or  rates,  and  shall be due and  payable  on the  dates  and paid in
accordance with the terms and conditions, set forth in the Loan Agreement.

                  Payments of  principal,  and all  amounts due with  respect to
costs and expenses pursuant to the Loan Agreement, shall be made in lawful money
of the  United  States  of  America  in  immediately  available  funds,  without
deduction,  set-off or counterclaim  to the Lender to the account  maintained by
the Lender not later than 11:59 a.m.  (New York time) on the dates on which such
payments  shall become due pursuant to the terms and provisions set forth in the
Loan Agreement. Payments of interest (other than those due on the Maturity Date,
which shall be paid in accordance  with the terms of the  immediately  preceding
sentence)  shall be payable in kind  through the issuance of  additional  notes,
substantially  in the form hereof,  in the aggregate  principal  amount equal to
such amount of interest that would  otherwise be payable and shall mature on the
Maturity  Date.  The  Obligations  of the  Borrower  under  this  Note  and  any
additional note issued hereunder are secured in accordance with the terms of the
Pledge and Security Agreement.

                  If any  payment of  principal  or  interest on this Note shall
become due on a day that is not a Business  Day,  such payment  shall be made on
the next  succeeding  Business Day and such extension of time shall in such case
be included in computing interest in connection with such payment.


                                     1 of 2


                  This Note is the Note  provided for in, and is entitled to the
benefits  of the Loan  Agreement,  which Loan  Agreement,  among  other  things,
contains  provisions for  acceleration of the maturity hereof upon the happening
of certain stated events,  for prepayments on account of principal  hereof prior
to the maturity hereof upon the terms and conditions and with the effect therein
specified,  and provisions to the effect that no provision of the Loan Agreement
or this Note shall  require the payment or permit the  collection of interest in
excess of the Highest Lawful Rate.

                  The  Borrower  and  any  and  all  endorsers,  guarantors  and
sureties  severally  waive grace,  demand,  presentment  for payment,  notice of
dishonor or default, protest, notice of protest, notice of intent to accelerate,
notice of acceleration  and diligence in collecting and bringing of suit against
any party  hereto,  and agree to all renewals,  extensions  or partial  payments
hereon and to any release or  substitution  of security  hereof,  in whole or in
part, with or without notice, before or after maturity.

                  THIS NOTE SHALL BE GOVERNED BY, AND  CONSTRUED  IN  ACCORDANCE
WITH,  THE LAWS OF THE STATE OF NEW YORK  APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED WHOLLY WITHIN SUCH STATE.

                  IN WITNESS  WHEREOF,  the  Borrower has caused this Note to be
duly executed and delivered effective as of the date first above written.


                                                 BNS HOLDING, INC.

                                                 By: /s/ Michael Warren
                                                     ---------------------------
                                                 Name: Michael Warren
                                                 Title: President and CEO




                                     2 of 2

EX-10.10

                                                                   Exhibit 10.10

                            Collins Industries, Inc.
                                15 Compound Drive
                            Hutchinson, Kansas 67502

                                                                October 31, 2006

Steel Partners II, L.P.
590 Madison Avenue
32nd Floor
New York, NY 10022

                  Re:     ADVISORY FEE

         In connection with various services Steel Partners II, L.P. has
provided relating to the acquisition of Collins Industries, Inc. by CS
Acquisition Corp. through a merger (the "Merger"), pursuant to the Agreement and
Plan of Merger dated as of September 26, 2006 by and among Collins Industries,
Inc., CS Acquisition Corp. and Steel Partners II, L.P., including but not
limited to indicating its willingness to provide a financing commitment to fully
fund the acquisition, as well as assisting in arranging for a revolving line of
credit and term loan and lien with GMAC Commercial Finance LLC and a second lien
with Orix Finance Corp., the undersigned hereby agrees that it will pay you an
advisory fee of $1,000,000 on the date hereof. Such fee will be paid via wire
transfer of immediately available funds.

                                           Very truly yours,

                                           COLLINS INDUSTRIES, INC.

                                           By: /s/ John Becker
                                               ---------------------------------

EX-21.1

                                                                    Exhibit 21.1



                           SUBSIDIARIES OF THE COMPANY

- --------------------------------------------------------------------------------
            Name of Company                 Jurisdiction of Organization
- --------------------------------------------------------------------------------
          Collins I Holding Corp                   Delaware, USA
- --------------------------------------------------------------------------------

EX-99.1

                                                                 Exhibit 99.1(a)

COLLINS
  INDUSTRIES, INC.



                          FY 2005 FINANCIAL STATEMENTS




                                       1



INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Collins Industries, Inc. and Subsidiaries
Hutchinson, Kansas

We  have  audited  the  accompanying   consolidated  balance  sheet  of  Collins
Industries,  Inc. and  Subsidiaries as of October 31, 2005 and the  consolidated
statements of income and comprehensive income, shareholders' investment and cash
flows for the year then ended. These consolidated  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these  consolidated  financial  statements  based on our  audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the 2005 financial statements referred to above present fairly,
in all material  respects,  the  financial  position of Collins  Industries  and
Subsidiaries  as of October 31, 2005,  and the results of their  operations  and
their  cash  flows  for the  year  then  ended  in  conformity  with  accounting
principles generally accepted in the United States of America.

As discussed in Note 1 to the  consolidated  financial  statements,  in 2003 the
Company  changed its method of  accounting  for  goodwill  and other  intangible
assets to comply  with the  accounting  provisions  of  Statement  of  Financial
Accounting Standard No. 142.

/s/ McGladrey & Pullen, LLP
- -----------------------------------
Kansas City, Missouri
December 9, 2005, except for the last two paragraphs of Note 9
   as to which the date is January 19, 2006


                             2


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and
Shareholders of Collins Industries, Inc.,

We  have  audited  the  accompanying   consolidated  balance  sheet  of  Collins
Industries,  Inc. (a Missouri  corporation)  and  Subsidiaries as of October 31,
2004,  and the  related  consolidated  statements  of income  and  comprehensive
income,  shareholders'  investment  and cash  flows for each of the years in the
two-year period ended October 31, 2004. These consolidated  financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Collins Industries,
Inc.  and  Subsidiaries  as of  October  31,  2004,  and the  results  of  their
operations  and their  cash flows for each of the years in the  two-year  period
ended October 31, 2004, in conformity with U.S.  generally  accepted  accounting
principles.

As discussed in Note 1 to the  consolidated  financial  statements,  in 2003 the
Company  changed its method of  accounting  for  goodwill  and other  intangible
assets to comply  with the  accounting  provisions  of  Statement  of  Financial
Accounting Standard No. 142.


/s/ KPMG LLP
Kansas City, Missouri
July 28, 2005


                                       3


Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the years ended October 31, 2005, 2004 and 2003

                                                                    2005                 2004                 2003
                                                                    ----                 ----                 ----

Sales                                                          $ 269,448,588        $ 208,202,664        $ 204,617,949
Cost of sales                                                    242,238,624          184,128,034          181,608,277
                                                               -------------        -------------        -------------
     Gross profit                                                 27,209,964           24,074,630           23,009,672

Selling, general and administrative expenses                      21,421,351           19,180,504           18,558,989
Research and development expenses                                    101,578               82,537               93,527
                                                               -------------        -------------        -------------

     Income from operations                                        5,687,035            4,811,589            4,357,156

Other income (expense):
   Interest, net                                                  (2,004,594)          (1,472,380)          (1,728,369)
   Other, net                                                         78,126              521,533                6,078
                                                               -------------        -------------        -------------

                                                                  (1,926,468)            (950,847)          (1,722,291)
                                                               -------------        -------------        -------------


     Income before provision for income taxes                      3,760,567            3,860,742            2,634,865

Provision for income taxes                                         1,520,000            1,530,000              990,000
                                                               -------------        -------------        -------------

     Net income                                                $   2,240,567        $   2,330,742        $   1,644,865

Other comprehensive income, net of tax:
 Unrealized gain (loss) on interest rate swap agreement               25,562               75,654              143,702
                                                               -------------        -------------        -------------

     Comprehensive income                                      $   2,266,129        $   2,406,396        $   1,788,567
                                                               =============        =============        =============

Earnings per share:
 Basic                                                         $         .37        $         .40        $         .25

 Diluted                                                       $         .36        $         .38        $         .24

Dividends per share                                            $        0.16        $        0.14        $        0.12

                     The accompanying notes are an integral part of these consolidated statements.


                                                           4


Collins Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
October 31, 2005 and 2004

                                    ASSETS                                          2005               2004
                                                                                    ----               ----
Current assets:
 Cash and cash equivalents                                                       $   222,594       $   163,098
 Receivables, less allowance for uncollectible accounts of $150,985
              in 2005 and $174,346 in 2004                                        12,633,788        10,979,087
 Inventories                                                                      40,137,726        39,059,185
 Prepaid expenses and other current assets                                         4,087,848         4,368,191
                                                                                ------------      ------------
     Total current assets                                                         57,081,956        54,569,561

Restricted cash                                                                       97,072           359,810

Property and equipment:
 Land and improvements                                                             2,864,053         2,856,115
 Buildings and improvements                                                       21,866,133        19,038,969
 Machinery and equipment                                                          25,211,495        23,742,788
 Office furniture and fixtures                                                     4,282,154         3,966,401
                                                                                ------------      ------------
                                                                                  54,223,835        49,604,273
Less - accumulated depreciation                                                   32,824,994        30,239,053
                                                                                ------------      ------------
                                                                                  21,398,841        19,365,220
Goodwill                                                                           5,050,232         5,050,232
Other assets                                                                       1,420,212         1,382,482
                                                                                ------------      ------------
Total Assets                                                                     $85,048,313       $80,727,305
                                                                                ============      ============

                     LIABILITIES & SHAREHOLDERS' INVESTMENT
Current liabilities
 Current maturities of long-term debt and capitalized leases                     $ 3,109,235       $ 2,371,734
 Controlled disbursements                                                          3,994,800         5,668,517
 Accounts payable                                                                 17,796,263        18,408,291
 Accrued expenses and other current liabilities                                    8,112,587         9,469,165
                                                                                ------------      ------------
     Total current liabilities                                                    33,012,885        35,917,707

Long-term debt and capitalized leases, less current maturities                    23,591,586        18,515,178

Deferred income taxes                                                              1,851,726         1,525,560

Shareholders' investment:
 Preferred stock, $.10 par value
   Authorized - 750,000 shares, Outstanding - No shares outstanding
 Capital stock, $.10  par  value
   Authorized - 3,000,000  shares, Outstanding - No  shares outstanding
 Common stock, $.10 par value
   Authorized - 17,000,000 shares
   Issued and outstanding - 6,633,013 shares in 2005
   and 6,369,327 shares in 2004                                                      663,301           636,933
 Paid-in capital                                                                  13,992,808        13,342,600
 Deferred compensation                                                            (1,550,370)       (1,472,590)
 Accumulated other comprehensive income (loss), net                                     --             (25,562)
 Retained earnings                                                                13,486,377        12,287,479
                                                                                ------------      ------------

     Total shareholders' investment                                               26,592,116        24,768,860
                                                                                ------------      ------------
 Total Liabilities & Shareholders' Investment                                   $ 85,048,313      $ 80,727,305
                                                                                ============      ============

             The accompanying notes are an integral part of these consolidated balance sheets.


                                                     5


Collins Industries, Inc. and Subsidiaries
CONSOLIDATED  STATEMENTS  OF CASH FLOWS For the years ended October 31, 2005,
2004 and 2003

                                                                      2005             2004             2003
                                                                      ----             ----             ----
Cash flow from operations:
  Cash received from customers                                  $ 267,793,887    $ 203,853,977    $ 206,913,163
  Cash paid to suppliers and employees                           (263,759,849)    (195,778,494)    (199,920,830)
  Interest paid, net                                               (1,941,960)      (1,452,952)      (1,760,118)
  Income taxes paid                                                (1,714,195)      (1,241,684)        (648,540)
                                                                -------------    -------------    -------------
     Cash provided by operations                                      377,883        5,380,847        4,583,675
                                                                -------------    -------------    -------------

Cash flow from investing activities:
  Capital expenditures                                             (4,709,782)      (1,837,219)      (3,131,071)
  Proceeds from sale of property and equipment                           --            617,000             --
  Expenditures for other assets                                      (416,850)         (75,334)         (38,096)
                                                                -------------    -------------    -------------
     Cash used in investing activities                             (5,126,632)      (1,295,553)      (3,169,167)
                                                                -------------    -------------    -------------

Cash flow from financing activities:
  Principal payments of long-term debt and capitalized leases      (2,207,279)      (2,927,722)      (3,546,861)
  Addition to long-term debt and capitalized leases                 8,040,430        4,668,644          900,000
  Changes in restricted unexpended IRB cash                           262,738          412,993        1,976,167
  Purchase of common stock and other capital transactions            (245,973)      (5,302,065)        (188,229)
  Payment of dividends                                             (1,041,671)        (851,058)        (863,087)
                                                                -------------    -------------    -------------
     Cash provided by/(used in) financing activities                4,808,245       (3,999,208)      (1,722,010)
                                                                -------------    -------------    -------------

Net increase (decrease) in cash and cash equivalents                   59,496           86,086         (307,502)
Cash and cash equivalents at beginning of year                        163,098           77,012          384,514
                                                                -------------    -------------    -------------

Cash and cash equivalents at end of year                        $     222,594    $     163,098    $      77,012
                                                                =============    =============    =============

Reconciliation of net income to net cash provided by
operations:
  Net income                                                    $   2,240,567    $   2,330,742    $   1,644,865
  Depreciation and amortization                                     3,398,630        3,392,944        3,320,474
  Restricted stock vesting upon severance                             409,500             --               --
  Deferred income taxes (credits)                                     896,000           92,000         (122,000)
  (Gain) Loss on sale of property and equipment                        72,680         (466,733)            --
Changes in assets and liabilities:
  (Increase) decrease in receivables                               (1,654,701)      (4,348,688)       2,295,214
  (Increase) in inventories                                        (1,078,541)      (2,667,583)        (654,805)
  (Increase) decrease in prepaid expenses                            (263,929)        (193,461)        (131,196)
  Increase (decrease) in controlled disbursements                  (1,673,717)       2,036,230        1,654,803
  Increase (decrease) in accounts payable                            (612,028)       4,639,854       (3,764,449)
  Increase (decrease) in accrued expenses                          (1,356,578)         565,542          340,769
                                                                -------------    -------------    -------------
  Cash provided by operations                                   $     377,883    $   5,380,847    $   4,583,675
                                                                =============    =============    =============

                  The accompanying notes are an integral part of these consolidated statements


                                                       6



Collins Industries, Inc. and Subsidiaries
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  INVESTMENT  For the  years  ended
October 31, 2005, 2004 and 2003

                                              Common Stock                     Paid-In        Retained
                                                Shares           Amount        Capital        Earnings           Other
                                                ------           ------        -------        --------           -----
Balance October 31, 2002                       7,115,629    $    711,563    $ 17,110,446    $ 10,026,016    $ (1,512,910)
Stock issued under stock option plans              3,700             370           6,818            --              --
Issuance of restricted stock awards, net         185,500          18,550         642,768            --          (661,318)
Amortization of restricted stock awards             --              --              --              --           690,363
Net income                                          --              --              --         1,644,865            --
Other comprehensive income (net of taxes)           --              --              --              --           143,702
Cash dividends paid                                 --              --              --          (863,087)           --
Purchase and retirement of treasury stock        (56,964)         (5,696)       (189,722)           --              --
                --- ----                       ---------    ------------    ------------    ------------    ------------

Balance October 31, 2003                       7,247,865         724,787      17,570,310      10,807,794      (1,340,163)

Stock issued under stock option plans             21,600           2,160          39,453            --              --
Issuance of restricted stock awards, net         195,000          19,500         967,000            --          (986,500)
Amortization of restricted stock awards             --              --              --              --           752,857
Net income                                          --              --              --         2,330,743            --
Other comprehensive income (net of taxes)           --              --              --              --            75,654
Cash dividends paid                                 --              --              --          (851,058)           --
Purchase and retirement of treasury stock     (1,095,138)       (109,514)     (5,234,163)           --              --
                --- ----                       ---------    ------------    ------------    ------------    ------------

Balance October 31, 2004                       6,369,327         636,933      13,342,600      12,287,479      (1,498,152)

Stock issued under stock option plans            646,195          64,620       2,757,528            --              --
Issuance of restricted stock awards, net         184,000          18,400         904,150            --          (513,050)
Amortization of restricted stock awards                                                                          435,270
Net income                                          --              --              --         2,240,567            --
Other comprehensive income (net of taxes)           --              --              --              --            25,562
Tax benefit from NQSO options exercised             --              --           603,401            --              --
Cash dividends paid                                 --              --              --        (1,041,671)           --
Purchase and retirement of treasury stock       (566,509)        (56,652)     (3,614,871)           --              --
                --- ----                       ---------    ------------    ------------    ------------    ------------

Balance October 31, 2005                       6,633,013    $    663,301    $ 13,992,808    $ 13,486,377    $ (1,550,370)
                === ====                       =========    ============    ============    ============    ============

                       The accompanying notes are an integral part of these consolidated statements.


                                                             7


COLLINS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE (1) NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) GENERAL  DEVELOPMENT OF BUSINESS - Collins  Industries,  Inc. was founded in
1971 as a manufacturer of small school buses and ambulances  built from modified
cargo vans.  The  Company's  initial  product was the first "Type A" school bus,
designed to carry 14 to 20 passengers.  Today the Company manufactures specialty
vehicles and accessories for various basic service niches of the  transportation
industry. The Company's products include ambulances, small school buses, shuttle
and mid-size  commercial buses,  terminal trucks,  commercial bus chassis,  road
construction  equipment and  industrial  rental  sweepers.  From its  inception,
Collins' goal has been to become one of the largest  manufacturers  of specialty
vehicles  in the U. S. The  Company has grown  primarily  through  the  internal
development of new products and the acquisition of complementary product lines.

In the U.S.,  Collins  believes that it is the largest  single  manufacturer  of
ambulances,  the second largest  manufacturer  of terminal  trucks,  the leading
manufacturer  of small school buses and a leading  manufacturer of sweepers used
in the road construction  industry. The Company sells its products under several
well-known trade names, including Wheeled Coach(R) (ambulances),  Collins Bus(R)
and  Mid  Bus(R)  (small  school  buses),  World  Trans(R)  (commercial  buses),
Capacity(R)  (terminal trucks) and  Waldon(R)/Lay-Mor(R)  (road construction and
industrial rental sweeper equipment).

Most Collins products are built to customer  specifications from a wide range of
options  offered by the Company.  Collins  sells to niche  markets  which demand
manufacturing processes too sophisticated for small job shop assemblers,  but do
not require the highly  automated  assembly line  operations of mass  production
vehicle manufacturers.  The Company emphasizes specialty engineering and product
innovation,  and it has introduced new products and product improvements,  which
include the Moduvan(R) ambulance,  the first ambulance of its size with advanced
life-support  system capability;  the Dura-Ride(R)  suspension system, the first
frame-isolating  suspension system for terminal trucks;  and the innovation of a
larger seating capacity,  Type A Super Bantam(TM) school bus capable of carrying
up to 30 passengers, one of the largest Type A school buses in the industry.

(b) DESCRIPTION OF BUSINESS - The Company  principally  manufactures and markets
specialty vehicles.

AMBULANCES. The Company manufactures both modular and van-type ambulances at its
Hutchinson,  Kansas and Orlando, Florida plants. Modular ambulances are produced
by attaching an all-aluminum, box-type, patient compartment to a dual rear-wheel
cab chassis  ("Type I")  ambulance or to a dual  rear-wheel,  van-type,  cutaway
chassis  ("Type  III")  ambulance  or to a  single  rear-wheel  cutaway  chassis
("Moduvan")  ambulance.  A cutaway chassis consists of only the front portion of
the driver's  compartment,  engine,  drive train,  frame,  axle and wheels.  Van
("Type II") ambulances are cargo vans modified to include a patient  compartment
and a raised  fiberglass roof. Type II ambulances are smaller and less expensive
than modular ambulances.


                                        8


The Company also produces a limited  number of medical  support vans designed to
transport medical and life-support equipment.  Medical support vans are modified
commercial  vehicles which do not have a patient  compartment  for advanced life
support system.

BUSES.  The Company  manufactures  small school and activity buses,  and certain
other commercial and shuttle buses at its Bluffton,  Ohio and South  Hutchinson,
Kansas facilities.

       SCHOOL AND ACTIVITY BUSES. The Company  manufactures  small Type A school
       and activity buses which carry from 14 to 24 passengers.  The majority of
       Type A school  buses  currently  built by the  Company  are  produced  by
       fabricating  the  body  and  mounting  it  on  a  vendor-supplied,   dual
       rear-wheel or single  rear-wheel,  cutaway  chassis.  The Company was the
       first  manufacturer  to  produce  a Type A  school  bus on  this  type of
       chassis,  which  permits  greater  seating  capacity  than a van chassis.
       School and activity buses are produced in compliance with federal,  state
       and local laws  regarding  school and  activity bus  vehicles.  In recent
       years, the Company has sold an increasing  number of small activity buses
       used by day care, church and other non-profit organizations.

       COMMERCIAL  AND SHUTTLE BUSES.  The Company  produces a limited number of
       commercial and shuttle buses for churches,  transit  authorities,  hotels
       and resorts,  retirement centers,  nursing homes and similar users. These
       buses are built to customer  specifications and are designed to transport
       14 to 30 passengers over short distances.

TERMINAL TRUCKS / ROAD  CONSTRUCTION  EQUIPMENT.  The Company produces two basic
models of terminal trucks at its Longview, Texas facility, the Trailer Jockey(R)
and the  Yardmaster(R).  Terminal  trucks are  designed  and built to  withstand
heavy-duty use by moving trailers and containers at warehouses, rail yards, rail
terminals and shipping ports.  Most terminal trucks  manufactured by the Company
are built to customer specifications.  The Company manufactures the entire truck
except  for major  drive  train  components  which are  purchased  from  outside
suppliers.

The road construction  equipment produced by the Company includes three and four
wheel  sweepers,  a full line of articulated  four-wheel  drive  loaders,  rough
terrain  lift  trucks,   compact  loaders  and  backhoes.   These  products  are
principally  sold in both commercial and rental markets through direct sales and
distributors   throughout  the  United  States.

(c) USE OF ESTIMATES - The  preparation  of financial  statements  in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting  period.  Actual results could differ from those estimates.

(d) CONSOLIDATION AND OPERATIONS - The consolidated financial statements include
the  accounts of Collins  Industries,  Inc.  (the  Company) and its wholly owned
subsidiaries.  All significant  intercompany accounts and transactions have been
eliminated in consolidation.


                                        9



The Company primarily  operates in the ambulance,  bus, and terminal  truck/road
construction equipment segments.  Manufacturing activities are carried on solely
in the United  States.  However,  the Company  does market its products in other
countries. Revenues derived from export sales were less than 10% of consolidated
sales in  fiscal  2005,  2004 and  2003.

(e) CASH AND CASH EQUIVALENTS - Cash includes checking accounts,  funds invested
in overnight and other short-term,  interest-bearing accounts of three months or
less.

Controlled   Disbursements  -  The  Company  maintains  controlled  disbursement
accounts with its lead bank under an  arrangement  whereby all cash receipts and
checks are centralized and presented to the bank daily. All deposits are applied
directly  against the Company's  revolving  credit line and all checks presented
for payment in the  controlled  disbursement  accounts are funded  through daily
borrowings under the Company's revolving credit facility. Accordingly controlled
disbursements represent the Company's liability for outstanding checks drawn but
not yet presented for payment to the bank.

Restricted  Cash -  Restricted  cash  includes  unexpended  cash  proceeds  from
Industrial  Revenue  Bonds  issued in 2002.  The cash must be used for  specific
manufacturing  modernization  projects at our Florida facility

(f) RECEIVABLES - Accounts  Receivables are carried at original amounts due less
an estimate made for doubtful  receivables  based on a review of all outstanding
amounts on a periodic  basis.  Management  determines the allowance for doubtful
accounts by regularly evaluating  individual accounts receivable and considering
a  customer's  financial   condition,   credit  history,  and  current  economic
conditions. The Company charges interest on certain past due accounts determined
at the discretion of  management.  The Company  continues to accrue  interest on
past due  accounts  until such time as specific  arrangements  are made with the
customer,  or the account is deemed  uncollectible and written off.  Receivables
are written off when deemed uncollectible.  Recoveries of receivables previously
written off are recorded when received.  Accounts receivable are considered past
due after the contractual payment date has passed.

(g)  INVENTORIES  -  Inventories  are  stated  at the  lower of cost  (first-in,
first-out) or market.  Major  classes of  inventories  which  include  material,
labor,  and  manufacturing  overhead  required in production of Company products
consisted of the following:

                                       2005          2004
                                       ----          ----

Chassis                            $ 5,664,214   $ 5,767,019
Raw materials & components          16,237,033    14,997,408
Work-in-process                      8,694,059     9,037,199
Finished goods                       9,542,420     9,257,559
                                   -----------   -----------
                                   $40,137,726   $39,059,185
                                   ===========   ===========


                                       10


(h)  PROPERTY  AND  EQUIPMENT  - Property  and  Equipment  is  recorded at cost.
Depreciation is provided using the straight-line  method for financial reporting
purposes  and  accelerated  methods for income tax  purposes.  The  amortization
expense on assets  acquired under capital  leases is included with  depreciation
expense on owned assets. The estimated useful lives of property are as follows:

Land improvements                  10 to 20 years
Buildings and improvements         10 to 40 years
Machinery and equipment             3 to 15 years
Office furniture and fixtures       3 to 10 years

Maintenance  and  repairs  are  charged  to  expense  as  incurred.  The cost of
additions and betterments are capitalized.  The cost and related depreciation of
property  retired or sold are removed from the applicable  accounts and any gain
or loss is taken into income.

At October 31, 2005 and 2004 assets acquired under capital leases with a cost of
$11,356,775  and  $11,256,775  and  accumulated  depreciation  of $4,328,927 and
$3,551,592, respectively are included in the consolidated balance sheet.

(i) IMPAIRMENT OF LONG-LIVED  ASSETS - Long-lived  assets,  such as property and
equipment,   are  reviewed  for  impairment   whenever   events  or  changes  in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying amount of an asset to estimated  undiscounted  future
cash flows expected to be generated by the asset.  If the carrying  amount of an
asset  exceeds  its  estimated  future  cash  flows,  an  impairment  charge  is
recognized  by the amount by which the carrying  amount of the asset exceeds the
fair value of the asset.

(j) GOODWILL - In June 2001,  the Financial  Accounting  Standards  Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and
Other Intangible Assets".  SFAS No. 142 was effective for fiscal years beginning
after  December 15, 2001.  Accordingly,  after October 31, 2002,  goodwill is no
longer  amortized over future  periods,  but is assessed for impairment at least
annually  using a fair value test.  The  Company  adopted  this new  standard on
November 1, 2002.

As of October 31, 2005 and October 31,  2004,  the Company  tested for  goodwill
impairment in the bus and terminal  truck/road  construction  business  lines of
business  using the discounted  cash flow approach and determined  that the fair
values for each of these segments  exceeded the related carrying  values.  On an
on-going basis, and absent any impairment indicators,  the Company will continue
to conduct similar annual tests and record any impairment losses.

At October 31, 2005 and October 31, 2004, the Company's  gross goodwill  related
to  acquisition  of certain bus and terminal  truck/road  construction  lines of
business  was  approximately  $6.1  million  and  accumulated   amortization  of
approximately $1.0 million.  Prior to November 1, 2002 goodwill was amortized on
a straight-line basis over 15-20 years.

                                           2005            2004            2003
Reported Net Income                  $   2,240,567   $   2,330,743   $   1,644,865
Add back: Goodwill amortization              --              --              --
Adjusted Net Income                  $   2,240,567   $   2,330,743   $   1,644,865

                                       11


Basic earnings per share:
Reported Net Income                           0.37            0.40            0.25
Goodwill amortization                         --              --              --
Adjusted Net Income                           0.37            0.40            0.25

Diluted earnings per share:
Reported Net Income                           0.36            0.38            0.24
Goodwill amortization                         --              --              --
Adjusted Net Income                           0.36            0.38            0.24


(k) REVENUE RECOGNITION - The Company records vehicle sales, and passes title to
the  customer,  at the earlier of  completion of the vehicle and receipt of full
payment or shipment or delivery to the  customer as  specified  by the  customer
purchase order.  Customer  deposits for partial payment of vehicles are deferred
and treated as current liabilities until the vehicle is completed and recognized
as revenue.

In certain instances,  the Company will recognize revenue when physical delivery
has not occurred when the following criteria are met:

       o        Risk of ownership has passed to the customer;
       o        The customer has made a fixed commitment to purchase the unit;
       o        The customer has requested the transaction be on a bill and hold
                basis and the customer has a  substantial  business  purpose for
                ordering the unit on a bill and hold basis;
       o        There is a fixed  schedule  for  delivery of the unit  (normally
                within the next 30 days);
       o        The Company does not retain any specific performance obligations
                such that the earnings process is not complete;
       o        The unit is segregated  from the Company's  inventory and is not
                subject to being used to fill other orders; and
       o        The unit is complete and ready for shipment.

The Company  recognized  approximately  $2.2M,  $2.8M and $1.2M of revenue as of
October 31, 2005, 2004 and 2003, respectively under Collect and Hold agreements.
The  Company  had  collected  the  entire  amount  of  this  revenue  and had no
outstanding  accounts receivable for these units as of October 31, 2005, 2004 or
2003.

The  Company  does not  offer  any  return  or price  protection  rights  to its
customers.  The  Company  recognizes  revenue  in  accordance  with  SFAS No. 48
"Revenue Recognition When Right of Return Exists," when the following conditions
are met:

       o        Price to customer is substantially fixed at the date of sale.
       o        Customer  has  or is  obligated  to  pay  seller,  and it is not
                contingent on product resale.
       o        Customer  obligation  is not  changed  in the  event of theft or
                product damage.
       o        Customer acquiring the product for resale has economic substance
                apart from that provided by the Company.


                                       12


       o        Company  does  not  have  significant   obligations  for  future
                performance  to  bring  about  resale  of  the  product  by  the
                customer.
       o        Amount of future returns can be reasonably estimated.

(l)  EARNINGS PER SHARE - Basic  earnings  per share are  computed  based on the
weighted  average  number of common  shares  outstanding.  Potentially  dilutive
shares, calculated using the treasury stock method, consist of stock options and
restricted stock.

The following is a reconciliation  of shares used to calculate basic and diluted
earnings per share:

                                                  2005        2004        2003
                                                  ----        ----        ----
Average shares  outstanding - basic             5,986,687   5,824,451   6,663,471
Effect of potentially  dilutive stock
   options and restricted stock                   312,825     386,661     192,484
                                                ---------   ---------   ---------
Average shares  outstanding - diluted           6,299,512   6,211,112   6,855,955
                                                =========   =========   =========

(m) STOCK OPTION PLAN - The Company applies the intrinsic-value-based  method of
accounting  prescribed  by  Accounting  Principles  Board (APB)  Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations  including
FASB Interpretation No. 44, Accounting for Certain Transactions  involving Stock
Compensation,  an  interpretation  of APB  Opinion  No. 25, to  account  for its
fixed-plan stock options. Under this method, compensation expense is recorded on
the date of grant  only if the  current  market  price of the  underlying  stock
exceeded  the  exercise  price.   SFAS  No.  123,   Accounting  for  Stock-Based
Compensation,   established  accounting  and  disclosure  requirements  using  a
fair-value-based  method of accounting  for  stock-based  employee  compensation
plans.  As allowed by SFAS No. 123, the Company has elected to continue to apply
the intrinsic-value-based  method of accounting described above, and has adopted
only the  disclosure  requirements  of SFAS No. 123. No stock  options have been
granted since 1999 and all outstanding options are fully vested. Accordingly, no
proforma net income disclosures are required.


                                       13


NOTE (2) LONG-TERM DEBT AND CAPITALIZED LEASES

Long-term  debt and  capitalized  leases at October 31, 2005 and 2004 consist of
the following:

                                                                  2005          2004
                                                                  ----          ----
Bank credit facility: (A)
 Revolving credit borrowings                                  $13,569,587   $ 9,261,302
 Term Loan A, quarterly principal payment of $250,000           3,100,186     4,100,190
 Term Loan B, quarterly principal payments of $42,500             765,000          --
 Term Loan C, quarterly principal payments of $51,788             776,818       983,963
 Term Loan D, quarterly principal payments of $58,750           2,232,500          --
 Term Loan E, quarterly principal payments of $50,000             900,000          --
Capitalized leases:
 City of South Hutchinson, Kansas, 4.75%-5.80%
  Annual principal and sinking fund payments range
  From $415,000 in 2006 to $322,504 in 2007                       737,504     1,128,750
 City of South Hutchinson, Kansas, 4.80%-5.90%
  Annual principal and sinking fund payments range
  From $137,000 in 2006 to $88,000 in 2009                        520,411       647,915
 Longview Industrial  Corporation,  Longview,  Texas
  Variable Rate Demand Revenue Bonds, 1.55% - 3.62% in 2005
  Annual principal and sinking fund payments range
  From $400,000 in 2006 to $75,898 in 2009                      1,175,898     1,487,709
 Orange County Industrial Development Authority
  Orlando, Florida, 5.50%
  Annual principal and sinking fund payments range
  From $175,000 in 2006 to $250,000 in 2012                     1,500,000     1,675,000
 Reno County, Kansas, 4.60%-5.50%
  Annual principal and sinking fund payments range
  From $169,000 in 2006 to $250,000 in 2012                     1,422,917     1,602,083
                                                              -----------   -----------
                                                               26,700,821    20,886,912
Less - current maturities                                       3,109,235     2,371,734
                                                              -----------   -----------
                                                              $23,591,586   $18,515,178
                                                              ===========   ===========

(A) On May 17, 2002 the Company entered into a Loan and Security Agreement, (the
"Agreement"),  with Fleet Capital  Corporation,  a Rhode Island Corporation (the
"Bank").  The  Agreement  was amended in fiscal 2004 and provides a total credit
facility of $39.0  million  consisting of a revolving  credit  facility of $30.0
million and long-term credit  facilities of $9.0 million.  The amended Agreement
expires May 17, 2008. The credit facilities bear interest based on a combination
of  Eurodollar  (LIBOR plus 1.75%) and the Bank's  prime  lending rate (6.75% at
October 31, 2005).  The revolving credit facility also provides for a maximum of
$2.5 million in letters of credit,  of which $1.9 million  were  outstanding  at
October 31, 2005. The total amount of unused  revolving  credit available to the
Company  was $11.0  million at October  31,  2005.  On May 13,  2005 the Company
entered into an Amendment which provided for, among other things, two additional
term loans in the original principal amount of $2.35 million and $1.0 million to
finance the acquisition of certain real property and to finance the improvements
thereon comprising the manufacturing  facility that was leased by the Company in
Bluffton, Ohio.


                                       14


The Company has used derivative financial  instruments to reduce exposure to its
variable-rate  debt. On July 5, 2002, the Company  entered into an interest rate
declining  balance  swap  agreement  on term debt of $6.8  million  to limit the
effect of potential  increases in the interest rates on its  floating-rate  term
debt.  This  swap  agreement  expired  in May of 2005  and was  not  renewed  or
replaced.   The  effect  of  this   agreement  was  to  convert  the  underlying
variable-rate  debt based on LIBOR to a  fixed-rate  debt with an interest  rate
between 4.42% and 4.65% plus a margin of 175 basis points..

The credit facility is collateralized by receivables, inventories, equipment and
certain real property. Under the terms of the Agreement, the Company is required
to  maintain  certain  financial  ratios  and other  financial  conditions.  The
Agreement  also  prohibits  the  Company  from  incurring   certain   additional
indebtedness,  limits  certain  investments,  advances  or loans  and  restricts
substantial asset sales and capital expenditures.

Certain  of the  Company's  manufacturing  facilities  were  financed  from  the
proceeds  of  industrial  revenue  bonds.  Lease  purchase  agreements  with the
respective  cities  provide  that the Company  may  purchase  the  manufacturing
facilities  at any time  during  the  lease  terms  by  paying  the  outstanding
principal  amount of the bonds plus a nominal  amount.  At October 31, 2005, the
net book  value of  manufacturing  facilities  subject to these  lease  purchase
agreements  was  approximately  $7.0 million.  At October 31, 2005 the Company's
assets included $0.1 million in unexpended cash proceeds from Industrial Revenue
Bonds issued in 2002.

The  carrying  amount of the  Company's  long-term  obligations  does not differ
materially  from fair  value  based on current  market  rates  available  to the
Company.

The aggregate  maturities of capitalized leases and long-term debt for the years
subsequent to October 31, 2005 are as follows:

                2006                 $ 3,109,235
                2007                   2,960,904
                2008                  18,673,958
                2009                     590,474
                2010                     454,167
                Thereafter               912,083
                                     -----------
                Total                $26,700,821
                                     ===========

The Company has aggregate  maturities of $18.7 million in capitalized leases and
long-term debt due in 2008, principally as a result of a loan agreement with the
Company's lead bank that expires May 17, 2008. The Company currently anticipates
arranging an extension or refinancing of this debt at or prior to maturity.

NOTE (3) COMPREHENSIVE INCOME

Comprehensive income consists of net income and other gains and losses affecting
shareholders'  investment that, under generally accepted  accounting  principles
are excluded from net income.  As of October 31, 2005 and 2004, the  accumulated
comprehensive income/(loss) amounts were none and $(40,562),  respectively.  The
2004  accumulated  comprehensive  loss related to unrealized  losses on interest
rate  swaps and it was  reduced  by  $15,000  of  deferred  tax  benefit.  Other
comprehensive  income (loss) for the years ended October 31, 2005, 2004 and 2003
was $25,562, $75,654, and $143,702 respectively.  These amounts are net of taxes
of $15,000,  $45,000 and $90,000 for the years ended October 31, 2005,  2004 and
2003, respectively.


                                       15


NOTE (4) INCOME TAXES

The provision for income taxes consists of the following:

                     2005            2004            2003
                     ----            ----            ----
Current          $   624,000     $ 1,438,000     $ 1,112,000
Deferred             896,000          92,000        (122,000)
Total            $ 1,520,000     $ 1,530,000     $   990,000

The Company accounts for income taxes in accordance with the asset and liability
method.  Deferred income taxes are determined based upon the difference  between
the book and tax basis of the Company's assets and  liabilities.  Deferred taxes
are  provided  at the  enacted  tax  rates  expected  to be in  effect  when the
differences reverse. The income tax effect of temporary  differences  comprising
the deferred tax assets are included in other current assets and  liabilities on
the accompanying consolidated balance sheet and result from:

                                                  2005           2004
                                                  ----           ----
Deferred tax assets:
  Self-insurance reserves                     $   708,000    $ 1,124,000
  Vacation                                        220,000        196,000
  Warranty / recall                               635,000        474,000
  Doubtful accounts                                57,000         67,000
  Inventories                                     475,000        413,000
  Amortization                                       --           42,000
  Revenue recognition                              23,000         62,000
  Interest rate swaps                                --           15,000
  Restricted stock awards                            --          333,000
  Deferred compensation                            80,000        139,000
  Accrued severance liability                     157,000           --
  Other                                            42,000        105,000
                                              -----------    -----------
                                                2,397,000      2,970,000
                                              -----------    -----------
Deferred tax liabilities:
  Accelerated depreciation                     (1,831,000)    (1,570,000)
  Prepaid health insurance                       (569,000)      (532,000)
  Other                                           (25,000)          --
                                              -----------    -----------
                                               (2,425,000)    (2,102,000)
                                              -----------    -----------
Net deferred tax assets / (liabilities)       $   (28,000)   $   868,000
                                              ===========    ===========


                                       16


The  components  giving  rise  to the  net  deferred  tax  assets  (liabilities)
described  above have been  included in the  accompanying  consolidated  balance
sheets as of October 31, 2005 and 2004 as follows:

                                                    2005           2004
                                                    ----           ----

Current assets (included in prepaid expenses)   $ 1,824,000    $ 2,394,000
Noncurrent liabilities                           (1,852,000)    (1,526,000)
                                                -----------    -----------
Total                                           $   (28,000)   $   868,000
                                                ===========    ===========

No valuation  allowance  against deferred tax assets was provided at October 31,
2005 and 2004, as management considers it more likely than not that the recorded
tax assets will be realized.

A  reconciliation  between the statutory  federal  income tax rate (34%) and the
effective  rate of income tax  expense  for each of the three  years  during the
period ended October 31, 2005 follows:

                                                  2005    2004    2003
                                                  ----    ----    ----

STATUTORY FEDERAL INCOME TAX RATE                  34%     34%     34%
Increase (decrease) in taxes Resulting from:
State tax, net of federal benefit                   6       4       4
Other                                              --       1      --
                                                   --      --      --

Effective tax rate                                 40%     39%     38%
                                                   ==      ==      ==

NOTE (5) CAPITAL STOCK

PREFERRED STOCK - On March 28, 1995, the Company's Board of Directors  adopted a
stockholders  rights plan  (Plan) and  declared a dividend  distribution  of one
right  (Right) for each  outstanding  share of common stock to  stockholders  of
record on April 20,  1995.  Under the terms of the Plan each Right  entitles the
holder  to  purchase  one  one-hundredth  of a share of  Series A  Participating
Preferred  Stock (Unit) at an exercise  price of $7.44 per Unit.  The Rights are
exercisable a specified number of days following (i) the acquisition by a person
or group of persons  of 20% or more of the  Company's  common  stock or (ii) the
commencement  of a tender  offer  or an  exchange  offer  for 20% or more of the
Company's  common stock or (iii) when a majority of the  Company's  unaffiliated
directors (as defined)  declares that a person is deemed to be an adverse person
(as  defined)  upon  determination  that such  adverse  person  has  become  the
beneficial  owner of at least 10% of the Company's common stock. The Company has
authorized and reserved 750,000 shares of preferred  stock,  $.10 par value, for
issuance  upon the exercise of the Rights.  The Company may redeem the Rights in
whole,  but not in part,  at a price of $.01 per  Right in  accordance  with the
provisions of the Plan. These Rights expired on April 1, 2005.

STOCK-BASED COMPENSATION PLANS - The Company has two shareholder-approved  stock
plans,  the 1995  Stock  Option  Plan (the  "1995  Plan")  and the 1997  Omnibus
Incentive Plan (the "1997 Plan").


                                       17


Under the 1995 Plan, a total of 1,000,000  shares of the Company's  common stock
were available for grant to officers, directors and key employees. As of October
31, 2005,  all of these  options had been granted and options to purchase  5,800
shares were outstanding under the 1995 Plan.

Under the 1997 Plan, directors,  officers and key employees may be granted stock
options,  restricted  stock and other  stock-based  awards. A total of 2,000,000
shares may be granted  under the 1997 Plan. At October 31, 2005 a total of 2,000
shares were  available for future  issuance and options for 107,500  shares were
outstanding under the 1997 Plan.

In fiscal 2005, the Company issued 184,000 shares of common stock under the 1997
Plan in the form of  restricted  stock awards which will vest in fiscal 2009. In
fiscal 2004,  the Company  issued  195,000 shares of common stock under the 1997
Plan in the form of  restricted  stock awards which will vest in fiscal 2008. In
fiscal 2003,  the Company  issued  205,000 shares of common stock under the 1997
Plan in the form of  restricted  stock  awards  which will vest in fiscal  2007.
Restricted  shares  issued  under the 1997 Plan were  awarded as an incentive to
retain key employees, officers and directors. Upon issuance of restricted stock,
unearned  compensation,  equivalent  to the  excess of the  market  price of the
shares  awarded over the price paid by the  recipient  at the date of grant,  is
charged to equity and amortized against income over the related vesting period.

Under both plans,  the exercise price of all options granted through October 31,
2005 equaled the stock's  market price on the date of grant and fully vested six
months  after the date of grant.  The original  expiration  dates of the options
ranged  from 5 to 10  years.  Options  outstanding  at  October  31,  2005 had a
weighted  average  contractual life of two years and exercise prices ranged from
$3.97 to $5.13 per share.

A summary of  outstanding  options under the Company's two stock option plans at
October  31,  2005,  2004 and 2003 and  changes  during the years then ended are
presented in the table following:

                                   2005                    2004                    2003
                                   ----                    ----                    ----
                                          Per                     Per                      Per
                             Shares     Share(a)     Shares     Share(a)     Shares      Share(a)
                             ------     --------     ------     --------     ------      --------

Outstanding at beginning
of year
                            816,600    $   4.33     838,200    $   4.27     849,800    $   4.26

Exercised                  (646,195)       4.37     (21,600)       1.93      (3,700)       1.94

Forfeited                   (57,105)       4.10        --          --        (7,900)       4.44
                            -------    --------     -------    --------     -------    --------

Outstanding at end
of year                     113,300    $   4.24     816,600    $   4.33     838,200    $   4.27
                            =======    ========     =======    ========     =======    ========

Exercisable at end
of year                     113,300    $   4.24     816,600    $   4.33     838,200    $   4.27
                            =======    ========     =======    ========     =======    ========

(a) Weighted average exercise price per share.


                                               18


NOTE (6) TAX DEFERRED SAVINGS PLAN AND TRUST

In 1985, the Company made available to all eligible employees the opportunity to
participate  in the Company's Tax Deferred  Savings Plan and Trust.  The Company
provides a 50% matching  contribution in the form of cash or unregistered common
stock of the Company on the eligible amount invested by participants in the plan
to purchase common stock of the Company. The Company's contribution to this plan
was $206,045 in 2005,  $178,745 in 2004,  and  $159,160 in 2003.  This plan held
446,320  shares of the  Company's  common  stock at October 31, 2005 and 465,542
shares at October 31, 2004 and 535,552 shares at October 31, 2003.

NOTE (7) COMMITMENTS AND CONTINGENCIES

(a) LETTERS OF CREDIT - The Company  has  outstanding  letters of credit as more
fully described in Note 3.

(b)  REPURCHASE  AGREEMENTS  - It is  customary  practice  for  companies in the
specialty  vehicle  industry to enter into repurchase  agreements with financing
institutions  to provide  floor plan  financing  for dealers.  In the event of a
dealer default, these agreements generally require the repurchase of products at
the original  invoice price net of certain  adjustments.  The risk of loss under
the  agreements is limited to the risk that market prices for these products may
decline between the time of delivery to the dealer and time of repurchase by the
Company.  The risk is spread  over  numerous  dealers  and the  Company  has not
incurred   significant  losses  under  these  agreements.   In  the  opinion  of
management,  any future losses under these  agreements  will not have a material
adverse effect on the Company's financial position or results of operations. The
Company's  repurchase  obligation  under these agreements is limited to vehicles
which are in new  condition  and as to which the dealer still holds  title.  The
Company's   contingent   obligation  under  such  agreements  was  approximately
$2,089,127 at October 31, 2005.

(c) OPERATING LEASES - The Company has operating leases  principally for certain
manufacturing  facilities,  vehicles and equipment.  Operating lease expense was
$646,780 in 2005,  $758,752 in 2004 and $651,998 in 2003. It is expected that in
the ordinary course of business these leases will be renewed or replaced as they
expire.

The  following  schedule  details  operating  lease  commitments  for the  years
subsequent to October 31, 2005:

       2006                   $381,998
       2007                    305,354
       2008                    228,184
       2009                     60,371
       2010                       --
       Thereafter                 --

(d)  LITIGATION - At October 31, 2005 the Company has  litigation  pending which
arose  in the  ordinary  course  of  business.  Litigation  is  subject  to many
uncertainties  and  the  outcome  of the  individual  matters  is not  presently


                                       19


determinable. It is management's opinion that this litigation will not result in
liabilities that would have a material adverse effect on the Company's financial
position or results of operations.

(e)  SELF-INSURANCE  RESERVES - The Company has  historically  self-insured  for
workers' compensation, health insurance, general liability and product liability
claims, subject to specific retention and reinsurance levels.

Effective  July  1,  2005,  the  Company  purchased   guaranteed  cost  workers'
compensation  insurance for the states in which it had previously  self-insured.
The  Company  continues  to be  self-insured  in  certain  states  for  workers'
compensation claims incurred prior to July 1, 2005.

Certain  workers'  compensation  claims have been denied by the Company's excess
liability  insurance  carrier.  Reserves have been recorded assuming no recovery
from the excess  insurance  carrier is received.  Management  is  disputing  the
denial of coverage by the excess liability insurance carrier but recovery of any
amounts is contingent  and management  cannot  provide any assurances  regarding
recovery  of any  amounts.  The  amount of excess  coverage  being  disputed  is
approximately  $0.5 million.  Subsequent to October 31, 2005, the Company agreed
to a settlement with the excess liability carrier for approximately $0.4 million
less legal fees. This settlement is expected to be collected and recorded in the
first  quarter of FY 2006.

(f) CHASSIS CONTINGENT LIABILITIES - The Company obtains certain vehicle chassis
from two  automotive  manufacturers  under  agreements  that do not transfer the
vehicle's  certificate  of origin to the Company and,  accordingly,  the Company
accounts for the chassis as consigned inventory. Chassis are typically converted
and delivered to customers  within 90 days. The Company's  contingent  liability
under such agreements was approximately $19.6 million at October 31, 2005.

(g)  WARRANTIES  - The  Company's  products  generally  carry  explicit  product
warranties  that extend from several months to more than a year,  based on terms
that are generally accepted in the marketplace.  Certain components  included in
the  Company's end products  (such as chassis,  engines,  axles,  transmissions,
tires, etc.) may include warranties from original equipment manufacturers (OEM).
These  OEM  warranties  are  generally  passed  on to the  end  customer  of the
Company's products and the customer generally deals directly with the applicable
component  manufacturer.  The Company records  provisions for estimated warranty
and other related  costs at the time of sale based on  historical  warranty loss
experience  and   periodically   adjusts  these  provisions  to  reflect  actual
experience. Certain warranty and other related claims involve matters of dispute
that  ultimately  are  resolved  by  negotiation,   arbitration  or  litigation.
Infrequently,  a material  warranty issue may arise which is beyond the scope of
the Company's historical experience.  The Company provides for any such warranty
issues as they become known and estimable.  It is reasonably  possible that from
time to time  additional  warranty  and other  related  claims  could arise from
disputes  or  other  matters  beyond  the  scope  of  the  Company's  historical
experience.  The following  table provides the changes for fiscal years 2005 and
2004 in the Company's product warranties (in thousands):


                                       20


                                                      2005        2004
                                                      ----        ----
Accrued warranties Beginning of Fiscal Year         $ 1,184     $ 1,133

Provisions for warranty charged against income        2,273       1,561

Payments and adjustments of warranties               (1,813)     (1,510)
                                                    -------     -------

Accrued warranties at Fiscal Year End               $ 1,644     $ 1,184
                                                    =======     =======

NOTE (8) AUDIT COMMITTEE INVESTIGATION AND OTHER

On January 31, 2005, the Company  announced that it delayed filing the Form 10-K
for the year ended  October 31, 2004 because  Company  management  and the Audit
Committee  of its  Board of  Directors  were  investigating  and  analyzing  the
Company's manner of establishing reserves in various workers' compensation cases
in the states of Kansas and  Florida.  The  decision to delay filing of the Form
10-K for the period  ended  October  31,  2004 was made to permit the  Company's
management and Audit Committee to complete the investigation  and analysis,  and
to allow its independent  registered  public  accounting firm sufficient time to
complete the audit of the Company's October 31, 2004 financial statements.

The Audit Committee hired independent legal counsel and an independent insurance
consultant to assist in its investigation of the workers compensation  reserves.
Due to the complexity of calculating the reserves  required at the various dates
and the  difficulty of estimating  the reserve  amount in each case,  additional
time was needed to ensure a complete  investigation  and this caused the Company
to not be in  position  to file its  periodic  reports  with the SEC on a timely
basis.

The Company  discovered  issues with workers'  compensation  claims for injuries
dating back to 1990. The special  investigation  revealed that Company personnel
with  responsibility  for setting reserves did so in an aggressive  manner which
caused the third-party  administrator  adjusters to recommend reserves at levels
lower than they would have  otherwise  recommended.  Personnel  also  employed a
practice  known as  stair-stepping  reserves for certain  claims.  This involves
recording  reserves initially at an amount lower than the amount the claim would
be expected to settle for and  increasing  the reserve  over time.  In addition,
several  Florida  claims that had  existed  for an  extended  period of time had
reserves which had been set artificially low and then increased  periodically to
reflect  on-going  payments to  claimants.  The accrual of these  amounts in the
period that claims were incurred  resulted in a charge to retained  earnings for
periods prior to October 31, 2001 and a reversal of reserves in subsequent years
to reflect amounts that should already have been recorded.

On May 12, 2005, the Company  announced that its Audit Committee had recommended
revised  procedures for establishing  workers'  compensation  reserves.  Revised
procedures were put in place to help ensure reserve  recommendations made by the
third  party  administrator  ("TPA")  are  recorded.  Procedures  also  prohibit


                                       21


inappropriate  influence  by  management  in  the  determination  of  the  TPA's
recommended reserve amounts. The revised procedures require increased accounting
oversight  to help insure  reserves are recorded in  accordance  with  generally
accepted   accounting   principles.   The  Board  of   Directors   approved  the
recommendation.

OTHER

The Company  failed to meet the continued  listing  qualifications  set forth in
NASDAQ  Marketplace  Rule  4310(c)(14)  due to the delayed  filing of its annual
report on Form 10-K with the  Securities  and Exchange  Commission and as of May
16, 2005 that its securities were delisted from the NASDAQ National Market.

On May 13, 2005, the Company's Mid Bus subsidiary  completed the purchase of its
Bluffton,  Ohio manufacturing facility for a purchase price of $2,000,000.  This
property  was  leased  prior to  being  purchased  with  financing  through  the
Company's  lead bank. In addition to the purchase  price,  the Company agreed to
purchase up to  $1,000,000 of parts or products over the next five years from an
affiliate of the seller.  Certain  penalties are imposed on the Company if it is
unable or unwilling to meet this purchase commitment.

On March 21, 2005,  the Company  reported  that the Executive  Vice  President -
Operations,  Terry L. Clark, and Chief Financial Officer,  Larry Sayre,  retired
effective March 18, 2005. April 1, 2005, Randall Swift became Vice President and
Chief Operating Officer of the Company.  On May 23, 2005, Cletus Glasener became
Vice President and Chief  Financial  Officer of the Company.  A charge to income
totaling approximately $1.1 million was recorded in the second quarter of fiscal
year 2005. This amount represents the estimated severance  obligation of the two
executives who retired.

NOTE (9) SUBSEQUENT EVENTS

On November 2, 2005, the Company announced that the Company's Board of Directors
had approved (i) a 1-for-300  reverse stock split of the  Company's  outstanding
common stock to be followed  immediately  by a 300-for-1  forward stock split of
the Company's outstanding common stock (the  "Reverse/Forward  Stock Split") and
(ii) a standing  option for the Company to repurchase any shares of common stock
proposed to be  transferred  by a shareholder  after the  Reverse/Forward  Stock
Split if after such proposed  transfer the number of  shareholders  of record of
the  Company's  common  stock  would  equal or exceed  250 (the  "Right of First
Refusal").

Pursuant to the  Reverse/Forward  Stock Split,  shareholders  of record  holding
fewer than 300 shares of the  Company's  outstanding  common  stock  immediately
before the transaction  would have such shares  cancelled and converted into the
right to receive  from the  Company a cash  payment of $7.70 for each such share
owned before the reverse stock split. Shareholders of record holding 300 or more
shares  of  the  Company's  outstanding  common  stock  immediately  before  the
transaction  will continue to hold the same number of shares of that class after
completion  of the  transaction  and will not receive any cash payment for their
shares of that class.


                                       22


The Board of Directors created a special  committee of independent  directors to
review the proposed  Reverse/Forward Stock Split and Right of First Refusal. The
special  committee  received  a fairness  opinion  from its  financial  advisor,
Stifel, Nicolaus & Company, Incorporated,  that the per share cash consideration
to be paid in the proposed Reverse/Forward Stock Split is fair, from a financial
point of view,  to the  Company's  shareholders  that  would be cashed  out as a
result of the Reverse/Forward Stock Split.

A  Special   Shareholders   Meeting  was  held  on  January  19,  2006  and  the
Reverse/Forward  Split and  granting  the  Company  the  Right of First  Refusal
proposals were approved by a majority of the shareholders.  On January 19, 2006,
the  Certificates  of Amendment to the Company's  Articles of  Incorporation  as
amended,  effecting the Reverse/Forward  Stock Split were accepted for filing by
the Secretary of State of Missouri.  As a result, the Company had fewer than 300
shareholders  of record which enabled the Company to  voluntarily  terminate the
registration  of its common stock under the Securities  Exchange Act of 1934, as
amended.

On  January  19,  2006,  the  Company  filed a Form 15 with the  Securities  and
Exchange Commission to terminate registration of its common stock.


                                       23


                                                                 Exhibit 99.1(b)


COLLINS
INDUSTRIES INC.




                      3RD QUARTER 2006 FINANCIAL STATEMENTS




                               Collins Industries, Inc. and Subsidiaries
                                 CONSOLIDATED CONDENSED BALANCE SHEETS

                                                                        (Unaudited)
                                                                         July 31,         October 31,
                                                                            2006             2005
                                                                       -------------     -------------
ASSETS
Current Assets:
    Cash and cash equivalents                                          $    250,799      $    222,594
    Receivables, less allowance for uncollectible accounts               22,598,207        12,633,788
       of $94,419 at 7/31/06 and $150,985 at 10/31/05
    Inventories                                                          41,398,216        40,137,726
    Prepaid expenses and other current assets                             3,059,176         4,087,848
                                                                       ------------      ------------
       Total current assets                                              67,306,398        57,081,956

Restricted cash                                                               4,210            97,072

Property and equipment                                                   49,578,664        54,223,835
       Less:  accumulated depreciation                                   28,755,785        32,824,994
                                                                       ------------      ------------
       Net property and equipment                                        20,822,879        21,398,841
Goodwill                                                                  5,050,229         5,050,229
Other assets                                                              1,121,187         1,420,215
                                                                       ------------      ------------
       Total assets                                                    $ 94,304,903      $ 85,048,313
                                                                       ============      ============

LIABILITIES & SHAREHOLDERS' INVESTMENT
Current liabilities:
    Current maturities of long-term debt & capitalized leases          $  3,126,317      $  3,109,235
    Controlled disbursements                                              2,427,773         3,994,800
    Accounts payable                                                     26,322,486        17,796,263
    Accrued expenses and other current liabilities                        9,233,074         8,112,587
                                                                       ------------      ------------
       Total current liabilities                                         41,109,650        33,012,885

Long-term debt and capitalized leases, less current maturities           20,305,753        23,591,586

Deferred income taxes                                                     1,798,097         1,851,726

Shareholders' investment:
    Common stock                                                            634,338           663,301
    Paid-in capital                                                      13,992,815        13,992,808
    Deferred compensation                                                (1,054,626)       (1,550,370)
    Accumulated other comprehensive income (loss), net                         --                --
    Retained earnings                                                    17,518,876        13,486,377
                                                                       ------------      ------------
       Total shareholders' investment                                    31,091,403        26,592,116
                                                                       ------------      ------------
       Total liabilities & shareholders' investment                    $ 94,304,903      $ 85,048,313
                                                                       ============      ============


(See accompanying notes)


                                                                                                     2


                                          Collins Industries, Inc. and Subsidiaries
                            CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                                         (Unaudited)

                                                                 Three Months Ended                  Nine Months Ended
                                                                      July 31,                           July 31,
                                                                2006             2005             2006             2005
                                                           --------------   --------------   --------------   --------------

Sales                                                      $  89,239,765    $  80,617,600    $ 229,532,268    $ 193,459,400
Cost of sales                                                 77,572,452       72,059,819      200,694,802      174,370,129
                                                           -------------    -------------    -------------    -------------

   Gross profit                                               11,667,313        8,557,781       28,837,466       19,089,271

Selling, general and administrative expenses                   5,489,399        5,288,328       15,099,220       16,219,953
                                                           -------------    -------------    -------------    -------------

   Income from operations                                      6,177,914        3,269,453       13,738,246        2,869,318

Other income (expense):
   Interest expense                                             (580,108)        (564,233)      (1,673,473)      (1,497,250)
   Other, net                                                    (56,087)           4,055            6,706           30,653
                                                           -------------    -------------    -------------    -------------
                                                                (636,195)        (560,178)      (1,666,767)      (1,466,597)
                                                           -------------    -------------    -------------    -------------

Income before income taxes                                     5,541,719        2,709,275       12,071,479        1,402,721

Income tax expense                                             2,050,000        1,060,000        4,470,000          530,000
                                                           -------------    -------------    -------------    -------------


Net income                                                 $   3,491,719    $   1,649,275    $   7,601,479    $     872,721

Other comprehensive income, net of tax:
   Unrealized gain on interest rate swap                            --                                               25,562
                                                           -------------    -------------    -------------    -------------

      Comprehensive income                                 $   3,491,719    $   1,649,275    $   7,601,479    $     898,283
                                                           =============    =============    =============    =============

Earnings per share:
   Basic                                                   $        0.60        $    0.27      $      1.29       $     0.15
                                                           =============    =============    =============    =============
   Diluted                                                 $        0.56        $    0.26      $      1.20       $     0.14
                                                           =============    =============    =============    =============

Dividends per share                                        $         .05        $     .04      $       .14       $      .12
                                                           =============    =============    =============    =============

Weighted average common and common equivalent
  shares outstanding:
  Basic                                                        5,821,875        6,053,430        5,914,465        5,936,733
                                                           =============    =============    =============    =============
  Diluted                                                      6,265,846        6,289,658        6,335,267        6,257,081
                                                           =============    =============    =============    =============


(See accompanying notes)


                                                                                                                           3


                                   Collins Industries, Inc. and Subsidiaries
                                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
                                                  (Unaudited)

                                                                                       Nine Months Ended
                                                                                           July 31,
                                                                                     2006             2005
                                                                                --------------   --------------
Cash flow from operations:
    Cash received from customers                                                $ 219,567,842    $ 188,167,819
    Cash paid to suppliers and employees                                         (206,907,933)    (187,339,593)
    Interest paid                                                                  (1,605,507)      (1,378,545)
    Income taxes paid                                                              (3,099,134)        (743,150)
                                                                                -------------    -------------

        Cash provided by  (used in) operations                                      7,955,268       (1,293,469)
                                                                                -------------    -------------

Cash flow from investing activities:
    Capital expenditures                                                           (1,320,328)      (4,164,346)
    Other, net                                                                        207,793         (177,532)
                                                                                -------------    -------------

        Cash (used in) investing activities                                        (1,112,535)      (4,341,878)
                                                                                -------------    -------------

Cash flow from financing activities:
    Borrowings (repayment) of long-term debt                                       (1,305,592)       8,817,376
    Principal payments of long-term debt
      and capitalized leases                                                       (1,963,159)      (1,571,748)
    Expenditures of restricted cash                                                    92,862           42,151
    Purchase of common stock and other capital transactions                        (2,738,982)        (886,103)
    Payment of dividends                                                             (899,657)        (776,657)
                                                                                -------------    -------------

        Cash provided by (used in) financing activities                            (6,814,528)       5,625,019
                                                                                -------------    -------------

Net increase (decrease) in cash and cash equivalents                                   28,205          (10,328)
                                                                                -------------    -------------

Cash and cash equivalents at beginning of period                                      222,594          163,098
                                                                                -------------    -------------

Cash and cash equivalents at end of period                                      $     250,799    $     152,770
                                                                                =============    =============

Reconciliation of net income to net cash provided by (used in) operations:
    Net income                                                                  $   7,601,479    $     872,721
    Depreciation and amortization                                                   2,523,973        2,381,017
    Restricted Stock vesting as severance pay                                            --            409,500
    (Increase) decrease in receivables                                             (9,964,419)      (5,291,581)
    (Increase) decrease in inventories                                             (1,260,490)      (7,029,516)
    (Increase) decrease in prepaid expenses and other current assets                1,555,202          980,687
    Increase (decrease)  in accounts payable and accrued expenses                   8,079,683        6,383,704
    Deferred income taxes (credits)                                                  (580,160)            --
                                                                                -------------    -------------

        Cash provided by  (used in) operations                                  $   7,955,268    $  (1,293,469)
                                                                                =============    =============


(See accompanying notes)


                                                                                                              4


                    COLLINS INDUSTRIES, INC. AND SUBSIDIARIES


              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

(1)  GENERAL

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

In the opinion of management,  the accompanying unaudited consolidated condensed
financial  statements  contain  all  adjustments   (consisting  of  only  normal
recurring items) necessary to summarize fairly the Company's  financial position
at July 31, 2006 and the results of operations  and the cash flows for the three
and nine month periods ended July 31, 2006 and 2005.

The  Company  suggests  that  the  unaudited  Consolidated  Condensed  Financial
Statements  for the three and nine month  periods ended July 31, 2006 be read in
conjunction with the Company's audited  financial  statements for the year ended
October 31, 2005.


(2)  INVENTORIES

Inventories,  which include  material,  labor, and manufacturing  overhead,  are
stated at the lower of cost (FIFO) or market.

Major classes of inventories as of July 31, 2006 and October 31, 2005, consisted
of the following:

                                        July 31, 2006     October 31, 2005
                                        -------------     ----------------

         Chassis                         $ 6,861,572         $ 5,664,214
         Raw materials & components       16,525,195          16,237,033
         Work-in-process                   9,882,390           8,694,059
         Finished goods                    8,129,059           9,542,420
                                         -----------         -----------
                                         $41,398,216        $ 40,137,726
                                         ===========         ===========


(3)  EARNINGS PER SHARE

Dilutive  securities,  consisting  of options to purchase the  Company's  common
stock and restricted  stock awards,  are included in the  calculation of diluted
weighted average common shares.  Dilutive  securities for the three month period
ended July 31,  2006 and 2005 were  443,971 and  236,229  shares,  respectively.
Dilutive  securities  for the nine  months  ended  July 31,  2006 and 2005  were
420,802 and 320,348 shares, respectively.


                                                                               5


(4)  CONTINGENCIES AND LITIGATION

At July 31, 2006 the  Company had  contingencies  and pending  litigation  which
arose  in the  ordinary  course  of  business.  Litigation  is  subject  to many
uncertainties  and  the  outcome  of the  individual  matters  is not  presently
determinable.  It is management's  opinion that this litigation would not result
in  liabilities  that  would  have a material  adverse  effect on the  Company's
consolidated financial position or results of operations or cash flows.

Certain  workers  compensation  claims had been denied by the  Company's  excess
liability  insurance carrier.  Reserves had previously been recorded assuming no
recovery from the excess insurance  carrier would be received.  During the three
month period ending January 31, 2006, a favorable settlement was reached for the
pre-tax recovery of approximately $0.3 million net of legal fees.


(5)  GUARANTEES AND WARRANTIES

Letters of Credit

This Company has issued various standby letters of credit in the ordinary course
of business.  No liability has been reflected in the accompanying  balance sheet
and no draws on the Company's standby letters of credit have ever been made. The
currently  outstanding  standby letters of credit are limited to (i) a letter of
credit  originally  issued  approximately  16 years ago (renewable  annually) as
required  under  Kansas  law  to  backup   self-insured   reserves  for  workers
compensation insurance, (ii) a declining standby letter of credit required under
Texas  law to  backup  certain  industrial  revenue  bonds  issued  for a  plant
expansion in Longview,  Texas in 1999 that is renewable annually and (iii) other
standby  letters of credit related to periodic bids and issued for other similar
purposes.   A  default  in  meeting  an  obligation   or  condition   under  the
above-referenced standby letters of credit could require the Company to record a
liability.  The letters of credit outstanding at July 31, 2006 are summarized as
follows:

                                                                           Date of
Purpose                                                    Amount         Expiration
- -------                                                    ------         ----------

Workers compensation - Kansas self-insurance reserves     $915,300       April 1, 2007
Industrial revenue bond-Longview, Texas [a]                910,308     September 16, 2006
Bids and other                                           1,368,806          Various

[a] All assets  (originally  $3.0  million)  acquired  with the  proceeds of the
Longview,  Texas industrial  revenue bonds would also be available to offset any
defaults under these  obligations.  The liquidation amount of such assets is not
reasonably estimable.

Warranties

The Company's  products  generally carry explicit product warranties that extend
from  several  months to more  than a year,  based on terms  that are  generally
accepted in the marketplace.  Certain  components  included in the Company's end
products  (such as chassis,  engines,  axles,  transmissions,  tires,  etc.) may


                                                                               6


include  warranties  from  original  equipment  manufacturers  (OEM).  These OEM
warranties are generally passed on to the end customer of the Company's products
and  the  customer  generally  deals  directly  with  the  applicable  component
manufacturer.  The Company records  provisions for estimated  warranty and other
related costs at the time of sale based on historical  warranty loss  experience
and periodically adjusts these provisions to reflect actual experience.  Certain
warranty and other related claims involve matters of dispute that ultimately are
resolved by  negotiation,  arbitration or litigation.  Infrequently,  a material
warranty  issue may arise which is beyond the scope of the Company's  historical
experience.  The Company  provides for any such  warranty  issues as they become
known and estimable. It is reasonably possible that from time to time additional
warranty and other  related  claims could arise from  disputes or other  matters
beyond the scope of the Company's  historical  experience.  The following tables
provide the changes in the Company's product warranties (in thousands):

Reconciliation of Accrued Warranties Three Months Ended July 31       2006          2005
- ------------------------------------------------------------------------------------------
Accrued warranties at the beginning of the period,                  $ 1,436       $ 1,350

Provisions for warranty charged against income
    for the three months ended July 31,                                 532           621

Payments and adjustments of warranties
    for the three months ended July 31,                                (414)         (565)
                                                                    -------       -------

Accrued warranties at July 31,                                      $ 1,554       $ 1,406
                                                                    =======       =======


Reconciliation of Accrued Warranties Nine Months Ended July 31        2006          2005
- ------------------------------------------------------------------------------------------

Accrued warranties at the beginning of the period,                  $ 1,644       $ 1,184

Provisions for warranty charged against income
    for the nine months ended July 31,                                1,135         1,552

Payments and adjustments of warranties
    for the nine months ended July 31,                               (1,225)       (1,330)
                                                                    -------       -------

Accrued warranties at July 31,                                      $ 1,554       $ 1,406
                                                                    =======       =======


(6)  CAPITAL STOCK

A  Special   Shareholders  Meeting  was  held  on  January  19,  2006  in  which
shareholders  approved a  reverse/forward  stock split such that shareholders of
record holding fewer than 300 shares of the Company's  outstanding  common stock
immediately before the transaction had their shares cancelled and converted into
the right to  receive  from the  Company a cash  payment  of $7.70 for each such
share owned before the reverse stock split. The Company also extended this right
to beneficial shareholders who held their shares in street name.

The Company's Exchange Agent is currently receiving cancelled stock certificates
and disbursing funds or new certificates to those registered  shareholders whose
shares were cancelled.  The Company's  Exchange Agent also determined the number
of shares owned by beneficial  owners that were canceled and  repurchased.  This
transaction was completed during the quarter ended April 30, 2006


                                                                               7


In addition,  as required  under  Missouri law, the Company  issued one share of
non-redeemable common stock on January 19, 2006

Prior to the Special  Shareholder  Meeting,  the Company had 6,633,013 shares of
Common Stock outstanding.  Subsequent to the Special  Shareholder  Meeting,  the
Company  repurchased  and  canceled  289,638  shares  of Common  Stock,  leaving
6,343,375  shares  issued  and  outstanding  as of July 31,  2006.  This  amount
includes  521,500  unvested  Restricted  Stock Awards,  which vest under certain
conditions over the next three years.

The Company  accounted  for this  transaction  using the Treasury  Stock method,
whereby the proceeds  expended for the shares and expenses  associated with this
transaction  were debited to the Company's  Capital Stock and Retained  Earnings
equity accounts.  The total cost of this transaction,  including  expenses,  was
approximately $2.7 million.

As of July 31, 2006, the Company's capital structure was:

     o   Redeemable Common Stock, $0.10 par value: 17,000,000 shares authorized,
         6,343,375 issued and outstanding
     o   Non-redeemable  Common  Stock,  $0.10 par  value:  1 share  authorized,
         issued and outstanding
     o   Preferred Stock Series A, $0.10 par value:  750,000 shares  authorized,
         No issued or outstanding shares
     o   Capital stock, $0.10 par value: 2,249,999 shares authorized,  No issued
         or outstanding shares

As a result  of the  Reverse/Forward  Split,  the  Company  had  fewer  than 300
shareholders  of record which enabled the Company to  voluntarily  terminate the
registration  of its common stock under the Securities  Exchange Act of 1934, as
amended.  On January 19, 2006,  the Company filed a Form 15 with the  Securities
and Exchange  Commission to terminate  registration  of its common  stock.  This
filing became effective 90 days after filing Form 15 on April 19, 2006.


(7)  STOCK BASED COMPENSATION

At July 31, 2006 the Company had two stock-based  employee  compensation  plans,
which  are  more  fully  described  in  Notes  [1(m)  and  5] of the  "Notes  to
Consolidated  Financial  Statements"  in the  Company's  2005 audited  financial
statements.  The Company  accounts  for these plans  under the  recognition  and
measurement  principles of APB Opinion No. 25,  "Accounting  for Stock Issued to
Employees"  and related  interpretations.  No stock based  compensation  cost is
reflected  in net  income,  as all  options  granted  under  those  plans had an
exercise price equal to the market value of the  underlying  common stock on the
date of grant.  No stock options have been granted since 1999 and therefore,  no
proforma net income disclosures are required.

(8)  OTHER

On May 23, 2006, the Board of Directors declared a dividend  distribution of one
right for each outstanding  share of Common Stock, $.10 par value per share (the
"Common  Share"),  to shareholders of record at the close of business on June 5,
2006. Each right entitles the registered holder to purchase from the Company one


                                                                               8


one-hundredth of a share of Series A Junior Participating  Preferred Stock, $.10
par value per  share,  at a  purchase  price of $30.00  per  share,  subject  to
adjustment.  The  description  and terms of the rights are set forth in a Rights
Agreement  (the  "Rights  Agreement")  between the  Company and Mellon  Investor
Services LLC as rights agent.

Initially,  the  rights  will  be  attached  to all  Common  Share  certificates
representing Common Shares then outstanding and no separate certificates for the
rights will be distributed.  The rights will separate from the Common Shares and
a  Distribution  Date will occur upon the earlier of (i) the 10th  business  day
after  the date on which  there is a public  announcement  that any  person or a
group of affiliated or associated persons (an "Acquiring Person"), has acquired,
or obtained the right to acquire,  other than pursuant to a "Qualifying  Offer,"
beneficial  ownership of 20% or more of the outstanding  Common Shares (the date
of such first public  announcement,  the "Shares Acquisition Date"),  other than
such  acquisition by the Company,  any  subsidiary of the Company,  any employee
benefit  plan of the  Company or of any  subsidiary  of the  Company (an "Exempt
Person"),  and (ii) the 10th  business day after the date of  commencement  of a
tender offer or an exchange  offer by any person  (other than an Exempt  Person)
for the Common Shares of the Company if, upon consummation  thereof, such person
would be the beneficial  owner of 20% or more of the outstanding  Common Shares.
The rights are not exercisable  until the  Distribution  Date and will expire at
the close of business on May 25, 2016, unless earlier redeemed by the Company.

No holder of any right  certificate is entitled to vote or receive  dividends or
is  deemed  for any  purpose  the  holder  of the  preferred  stock or any other
securities  which may at any time be  issuable  on the  exercise  of the  rights
represented  thereby,  nor does the holder of any right  certificate have any of
the rights of a shareholder of the Company or any right to vote for the election
of  directors  or upon any  matter  submitted  to  shareholders  at any  meeting
thereof,  or to give or withhold consent to any corporate  action, or to receive
notice of  meetings  or other  actions  affecting  shareholders,  or to  receive
dividends  or  subscription  rights,  or  otherwise,  until  the right or rights
evidenced by a right  certificate  have been  exercised in  accordance  with the
Rights Agreement.

A "Qualifying Offer" is a bona fide offer for all outstanding Common Shares that
meets  the  following  criteria:  (1)  the  offeror  must  have  firm  financing
commitments from responsible  financial  institutions  sufficient to pay for all
outstanding  shares;  (2) the offeror must own, after consummation of the offer,
shares  representing  a  majority  of the voting  power of the then  outstanding
shares of voting stock; (3) such offer must remain open for at least 45 business
days from  commencement and at least 20 business days after the last increase or
permitted  decrease  in  the  price  offered  or  after  any  bona  fide  higher
alternative offer is made (except in certain limited circumstances); and (4) the
offeror  must  irrevocably   commit  to  acquire  for  cash  promptly  following
consummation  of the offer,  the remaining  shares at the same price paid in the
offer.

The Rights  Agreement  is  designed  to protect  the  Company  against  coercive
takeover tactics and also to encourage third parties interested in acquiring the
Company to negotiate with the Company rather than proceed unilaterally.


                                                                               9


On June 29, 2006, the Company announced that it was exploring a possible sale of
the  Company.  It had  retained  George K. Baum  Advisors  LLC as its  financial
advisor to assist with the process.

On August 28, 2006, the Company announced that it had declared its thirty-nineth
consecutive  regular  quarterly cash dividend.  The dividend of $0.05 per share,
will be paid to  shareholders of record as of September 6, 2006 on September 15,
2006.




CAUTIONARY  STATEMENTS  REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE
RESULTS

This report and other written reports and oral statements made from time to time
by the Company  may contain  so-called  "forward-looking  statements"  about the
business,  financial  condition and  prospects of the Company,  all of which are
subject  to risks and  uncertainties.  One can  identify  these  forward-looking
statements  by  their  use  of  words  such  as  "expects",   "plans",   "will",
"estimates",  "forecasts",  "projects",  and other words of similar meaning. One
can  also  identify  them by the  fact  that  they  do not  relate  strictly  to
historical or current facts.  One should  understand  that it is not possible to
predict  or  identify  all  factors,  which  involve  risks  and  uncertainties.
Consequently,  the reader  should not  consider any such list or listing to be a
complete statement of all potential risks or uncertainties.

The  forward-looking  statements are made pursuant to the safe harbor provisions
of the Private  Securities  Litigation  Reform Act of 1995. The Company believes
the  assumptions  underlying  these  forward-looking  statements are reasonable;
however,  any of the  assumptions  could be inaccurate,  and  therefore,  actual
results  may differ  materially  from  those  projected  in the  forward-looking
statements due to certain risks and  uncertainties,  including,  but not limited
to, changes in funds budgeted by Federal,  state and local governments,  changes
in  product  demand,  the  availability  of key raw  materials,  components  and
chassis, various inventory risks due to changes in market conditions, changes in
competition,  substantial  dependence  on third  parties  for  product  quality,
interest rate  fluctuations,  adequate  direct labor pools,  development  of new
products, changes in tax and other governmental rules and regulations applicable
to the Company,  reliability  and timely  fulfillment of orders and other risks.
The Company  undertakes no  obligation to publicly  release any revisions to any
forward-looking  statements  contained herein to reflect events or circumstances
occurring after the date released or to reflect the occurrence of  unanticipated
events.

The  Company  does not  assume  the  obligation  to update  any  forward-looking
statement.  One should  carefully  evaluate such  statements in light of factors
described  in the  Company's  prior  filings  with the  Securities  and Exchange
Commission,  especially on Forms 10-K, 10-Q and 8-K (if any) and other financial
reports contained on the Company's website.


                                                                              10

EX-99.2

                                                                    Exhibit 99.2


         UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


SELECTED FINANCIAL DATA
BNS AND COLLINS UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

     The Unaudited Pro Forma Condensed Consolidated Statement of Earnings
combines the historical consolidated statements of earnings of BNS Holding, Inc.
("BNS") and Collins Industries, Inc. ("Collins"), giving effect to the
acquisition as if it had occurred on January 1, 2005 and January 1, 2006,
respectively. The Unaudited Pro Forma Condensed Consolidated Balance Sheet
combines the historical consolidated balance sheet of BNS and the historical
consolidated balance sheet of Collins, giving effect to the acquisition as if it
had been consummated on September 30, 2006. You should read this information in
conjunction with the:

     1.    accompanying notes to the Unaudited Pro Forma Condensed Consolidated
           Financial Statements;

     2.    separate historical consolidated financial statements of BNS as of
           and for the year ended December 31, 2005, included in the annual
           report on Form 10-K for the year ended December 31, 2005;

     3.    separate historical consolidated financial statements of Collins as
           of and for year ended October 31, 2005;

     4.    separate unaudited consolidated financial statements of BNS as of and
           for the nine months ended September 30, 2006, and;

     5.    separate unaudited consolidated financial statements of Collins for
           the nine months ended July 31, 2006.

     The unaudited pro forma condensed consolidated financial information is
provided for informational purposes only. The pro forma information is not
necessarily indicative of what the companies' financial position or results of
operations actually would have been had the acquisition been completed at the
dates indicated. In addition, the unaudited pro forma condensed consolidated
financial information does not purport to project the future financial position
or operating results of the consolidated company.

     The unaudited pro forma condensed consolidated financial information was
prepared using the purchase method of accounting with BNS treated as the
acquirer. Accordingly, we have adjusted the historical consolidated financial
information to give effect to the impact of the consideration issued in
connection with the acquisition. In the Unaudited Pro Forma Condensed
Consolidated Balance Sheet, BNS' cost to acquire Collins has been allocated to
the assets acquired and liabilities assumed based upon management's preliminary
estimate of their respective fair values as of the date of acquisition. Any
differences between the fair value of the consideration issued and the fair
value of the assets and liabilities acquired will be recorded as goodwill. The
amounts allocated to acquired assets and liabilities in the Unaudited pro forma
condensed consolidated financial statements are based on management's
preliminary internal valuation estimates. Definitive allocations will be
performed and finalized based upon certain valuations and other studies that
will be performed by BNS with the assistance of outside valuation specialists,
as required. Accordingly, the purchase allocation pro forma adjustments are
preliminary and have been made solely for the purpose of providing unaudited pro
forma condensed consolidated financial information and are subject to revision
based on a final determination of fair value.

     The Unaudited Pro Forma Condensed Consolidated Statement of Earnings also
includes certain purchase accounting adjustments, including items expected to
have a continuing impact on the consolidated results, such as interest expense
on various loans obtained for the purpose of the acquisition, reduction in the
selling and administrative expenses resulting from the termination of certain
executives after the acquisition and amortization of debt issue costs.

     Based on BNS' review of Collins' summary of significant accounting policies
disclosed in Collins' financial statements and preliminary discussions with
Collins' management, the nature and amount of any adjustments to the historical
financial statements of Collins to conform their accounting policies to those of
BNS are not expected to be significant. Upon consummation of the acquisition,
further review of Collins's accounting policies and financial statements may
result in required revisions to Collins's policies and classifications to
conform to BNS'.





                         UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
                                       For the year ended December 31, 2005
                                        (in $000's, except per share data)


                                                                                             Proforma       Proforma
                                                                   BNS        Collins        Adjustment    Consolidated
                                                                   (a)          (a)

Net Sales                                                     $    --        $ 269,449      $    --        $ 269,449
Cost of Sales                                                      --          242,239            533 (b)    242,772
                                                              ---------      ---------      ---------      ---------
                                                                   --           27,210           (533)        26,677
Selling, general and administrative expenses                      1,646         21,421           (302)(c)     22,765
Research and development                                           --              102           --              102
                                                              ---------      ---------      ---------      ---------
Operating income (loss)                                          (1,646)         5,687           (231)         3,810

Interest expense                                                   --           (2,004)        (8,955)(d)    (10,959)
Other non-operating income, net                                     496             78           (496)(e)         78
                                                              ---------      ---------      ---------      ---------
Income (loss) before income taxes                                (1,150)         3,761         (9,682)        (7,071)

Income tax provision (benefit)                                     --            1,520         (1,520)(f)        --
                                                              ---------      ---------      ---------      ---------
Income (loss) from continuing operations
before minority interest                                         (1,150)         2,241         (8,162)        (7,071)
Minority interest                                                                                 396 (g)        396
                                                              ---------      ---------      ---------      ---------
Net income (loss) from continuing operations                  $  (1,150)     $   2,241      $  (7,766)     $  (6,675)
                                                              =========      =========      =========      =========




Net income(loss) per common share-basic                       $   (0.38)     $    0.37                     $   (2.21)
                                                              =========      =========                     =========
Net income(loss) per common share-diluted                     $   (0.38)     $    0.36                     $   (2.21)
                                                              =========      =========                     =========
Weighted average number of shares used in
earnings per share computation-basic                              3,019          5,987                         3,019
                                                              =========      =========                     =========
Weighted average number of shares used in
earnings per share computation-diluted                            3,019          6,300                         3,019
                                                              =========      =========                     =========

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statement of Earnings.





               NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
           STATEMENT OF EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2005
                               (Currency in $'000)


(a)      The consolidated statement of earnings presented above for each company
         are for the year ended December 31, 2005 for BNS and October 31, 2005
         for Collins.

(b)      Pertains to the additional depreciation expense of $533 for the
         estimated increase in the value of fixed assets as a result of the
         acquisition.

(c)      Pertains to the reduction of compensation expenses amounting to $1,302
         resulting from the termination of certain executives of Collins upon
         the acquisition and the annual management fee of $1,000 payable to AIP.

(d)      Represents interest incurred on the various loans totaling $97,579
         obtained for the purpose of the acquisition. Estimated interest on new
         loans is $10,313 and the interest on the old debt of $2,004 was
         eliminated as it was refinanced in connection with the acquisition.
         Interest expense also includes the increase in amortization expense of
         $646 for debt issue costs related to the various loans obtained for the
         purpose of the acquisition. These debt issue costs are being amortized
         over five years, the original life of the loans.

(e)      Represents elimination of BNS' interest income which would not have
         been earned had the acquisition occurred at the beginning of the period

(f)      BNS has had a history of losses and the loss generated in the year
         presented is due to the additional interest expense which has a
         limitation on the ability to carryback to prior periods. Therefore, no
         benefit has been recorded for the current period pretax loss as it has
         not been determined whether the valuation allowance recorded against
         the deferred tax asset can be removed. The need for a valuation
         allowance against the deferred tax asset is being evaluated at this
         time.

(g)      Recording of the 20% minority interest ownership of the Collins net
         loss.








             UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
                  For the nine months ended September 30, 2006
                        (in $000's except per share data)

                                                                          Proforma             Proforma
                                                    BNS      Collins      Adjustment         Consolidated
                                                    (a)        (a)

Net Sales                                      $    --      $ 229,532    $    --               $ 229,532
Cost of Sales                                       --        200,695          400 (b)           201,095
                                               ---------    ---------    ---------             ---------
                                                    --         28,837         (400)               28,437
Selling, general and administrative
expenses                                           1,829       15,099         (247)(c)            16,681
                                               ---------    ---------    ---------             ---------
Operating income (loss)                           (1,829)      13,738         (153)               11,756
Interest expense                                    --         (1,674)      (6,546)(d)            (8,220)
Other non-operating income, net                      696            7         (696)(e)                 7
                                               ---------    ---------    ---------             ---------
Income (loss) before income taxes
                                                  (1,133)      12,071       (7,395)                3,543
Income tax provision (benefit)                      --          4,470       (3,913)(f)               557
                                               ---------    ---------    ---------             ---------
Income (loss) from continuing operations
before minority interest                          (1,133)       7,601       (3,482)                2,986
Minority interest                                   --           --           (875)(g)              (875)
                                               ---------    ---------    ---------             ---------
Net income (loss) from continuing operations   $  (1,133)   $   7,601    $  (4,357)            $   2,111
                                               =========    =========    =========             =========


Net income(loss) per common share-basic        $   (0.37)   $    1.29                          $    0.70
                                               =========    =========                          =========
Net income(loss) per common share-diluted      $   (0.37)   $    1.20                          $    0.70
                                               =========    =========                          =========
Weighted average number of shares used in
earnings per share computation-basic               3,025        5,914                              3,025
                                               =========    =========                          =========
Weighted average number of shares used in
earnings per share computation-diluted             3,029        6,335                              3,029
                                               =========    =========                          =========


See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statement
of Earnings.







               NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
       STATEMENT OF EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
                               (Currency in $'000)


(a)      The consolidated statement of earnings presented above for each company
         are for the nine months ended September 30, 2006 for BNS and July 31,
         2006 for Collins.

(b)      Pertains to the additional depreciation expense of $400 for the
         estimated increase in the value of fixed assets as a result of the
         acquisition

(c)      Pertains to the reduction of compensation expenses amounting to $997
         resulting from the termination of certain executives of Collins upon
         the acquisition and the management fee of $750 payable to AIP.

(d)      Represents interest incurred on the various loans totaling $97,579
         obtained for the purpose of the acquisition. Estimated interest on new
         loans is $7,735 and the interest on the old debt of $1,674,was
         eliminated as it was refinanced in connection with the acquisition.
         Interest expense also includes the increase in amortization expense of
         $485 for debt issue costs related to the various loans obtained for the
         purpose of the acquisition. These debt issue costs are being amortized
         over five years, the original life of the loans.

(e)      Represents elimination of BNS' interest income which would not have
         been earned had the acquisition occurred at the beginning of the period

(f)      BNS has had a history of losses and has net operating loss
         carryforwards. These losses have not been previously benefited. A tax
         provision representing state income taxes of $486 and federal
         alternative minimum taxes of $71 has been recorded for the current
         period as the BNS losses would be available to offset the regular
         federal income tax provision on the pretax profit.

(g)      Recording of the 20% minority interest ownership of the Collins net
         income.

(h)      In the first quarter of 2006 BNS withdrew it offer to acquire to assets
         of another target company. At that time the BNS reversed the previously
         deferred acquisition costs related to that acquisition into the income
         statement as a period cost. The previously deferred acquisition costs
         that were recorded as a period cost in the first quarter of 2006 was
         $621. The company had also incurred $150 of acquisition costs in the
         first quarter related to that acquisition. These expenses were also
         recorded as a period cost.





            UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                            As of September 30, 2006
                                   (in $000's)

                                                                                    Proforma             Proforma
                                                BNS (a)          Collins (a)       Adjustments          Consolidated

ASSETS
Cash and cash equivalents                      $ 19,809          $    251          $ (16,682) (c)       $   3,378
Accounts receivable                                  --            22,598                 --               22,598
Inventories                                          --            41,398                 --               41,398
Prepaid expenses and other current assets           544             3,059                 --                3,603
                                               ---------         ---------         ----------           ----------
TOTAL CURRENT ASSETS                             20,353            67,306            (16,682)              70,977
Net property and equipment                            3            20,823              8,000  (d)          28,826
Net goodwill and other intangible assets             --             5,050             53,769  (e)          58,819
Deferred income taxes                                                                     --  (f)              --
Other non-current assets                            474             1,126                                   1,600
                                               ---------         ---------         ----------           ----------
TOTAL ASSETS                                   $ 20,830          $ 94,305          $  45,087            $ 160,222
                                               =========         =========         ==========           ==========


LIABILITIES
Accounts payable                               $     --          $ 26,323          $      --            $  26,323
Accrued and other liabilities                     1,058            11,661                 --               12,719
Debts due within one year                             -             3,126              4,874  (c)(g)        8,000
                                               ---------         ---------         ----------           ----------
TOTAL CURRENT LIABILITIES                         1,058            41,110              4,874               47,042
Long-term debt                                       --            20,306             69,273  (c)(g)       89,579
Deferred income taxes                                --             1,798             (1,798)                  --
                                               ---------         ---------         ----------           ----------
TOTAL LIABILITIES                                 1,058            63,214             72,349              136,621
                                               ---------         ---------         ----------           ----------

MINORITY INTEREST                                    --                --              3,829  (h)           3,829

Common stock                                         30               634               (634) (h)              30
Paid-in capital                                  87,119            13,993            (13,993) (h)          87,119
Deferred compensation                                --            (1,055)             1,055  (h)              --
Retained earnings (accumulated deficit)         (66,922)           17,519            (17,519) (h)         (66,922)
Unamortized value of restricted stock awards         --                --                 --                   --
Treasury stock                                     (455)               --                 --                 (455)
                                               ---------         ---------         ----------           ----------
TOTAL SHAREHOLDERS' EQUITY                       19,772            31,091            (31,091)              19,772
                                               ---------         ---------         ----------           ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
    EQUITY                                     $ 20,830          $ 94,305          $  45,087            $ 160,222
                                               =========         =========         ==========           ==========


See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Balance
Sheet.






        NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

(a)  The consolidated balance sheets presented above for each company are as of
     September 30, 2006 for BNS and July 31, 2006 for Collins.

(b)  Certain reclassifications have been made to the historical presentation of
     BNS and Collins to conform to the presentation used in the Unaudited Pro
     Forma Condensed Consolidated Balance Sheet.

(c)  Following are the sources and uses of cash for the purpose of the
     acquisition:

        Proceeds from new loans to be obtained                      $    97,579

        Full payment of current portion of old debt                 (     3,126)
        Full payment of long-term portion of old debt               (    20,306)
        Payments to shareholders of Collins                         (    79,292)
        Payments for debt issue cost                                (     3,230)
        Payments for acquisition expenses                           (     5,219)
        Payments for severance and compensation payment for options (     3,088)
                                                                    ------------
                   Net cash used                                    ($   16,682)
                                                                    ============

     $8,000 of the new debt has been classified as current as it is likely to be
     paid within one year.

(d)  Represents the increase in value of fixed assets resulting from a
     preliminary assessment of the fair market value of the fixed assets.
     Collins, however, has not completed an assessment of the fair value of its
     assets and liabilities and the related business integration plans.

(e)  As mentioned above, Collins has not completed an assessment of the fair
     value of its assets and liabilities. The table below represents a
     preliminary allocation of the total consideration paid in excess of the
     book value of the net assets acquired to Collins' tangible and intangible
     assets and liabilities based on management's preliminary estimate of their
     respective fair value as of the date of the business combination:

         Total acquisition price                                                        $ 79,292
         Total Collins shareholders' equity                                              (31,091)
         Minority ownership of Collins                                                     3,829
         Write up to fair value related to fixed assets                                   (8,000)
         Severance accrual directly related to acquisition                                 2,152
         Compensation payment to employees for options                                       936
         Removal of deferred tax valuation allowance to the extent
                    of deferred tax liabilities-BNS                                       (4,758)
         Recording of deferred tax liability related to fixed asset adjustment             2,960
         Payment for acquisition expenses                                                  5,219
                                                                                        --------
         Portion of purchase price allocated to goodwill                                $ 50,539
                                                                                        ========



     Upon completion of the fair value assessment, BNS anticipates that the
     ultimate purchase price allocation may differ from the preliminary
     assessment outlined above. Any changes to the initial estimates of the fair
     value of the assets and liabilities will be allocated to residual goodwill.

     In addition to the above residual allocation to intangible assets, debt
     issue cost of $3,230 has been recorded as intangible assets.

(f)  Pertains to recognition of deferred tax assets related to pre-acquisition
     net operating loss carry forwards and other temporary differences of BNS.
     Prior to the acquisition, BNS recognized a full valuation allowance against
     its deferred tax assets of $19,178 to reflect its expectation that it is
     more likely than not that it will not generate future taxable income to
     utilize the amount. The need for a valuation allowance against the deferred
     tax asset is being evaluated at this time. The valuation allowance recorded
     against the deferred tax asset has been removed to the extent that a
     deferred tax liability has been recorded. A deferred tax labiality of
     $2,960 was recorded on the increase in value of the fixed assets as
     described in note (c) above. The deferred income tax liabilities on Collins
     balance sheet of $1,798 was reclassified to this account.

(g)  Represents the various loans to be obtained for the purpose of the
     acquisition ($97,579).

(h)  Represents elimination of Collins historical equity and establishment of a
     20% minority interest due to the acquisition of 80% of Collins by BNS.