10-K

Securities and Exchange Commission

Washington, DC 20549

FORM 10-K

(Mark One)

[ X ] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 (Fee Required)

For the fiscal year ended October 31, 2002 or

[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required)

For the transition period from _________ to ___________

Commission file number 0-12619

Collins Industries, Inc. .

(Exact name of registrant as specified in its charter)

Missouri 43-0985160 .

(State or other jurisdiction of incorporation) (I.R.S. Employer Identification Number)

15 Compound Drive Hutchinson, Kansas 67502-4349 .

(Address of principal executive offices) (Zip Code)

Registrant's telephone number including area code 620-663-5551 .

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered

None . N/A ..

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, Par Value $.10 per share .

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy of information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( )

Indicate by check mark wither the registrant is an accelerated Filer (as defined under rule 12-b of the Act). Yes ___ No x .

The aggregate market value of voting stock held by non-affiliates of the registrant was $ 18,610,258 as of
January 7, 2003

The number of shares of Common Stock outstanding on January 7, 2003 was 7,073,629 .

Documents Incorporated by Reference

The following are the documents incorporated by reference and the part of the Form 10-K into which the document is incorporated:

Document: Part of Form 10-K

Proxy Statement for Annual Meeting

of Shareholders on February 28, 2003 _ Part III .

PART I

Item 1. BUSINESS

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 16 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, road construction equipment and industrial rental sweepers. From its inception, Collins' stated goal has been to become the largest manufacturer 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 is the largest manufacturer of ambulances, the second largest manufacturer of terminal trucks and a leading manufacturer of small school buses, and sweepers used in the road construction industry. The Company sells its products under several well-known trade names, including Wheeled CoachÒ (ambulances), Collins BusÒ and Mid Busæ (small school buses), World TransÒ (commercial buses), CapacityÒ (terminal trucks) and Waldonæ /Lay-Moræ (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 ambulance, the first ambulance of its size with advanced life-support system capability; the Dura-Ride suspension system, the first frame-isolating suspension system for terminal trucks; and the innovation of a larger seating capacity, Type A Super Bantam school bus capable of carrying up to 24 passengers, the largest Type A school bus in the industry.

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Description of Business

The Company principally manufactures and markets Specialty Vehicles.

See "Note 8 to the Consolidated Financial Statements" for quantitative segment information.

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 either a dual rear-wheel cab chassis ("Type I") ambulance or 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.

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 systems.

Buses. The Company manufactures small school buses, commercial and shuttle buses at its Bluffton, Ohio and South Hutchinson, Kansas facilities.

School Buses. The Company manufactures small Type A school buses which carry from 16 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 buses are produced in compliance with federal, state and local laws regarding school transportation vehicles.

Commercial and Shuttle Buses. The Company produces shuttle and transit buses for car rental agencies, 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. The DiplomatÔ is a steel body bus built on a vendor-supplied, cutaway chassis that carries 17 to 25 passengers and targets a low- to mid-price range market.

Terminal Trucks / Road Construction Equipment. The Company produces two basic models of terminal trucks at its Longview, Texas facility, the Trailer Jockey and the Yardmaster . 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 drivetrain components which are purchased from outside suppliers.

The Company produces three and four wheel sweepers, a full line of articulated four-wheel drive loaders, rough terrain lift trucks, compact loaders and backhoes (road construction equipment). These products are principally sold in both commercial and rental markets through direct sales and distributors throughout the United States. During fiscal 2002, certain operations related to these products were moved to Longview, Texas from Fairview, Oklahoma.

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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, the Company fabricates the principal components of its products. Collins' internal capabilities include CNC gas/plasma shape cutting, 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 intends to continue to improve 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. In fiscal 2002, both the Florida and Kansas ambulance facilities initiated capital projects to automate production. Substantially all of the costs associated with these projects will be financed from the proceeds of the Industrial Revenue Bonds obtained in fiscal 2002. Management believes the Company's manufacturing facilities are in good condition and are adequate for the purposes for which they currently are used. The capacity of the Company's current facilities, particularly if operated on a multiple shift basis, is adequate to meet current needs and anticipated sales volumes.

New Products

The Company is not presently engaged in activities which would require a significant amount of expenditures or use of material amounts of assets for development of products in the planning stage or otherwise for the foreseeable future.

Suppliers

In order to ensure that it has a readily available supply of chassis for ambulance and bus production, the Company has entered into consignment agreements with General Motors Corporation ("GMC") and Ford Motor Company ("Ford"). Under those agreements, chassis are kept at Company production facilities at no cost to the Company other than chassis storage costs. When an individual chassis is selected from the Company's consignment pool for use in vehicle production, title to the chassis passes to the Company and the Company becomes liable to the consignor for the cost of the chassis. Chassis currently in the consignment pool are supplied by Ford and GMC. While an interruption in supply from one source may cause a temporary slowdown in production, the Company believes that it could obtain adequate numbers of chassis from alternate sources of supply.

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The Company uses substantial amounts of steel in the production of its terminal truck products and road construction equipment and purchases 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 of such raw materials and components, and the Company 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

The Company owns federal registrations for most of the trademarks which it uses on its products. The Company also owns patents on its bus body design, ambulance design, Dura-Ride air suspension system, ambulance warning light system and air-activated bus door. The Company believes that its patents are helpful, because they may force competitors to do more extensive design work to produce a competitive product. The Company 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 the Company's business.

Seasonality of Business

Historically, a major portion of the Company's net income has been earned in the second and third fiscal quarters ending April 30 and July 31, respectively. The purchasing patterns of school districts are typically strongest in the spring and summer months which accounts for typically stronger sales of small school buses in the quarters ending April 30 and July 31, respectively. Generally, the Company's sales tend to be lower in the fall and winter months due to the purchasing patterns of the Company's customers in general and because purchasing activities are normally lower near the end of the calendar year.

Sales Terms

The Company 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 through an unrelated third party for the dealers, resulting in payment generally within days of the sale.

Customer Concentration

The Company has no single customer whose loss would have a material adverse effect on the Company as a whole.

Sales Backlog

The sales backlog at October 31, 2002, was approximately $42.2 million compared to $38.8 million at October 31, 2001. In the opinion of management, the majority of this sales backlog will be shipped in fiscal 2003.

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Governmental Sales

The Company has pursued, and will continue to pursue, opportunities in government sales as they occur. No material portion of the Company's business, however, is subject to renegotiation of profits or termination of contracts or subcontracts at the election of the government.

Marketing and Distribution

The Company, 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 the Company's 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.

The Company regularly advertises in consumer and trade magazines and other print media and actively participates in national, regional and local trade shows. In addition, Company 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 the Company's product lines are very competitive, and the Company currently has several direct competitors in most markets. Some of these competitors may have greater relative resources. The Company 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 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 the Collins Bus and Mid Bus brand names, and (iii) in the terminal truck and road construction equipment market for sweepers on the strength of its Waldon and Lay-Mor brand names, product quality, price and distribution networks. The Company primarily competes in the terminal truck market with one larger domestic competitor, Ottawa Truck, which is owned by Kalmar Industries. Kalmar has international distribution channels and may have greater relative resources than the Company. The Company believes it can compete successfully in this 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
	2002	2001	2000
Research and Development Expenses	$198,814	$166,763	$156,475

This table cites the level of research and development costs the Company incurred the past three fiscal years. It should be noted the Company does significant research and development work on

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the production line and, therefore, the major costs of new programs are recorded as cost of sales and are expensed as prototypes.

Regulation

The Company is subject to various laws and regulations with respect to employees' health and safety and the protection of the environment. In addition, all of the Company's on-road vehicles must satisfy certain standards applicable to such vehicles 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. In management's opinion, the Company 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 the Company.

Employees

The Company employs approximately 1,000 persons full time, including officers and administrative personnel. The Company has not experienced any strikes or work stoppages due to labor problems and considers its relations with its employees to be satisfactory.

Export Sales

See "Note 8 to the Consolidated Financial Statements".

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Item 2. PROPERTIES

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

Location	Use	Approximate Size (sq ft)
Hutchinson, Kansas (1)	Corporate headquarters	5,000
Hutchinson, Kansas (1),(2)	Ambulance production; Office space	216,000
South Hutchinson, Kansas(1),(3)	Small school bus and commercial bus production; Office space	247,000
Orlando, Florida (1),(4)	Ambulance production; Office space	311,000
Longview, Texas (5)	Terminal truck/road construction equipment production; chassis production; Office space	180,000
Mansfield, Texas (1)	Ambulance sales, service and distribution center	25,000
Fairview, Oklahoma (1)	Road construction equipment fabrication and assembly; Office space	74,000
Bluffton, Ohio (6)	Small school bus and commercial bus production; Office space	186,000

(1) This property is pledged as collateral to secure payment of the Company's debt obligations. See "Note 2 to Consolidated

Financial Statements."

(2) This facility and certain related equipment are financed by industrial revenue bonds in the original principal amount of

$2,000,000 in 2002 issued by Reno County, Kansas under lease purchase agreements.

(3) This facility and certain related equipment are financed by industrial revenue bonds in the original principal amounts of

$1,250,000 in 1999 and $3,500,000 in 1997 issued by the City of South Hutchinson under lease purchase agreements.

(4) Certain related equipment is financed by industrial revenue bonds in the original principal amount of

$2,000,000 in 2002 issued by Orange County, Florida Industrial Development Authority under lease purchase agreements.

(5) This facility and certain related equipment are financed by industrial revenue bonds in the original
principal amount of $4,200,000 in 1999 issued by the Longview Industrial Corporation, Longview, Texas.

(6) This property is leased until December 31, 2004, with an option to renew for two additional five year terms or purchase

after January 1, 2005.

The Company leases several facilities throughout the U.S. for the sale and distribution of
ambulances. Although the Company evaluates opportunities to acquire additional properties at favorable prices as they arise, it believes that its facilities are well maintained and will be adequate to serve its needs in the foreseeable future. Certain Company facilities have room to expand in existing buildings and others have land upon which additional buildings can be constructed.

Item 3. LEGAL PROCEEDINGS

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

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company did not submit any matter to a vote of security holders during the fourth quarter of the fiscal year ended October 31, 2002.

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PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS

Collins Industries, Inc. common stock is quoted on the Nasdaq Stock Market under the symbol COLL. The following table sets forth the high and low sales prices per share of the common stock as reported by the Nasdaq Stock Market. The Company's common stock had 528 shareholders of record at October 31, 2002.

FISCAL 2002

			Volume
Quarter	High	Low	(000s)
First	$ 4.00	$ 2.85	265
Second	5.60	3.50	398
Third	5.25	4.04	454
Fourth	4.10	2.50	229

FISCAL 2001

			Volume
Quarter	High	Low	(000s)
First	$ 4.25	$ 2.75	838
Second	3.75	2.56	431
Third	4.22	2.71	186
Fourth	4.52	2.84	408

During the period covered by this Report, the Company did not sell any equity securities that were not registered under the Securities Act.

During the fiscal year ended October 31, 2002 and 2001, the Company paid cash dividends of $0.12 and $0.1425 per share, respectively.

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Item 6. SELECTED FINANCIAL DATA

Operating History

(In thousands except share and per-share data)

Fiscal years ended October 31,	2002	2001	2000 (a)	1999(b)	1998
Sales	$ 200,839	$ 207,653	$ 220,912	$ 196,398	$ 156,445
Cost of sales	178,114	182,317	192,621	165,978	134,427
Gross profit	22,725	25,336	28,291	30,420	22,018
Selling, general and administrative
(includes research & development)	18,366	19,625	20,725	20,046	16,124
Income from operations	4,359	5,711	7,566	10,374	5,894
Other income (expenses):
Interest, net	(1,527)	(2,056)	(1,743)	(1,820)	(1,400)
Other, net	26	27	125	316	243
Income before provision for income taxes	2,858	3,682	5,948	8,870	4,737
Provision for income taxes	1,110	1,300	1,790	3,460	1,710
Net income	$ 1,748	$ 2,382	$ 4,158	$ 5,410	$ 3,027
Earnings per share-diluted:
Net income	$ .26	$ .33	$ .55	$ .72	$ .39
Dividends per share	$ .1200	$ .1425	$ .1800	$ .1000	$ .2300
Weighted average shares outstanding - Diluted	6,854,222	7,131,734	7,574,915	7,551,247	7,668,543
Depreciation and amortization	$ 3,506	$ 3,525	$ 3,099	$ 2,568	$ 1,795

Financial Position

(In thousands, except share and per-share data)

As of October 31,	2002	2001	2000 (a)	1999(b)	1998
Current assets	$ 47,975	$ 44,792	$ 54,871	$ 43,359	$ 31,747
Current liabilities	28,555	26,013	34,719	26,658	16,072
Working capital	19,420	18,779	20,152	16,702	15,675
Total assets	76,602	69,826	81,022	66,979	49,076
Long-term debt and capitalized leases (less current maturities)	19,396	15,124	19,016	15,803	12,733
Shareholders' investment	27,536	27,730	26,673	23,960	20,271
Book value per share	3.87	3.80	3.59	3.21	2.73

Financial Comparisons

Fiscal years ended October 31,	2002	2001	2000 (a)	1999(b)	1998
Gross profit margin	11.3%	12.2%	12.8%	15.5%	14.0%
Net profit margin	0.9%	1.1%	1.9%	2.8%	1.9%
Selling, general and administrative (including R&D) as percent of sales	9.1%	9.5%	9.4%	10.2%	10.3%
Current ratio	1.7:1	1.7:1	1.6:1	1.6:1	2.0:1
Long-term debt and capitalized leases
to shareholders' investment	0.7:1	0.5:1	0.7:1	0.7:1	0.6:1
Manufacturing space (000's square feet)	1,108	1,108	1,108	1,014	988
Common stock repurchased	$ 1,749	$ 908	$ 539	$ 1,261	$ 974
Capital expenditures	$ 3,004	$ 1,687	$ 1,763	$ 3,140	$ 5,958

1. 2000 includes results from Mobile Products, Inc. acquisition of certain assets of Waldon, Inc.
2. 1999 includes results from Mid Bus acquisition.

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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company's consolidated results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements and notes thereto.

GENERAL

Collins Industries, Inc. 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. Terminal trucks and road construction equipment products were initially disclosed as separate segments. In the second quarter of fiscal 2001, terminal trucks and road construction equipment segments were combined. This combination resulted from consolidation of many of their operations and common management. 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 e quipment.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies of the "Notes to Consolidated Financial Statements." The Company 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, 2002, 2001 and 2000 nonrecurring gains or losses were not incurred and as such have no impact on this analysis.

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

The Company's 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.

See "Note 8 to the Consolidated Financial Statements" for quantitative segment information.

RESULTS OF OPERATIONS

Fiscal 2002 Compared to Fiscal 2001. Sales for fiscal 2002 declined 3.3% to $200.8 million compared to $207.7 million in fiscal 2001. This decrease was principally due to a 13.3% decrease in unit volume sales of terminal truck/road construction products. Sales of terminal truck/road construction products declined primarily as a result of an overall decline in the economy with slowing of orders for purchases of new equipment by trucking, warehousing, domestic shipping and road construction industries. Unit volume sales of ambulance products increased 12.8% in fiscal 2002 compared to 2001. This increase was principally due to higher

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export sales of ambulances in fiscal 2002. Unit volume sales of bus products in fiscal 2002 were approximately the same as in fiscal 2001.

Average unit selling prices of terminal truck/road construction products decreased 1.5% in fiscal 2002 compared to fiscal 2001. This decrease principally resulted from higher competitive price discounts granted in 2002. Ambulance products selling prices decreased 11.7% in fiscal 2002 compared to fiscal 2001. These decreases principally resulted from the impact of a greater number of customer furnished chassis in 2002 compared to 2001. The average unit price of bus products increased by less than 1% in fiscal 2002.

At October 31, 2002, the Company's consolidated sales backlog was $42.2 million compared to $38.8 million at October 31, 2001. The Company believes a majority of its consolidated sales backlog will be shipped in fiscal 2003.

Cost of sales for fiscal 2002 was 88.7% of sales compared to 87.8% of sales in fiscal 2001. The overall percentage increase was principally due to sales discounts, higher raw material costs and higher manufacturing overhead costs related to employee health insurance expense, workers compensation and general liability insurance.

Selling, general and administrative expenses for fiscal 2002 were $18.2 million (9.0% of sales) compared to $19.5 million (9.3% of sales) in fiscal 2001. This decrease principally resulted from lower corporate expenses, lower selling costs associated with terminal truck/road construction product sales and the impact of changes in the distribution network and sales mix of ambulance products.

Interest expense decreased in fiscal 2002 principally as a result an overall decrease of the Company's effective interest rates.

Income tax expense in fiscal 2002 was $1.1 million compared to $1.3 million in fiscal 2001. Income tax expense as a percentage of pretax income was 39% in fiscal 2002 compared to 35% in fiscal 2001. Income tax expense as a percent of pretax income increased principally as a result of higher state income taxes and non-deductible expenses.

The Company's net income in fiscal 2002 decreased to $1.7 million ($.26 per share-diluted) compared to $2.4 million ($.33 per share-diluted) in fiscal 2001. This decrease was principally due to declines in terminal truck/road construction products sales and profits, lower profit contributions from bus products and higher effective income tax rates in fiscal 2002. These decreases were partially offset by the impact of higher profit contributions from ambulances and lower interest costs.

Fiscal 2001 Compared to Fiscal 2000. Sales for fiscal 2001 declined 6.0% to $207.7 million compared to $220.9 million in fiscal 2000. This decrease was principally due to a 20.3% and 13.5% decrease in unit volume sales of terminal truck/road construction products and bus products, respectively. Sales of terminal truck/road construction products declined primarily as a result of an overall decline in the economy with slowing of orders for purchases of new equipment by trucking and warehouse industries. There were several factors contributing to bus

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sales decline for fiscal 2001. These factors included lower school bus orders for winter production and in the second quarter of fiscal 2001 the Company experienced some chassis delays due to winter plant shutdowns at both Ford Motor Company and General Motors. This decrease was partially offset by the impact of road construction products, a component acquired in September of 2000.

Average terminal truck/road construction product unit selling prices increased 3.2% in fiscal 2001 compared to fiscal 2000, and principally resulted from increased international sales. Ambulance products selling prices decreased 2.3% in fiscal 2001 compared to fiscal 2000 and principally resulted from competitive discounts.

Cost of sales for fiscal 2001 was 87.8% of sales compared to 87.2% of sales in fiscal 2000. The percentage increase was principally due to the decrease in bus unit sales without a corresponding decrease in fixed manufacturing overhead related to school bus operations.

Selling, general and administrative expenses for fiscal 2001 were $19.5 million (9.3% of sales) compared to $20.6 million (9.3% of sales) in fiscal 2000. This decrease principally resulted from lower corporate expenses and a change in the distribution network of ambulance products. The dealer network for ambulance products has been expanded and its direct sales force has been reduced.

Interest expense increased in fiscal 2001 as a result of an increase in the interest-bearing debt associated with an acquisition late in fiscal 2000 and higher inventories through the third quarter of fiscal 2001. This increase was partially offset by an overall decrease of the Company's effective interest rates.

Income tax expense in fiscal 2001 was $1.3 million compared to $1.8 million in fiscal 2000. Income tax expense as a percentage of pretax income was 35% in fiscal 2001 compared to 31% in fiscal 2000. Income tax expense as a percent of pretax income increased principally as a result of state tax credits and reductions of prior accruals in fiscal 2000.

The Company's net income in fiscal 2001 decreased to $2.4 million ($.33 per share-diluted) compared to $4.2 million ($.55 per share-diluted) in fiscal 2000. This decrease was principally due to decreases in terminal truck/road construction product and bus product sales, and higher income tax rates in fiscal 2001. These decreases were partially offset by the impact of road construction products, higher profit from ambulances and lower corporate expenses.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company has principally relied on internally generated funds, supplier financing, bank borrowings and industrial revenue bonds to finance its operations and capital expenditures. The Company's 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.

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Cash provided by operations was $4.7 million in fiscal 2002 compared to $8.7 million in fiscal 2001. Principal sources of the cash provided by operations in fiscal 2002 were from Company profits and increases of accounts payable. These sources of cash from operations were offset by increases in receivables principally associated with exports sales of terminal trucks in October of 2002.

Cash provided by operations was $8.7 million in fiscal 2001 compared to $6.6 million in fiscal 2000. Principal sources of the cash provided by operations in fiscal 2001 were from Company profits and reduction of receivables and inventories and an increase of accrued expenses. These sources of cash from operations were offset by decrease in accounts payable.

Cash used in investing activities was $3.0 million in fiscal 2002 compared to $1.8 million in fiscal 2001. In fiscal 2002, the principal use of cash for investing purposes was for capital expenditures related to automation projects in the ambulance and bus facilities.

Cash used in investing activities was $1.8 million in fiscal 2001 compared to $9.7 million in fiscal 2000. In fiscal 2001, the principal use of cash for investing purposes was capital expenditures related to the Company's expansion of its ambulance sales facility in Orlando, Florida, and relocation of corporate personnel and data processing equipment in Hutchinson, Kansas.

Cash used by financing activities was $1.5 million in fiscal 2002 compared to $6.9 million in fiscal 2001. In fiscal 2002, the principal sources of cash from financing activities related to two new Industrial Revenue Bonds aggregating $4.0 million, $.6 million borrowed against Industrial Revenue Bonds issued prior to fiscal 2002 and $1.2 million in additional debt related to refinancing revolving and term debt credit lines. These new sources of cash from financing activities were partially offset by the Company's repayment of debt of $2.1 million, unexpended IRB bond proceeds of $2.7 million, the repurchase and retirement of common stock of $1.6 million and the payment of cash dividends of $.9 million. At October 31, 2002, cash balances included restricted funds of $2.7 million related to the unused proceeds from the new Industrial Revenue Bonds issued in fiscal 2002.

Cash used in financing activities was $6.9 million in fiscal 2001 compared to cash provided by financing activities of $3.0 million in fiscal 2000. In fiscal 2001, the Company used cash of $6.4 million to reduce other long-term debt, $.9 million to purchase and retire common stock, $1.0 million to pay cash dividends and made additional long-term borrowings of $1.4 million.

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 provides a total credit facility of $38.2 million consisting of a revolving credit facility of $25.0 million and a long-term credit facilities of $13.2 million. This Agreement expires May 17, 2005. The credit facilities bear interest based on a combination of Eurodollar (LIBOR plus 1.75%) and the Bank's prime lending rate (4.50% at October 31, 2002). The revolving credit facility also provides for a maximum of $2.5 million in letters of credit, of which $1.3 million were outstanding at October 31, 2002. The total amount of unused revolving credit available to the Company was $17.8 million at October 31, 2002.

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The Company believes that its cash flows from operations, its credit facility with its lead bank and unused funds restricted for future capital expenditures will be sufficient to satisfy its future working capital, capital expenditure requirements and anticipated dividends. See "Note 2 to the Consolidated Financial Statements" for quantitative information.

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 oblig ation under such agreements was approximately $1,749,000 at October 31, 2002.

CRITICAL ACCOUNTING PRINCIPLES AND ESTIMATES

The Company's 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 higher degree of judgments, estimates, and complexity:

Inventories

The Company values its inventories at the lower of cost or market. The Company has chosen the first-in, first-out (FIFO) cost method for 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. Goodwill will no longer be amortized over future periods, but will be assessed for impairment at least annually using a fair value test. The Company will adopt this new standard on November 1, 2002.

As of November 1, 2002, the Company 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, the Company will conduct similar tests and record any impairment loss. Management believes that the estimates of future cash flows and fair values are

14

reasonable; however, changes in estimates of such cash flows and fair value could affect the valuations.

Insurance Reserves

Generally, the Company is self-insured for workers' compensation for certain subsidiaries and for all group medical insurance. Under these plans, liabilities are recognized for claims incurred (including claims incurred but not reported) and changes in the reserves. At the time a workers' compensation claim is filed, a liability is estimated to settle the claim. The liability for workers' compensation claims is determined based on management's estimates of the nature and severity of the 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 the Company's products, the Company is subject to product liability claims in the normal course of business. To the extent permitted under applicable law, the Company maintains insurance to reduce or eliminate risk to the Company. This insurance coverage includes self-insured retentions that vary each year.

The Company 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

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 manufacturers' warranties. These manufacturers' 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 his torical 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.

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.

15

PRINCIPAL CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The Company's contractual obligations and other commercial commitments are summarized below and fully disclosed in Notes 2 and 7 in Note to Consolidated Financial Statements:

	Payments due by period (in millions)
		Less than			After 5
	Total	1 year	1-3 years	4-5 years	years
Contractual Cash Obligations
Long-term debt	$ 12.552	$ 1.000	$ 11.552	$ -	$ -
Capital lease obligations	8.982	1.138	2.400	2.467	2.977
Operating leases	1.918	0.647	0.839	0.388	0.044
Purchase obligations	8.089	8.089	-	-	-
Chassis contingent obligations	15.078	15.078	-	-	-
Total contractual cash obligations	$ 46.619	$ 25.952	$ 14.791	$ 2.855	$ 3.021
Other Commercial Commitments
Lines of credit	$ -	$ -	$ -	$ -	$ -
Standby letters of credit	3.560	3.560	-	-	-
Standby repurchase commitments	1.749	1.749	-	-	-
Other commercial commitments	-	-	-	-	-
Total commercial commitments	$ 5.309	$ 5.309	$ -	$ -	$ -

Recently Issued Accounting Standards

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets". SFAS 142 eliminates further amortization on goodwill, and requires impairment of goodwill and intangible assets be assessed annually, with valuation write-downs, if any, reflected in the financial statements. Under current operations, adoption of SFAS 142 is not expected to have a material impact on the Company's results of operations or financial position. SFAS 142 will be effective for the Company's fiscal year ending October 31, 2003.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations". SFAS 143 requires the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. Under current operations, adoption of SFAS 143 is not expected to have a material impact on the Company's results of operations or financial position. SFAS 143 will be effective for the Company's fiscal year ending October 31, 2003.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS 144 slightly changes and clarifies the accounting for long-lived assets. Under current operations, adoption of SFAS 144 is not expected to have a material impact on the Company's results of operations or financial position. SFAS 144 will be effective for the Company's fiscal year ending October 31, 2003.

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In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". SFAS 146 changes the accounting for costs associated with exit or disposal activities. Under current operations, adoption of SFAS 146 is not expected to have a material impact on the Company's results of operations or financial position. SFAS 146 will be effective for the Company's fiscal year ending October 31, 2003.

In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45), "Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others". FIN 45 requires a liability to be recognized at the time a company issues a guarantee for the fair value of the obligations assumed under certain guarantee agreements. Additional disclosures about guarantee agreements are also required in the interim and annual financial statements. Under current operations, adoption of FIN 45 is not expected to have a material impact on the Company's results of operations or financial position. FIN 45 will be effective for the Company's fiscal year ending October 31, 2003.

Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results

This annual 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 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.

No forward-looking statement can be guaranteed and actual future results may vary materially. The actual results of the Company 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, changes in competition, various inventory risks due to changes in market conditions, changes in product demand, substantial dependence on third parties for product quality, the availability of key raw materials, components and chassis, 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 indicated in the Company's filings with the Securities and Exchange Commission.

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 filings with the Securities and Exchange Commission, especially on Forms 10-K, 10-Q and 8-K (if any).

17

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

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

The Company uses derivative financial instruments to reduce exposure to its variable rate debt. On July 24, 2001 and on July 5, 2002, the Company entered into interest rate swap agreements to limit the effect of increases in the interest rates on $10.0 million of its floating debt. The agreements provide two $5 million swaps through January 2003 and July 2003. On July 5, 2002, the Company entered into an interest rate $6.8 million declining balance swap agreement to limit the effect of increases in the interest rates on its floating rate term debt through May 2005. The effect of these agreements is to convert underlying variable-rate debt based on LIBOR to fixed rate debt with an interest rate between 4.42% and 4.65% plus a margin of 175 basis points. These agreements reduce the Company's risk with respect to variable-rate debt. Fair value of these swaps at October 31, 2002 was $16.4 million.

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Collins Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the years ended October 31,

	2002	2001	2000
Sales	$200,839,393	$207,653,284	$220,911,785
Cost of sales	178,114,150	182,317,488	192,620,891
Gross profit	22,725,243	25,335,796	28,290,894
Selling, general and administrative expenses	18,167,038	19,457,978	20,568,277
Research and development expenses	198,814	166,763	156,475
Income from operations	4,359,391	5,711,055	7,566,142
Other income (expense):
Interest, net	(1,527,592)	(2,055,886)	(1,742,739)
Other, net	26,034	26,858	125,027
	(1,501,558)	(2,029,028)	(1,617,712)
Income before provision for income taxes	2,857,833	3,682,027	5,948,430
Provision for income taxes	1,110,000	1,300,000	1,790,000
Net income	$ 1,747,833	$ 2,382,027	$ 4,158,430
Other comprehensive income, net of tax:
Unrealized loss on interest rate swap
agreement	(244,918)	-	-
Comprehensive income	$ 1,502,915	$ 2,382,027	$ 4,158,430
Earnings per share:
Basic	$.26	$.35	$.58
Diluted	$.26	$.33	$.55
Dividends per share	$0.1200	$0.1425	$0.1800

The accompanying notes are an integral part of these consolidated statements.

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Collins Industries, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

October 31,

ASSETS	2002	2001
Current assets:
Cash	$ 384,514	$ 192,615
Receivables	8,982,854	6,085,501
Inventories	35,724,808	35,369,300
Prepaid expenses and other current assets	2,883,130	3,144,129
Total current assets	47,975,306	44,791,545
Restricted cash	2,748,970	-
Property and equipment, at cost:
Land and improvements	2,902,933	2,901,401
Buildings and improvements	19,432,685	18,992,918
Machinery and equipment	22,065,315	20,012,966
Office furniture and fixtures	4,479,740	3,985,678
	48,880,673	45,892,963
Less - accumulated depreciation	29,653,262	27,384,835
	19,227,411	18,508,128
Other assets	6,650,054	6,526,771
	$76,601,741	$69,826,444
LIABILITIES & SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt and capitalized leases	$ 2,137,915	$ 2,044,553
Controlled disbursements	5,287,090	4,913,696
Accounts payable	14,385,933	12,617,257
Accrued expenses and other current liabilities	6,743,702	6,437,099
Total current liabilities	28,554,640	26,012,605
Long-term debt and capitalized leases	19,395,723	15,123,781
Deferred income taxes	1,115,336	959,688
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 - 7,115,629 shares in 2002 and 7,291,755 shares in 2001	711,563	729,175
Paid-in capital	17,110,446	17,612,508
Deferred compensation	(1,267,992)	(945,981)
Accumulated other comprehensive income (loss), net	(244,918)	-
Retained earnings	11,226,943	10,334,668
Total shareholders' investment	27,536,042	27,730,370
	$76,601,741	$69,826,444

The accompanying notes are an integral part of these consolidated balance sheets.

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Collins Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended October 31,

	2002	2001	2000
Cash flow from operations:
Cash received from customers	$197,942,040	$211,773,952	$218,576,230
Cash paid to suppliers and employees	(191,276,791)	(200,474,336)	(207,842,808)
Interest paid, net	(1,563,990)	(2,098,523)	(1,700,879)
Income taxes paid	(406,650)	(542,250)	(2,439,176)
Cash provided by operations	4,694,609	8,658,843	6,593,367
Cash flow from investing activities:
Capital expenditures and acquisitions	(3,003,579)	(1,667,382)	(9,591,116)
Expenditures for other assets	(43,560)	(137,420)	(119,690)
Cash used in investing activities	(3,047,139)	(1,804,802)	(9,710,806)
Cash flow from financing activities:
Principal payments of long-term debt and
capitalized leases	(2,062,485)	(6,370,175)	(1,539,372)
Addition to long-term debt and capitalized leases	5,817,348	1,434,847	6,379,522
Changes in restricted unexpended IRB cash	(2,748,970)	-	-
Purchase of common stock and other
capital transactions	(1,605,906)	(908,231)	(527,166)
Payment of dividends	(855,558)	(1,021,968)	(1,336,392)
Cash provided by (used in) financing activities	(1,455,571)	(6,865,527)	2,976,592
Net increase (decrease) in cash	191,899	(11,486)	(140,847)
Cash at beginning of year	192,615	204,101	344,948
Cash at end of year	$ 384,514	$ 192,615	$ 204,101
Reconciliation of net income to net
cash provided by operations:
Net income	$ 1,747,833	$ 2,382,027	$ 4,158,430
Depreciation and amortization	3,505,504	3,525,087	3,098,615
Deferred income taxes	205,000	344,766	57,754
Changes in assets and liabilities, net of acquisitions:
Decrease (increase) in receivables	(2,897,353)	4,120,668	(2,335,555)
Decrease (increase) in inventories	(355,508)	6,041,490	(2,444,572)
Increase (decrease) in prepaid expenses	361,648	(94,350)	(548,763)
Increase (decrease) in controlled disbursements	373,394	83,718	527,307
Increase (decrease) in accounts payable	1,768,676	(8,164,148)	4,131,489
Increase (decrease) in accrued expenses	(14,585)	417,616	(181,171)
Other, net	-	1,969	129,833
Cash provided by operations	$ 4,694,609	$ 8,658,843	$ 6,593,367

The accompanying notes are an integral part of these consolidated statements.

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Collins Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT

For the years ended October 31,

	Common Stock		Paid-In	Retained
	Shares	Amount	Capital	Earnings	Other
Balance October 31, 1999	7,465,406	$746,541	$18,094,900	$6,152,571	($1,033,521)
Stock issued under stock
option plans	9,540	954	11,305	-	-
Issuance of restricted stock awards, net	101,222	10,122	444,878	-	(455,000)
Amortization of restricted
stock awards	-	-	-	-	417,352
Net income	-	-	-	4,158,430	-
Cash dividends paid	-	-	-	(1,336,392)	-
Purchase and retirement of treasury stock	(151,713)	(15,171)	(524,253)	-	-
Balance October 31, 2000	7,424,455	742,446	18,026,830	8,974,609	(1,071,169)
Issuance of restricted stock awards, net	132,000	13,200	467,438	-	(480,638)
Amortization of restricted
stock awards	-	-	-	-	605,826
Net income	-	-	-	2,382,027	-
Cash dividends paid	-	-	-	(1,021,968)	-
Purchase and retirement of treasury stock	(264,700)	(26,471)	(881,760)	-	-
Balance October 31, 2001	7,291,755	729,175	17,612,508	10,334,668	(945,981)
Stock issued under stock
option plans	76,000	7,600	135,236	-	-
Issuance of restricted stock awards, net	202,500	20,250	992,250	-	(1,012,500)
Amortization of restricted
stock awards	-	-	-	-	690,489
Net income	-	-	-	1,747,833	-
Other comprehensive income (loss) (net of taxes)	-	-	-	-	(244,918)
Cash dividends paid	-	-	-	(855,558)	-
Tax benefit from NQSO options exercised	-	-	73,731	-	-
Purchase and retirement of treasury stock	(454,626)	(45,462)	(1,703,279)	-	-
Balance October 31, 2002	7,115,629	$711,563	$17,110,446	$11,226,943	($1,512,910)

The accompanying notes are an integral part of these consolidated statements.

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Collins Industries, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the three years ended October 31, 2002

(1) Summary of Significant Accounting Policies

(a) 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.

The Company primarily operates in the bus, ambulance, 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 to unaffiliated customers were less than 10% of consolidated sales in fiscal 2002, 2001 and 2000.

(b) Cash and Cash Management - Cash includes checking accounts, funds invested in overnight and other short-term, interest-bearing accounts of three months or less.

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. At October 31, 2002 and 2001 accounts payable included outstanding checks drawn on controlled disbursement accounts of $5,287,090 and $4,913,696, respectively.

(c) 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:

	2002	2001
Chassis	$ 7,434,486	$ 6,334,882
Raw materials & components	14,122,413	12,163,394
Work-in-process	6,156,230	6,021,652
Finished goods	8,011,679	10,849,372
	$35,724,808	$35,369,300

(d) Depreciation and Maintenance - Depreciation is provided using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. The estimated useful lives of property are as follows:

Land improvements	10 to 20 years
Buildings and improvements	10 to 30 years
Machinery and equipment	3 to 15 years
Office furniture and fixtures	3 to 10 years
		23

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.

(e) Goodwill - 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. Goodwill will no longer be amortized over future periods, but will be assessed for impairment at least annually using a fair value test. The Company will adopt this new standard on November 1, 2002.

As of November 1, 2002, the Company 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, the Company will conduct similar tests and record any impairment loss.

At October 31, 2002 the Company's goodwill related to the bus and terminal truck/road construction segments was $3.0 million and $2.0 million, respectively. Goodwill amortization charged against fiscal 2002 earnings was $283,000, net of tax ($.04 per share). The effect on future net income of not amortizing these costs is anticipated to be approximately $280,000 ($.04 per share) for each of the next five years starting in fiscal 2003.

(f) 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.

(g) 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:

	2002	2001	2000
Average shares outstanding - basic	6,681,140	6,890,965	7,213,825
Effect of potentially dilutive stock options and restricted stock	173,082	240,769	361,090
Average shares outstanding - diluted	6,854,222	7,131,734	7,574,915

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(2) Long-term Debt and Capitalized Leases

Long-term debt and capitalized leases at October 31, 2002 and 2001 consist of the following:

	2002	2001
Bank credit facility:
Revolving credit borrowings	$ 6,052,343	$ 9,030,693
Term Loan A Quarterly principal payments of $250,000	6,500,000	935,000
Term Loan B	-	856,509
Term Loan C	-	842,932
Capitalized leases:
City of South Hutchinson, Kansas, 4.75%-5.80%
Annual principal and sinking fund payments range
From $351,000 in 2003 to $323,000 in 2007	1,833,612	2,186,945
City of South Hutchinson, Kansas, 4.80%-5.90%
Annual principal and sinking fund payments range
From $116,000 in 2003 to $150,000 in 2009	925,138	572,180
Longview Industrial Corporation, Longview, Texas
Variable Rate Demand Revenue Bonds -
Annual principal and sinking fund payments range
From $350,000 in 2003 to $200,000 in 2009	2,289,212	2,744,075
Orange County Industrial Development Authority
Orlando, Florida, 5.50%
Annual principal and sinking fund payments range
From $160,000 in 2003 to $250,000 in 2012	2,000,000	-
Reno County, Kansas, 4.60%-5.50%
Annual principal and sinking fund payments range
From $161,000 in 2003 to $250,000 in 2012	1,933,333	-
	21,533,638	17,168,334
Less - current maturities	2,137,915	2,044,553
	$19,395,723	$15,123,781

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 provides a total credit facility of $38.2 million consisting of a revolving credit facility of $25.0 million and a long-term credit facilities of $13.2 million. This Agreement expires May 17, 2005. The credit facilities bear interest based on a combination of Eurodollar (LIBOR plus 1.75%) and the Bank's prime lending rate (4.50% at October 31, 2002). The revolving credit facility also provides for a maximum of $2.5 million in letters of credit, of which $1.3 million were outstanding at October 31, 2002. The total amount of unused revolving credit available to the Company was $17.8 million at October 31, 2002.

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

25

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. At October 31, 2002 and 2001, the Company was in compliance with all loan covenants.

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, 2002, the net book value of manufacturing facilities subject to these lease purchase agreements was approximately $6.6 million. At October 31, 2002 the Company's assets included $2.7 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, 2002 are as follows:

2003	$ 2,137,915
2004	2,176,667
2005	11,776,093
2006	1,275,834
2007	1,191,529
2008 and thereafter	2,975,600

The Company has aggregate maturities of $11.8 million in capitalized leases and long-term debt due in 2005, principally as a result of a loan agreement with the Company's lead bank that expires May 17, 2005. The Company currently anticipates arranging an extension or refinancing of this debt at or prior to maturity.

The Company uses derivative financial instruments to reduce exposure to its variable-rate debt. On July 24, 2001 and on July 5, 2002, the Company entered into interest rate swap agreements to limit the effect of increases in the interest rates on $10.0 million of its floating debt. The agreements provide two $5 million swaps through January 2003 and July 2003. On July 5, 2002, the Company entered into an interest rate $6.8 million declining balance swap agreement to limit the effect of increases in the interest rates on its floating rate term debt through May 2005. The effect of these agreements is to convert underlying variable-rate debt based on LIBOR to fixed rate debt with an interest rate between 4.42% and 4.65% plus a margin of 175 basis points. These agreements reduce the Company's risk with respect to variable-rate debt. Fair value of these swaps at October 31, 2002 was $16.4 million.

26

(3) Other Comprehensive Income

Other comprehensive income consists of net income and other gains and losses affecting shareholders' investments that, under generally accepted accounting principles, are excluded from net income. Accumulated other comprehensive income (loss) as of October 31, 2002, includes unrealized losses on interest rate swaps of $394,918, reduced by $150,000 of deferred tax benefit. Other comprehensive income for the year ended October 31, 2002 was $1,502,915. There was no other comprehensive income or loss for the years ended October 31, 2001 or 2000.

(4) Income Taxes

The provision for income taxes consists of the following:

	2002	2001	2000
Current	$ 905,000	$1,120,000	$2,136,000
Deferred	205,000	180,000	(346,000)
	$1,110,000	$1,300,000	$1,790,000

The Company accounts for income taxes in accordance with the 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:

	2002	2001
Deferred tax assets:
Self-insurance reserves	$ 424,000	$ 322,000
Vacation	206,000	213,000
Warranty	343,000	347,000
Doubtful accounts	25,000	24,000
Inventories	429,000	440,000
Amortization	178,000	196,000
Revenue recognition	-	68,000
Restricted stock awards	151,000	274,000
Deferred compensation	40,000	-
Other	25,000	18,000
	1,821,000	1,902,000
Deferred tax liabilities:
Accelerated depreciation	(1,296,000)	(1,226,000)
Prepaid health insurance	(590,000)	(536,000)
	(1,886,000)	(1,762,000)
Net deferred tax assets (liabilities)	$ (65,000)	$ 140,000

27

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, 2002 follows:

	2002	2001	2000
Statutory federal income tax rate	34%	34%	34%
Increase (decrease) in taxes
Resulting from:
State tax, net of federal benefit	4	3	4
Utilization of state tax credits	-	-	(3)
Decrease in prior accruals	-	-	(3)
Other	1	(2)	(2)
Effective tax rate	39%	35%	30%

(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. Rights expire on April 1, 2005 unless redeemed by the Company.

Stock-Based Compensation Plans - The Company has two shareholder-approved stock plans, the 1997 Omnibus Incentive Plan (the "1997 Plan") and 1995 Stock Option Plan (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.

In fiscal 2002, the Company issued 202,500 shares of common stock under the 1997 Plan in the form of restricted stock awards. These shares were issued as an incentive to retain key employees, officers and directors and will vest in fiscal 2005. In fiscal 2001, the Company issued 142,000 shares of common stock in the form of restricted stock awards. These shares will vest in fiscal 2004. In fiscal 2000, the Company issued 119,000 shares of common stock in the form of restricted stock awards. Of these shares, 2,000 vested in fiscal 2002 and 117,000 will vest in fiscal 2003. 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

28

grant, is charged to equity and amortized against income over the related vesting period. At October 31, 2002, options for 737,500 shares were outstanding under the 1997 Plan. 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, 2002, all of these shares had been granted and options for 112,300 shares were outstanding under the 1995 Plan.

Under both plans, the exercise price of all options granted through October 31, 2002 equaled the stock's market price on the date of grant and fully vested six months after the date of grant. The expiration dates of the options range from 5 to 10 years. Options outstanding at October 31, 2002 had a weighted average contractual life of four years, eleven months and exercise prices ranged from $1.75 to $5.13.

A summary of the Company's two stock option plans at October 31, 2002, 2001 and 2000 and changes during the years then ended are presented in the table following:

	2002		2001		2000
		Per		Per		Per
	Shares	Share(a)	Shares	Share(a)	Shares	Share(a)
Outstanding at beginning of year	925,800	$4.07	985,800	$4.08	1,048,300	$4.07
Exercised	(76,000)	1.88	-	-	(12,000)	1.87
Forfeited	-	-	(60,000)	4.33	(50,500)	4.36
Outstanding at end of year	849,800	$4.26	925,800	$4.07	985,800	$4.08
Exercisable at end of year	849,800	$4.26	925,800	$4.07	985,800	$4.08

The Company applies Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for its Plans. Accordingly, no compensation expense has been recognized for its stock options.

No stock options have been granted since 1999 and therefore, no proforma net income disclosures are required .

(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 $81,488 in 2002, $131,165 in 2001, and $130,487 in

29

2000. This plan held 515,427 shares of the Company's common stock at October 31, 2002 and 606,462 shares at October 31, 2001.

(7) Commitments and Contingencies

(a) 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.

(b) Letters of Credit - The Company has outstanding letters of credit as more fully described in Note 2.

(c) 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 ti tle. The Company's contingent obligation under such agreements was approximately $1,749,000 at October 31, 2002.

(d) Operating Leases - The Company has operating leases principally for certain manufacturing facilities vehicles and equipment. Operating lease expense was $586,297 in 2002, $612,352 in 2001, and $562,709 in 2000. 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, 2002:

2003	$646,566
2004	579,844
2005	258,830
2006	205,166
2007	182,448
2008 and thereafter	43,719

(e) Litigation - At October 31, 2002 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 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.

30

(f) Self-insurance Reserves - The Company is self-insured for workers compensation, health insurance, general liability and product liability claims, subject to specific retention and reinsurance levels.

(g) 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.

(8) Segment Information

The Company 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. Terminal trucks and road construction equipment products were initially disclosed as separate segments. In the second quarter of fiscal 2001, terminal trucks and road construction equipment segments were combined. This combination resulted from consolidation of many of their operations and common management. 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.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 of the Notes to the Consolidated Financial Statements. The Company 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, 2002, 2001 and 2000 nonrecurring gains or losses were not incurred and as such have no impact on this analysis.

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

The Company's 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.

31

The following table contains segment information for the years ended October 31, 2002, 2001 and 2000. All amounts are in thousands of dollars.

		Ambulance	Buses	Terminal Trucks / Road Construction Equipment	Other	Consolidated Total
Revenues from external customers	2002	$95,547	$66,266	$39,026	-	$200,839
	2001	$95,932	$66,022	$45,699	-	$207,653
	2000	98,412	77,920	44,580	-	220,912
Intersegment revenues:	2002	787	2,315	251	-	3,353
	2001	-	1,370	257	-	1,627
	2000	88	223	387	-	698
Interest income/(expense) net:	2002	(283)	(497)	(691)	(57)	(1,528)
	2001	(624)	(769)	(944)	281	(2,056)
	2000	(654)	(822)	(525)	258	(1,743)
Depreciation and amortization:	2002	(700)	(1,195)	(707)	(904)	(3,506)
	2001	(778)	(1,220)	(715)	(812)	(3,525)
	2000	(671)	(1,174)	(432)	(822)	(3,099)
Segment profit (loss) pre tax:	2002	6,333	(167)	761	(4,069)	2,858
	2001	4,089	689	2,385	(3,481)	3,682
	2000	3,450	3,755	3,262	(4,519)	5,948
Segment assets:	2002	32,844	21,428	17,956	4,374	76,602
	2001	26,411	22,125	16,767	4,523	69,826
	2000	30,583	24,137	21,911	4,391	81,022
Segment expenditures for capital assets:	2002	1,953	902	122	27	3,004
	2001	856	386	229	216	1,687
	2000	393	283	1,074	13	1,763

Other includes the elimination of intersegment transactions and expenses generated to support corporate activities not directly attributable to any specific organization within the enterprise.

Non-domestic sales were $19.8 million, $12.0 million, and $11.2 million for fiscal years 2002, 2001, and 2000 respectively.

All assets are held by companies operating in the United States.

During 2002, 2001 and 2000, sales to any one customer were not in excess of 10% of consolidated sales.

32

(9) Quarterly Financial Information (Unaudited)

(Dollars in thousands except per share information)

Financial Results

	Net Sales		Gross Profit		Net Earnings (Loss)
	2002	2001	2002	2001	2002	2001
First Quarter	$ 39,774	$ 42,445	$ 3,918	$ 4,546	$ (660)	$ (608)
Second Quarter	47,375	51,073	5,072	6,766	166	785
Third Quarter	55,520	57,126	6,335	6,883	1,009	1,150
Fourth Quarter	58,170	57,009	7,400	7,141	1,233	1,055
Fiscal Year	$200,839	$207,653	$22,725	$25,336	$ 1,748	$ 2,382

	Basic Earnings (Loss) Per Common Share		Diluted Earnings (Loss) Per Common Share
	2002	2001	2002	2001
First Quarter	$ (.10)	$ (.09)	$ (.10)	$ (.09)
Second Quarter	.03	.11	.02	.11
Third Quarter	.15	.17	.15	.16
Fourth Quarter	.18	.15	.18	.15
Fiscal Year	$ .26	$ .35	$ .26	$ .33

Fiscal year 2001 basic earnings per share and fiscal year 2002 diluted earnings per share is greater than the sum of quarters due to rounding and reduction of shares outstanding from purchase and retirement of treasury stock.

33

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To 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, 2002, and the related 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. The accompanying consolidated financial statements of the Company as of October 31, 2001 and 2000, and for the years then ended were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those financial statements in their report dated November 19, 2001.

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 2002 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Collins Industries, Inc. and Subsidiaries as of October 31, 2002, 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.

KPMG LLP

Kansas City, Missouri

November 21, 2002

34

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and

Shareholders of Collins Industries, Inc.,

We have audited the accompanying consolidated balance sheets of Collins Industries, Inc. (a Missouri corporation) and Subsidiaries as of October 31, 2001 and 2000, and the related consolidated statements of income, shareholders' investment and cash flows for each of the three years in the period ended October 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Collins Industries, Inc. and Subsidiaries as of October 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2001, in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Kansas City, Missouri

November 19, 2001

This audit report of Arthur Andersen LLP, our former independent public accountants, is a copy of the original report dated November 19, 2001 rendered by Arthur Andersen LLP on our consolidated financial statements included in our form 10-K filed on December 26, 2001, and has not been reissued by Arthur Andersen LLP since that date. This report refers to financial statements not physically included in this filing.

35

Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

36

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information with respect to Directors and Executive Officers is contained in the section entitled "Management" in the Proxy Statement for the Annual Meeting of Shareholders to be held February 28, 2003, and is incorporated herein by reference.

Item 11. EXECUTIVE COMPENSATION

Information with respect to executive compensation is contained in the section entitled "Executive Compensation" in the Company's Proxy Statement for the Annual Meeting of Shareholders to be held on February 28, 2003, and is incorporated herein by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

Information with respect to security ownership of certain beneficial owners and management is contained in the section entitled "Security Ownership of Certain Beneficial Owners and Management" in the Company's Proxy Statement for the Annual Meeting of Shareholders to be held on February 28, 2003, and is incorporated herein by reference.

Equity Compensation Plan - The following table sets forth information as of the end of the Company's 2002 fiscal year with respect to compensation plans under which equity securities of the Company are authorized for issuance.

Plan Category	Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights (A)		Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (B)	Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A) (C)
Equity compensation plans approved by security holders	849,800	(1)	$4.26	401,000
Equity compensation plans not approved by security holders	-		$ -	-
Total	849,800		$4.26	401,000

(1) These plans include the 1995 Stock Option Plan and the 1997 Omnibus Incentive Plan.

37

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None

Item 14. CONTROLS AND PROCEDURES

1. Evaluation of disclosure controls and procedures. Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13(a)-14(c) and 15-d-14(c)) as of a date (the "Evaluation Date") within 90 days before the filing date of this annual report, have concluded that, as of the Evaluation Date, our disclosure controls and procedures were adequate and designed to ensure that the information required to be disclosed in the reports filed or submitted by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods.
2. Changes in internal controls. There were no significant changes in our internal controls or in other factors that could significantly affect our internal controls subsequent to the date of their evaluation.

38

 PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, REPORTS
ON FORM 8-K

(a) The following documents are filed as a part of this Report:

(1) Financial Statements:

All financial statements and notes thereto as set
forth under Item 8 of this Report on Form 10-K:

Reports of Independent Public Accountants

Consolidated Statements of Income and Comprehensive Income for
the Three Years Ended October 31, 2002

Consolidated Balance Sheets--October 31, 2002
and 2001

Consolidated Statements of Cash Flows for
the Three Years Ended October 31, 2002

Consolidated Statements of Shareholders' Investment
for the Three Years Ended October 31, 2002

(2) Financial Statement Schedules:

All schedules have been omitted as not applicable

or not required under the instructions contained in

Regulation S-X or the information is included in the

financial statements or notes thereto.

39

(3) Exhibits:

Exhibit Number		Document
3.1	-	Certificate of Incorporation of Registrant, as amended (included as Exhibit 3.1 of the Company's Amendment No. 2 to Form 2-1, No. 2-93247 and incorporated herein by reference).
3.2	-	Amendment to Certificate of Incorporation of Registrant (included as Exhibit 3.3 of the Company's Amendment No. 1 to form S-1, No 2-93247 and incorporated herein by reference).
3.3	-	Amendment to Certificate of Incorporation of Registrant (included as Exhibit 3.3(c) of the Company's Amendment No. 1 to Form S-1, No. 33-48323 and incorporated herein by reference).
3.4	-	By-Laws of the Registrant, as amended (included as Exhibit 3.4 of the Company's S-1, No. 33-48323 and incorporated herein by reference).
4.1	-	Rights Agreement dated as of March 28, 1995 between the Registrant and Mellon Bank, N.A. (included as Exhibit 1 to Form 8-A filed with the SEC as of March 28, 1995).
4.2	-	First Amendment to the Rights Agreement dated as of April 25, 1995 (included as Exhibit 4 to Form 8-A/A filed with the SEC as of May 8, 1995).
10.1	-	Various bailment and consignment agreements between the Registrant and Automotive manufacturers (included as Exhibit 10.2 to the Company's Registration Statement on Form S-1, No. 33-48323 and incorporated herein by reference).
10.2	-	Form of Indemnification Agreement between Registrant and its directors. (Incorporated herein by reference to Exhibit 10.21 to the Registrant's Report on Form 10-K for the fiscal year ended October 31, 1991.)
			40

Exhibit Number			Document
10.3	-	Amended and Restated Lease dated November 15, 1997, between the Registrant and the City of South Hutchinson, Kansas. (Incorporated herein by reference to Exhibit 10.4 to the Registrant's Report on Form 10-K for the fiscal year ended October 31, 1998.)
10.4	-	1999 Supplemental Lease dated June 1, 1999, by and between the City of South Hutchinson, Kansas and Collins Bus Corporation. Original Lease dated August 1, 1984 and a November 15, 1997, Amended and Restated Lease between the same parties. (Incorporated herein by reference to Exhibit 10.1 to the Registrant's Report on Form 10-Q for the quarterly period ended July 31, 1999.)
10.5	-	Loan Agreement dated April 1, 1999, between Longview Industrial Corporation and Collins Industries, Inc. (Incorporated herein by reference to Exhibit 10.2 to the Registrant's Report on Form 10-Q for the quarterly period ended July 31, 1999.)
10.6	-	Loan and Security Agreement dated as of May 17, 2002, by and between Collins Industries, Inc., and Fleet Capital Corporation. (Incorporated herein by reference to Exhibit 10.1 to the Registrant's Report on Form 10-Q for the quarterly period ended July 31, 2002.)
10.7	-	Deferred Compensation Plan dated as of November 27, 2001, between Collins Industries, Inc and Intrust Bank N.A. (Incorporated herein by reference to Exhibit 10.2 to the Registrant's Report on Form 10-Q for the quarterly period ended July 31, 2002.)
10.8	-	Lease dated June 20, 2002, by and between Reno County, Kansas and Wheeled Coach Industries, Inc.

41

Exhibit Number		Document
10.9	-	Amendment No. 1 dated as of October 15, 2002, to the Loan and Security Agreement dated as of May 17, 2002, by and between Collins Industries, Inc., and Fleet Capital Corporation.
10.10	-	Financing Agreement dated October 16, 2002, between the Orange County Industrial Development Authority, Orange County Florida, and Wheeled Coach Industries, Inc..
21.1	-	The following are the names and jurisdiction of incorporation of the subsidiaries of the Company:
			Jurisdiction
		Names	of Incorporation
		Collins Bus Corporation	Kansas
		Capacity of Texas, Inc.	Texas
		Mid Bus, Inc.	Ohio
		Wheeled Coach Industries, Inc.	Florida
		Collins Ambulance Corp.	Kansas
		Collins Financial Services, Inc.	Kansas
		Mobile Products, Inc.	Kansas
		Mobile-Tech Corporation	Kansas
		World Trans, Inc.	Kansas
23.1	-	Accountants Consent
99.1	-	Certification of Periodic Report-CEO
99.2	-	Certification of Periodic Report-CFO

(b) Reports on Form 8-K

None

42

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.

		COLLINS INDUSTRIES, INC.
	By	/s/ Donald Lynn Collins
		Donald Lynn Collins, President and Chief Executive Officer
Dated:	January 15, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant, in their respective capacities and on the dates indicated.

Dated:	January 15, 2003		/s/ Don L. Collins
			Don L. Collins, Director
Dated:	January 15, 2003		/s/ Donald Lynn Collins
			Donald Lynn Collins, Director, President and Chief Executive Officer (Principal Executive Officer)
Dated:	January 15, 2003		/s/ Don S. Peters
			Don S. Peters, Director
Dated:	January 15, 2003		/s/ Arch G. Gothard III
			Arch G. Gothard III, Director
Dated:	January 15, 2003		/s/ William R. Patterson
			William R. Patterson, Director
Dated:	January 15, 2003		/s/ Larry W. Sayre
			Larry W. Sayre, Vice President of Finance and Chief Financial Officer (Principal Financial and Accounting Officer)
		43

CERTIFICATIONS

I, Donald Lynn Collins, certify that:

1. I have reviewed this annual report on Form 10-K of Collins Industries, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

1. designed such disclosure controls and procedures to ensure that material

information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

2. evaluated the effectiveness of the registrant's disclosure controls and procedures

as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

3. presented in this annual report our conclusions about the effectiveness of the

disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

1. all significant deficiencies in the design or operation of internal controls which

could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

2. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated:	January 15, 2003		/s/ Donald Lynn Collins
			Donald Lynn Collins, President
			And Chief Executive Officer
		44

I, Larry W. Sayre, certify that:

1. I have reviewed this annual report on Form 10-K of Collins Industries, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

1. designed such disclosure controls and procedures to ensure that material

information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

2. evaluated the effectiveness of the registrant's disclosure controls and procedures

as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

3. presented in this annual report our conclusions about the effectiveness of the

disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies in the design or operation of internal controls which

could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated:	January 15, 2003	/s/ Larry W. Sayre
		Larry W. Sayre , Vice President of
		Finance and Chief Financial Officer

45

EX-10

Lease

By and Between

Reno County, Kansas

and

Wheeled Coach Industries, Inc

Dated June 1, 2002

LEASE

Table of Contents

Parties

Recitals.

ARTICLE I

Section 1.1 Definitions

Section 1.2 Representations and Covenants by Tenant

Section 1.3 Representations and Covenants by Issuer

ARTICLE II

Section 2.1 Granting of Leasehold

ARTICLE III

Section 3.1 Basic Rent

Section 3.2 Acquisition of Bonds

Section 3.3 Additional Rent

Section 3.4 Rent Payable Without Abatement or Setoff

Section 3.5 Prepayment of Basic Rent

Section 3.6 Deposit of Rent by Trustee

ARTICLE IV

Section 4.1 Disposition of original Proceeds; Project Fund

ARTICLE V

Section 5.1 Acquisition of Land and Improvements

Section 5.2 Project Contracts

Section 5.3 Payment of Project Costs for Building and Improvements.

Section 5.4 Payment of Project Costs for Machinery and Equipment

Section 5.5 Completion of Project

Section 5.6 Deficiency of Project Fund

Section 5.7 Surplus in Project Fund

Section 5.8 Right of Entry by Issuer

Section 5.9 Machinery and Equipment Purchased by Tenant

Section 5.10 Project Property of Issuer

Section 5.11 Kansas Retailers' Sales Tax

ARTICLE VI

Section 6.1 Insurance as a Condition to Disbursement

Section 6.2 Insurance After Completion

Section 6.3 General Insurance Provisions

Section 6.4 Owner's Title Insurance

ARTICLE VII

Section 7.1 Impositions

Section 7.2 Receipted Statements

Section 7.3 Issuer May Not Sell

Section 7.4 Contest of Impositions

Section 7.5 Ad Valorem Taxes

ARTICLE VIII

Section 8.1 Use of Project.

Section 8.2 Environmental Provisions

ARTICLE IX

Section 9.1 Sublease by Tenant.

Section 9.2 Assignment by Tenant

Section 9.3 Release of Tenant

Section 9.4 Mergers and Consolidations

Section 9.5 Covenant Against Other Assignments

ARTICLE X

Section 10.1 Repairs and Maintenance

Section 10.2 Removal, Disposition and Substitution of Machinery and Equipment.

ARTICLE XI

Section 11.1 Alteration of Project

ARTICLE XII

Section 12.1 Additional Improvements

ARTICLE XIII

Section 13.1 Securing of Permits and Authorizations

Section 13.2 Mechanics' Liens

Section 13.3 Contest of Liens

Section 13.4 Utilities

ARTICLE XIV

Section 14.1 Indemnity

ARTICLE XV

Section 15.1 Access to Project

ARTICLE XVI

Section 16.1 Option to Extend Term

ARTICLE XVII

Section 17.1 Option to Purchase Project

Section 17.2 Quality of Title and Purchase Price

Section 17.4 Effect of Failure to Complete Purchase

Section 17.5 Application of Condemnation Awards if Tenant Purchases Project

Section 17.6 Option to Purchase Unimproved Portions of Land.

Section 17.7 Quality of Title-Purchase Price

Section 17.8 Closing of Purchase

Section 17.9 Effect of Purchase on Lease

Section 17.10 Effect of Failure to Complete Purchase

ARTICLE XVIII

Section 18.1 Damage and Destruction.

Section 18.2 Condemnation

ARTICLE XIX

Section 19.1 Termination by Reason of Change of Circumstances

ARTICLE XX

Section 20.1 Remedies on Default

Section 20.2 Survival of Obligations

Section 20.3 No Remedy Exclusive

ARTICLE XXI

Section 21.1 Performance of Tenant's Obligations by Issuer

ARTICLE XXII

Section 22.1 Surrender of Possession

ARTICLE XXIII

Section 23.1 Notices

ARTICLE XXIV

Section 24.1 Net Lease

Section 24.2 Funds Held by Trustee After Payment of Bonds

ARTICLE XXV

Section 25.1 Rights and Remedies

Section 25.2 Waiver of Breach

Section 25.3 Issuer Shall Not Unreasonably Withhold Consents and Approvals

ARTICLE XXVI

Section 26.1 Financial Reports.

Section 26.2 Quiet Enjoyment and Possession

ARTICLE XXVII

Section 27.1 Investment Tax Credit; Depreciation

ARTICLE XXVIII

Section 28.1 Amendments

Section 28.2 Granting of Easements

Section 28.3 Security Interests

Section 28.4 Incorporation by Reference

Section 28.5 Construction and Enforcement

Section 28.6 Invalidity of Provisions of Lease

Section 28.7 Covenants Binding on Successors and Assigns

Section 28.8 Section Headings

Section 28.9 Execution of Counterparts..

Signatures

Acknowledgments

Schedule I.

Appendix A

LEASE

  This Lease, made and entered into as of the first day of June, 2002 by and between Reno County, Kansas, a political subdivision of the State of Kansas (the "Issuer"), and Wheeled Coach Industries, Inc., a Kansas corporation duly authorized and qualified to do business in the State of Kansas (the "Tenant").

WITNESSETH:

WHEREAS, Issuer is a municipal corporation duly organized and existing under the laws of the State of Kansas, with full lawful power and authority to enter into this Lease by and through its Governing Body; and

WHEREAS, Issuer in furtherance of the purposes and pursuant to the provisions of the laws of the State of Kansas, K.S.A. 12-1740 to 12-1749a, as amended (the "Act"), and in order to provide for the industrial and commercial development and welfare of Reno County, Kansas and its environs and to provide employment opportunities for its citizens and to promote the economic stability of the State of Kansas, has proposed and does hereby propose that it shall:

(a) Acquire the Project (as hereinafter defined);

(b) Lease the Project to Tenant for the rentals and upon the terms and conditions hereinafter set forth; and

(c) Issue, for the purpose of paying the foregoing costs, the 2002 Bonds under and pursuant to and subject to the provisions of the Act and Indenture (hereinafter defined), said Indenture being incorporated herein by reference and authorized by an ordinance of the Governing Body Issuer; and

WHEREAS, Tenant, pursuant to the foregoing proposals of Issuer, desires to lease the Project from Issuer for the rentals and upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein set forth, Issuer and Tenant do hereby covenant and agree as follows:

ARTICLE I

DEFINITIONS, REPRESENTATIONS AND COVENANTS

Section 1.1. Definitions. In addition to the words, terms and phrases elsewhere defined in this Lease, the following words, terms and phrases as used herein shall have the following meanings unless the context or use indicates another or different meaning or intent:

"Act" means K.S.A. 12-1740 to 12-1749a, inclusive, as amended.

"Additional Bonds" means any Bonds issued in addition to the 2002 Bonds pursuant to the provisions of Section 209 of the Indenture.

"Additional Rent" means all fees, charges and expenses of the Trustee, all Impositions, all amounts necessary to be used in conjunction with funds transferred to the Principal and Interest Payment Account as of the Completion Date so that funds may be redeemed in accordance with Section 302(b) of the Indenture in increments of $5,000, all amounts required under Article XXIV hereof, all other payments of whatever nature which Tenant has agreed to pay or assume under the provisions of this Lease and all expenses (including reasonable attorney's fees) incurred by Issuer in connection with the enforcement of any rights under this Lease or the Indenture. The fees, charges and expenses of the Trustee shall include all costs incurred in connection with the issuance, transfer, exchange, registration, redemption or payment of the Bonds except (a) the reasonable fees and expenses in connection with the replacement of a Bond or Bonds mutilated, stolen, lost or destroyed or (b) any tax or other government charge imposed in relation to the transfer, exchange, registration, redemption or payment of the Bonds.

"Additional Term" shall mean that term commencing on the last day of the Basic Term and terminating five years thereafter.

"Authorized Tenant Representative" means the President of Tenant, or such other person at the time designated to act on behalf of Tenant as evidenced by written certificate furnished to the Issuer and the Trustee containing the specimen signature of such person and signed on behalf of Tenant by its President or any Vice President. Such certificate may designate an alternate or alternates, each of whom shall be entitled to perform all duties of the Authorized Tenant Representative.

"Bankruptcy Code" means Title 11 of the United States Code, as amended.

"Basic Rent" means the monthly pro rata amount equal to the sum of (1) the next maturing monthly installment of interest on the Bonds plus (2) the the next maturing principal amount of the Bonds which amount, when added to Basic Rent Credits, is sufficient to pay, on any Payment Date, all principal of, redemption premium, if any, and interest on the Bonds which is due and payable on such Payment Date.

"Basic Rent Credits" means all funds on deposit in the Principal and Interest Payment Account and available for the payment of principal of, redemption premium, if any, and interest on the Bonds on any Payment Date.

"Basic Rent Payment Date" means June1, 2002 and the first day of each month thereafter until the principal of, redemption premium, if any, and interest on the Bonds have been fully paid or provision made for their payment in accordance with the provisions of the Indenture.

"Basic Term" means that term commencing as of the date of this Lease and ending on June 1, 2012 subject to prior termination as specified in this Lease, but to continue thereafter until all of the principal of, redemption premium, if any, and interest on all outstanding Bonds shall have been paid in full or provision made for their payment in accordance with the provisions of the Indenture.

"Bonds" means the fully registered 2002 Bonds and any Additional Bonds.

"Bond Counsel" means the firm of Martindell Swearer & Shaffer, llp or any other attorney or firm of attorneys whose expertise in matters relating to the issuance of obligations by states and their political subdivisions is recognized nationally and acceptable to Issuer, Trustee and Tenant.

"Bondowner" means the registered owner of any fully registered Bond.

"Business Day" means a day which is not a Saturday, Sunday or any day designated as a holiday by the Congress of the United States or by the legislature of the State and on which banks in the State are not authorized to be closed.

"Certificate of Completion" means a written certificate signed by the Authorized Tenant Representative stating that (1) the Project has been completed in accordance with the plans and specifications prepared or approved by Issuer or Tenant, as the case may be; (2) the Project has been completed in a good and workmanlike manner; (3) no mechanic's or *materialmen's liens have been filed, nor is there any basis for the filing of such liens, with respect to the Project; (4) all Improvements constituting a part of the Project are located or installed upon the Land; and (5) if required by ordinances duly adopted by Issuer or by applicable building codes, that an appropriate certificate of occupancy has been issued with respect to the Project.

"Change of Circumstances" means the occurrence of any of the following events:

(1) title to, or the temporary use of, all or any part of the Project shall be condemned by any authority exercising the power of eminent domain;

(2) the Project is damaged or destroyed, in whole or in part, by fire, theft or other casualty; or

(3) as a result of changes in the Constitution of the State or of any legislative or administrative action by the State or any political subdivision thereof, of by the United States, or by reason of any action instituted in any court, this Lease shall become void or unenforceable, or impossible of performance without unreasonable delay, or in any other way, by reason of such changes or circumstances, unreasonable burdens or excessive liabilities are imposed upon Tenant.

"Code" means the Internal Revenue Code of 1986, as amended, together with the regulations promulgated thereunder by the United States Department of the Treasury.

"Completion Date" means the date of completion of the acquisition, purchase, construction and installation of the Project pursuant to the Lease.

"Costs of Issuance" means any and all expenses of whatever nature incurred in connection with the issuance and sale of the Bonds, including but not limited to underwriting fees and expenses, or underwriting discount, bond and other printing expenses, and legal fees and expenses of counsel.

"Default" means any event or condition the occurrence of which, with the lapse of time or the giving of notice or both, constitutes an Event of Default.

"Event of Bankruptcy" means an event whereby the Tenant shall: (i) admit in writing its inability to pay its debts as they become due; or (ii) file a petition in bankruptcy or for reorganization or for the adoption of an arrangement under the Bankruptcy Code as now or in the future amended, or file a pleading asking for such relief; or (iii) make an assignment for the benefit of creditors; or (iv) consent to the appointment of a trustee or receiver for all or a major portion of its property; or (v) be finally adjudicated as bankrupt or insolvent under any federal or state law; or (vi) suffer the entry of a final and non-appealable court order under any federal or state law appointing a receiver or trustee for all or a major part of its property or ordering the winding-up or liquidation of its affairs, or approving a petition filed against it under the Bankruptcy Code, which order, if the Tenant has not consented thereto, shall not be vacated, denied, set aside or stayed within 60 days after the day of entry; or (vii) suffer a writ or warrant of attachment or any similar process to be issued by any court against all or any substantial portion of its property, and such writ or warrant of attachment or any similar process is not contested, stayed, or is not released within 60 days after the final entry, or levy or after any contest is finally adjudicated or any stay is vacated or set aside.

"Event of Default" means any one of the following events:

(a) Failure of Tenant to make any payment of Basic Rent at the time and in the amounts required hereunder; or

(b) Failure of Tenant to make any payment of Additional Rent at the times and in the amounts required hereunder, or failure to observe or perform any other covenant, agreement, obligation or provision of this Lease on the Tenant's part to be observed or performed, and the same is not remedied within thirty (30) days after the Issuer or the Trustee has given the Tenant written notice specifying such failure (or such longer period as shall be reasonably required to correct such default; provided that (i) Tenant has commenced such correction within said 30-day period, and (ii) Tenant diligently prosecutes such correction to completion); or

(c) An Event of Bankruptcy; or

(d) Tenant abandons the Project.

"Full Insurable Value" means the full actual replacement cost less physical depreciation as determined from time to time upon the request of Issuer, Tenant or the Trustee (but not more frequently than once in every 24 months) by an architect, appraiser, appraisal company or one of the insurers, selected and paid by Tenant.

"Guarantor" means that the Tenant under and pursuant to the terms of the Guaranty Agreement.

"Guaranty Agreement" means the separate guaranty agreement dated as of June 1, 2002 of the Tenant as Guarantor in favor of the Trustee for the benefit of the Bondowners, required by the Indenture.

"Hazardous Substances" means and includes those elements or compounds which are contained in the list of hazardous substances adopted by the EPA or the list of toxic pollutants designated by congress or the EPA or which are defined as hazardous, toxic, pollutant, infectious or radioactive by any other federal, or applicable state or local statutes, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in effect.

"Impositions" means all taxes and assessments, general and special, which may be lawfully taxed, charged, levied, assessed or imposed upon or against or payable for or in respect of the Project or any part thereof, or any improvements at any time thereon or Tenant's interest therein, including any new lawful taxes and assessments not of the kind enumerated above to the extent that the same are lawfully made, levied or assessed in lieu of or in addition to taxes or assessments now customarily levied against real or personal property, and further including all water and sewer charges, assessments and other governmental charges and impositions whatsoever, foreseen or unforeseen, which if not paid when due would encumber Issuer's title to the Project.

"Improvements" means the buildings, structure facilities, machinery, equipment and any other property purchased in whole or in part from the proceeds of the Bonds and more specifically described in Schedule I attached hereto and made a part hereof.

"Indenture" means the Trust Indenture, dated as of June 1, 2002 as from time to time amended and supplemented by Supplemental Indentures in accordance with the provisions thereof.

"Interest Payment Date" means June 1 and December 1 in each year, commencing as of December 1, 2002 and continuing so long as any principal amount of the 2002 Bonds remains Outstanding.

"Land" means the real property described in Schedule I attached hereto and made a part hereof.

"Lease" means this Lease Agreement by and between the Issuer and the Tenant, as from time to time supplemented and amended in accordance with the provisions hereof and of the Indenture.

"Net Proceeds" means, when used with respect to any insurance or condemnation award with respect to the Project, the proceeds from the insurance or condemnation award remaining after the payment of all expenses (including attorneys' fees and any extraordinary expenses of the Trustee) incurred in the collection of such proceeds.

The term "Notice Address" shall mean:

(1) With respect to the Tenant:

Wheeled Coach Industries, Inc.

15 Compound Drive

Hutchinson, KS 67502

Attn: President

(2) With respect to the Issuer:

Reno County, Kansas

206 West First Avenue

Hutchinson, KS 67501

Attn: County Clerk

(3) With respect to the Trustee:

First National Bank of Hutchinson

1 North Main Street

Hutchinson, KS 67501

Attn: Corporate Trust Services

"Notice Representative" means:

(1) With respect to the Tenant, any executive officer thereof.

(2) With respect to the Issuer, its duly elected or appointed City Clerk.

(3) With respect to the Trustee, any trust officer thereof.

"Original Proceeds" means all proceeds, including accrued interest, derived from the sale of the Bonds to the Purchaser.

"Outstanding" means, as of a particular date, Bonds heretofore issued, authenticated and delivered, except:

(a) Bonds theretofore cancelled by the Trustee or delivered to the Trustee for cancellation pursuant to the Indenture;

(b) Bonds for the payment or redemption of which moneys or investments have been deposited in trust with the Trustee for the benefit of the Owners of the Bonds in accordance with the provisions of the Indenture; and

(c) Bonds in exchange for or in lieu of which other Bonds have been authenticated and delivered pursuant to the Indenture.

"Owner" means the registered owner of any fully registered bond.

"Payment Date" means any date on which the principal of or interest on any Bond is payable.

"Principal and Interest Payment Account" means that account authorized and established with the Trustee by the Indenture and designated "Reno County, Kansas Principal and Interest Payment Account for Economic Development Revenue Bonds, (Wheeled Coach Industries, Inc. Project).

"Principal Payment Date" means, with respect to the 2002 Bonds, June 1 in each year commencing June 1, 2003 and continuing so long as any of the principal of the 2002 Bonds remains Outstanding and unpaid.

"Project" means and includes the Issuer's interest in the Land and the Improvements acquired, constructed or installed with proceeds of the 2002 Bonds together with any Project Additions.

"Project Additions" means any additional improvements acquired, constructed or installed from proceeds of any additional series of Bonds authorized and issued pursuant to the Indenture.

"Project Costs" means those costs incurred in connection with the Project, including:

(a) all costs and expenses incident or necessary to the acquisition of the Land and such of the Improvements as are constructed, installed or in progress at the date of such acquisition;

(b) fees and expenses of architects, appraisers, surveyors and engineers for estimates, surveys, soil borings and soil tests and other preliminary investigations and items necessary to the commencement of construction, preparation of plans, drawings and specifications and supervision of construction, as well as for the performance of all other duties of architects, appraisers, surveyors and engineers in relation to the construction, furnishing and equipping of the Project or the issuance of the Bonds;

(c) all costs and expenses of constructing, acquiring or installing the remaining portion of the Project;

(d) payment of interest actually incurred on any interim financing obtained from a lender unrelated to the Tenant for performance of work on the Project prior to the issuance of the Bonds;

(e) the cost of the title insurance policies and the cost of any insurance and performance and payment bonds maintained during the Construction Period in accordance with Section 6.3 and 6.4 of this Lease, respectively;

(F) interest accruing on the Bonds prior to the Completion Date, if and to the extent proceeds of the Bonds set aside and deposited to the credit of the Principal and Interest Payment Account pursuant to Section 602 of the Indenture are insufficient for payment of such interest.

(g) Costs of Issuance.

"Project Fund" means the account authorized and established with the Trustee pursuant to the Indenture and designated the "Reno County, Kansas Project Fund (Wheeled Coach Industries, Inc. Project)".

"Project Replacement Fund" means that fund authorized and established with the Trustee by the Indenture and designated the "Reno County, Kansas Project Replacement Fund (Wheeled Coach Industries, Inc. Project).

"Purchaser" means Froggatte & Company, Wichita, Kansas.

"2002 Bonds" means Reno County, Kansas, Economic Development Revenue Bonds, Series ___ 2002, (Wheeled Coach Industries, Inc. Project), dated June 1, 2002 in the aggregate principal amount of $1,600,000*.

"State" means the State of Kansas.

"Tenant" means Wheeled Coach Industries, Inc., its successors and assigns.

"Term" means, collectively, the Basic Term and any Additional Term of this Lease.

"Trustee" means First National Bank of Hutchinson in Reno County, Kansas in its capacity as trustee, bond registrar and insurance trustee and its successor or successors and any other corporation or association which at the time may be substituted in its place pursuant to and at the time serving as Trustee under the Indenture.

Section 1.2 Representations and Covenants by Tenant. Tenant makes the following covenants and representations as the basis for the undertakings on its part herein contained:

(a) Representations and Covenants Relating to the Code.

(i) It will not use or cause or allow more than 25 percent of the Original Proceeds (less costs of issuance and any Bond Reserve Account deposit) to be used or applied to provide a facility the primary purpose of which is retail food and beverage services, automobile sales or service, or the provision of recreation or entertainment.

(ii) It will not use or cause or allow any portion of the Original Proceeds to be used or applied to provide any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including roller skating, skateboard and ice skating), racquet sports facility (including any handball or racquetball court), hot tub facility, suntan facility, racetrack, airplane, skybox or other private luxury box, any health club facility, any facility primarily used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises.

(iii) At least 95% of the Original Proceeds, less Costs of Issuance and any Bond Reserve deposit, will be expended for Project Costs paid or incurred subsequent to the Official Action Date.

(iv) It will not make or cause or permit to be made, whether by the Trustee or otherwise, any use of the proceeds (as defined in the Code) of the Bonds which, if such use had been reasonably expected on the date of issuance of the Bonds, would have caused the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code and further covenants and agrees that it will comply with and will take all action reasonably required to insure that the Trustee complies with all applicable requirements of said Section 148 and the rules and regulations of the United States Treasury Department thereunder until all of the Bonds, including interest thereon and any applicable redemption premium, have been paid.

(v) The weighted average maturity of the Bonds, (determined in accordance with Section 147(b) of the Code), does not exceed 120 percent of the average reasonably expected economic life of the Project (as determined in accordance with Section 147(b) of the Code).

(vi) Tenant covenants and agrees to furnish to Issuer prior to issuance and delivery of the Bonds, all information necessary for Issuer to comply with Section 149(e) of the Code, including a fully completed Internal Revenue Service Form 8038 (or such other applicable information reporting form of the IRS) with respect to the Bonds. Tenant acknowledges and agrees that it shall principally be responsible, as between or among any preparers, for such information.

(vii) Tenant covenants and agrees to file or cause to be filed such periodic supplemental statements or notices with the Internal Revenue Service or such other designated governmental agency as may now or hereafter be required by applicable statutes or regulations, in order to comply with Section 144(a)(4) of the Code and for the exemption from Federal income taxation of the interest on the Bonds to continue in full force and effect. Tenant further covenants and agrees to do such other acts as may be necessary from time to time to assure the continued tax exempt status of the Bonds, and to refrain from any or all acts, including without limitation, the making of capital expenditures with respect to the Project or otherwise, which may at anytime adversely affect or threaten the tax exempt status of the Bonds.

(viii) The Project, and each portion thereof, constitutes either land or property of a character subject to the allowance for depreciation required by Section 144(a) of the Code. Not more than 25% of the proceeds of the Bonds will be used to acquire the Land in accordance with Section 147(c) of the Code. Except for costs associated with the issuance of the Bonds, all expenditures for and costs of the Project have been or will be items of Project Costs as defined herein.

(ix) As of the date of issuance of the Bonds or any Additional Bonds, there are not outstanding any obligations (other than the Bonds) the interest on which is exempt from Federal income tax by virtue of the provisions of Section 144(a) of the Code and the proceeds of which were to be used with respect to the Project or with respect to other facilities located within the boundaries of Issuer, or facilities contiguous to, or integrated with, the Project or any such facilities, and the principal user (as defined in the Code) of which is or will be the Tenant or any other Principal User.

(x) The Tenant will not request or authorize any disbursement by the Trustee pursuant to the Lease (other than for costs associated with the issuance of the Bonds) which would result in less than 95% of the proceeds of the Bonds, including any income thereon, being used to provide land or property of a character subject to the allowance for depreciation under the Code (other than any such proceeds or income used for costs associated with the issuance of the Bonds).

(xi) The Tenant will comply with all the limitations and requirements of Section 148 of the Code and the related regulations (Section 1.103-15) with respect to arbitrage limitations on industrial development bonds.

(xii) As of the date of issuance of the Bonds or any Additional Bonds, the amount of the Bonds and Additional Bonds allocated to any test period beneficiary (when increased by the tax-exempt, facility-related bonds allocated to such test period beneficiary) does not exceed $40,000,000, all as defined and set out in Section 144(a)(10) of the Code.

(xiii) Tenant covenants that not more than 2% of the aggregate principal amount of the Bonds will be expended for Costs of Issuance as required in Section 147(g) of the Code.

(xiv) Tenant covenants that no portion of the Original Proceeds of the Bonds will be used to acquire any property (or any interest therein) unless (a) the first use of such property is pursuant to such acquisition or (b) appropriate Rehabilitation Expenditures are made with respect to such property in accordance with Section 147(d) of the Code.

(xv) Tenant covenants that no property included in the Project was placed in service more than one year before the date of issue of the Bonds.

(xvi) Tenant covenants that no non-exempt user of the Project within the five years preceding the issuance of the Bonds, who will also be a user of the Project after the issuance of the Bonds, will receive directly or indirectly an amount equal to 5% or more of the face amount of the Bonds in payment for his interest in the Project.

The Issuer and the Tenant agree to amend the covenants contained in this Subsection in such manner as shall be set forth in an opinion of Bond Counsel as being necessary to maintain the exclusion of the interest on the Bonds from the recipient's gross income for purposes of federal income taxation. The covenants contained in this Section may be amended at any time, with the consent of the Trustee, by a written agreement executed by the Issuer and the Tenant pursuant to this Subsection without notice to or the consent of any Owners of the Bonds.

(b) General Representations and Covenants:

(i) Tenant is a Kansas corporation, duly organized and existing under the laws of said State, and is duly authorized and qualified to do business in the State of Kansas, with lawful power and authority to enter into this Lease, acting by and through its duly authorized officers.

(ii) Tenant shall (A) maintain and preserve its existence and organization as a corporation and its authority to do business in the State and to operate the Project; (B) shall not initiate any proceedings of any kind whatsoever to dissolve or liquidate without (1) securing the prior written consent thereto of the Issuer and (2) making provision for the payment in full of the principal of and interest and redemption premium, if any, on the Bonds. Tenant shall take appropriate steps to extend its corporate existence if necessary by reason of an impending expiration of its corporate existence while the Bonds are Outstanding.

(iii) Neither the execution or delivery of this Lease, the consummation of the transactions contemplated hereby or by the Indenture, nor the fulfillment of or compliance with the terms and conditions of this Lease contravenes any provisions of its certificate or articles of Incorporation, or bylaws or conflicts with or results in a breach of the terms, conditions or provisions of any mortgage, debt, agreement, indenture or instrument to which the Tenant is a party or by which it is bound, or to which it or any of its properties is subject, or would constitute a default (without regard to any required notice or the passage of any period of time) under any of the foregoing, or would result in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Tenant under the terms of any mortgage, debt, agreement, indenture or instrument, or violates any existing law, administrative regulation or court order or consent decree to which the Tenant is subject .

(iv) This Lease constitutes a legal, valid and binding obligation of the Tenant enforceable in accordance with its terms.

(v) The Tenant agrees to operate and will operate the Project, or cause the Project to be operated as a facility, as that term is contemplated in the Act, from the date of Issuer's acquisition of the Project to the end of the Lease term.

(vi) The Tenant has obtained or will obtain any and all permits, authorizations, licenses and franchises to enable it to operate and utilize the Project for the purposes for which it was leased by the Tenant under this Lease.

(vii) The estimated total cost of the Project to be financed by the Bonds, plus interest on the Bonds during acquisition, construction and installation of the Project, and expenses anticipated to be incurred in connection with the issuance of the Bonds, will not be less than the face amount of the Bonds.

Section 1.3. Representations and Covenants by Issuer. Issuer makes the following representations and covenants as the basis for the undertakings on its part herein contained:

(A) It is a municipal corporation existing under the Constitution and laws of the State. Under the provisions of the Act, Issuer has the power to enter into and perform the transactions contemplated by this Lease and the Indenture and to carry out its obligations hereunder and thereunder.

(B) It has not, in whole or in part, assigned, leased, hypothecated or otherwise created any other interest in, or disposed of, or caused or permitted any lien, claim or encumbrance to be placed against, the Project, except for this Lease and the pledge of the Project pursuant to the Indenture.

(C) Except as otherwise provided herein or in the Indenture, it will not during the Basic Term or the Additional Term, in whole or in part, assign, lease, hypothecate or otherwise create any other interest in, or dispose of, or cause or permit any lien, claim or encumbrance to be placed against, the Project, except this Lease and the pledge of the Project pursuant to the Indenture.

(D) It has duly authorized the execution and delivery of this Lease and the Indenture and the issuance, execution and delivery of the 2002 Bonds.

(E) It has obtained the consent to and/or approval of the issuance of the Bonds by each municipal corporation and political subdivision the consent of approval of which is required by the provisions of the Act and the Code.

(F) It will submit to the Internal Revenue Service in accordance with Section 149 of the Code a statement with respect to the Series 1998 Bonds which contains: (a) the name and address of the Issuer, (b) the date of issue, the amount of net proceeds of the issue, the stated interest rate, term and face amount of each obligation which is part of the issue, the amount of issuance costs of the issue and the amount of reserve of the issue, (c) where required, the name of the applicable elected representative who approved the issue, or a description of the voter referendum by which the issue was approved, (d) the name and address, and employer identification number of: (i) each initial principal user of any facilities provided with the proceeds of the issue; (ii) the common parent of any affiliated group of corporations (within the meaning of Section 1504(a) of the Code) of which such initial principal user is a member, and (iii) if the issue is treated as a separate issue under Section 144(a)(6)(A) of the Code, any person treated as a principal user under Section 144(a)(6)(B) of the Code, (e) a description of any property to be financed from the proceeds of the issue, (f) a certification by a State official designated by State law as the Governor of the State that the Bonds meet the requirements of Section 146 (relating to volume cap), if applicable, and (g) any other information required by Internal Revenue Service Form 8038 or other similar form provided by the Internal Revenue Service.

ARTICLE II

Section 2.1. Granting of Leasehold. Issuer by these presents hereby rents, leases and lets unto Tenant and Tenant hereby rents, leases and hires from Issuer, for the rentals and upon and subject to the terms and conditions hereinafter set forth, the Project for the Basic Term.

ARTICLE III

Section 3.1. Basic Rent. Issuer reserves and Tenant covenants and agrees to pay to the Trustee hereinafter and in the Indenture designated, for the account of Issuer and during the Basic Term, for deposit in the Principal and Interest Payment Account hereinafter and in the Indenture established, on each Basic Rent Payment Date, Basic Rent in immediately available funds.

Section 3.2. Acquisition of Bonds. In the event Tenant acquires any outstanding Bonds, it may present the same to Issuer for cancellation, and upon such cancellation, Tenant's obligation to pay Basic Rent shall be reduced accordingly, but in no event shall Tenant's obligation to pay Basic Rent be reduced in such a manner that the Trustee shall not have on hand in the Principal and Interest Payment Account funds sufficient to pay the maturing principal of, redemption premium, if any, and interest on the Bonds as and when the same shall become due and payable in accordance with the provisions of the Indenture.

Section 3.3. Additional Rent. Within Thirty (30) days after receipt of written notice thereof, Tenant shall pay any Additional Rent required to be paid pursuant to this Lease.

Section 3.4. Rent Payable Without Abatement or Setoff. Tenant covenants and agrees with and for the express benefit of Issuer and the Bondowners that all payments of Basic Rent and Additional Rent shall be made by Tenant as the same become due, and that Tenant shall perform all of its obligations, covenants and agreements hereunder without notice or demand and without abatement, deduction, setoff, counterclaim, recoupment or defense or any right of termination or cancellation arising from any circumstance whatsoever, whether now existing or hereafter arising, and irrespective of whether the Improvements shall have been acquired, started or completed, or whether Issuer's title to the Project or any part thereof is defective or non-existent, and notwithstanding any failure of consideration or commercial frustration of purpose, the eviction or constructive eviction of Tenant, any Change of Circumstances, any change in the tax or other laws of the United States of America, the State, or any municip al corporation of either, any change in Issuer's legal organization or status, or any default of Issuer hereunder, and regardless of the invalidity of any action of Issuer or any other event or condition whatsoever, and regardless of the invalidity of any portion of this Lease, and Tenant hereby waives the provisions of any statute or other law now or hereafter in effect contrary to any of its obligations, covenants or agreements under this Lease or which releases or purports to release Tenant therefrom. Nothing in this Lease shall be construed as a waiver by Tenant of any rights or claims Tenant may have against Issuer under this Lease or otherwise, but any recovery upon such rights and claims shall be had from Issuer separately, it being the intent of this Lease that Tenant shall be unconditionally and absolutely obligated to perform fully all of its obligations, agreements and covenants under this Lease (including the obligation to pay Basic Rent and Additional Rent) for the benefit of the Bondowners.

Section 3.5. Prepayment of Basic Rent. Tenant may at any time prepay all or any part of the Basic Rent.

Section 3.6. Deposit of Rent by Trustee. The Trustee shall deposit, use and apply all payments of Basic Rent and Additional Rent in accordance with the provisions of this Lease and the Indenture.

ARTICLE IV

Section 4.1. Disposition of Original Proceeds; Project Fund. The Original Proceeds of any series of Bonds shall be paid over to the Trustee for the account of Issuer. The Trustee shall, first, promptly pay from such Original Proceeds into the Principal and Interest Payment Account the full amount of any accrued interest and premium, if any, received upon such sale. The remainder of such proceeds shall be deposited by the Trustee in the Project Fund to be used and applied as provided in this Lease and the Indenture , except that Costs of Issuance may be paid from the Project Fund without further order or authorization.

ARTICLE V

Section 5.1. Acquisition of Land and Improvements. Tenant shall prior to or concurrently with the issuance of the Bonds, convey or cause to be conveyed to Issuer the Land and such of the Improvements as are then completed, installed or in progress. Tenant shall also concurrently with such conveyance make provisions for the discharge of any liens or encumbrances incurred by it in connection with the construction, installation or development of the Project.

Section 5.2. Project Contracts. It is recognized by the parties hereto that prior to the execution hereof Tenant has entered into a contract or contracts with respect to the acquisition and/or construction of the Improvements. Said contracts are hereinafter referred to as the "Project Contracts". Prior to the execution hereof, certain work has been or may have been performed on the Project pursuant to said Project Contracts or otherwise. Tenant hereby conveys, transfers and assigns to Issuer all of Tenant's interest in the Project Contracts and Issuer hereby designates Tenant as Issuer's agent for the purpose of executing and performing the Project Contracts. After the execution hereof, Tenant shall cause the Project Contracts to be fully performed by the contractor(s) thereunder in accordance with the terms thereof, and Tenant covenants to cause the Improvements to be acquired, constructed and/or completed in accordance with the Project Contracts. Tenant warrants that the construction and/or a cquisition of the improvements in accordance with said Project Contracts will result in the Project being suitable for use by Tenant for its purposes. Any and all amounts received by Issuer, Trustee or Tenant from any of the contractors or other suppliers by way of breach of contract, refunds or adjustments shall become a part of and be deposited in the Project Fund.

Section 5.3. Payment of Project Costs for Buildings and Improvements. Issuer hereby agrees to pay for the construction of the buildings and improvements constituting a portion of the Project, but solely from the Project Fund, and hereby authorizes and directs the Trustee to pay for the same, but solely from the Project Fund, from time to time, upon receipt by the Trustee of a certificate signed by the Authorized Tenant Representative in the form set forth by Appendix A hereto which is incorporated herein by reference.

The sole obligation of Issuer under this paragraph shall be to cause the Trustee to make such disbursements upon receipt of such certificates. The Trustee may rely fully on any such directions and shall not be required to make any investigation in connection therewith, except that the Trustee shall investigate requests for reimbursements directly to the Tenant and shall require such supporting evidence as would be required by a reasonable and prudent trustee.

Section 5.4. Payment of Project Costs for Machinery and Equipment. Issuer hereby agrees to pay for the purchase and acquisition of any machinery and equipment constituting a part of the Project, but solely from the Project Fund, from time to time, upon receipt by the Trustee of a certificate signed by the Authorized Tenant Representative in the form provided by Appendix B hereto which is incorporated herein by reference and accompanied by the following specific information:

1. Name of Seller;
2. Name of the manufacturer;
3. A copy of the seller's invoice, purchase order or other like document evidencing the purchase by Tenant of such machinery and/or equipment;
4. Common descriptive name of machinery or equipment;
5. Manufacturer's or seller's technical description of machinery or equipment;
6. Capacity or similar designation;
7. Serial number, if any; and
8. Model number, if any.

The sole obligation of Issuer under this Section shall be to cause the Trustee to make such disbursements upon receipt of said certificates. The Trustee may rely fully on any such certificate and shall not be required to make any independent investigation in connection therewith, except that the Trustee shall investigate requests for reimbursements directly to Tenant and shall require such supporting evidence as would be required by a reasonable and prudent trustee. All machinery, equipment and/or personal property acquired, in whole or in part, from funds deposited in the Project Fund pursuant to this section shall be and become a part of the Project.

Section 5.5. Completion of Project. Tenant warrants that the Project, when completed, will be necessary or useful in its development for use by Tenant for its purposes. Issuer and Tenant each covenant and agree to proceed diligently to complete the Project on or before July 1, 2003. Upon completion of the Project, Tenant shall cause the Authorized Tenant Representative to deliver a Certificate of Completion to the Trustee, and the date of such delivery shall be the Completion Date. In the event funds remain on hand in the Project Fund on the date the Certificate of Completion is furnished to Trustee or on the Completion Date, whichever shall first occur, such remaining funds shall be transferred by the Trustee to the Principal and Interest Payment Account on the Completion Date and shall be applied in accordance with the provisions of the Indenture.

Section 5.6. Deficiency of Project Fund. If the Project Fund shall be insufficient to pay fully all Project Costs and to fully complete the Project, lien free, Tenant covenants to pay the full amount of any such deficiency by making payments directly to the contractors and to the suppliers of materials, machinery, equipment, property and services as the same shall become due, and Tenant shall save Issuer whole and harmless from any obligation to pay such deficiency.

Section 5.7. Surplus in Project Fund. Any amount remaining in the Project Fund after the Certificate of Completion has been delivered to the Trustee, shall be transferred by the Trustee into the Principal and Interest Payment Account and used and applied by Trustee for the purposes and at the times authorized by the Indenture.

Section 5.8. Right of Entry by Issuer. The duly authorized agents of Issuer shall have the right at any reasonable time prior to the completion of the Project to have access to the Project or any parts thereof for the purpose of inspecting and supervising the acquisition, installation or construction thereof.

Section 5.9. Machinery and Equipment Purchased by Tenant. If no part of the purchase price of an item of machinery, equipment or personal property is paid from funds deposited in the Project Fund pursuant to the terms of this Lease, then such item of machinery, equipment or personal property shall not be deemed a part of the Project.

Section 5.10. Project Property of Issuer. All buildings, improvements and work constituting a part of the Project, all work and materials on the Project as such work progresses, and the Project as fully completed, anything under this Lease which becomes, is deemed to be, or constitutes a part of the Project, and the Project as repaired, rebuilt, rearranged, restored or replaced by Tenant under the provisions of this Lease, except as otherwise specifically provided herein, shall immediately when erected or installed become the absolute property of Issuer.

Section 5.11. Kansas Retailers' Sales Tax.

(a) The parties have entered into this Lease in contemplation that, under the existing provisions of K.S.A. 79-3606(d) and other applicable laws, sales of tangible personal property or services purchased in connection with construction of the Project are entitled to exemption from the tax imposed by the Kansas Retailers' Sales Tax Act. The parties agree that Issuer shall, upon the request of and with Tenant's assistance, promptly obtain from the State and furnish to the contractors and suppliers an exemption certificate for the construction of the Project. Tenant covenants that said exemption shall be used only in connection with the purchase of tangible personal property or services becoming a part of the Project.

(b) The parties further acknowledge that, under the existing provisions of K.S.A. 79-3603(h), a tax may be levied at the rate of Three percent (3%) upon the gross receipts derived by Issuer from the renting or leasing of personal property, if any, purchased from the proceeds of the Bonds. Tenant agrees to pay, as Additional Rent hereunder, the full amount of any such tax as hereinafter determined. Such payments, if required, shall be made at the same time as the installments of Basic Rent provided for hereby, and shall be made directly to Issuer, or in such other manner as Issuer may from time to time direct in writing. It shall be the duty of Issuer to promptly file any returns and remit any such taxes to the State, or to make suitable provision therefor, in accordance with applicable laws, rulings and regulations. Issuer's taxable gross receipts shall be determined by multiplying that portion of each installment of Basic Rent which represents the payment of principal of the Bonds by a fraction in wh ich the total proceeds of the Bonds is the denominator, and the amount expended from Bond proceeds for the acquisition of personal property, which amount shall be determined by Tenant and set forth in a certificate delivered to Issuer, Tenant and the Trustee immediately following completion of construction of the Project, is the numerator. The amount of each installment of tax due shall be determined by multiplying Issuer's taxable gross receipts determined in accordance with the preceding sentence (unless a different determination has been made in a judicial or administrative proceeding as hereinafter provided), by Three percent (3%) or such other tax rate percentage as may from time to time be imposed by applicable law. Notwithstanding the foregoing provisions, if it shall be determined in any judicial or administrative proceeding that Issuer's taxable gross receipts are in an amount other than the amount determined by applying the foregoing provisions, Tenant shall be obligated to pay and hereby agrees to pay the full amount of such tax, based upon such judicially or administratively determined gross receipts, it being the intent of this provision that Tenant shall pay in full the amount of any such tax, but no more than such amount, which Issuer is obligated to collect under the present or any future laws of the State.

ARTICLE VI

Section 6.1. Insurance as a Condition to Disbursement. As a condition precedent to disbursement of funds from the Project Fund pursuant to Article V hereunder, the following policies of insurance shall be in full force and effect:

(a) General accident and public liability insurance (including coverage for all losses whatsoever arising from the ownership, maintenance, use or operation of any automobile, truck or other vehicle in or upon the Project) under which Issuer, Tenant and Trustee shall be named as insureds or additional named insured, in an amount not less than the then maximum liability of a governmental entity for claims arising out of a single occurrence as provided by the Kansas tort claims act or other similar future law (currently $500,000 per occurrence); which policy shall provide that such insurance may not be cancelled by the issuer thereof without at least Thirty (30) days' advance written notice to Issuer, Tenant and Trustee, such insurance to be maintained throughout the life of this Lease; and

(b) Workers' Compensation Insurance; and

(c) With regard to buildings and improvements constituting a part of the Project, builder's risk-completed value form insurance insuring the Project against fire, lightning and all other risks covered by the broadest form extended coverage endorsement then and from time to time thereafter in use in the State to the Full Insurable Value of the Project. Such policy or policies of insurance shall name Issuer, Tenant and the Trustee as insureds, as their respective interests may appear, and all payments received under such policy or policies by Issuer or Tenant shall be paid over to the Trustee and be deposited in the Project Fund; and

(d) With regard to buildings and improvements constituting a part of the Project, performance and labor and material payment bonds and statutory bonds with respect to the Project Contracts and in the full amount of the Project Contracts, made by the contractors thereunder as the principals and a surety company or companies qualified to do business in Kansas as surety. Said performance and labor and material payment bonds shall name Issuer, Tenant and the Trustee as obligees. All payments received by Issuer, Tenant and/or the Trustee under said bonds shall become a part of and be deposited in the Project Fund.

Section 6.2. Insurance After Completion. Tenant shall and covenants and agrees that it will, prior to or simultaneously with the expiration of the insurance provided for in the preceding section and throughout the Basic Term at its sole cost and expense, keep the Project constantly insured against loss or damage by fire, lightning and all other risks covered by the broadest form extended coverage insurance endorsement then in use in the State in an amount equal to the Full Insurable Value thereof in such insurance company or companies as it may select and shall at all times maintain general accident and public liability insurance required pursuant to Section 6.1(a).

Section 6.3. General Insurance Provisions.

(a) Not less than Thirty (30) days prior to the expiration dates of the expiring policies, originals or certificates or acceptable binders of the policies provided for in this Article, each bearing notations evidencing payment of the premiums or other evidence of such payment satisfactory to Issuer, shall be delivered by Tenant to Issuer and Trustee. All policies of such insurance and all renewals thereof shall name Issuer, Tenant and Trustee as insureds as their respective interests may appear, shall contain a provision that such insurance may not be cancelled or amended by the issuer thereof without at least Thirty (30) days' written notice to Issuer, Tenant and the Trustee and shall be payable to the Trustee. Issuer and Tenant each hereby agree to do anything necessary, be it the endorsement of checks or otherwise, to cause any such payment to be made to the Trustee, as long as such payment is required by this Lease to be made to the Trustee. Any charges made by the Trustee for its services shall b e paid by Tenant.

(b) Each such policy of insurance shall be issued by a nationally recognized responsible insurance company qualified under the laws of the State to assume the risks covered therein.

(c) The initial premium on the policies of insurance herein required shall be paid by Tenant prior to or concurrently with the issuance of the Bonds, or at such later date as such policies of insurance may be required to be in force under the terms of this Article, and evidence of such payment shall be filed with the Trustee at such time.

(d) Each such policy of insurance may be subject to a reasonable deductible in an amount approved by the Trustee.

(e) Each policy of insurance required herein may be provided through blanket policies maintained by Tenant.

(f) Anything in this Lease to the contrary notwithstanding, Tenant shall be liable to Issuer pursuant to the provisions of this Lease or otherwise, as to any loss or damage which may have been occasioned by the negligence of Tenant, its agents or employees.

Section 6.4. Owner's Title Insurance. Tenant shall purchase, from the Project Fund or from Tenant's own funds, a policy of owner's title insurance, insuring fee simple title to the Project in Issuer, in an amount equal to $2,000,000. Issuer and Tenant agree that any and all proceeds therefrom during the Basic Term (a) if received before the completion of the Project shall be paid into and become a part of the Project Fund, (b) if received thereafter but before the Bonds and interest thereon have been paid in full, shall be paid into and become a part of the Principal and Interest Payment Account, and (c) if received after the Bonds, redemption premium, if any, and interest thereon have been paid in full, shall belong and be paid to Tenant.

ARTICLE VII

Section 7.1. Impositions. Tenant shall, during the life of this Lease, bear, pay and discharge, before the delinquency thereof, any and all Impositions. In the event any Impositions may be lawfully paid in installments, Tenant shall be required to pay only such installments thereof as become due and payable during the life of this Lease as and when the same become due and payable. Issuer covenants that without Tenant's written consent it will not, unless required by law, take any action which may reasonably be construed as tending to cause or induce the levying or assessment of any Imposition which Tenant would be required to pay under this Article and that should any such levy or assessment be threatened or occur Issuer shall, at Tenant's request, fully cooperate with Tenant in all reasonable ways to prevent any such levy or assessment.

Section 7.2. Receipted Statements. Unless Tenant exercises its right to contest any Impositions in accordance with Section 7.4 hereof, Tenant shall, within Thirty (30) days after the last day for payment, without penalty or interest, of an Imposition which Tenant is required to bear, pay and discharge pursuant to the terms hereof, deliver to Issuer a photostatic or other suitable copy of the statement issued therefor duly receipted to show the payment thereof.

Section 7.3. Issuer May Not Sell. Issuer covenants that, unless Tenant is in default under this Lease it will not, without Tenant's written consent, unless required by law, sell or otherwise part with or encumber its fee or other ownership interest in the Project at any time during the life of this Lease.

Section 7.4. Contest of Impositions. Tenant shall have the right, in its own or Issuer's name or both, to contest the validity or amount of any Imposition by appropriate legal proceedings instituted at least Ten (10) days before the Imposition complained of becomes delinquent if, and provided, Tenant (i) before instituting any such contest, shall give Issuer written notice of its intention to do so and, if requested in writing by Issuer, shall deposit with the Trustee a surety bond of a surety company acceptable to Issuer as surety, in favor of Issuer, or cash, in a sum of at least the amount of the Imposition so contested, assuring the payment of such contested Impositions together with all interest and penalties to accrue thereon and costs of suit, and (ii) shall diligently prosecute any such contest and at all times effectively stays or prevents any official or judicial sale therefor, under execution or otherwise, and (iii) promptly pays any final judgment enforcing the Imposition so contest ed and thereafter promptly procures record release or satisfaction thereof. Tenant shall hold Issuer whole and harmless from any costs and expenses Issuer may incur related to any such contest.

Section 7.5. Ad Valorem Taxes. The parties acknowledge that under the existing provisions of K.S.A. 79-201a, as amended, the property constructed or purchased with the proceeds of the Bonds is entitled to exemption from ad valorem taxation for a period of Ten (10) calendar years after the calendar year in which the Bonds are issued, provided proper application is made therefore. Issuer covenants that it will not voluntarily take any action which may reasonably be construed as tending to cause or induce the levy or assessment of ad valorem taxes on the Project so long as any of the Bonds are outstanding and unpaid or for said Ten (10) year period, whichever shall be the shorter time and should any such levy or assessment be threatened or occur, Issuer shall, at Tenant's request, fully cooperate with Tenant in all reasonable ways to prevent any such levy or assessment. Issuer further covenants that it will make all necessary filings regarding the application for such ad valorem tax exemption on or before March 1 in the calendar year following the calendar year in which the Bonds were issued, and will renew said application from time to time and take any other action as may be necessary to maintain such ad valorem tax exemption in full force and effect, in accordance with K.S.A. 79-210 et. seq. and the State Department of Revenue.

ARTICLE VIII

Section 8.1. Use of Project. Subject to the provisions of this Lease, Tenant shall have the right to use the Project for any and all purposes allowed by law and contemplated by the Constitution of the State and the Act. Tenant shall comply with all statutes, laws, ordinances, orders, judgments, decrees, regulations, directions and requirements of all federal, state, local and other governments or governmental authorities, now or hereafter applicable to the Project or to any adjoining public ways, as to the manner of use or the condition of the Project or of adjoining public ways. Tenant shall comply with the mandatory requirements, rules and regulations of all insurers under the policies required to be carried under the provisions of this Lease. Tenant shall pay all costs, expenses, claims, fines, penalties and damages that may in any manner arise out of, or be imposed as a result of, the failure of Tenant to comply with the provisions of this Article.

Section 8.2. Environmental Provisions.

A. The Tenant hereby covenants that it will not cause or permit any Hazardous Substances (as defined herein) to be placed, held, located or disposed of, on, under or at the Project Site, other than in the ordinary course of business and in compliance with all applicable laws.

B. In furtherance and not in limitation of any indemnity elsewhere provided to the Issuer hereunder and in the Indenture, the Tenant hereby agrees to indemnify and hold harmless the Issuer and the Trustee from and against any and all losses, liabilities, including strict liability, damages, injuries, expenses, including reasonable attorneys' fees, costs of any settlement or judgment and claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against, the Issuer or the Trustee by any Person for, with respect to, or as a direct or indirect result of, the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission, discharging or release from the Project Site of any Hazardous Substance (including, without limitation, any losses, liabilities, reasonable attorneys' fees, costs of any settlement or judgment or claims asserted or arising under the Comprehensive Environmental Response, Compensation and Liability Act, any federal, state or local so-called "Su perfund" or "Super lien" laws, or any other applicable statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability, including strict liability, or standards of conduct concerning, any Hazardous Substance) regardless of whether or not caused by or within the control of the Tenant.

C. If the Tenant receives any notice of (i) the happening of any event involving the use, other than in the ordinary course of business and in compliance with all applicable laws, spill, release, leak, seepage, discharge or cleanup of any Hazardous Substance on the Project Site or in connection with the Tenant's operations thereon or (ii) any complaint, order, citation or notice with regard to air emissions, water discharges or any other environmental, health or safety matter affecting the Tenant (an "Environmental Complaint") from any Persons (including, without limitation, the United States Environmental Protection Agency (the "EPA")), and the Kansas Department of Health and Environment ("KDHE") then the Tenant shall immediately notify the Issuer and the Trustee in writing of said notice.

D. The Issuer shall have the right, but not the obligation, and without limitation of the Issuer's other rights under this Agreement, to enter the Project or to take such actions as deemed necessary or advisable to inspect, clean-up, remove, resolve or minimize the impact of, or to otherwise deal with, any Hazardous Substance or Environmental Complaint following receipt of any notice from any Person, including, without imitation, the EPA or KDHE, asserting the existence of any Hazardous Substance or an Environmental Complaint pertaining to the Project or any part thereof which, if true, could result in an order, suit or other action against the Tenant and/or which, in the reasonable judgment of the Issuer, could jeopardize its interests under this Lease. All reasonable costs and expenses incurred by the Issuer in the exercise of any such rights and shall be payable by the Tenant upon demand.

E. If an Event of Default shall have occurred and be continuing, the Tenant at the request of the Issuer or Trustee shall periodically perform at the Tenant's expense an environmental risk assessment of the Project, or the hazardous waste management practices and/or hazardous waste disposal sites used by the Tenant with respect to the Project. Such audit and/or risk assessment shall be conducted by an environmental consultant satisfactory to the Issuer or Trustee. Should the Tenant fail to perform any such environmental audit or risk assessment within thirty (30) days of the written request of the Issuer or Trustee, the Issuer or Trustee shall have the right, but not the obligation, to retain an environmental consultant to perform any such environmental audit or risk assessment. All costs and expenses incurred by the Issuer in the exercise of such rights shall be payable by the Tenant on demand.

F. The Tenant shall not install nor permit to be installed in the Project friable asbestos or any substance containing asbestos and deemed hazardous by federal or state regulations applicable to the Project and respecting such material, and with respect to any such material currently present in the Project, shall promptly either (i) remove any material which such applicable regulations deem hazardous and require to be removed or (ii) otherwise comply with such applicable federal and state regulations, at the Tenant's expense. If the Tenant shall fail to so remove or otherwise comply, the Issuer may declare an Event of Default and/or do whatever is necessary to eliminate said substances from the Project or otherwise comply with the applicable law, regulation, or order, and the costs thereof shall be payable by the Tenant on demand. The Tenant shall defend, indemnify, and save the Issuer and the Trustee harmless from all costs and expenses (including consequential damages) asserted or proven against the Tenant by any Person, as compliance with such regulations. The foregoing indemnification shall be a recourse obligation of the Tenant and shall survive the termination of this Lease.

G. The provisions of this Section 8.2 shall survive the termination of this Lease, except with respect to obligations which would arise hereunder as a result of the use, spill, release, leak, seepage or discharge of Hazardous Substances on the Project Site after the Project is no longer occupied by the Tenant.

ARTICLE IX

Section 9.1. Sublease by Tenant. Tenant may sublease the Project to a single party or entity, with the prior written consent of Issuer, which consent Issuer shall not unreasonably withhold. Tenant may sublease portions of the Project for use by others in the normal course of its business without Issuer's prior consent or approval. In the event of any such subleasing, Tenant shall remain fully liable for the performance of its duties and obligations hereunder, and no such subleasing and no dealings or transactions between Issuer or the Trustee and any such subtenant shall relieve Tenant of any of its duties and obligations hereunder.

Section 9.2. Assignment by Tenant. Tenant may assign its interest in this Lease with the prior written consent of Issuer, which consent Issuer shall not unreasonably withhold. In the event of any such assignment, Tenant shall remain fully liable for the performance of its duties and obligations hereunder, except to the extent hereinafter provided, and no such assignment and no dealings or transactions between Issuer or the Trustee and any such assignee shall relieve Tenant of any of its duties and obligations hereunder, except as may be otherwise provided in the following section.

Section 9.3. Release of Tenant. If, in connection with an assignment by Tenant of its interests in this Lease, (1) the Issuer and the owners of Ninety percent (90%) in aggregate principal amount of the Outstanding Bonds (including any Additional Bonds) shall file with the Trustee and the Purchaser their prior written consent to such assignment, and (2) the proposed assignee shall expressly assume and agree to perform all of the obligations of Tenant under this Lease; then and in such event Tenant shall be fully released from all obligations accruing hereunder after the date of such assignment.

Section 9.4. Mergers and Consolidations. Notwithstanding the provisions of Section 9.2, if Tenant shall assign its interests in this Lease in connection with a transaction involving the merger or consolidation of Tenant with or into, or a sale, lease or other disposition of all or substantially all of the property of Tenant as an entirety to another person, association, corporation or other entity, and (1) Issuer shall file with the Trustee its prior written consent to such assignment, (2) the proposed assignee shall expressly assume and agree to perform all of the obligations of Tenant under this Lease and the Guaranty Agreement with regard to the Bonds, and (3) Tenant shall furnish the Trustee and Issuer with evidence in the form of financial statements accompanied by the certificate of an independent certified public accountant of recognized standing establishing that the net worth of such proposed assignee immediately following such assignment will be at least equal to the net worth of Ten ant as shown by the most recent financial statement of Tenant furnished to Trustee pursuant to this Lease; then and in such event Tenant shall be fully released from all obligations accruing hereunder after the date of such assignment.

Section 9.5. Covenant Against Other Assignments. Tenant will not assign or in any manner transfer its interests under this Lease, nor will it suffer or permit any assignment thereof by operation of law, except in accordance with the limitations, conditions and requirements herein set forth.

ARTICLE X

Section 10.1. Repairs and Maintenance. Tenant covenants and agrees that it will, during the Term of this Lease, keep and maintain the Project and all parts thereof in good condition and repair, including but not limited to the furnishing of all parts, mechanisms and devices required to keep the machinery, equipment and personal property constituting a part of the Project in good mechanical and working order, and that during said period of time it will keep the Project and all parts thereof free from filth, nuisance or conditions unreasonably increasing the danger of fire.

Section 10.2. Removal, Disposition and Substitution of Machinery and Equipment. Tenant shall have the right, provided Tenant is not in default in the payment of Basic Rent and Additional Rent, to remove and sell or otherwise dispose of any machinery and equipment which constitutes a part of the Project and which are no longer used by Tenant or, in the opinion of Tenant, are no longer useful to Tenant in its operations (whether by reason of changed processes, changed techniques, obsolescence, depreciation or otherwise), subject, however, to the following conditions:

(1) With respect only to such items of machinery and equipment that originally cost $10,000 or more, to the following:

(a) Prior to any such removal, Tenant shall deliver to the Trustee a certificate signed by the Authorized Tenant Representative (i) containing a complete description, including the make, model and serial numbers, if any, of any machinery and equipment constituting a part of the Project which it proposes to remove, (ii) stating the reason for such removal, (iii) stating what disposition, if any, of the machinery and equipment is to be made by Tenant after such removal and the names of the party or parties to whom such disposition is to be made and the consideration to be received by Tenant therefor, if any, and (iv) setting forth the original cost and the fair market value of such machinery and equipment; provided, however, that in no event shall the fair market value of such machinery and equipment be less than the consideration to be received by Tenant upon the disposition thereof.

(b) Prior to any such removal, Tenant shall pay the fair market value of such machinery and equipment as set forth in said certificate to the Trustee and the Trustee shall deposit such amount in the Principal and Interest Payment Account.

(c) Tenant may remove any machinery and equipment constituting a part of the Project without first complying with the provisions of subparagraph (b) above; provided, however, that Tenant shall promptly replace any such machinery and equipment so removed with machinery and equipment of the same or a different kind but which are capable of performing the same function, efficiently, as the machinery and equipment so removed, and the machinery and equipment so acquired by Tenant to replace such machinery and equipment shall be deemed a part of the Project. Within Thirty (30) days after any such replacement by Tenant, Tenant shall deliver to the Trustee a certificate of the Authorized Tenant Representative setting forth a complete description, including make, model and serial numbers, if any, of the machinery and equipment which Tenant has acquired to replace the machinery and equipment so removed by Tenant, the cost thereof and that said machinery and equipment have been installed.

(2) With respect to such items of machinery and equipment that originally cost less than $10,000, Tenant shall deliver to the Trustee a certificate setting forth the facts provided for in subparagraph (1)(a) above. In no event shall Tenant pursuant to this Subsection (2) remove items of machinery and equipment having an aggregate original cost of more than $25,000.

All machinery and equipment constituting a part of the Project and removed by Tenant pursuant to this Section shall become the absolute property of Tenant and may be sold or otherwise disposed of by Tenant without accounting to Issuer with respect thereto. In all cases, Tenant shall pay all the costs and expenses of any such removal and shall immediately repair at its expense all damage caused thereby. Tenant's rights under this Article to remove machinery and equipment constituting a part of the Project is intended only to permit Tenant to maintain an efficient operation by the removal of such machinery and equipment no longer suitable to Tenant's use for any of the reasons set forth in this paragraph and such right is not to be construed to permit a removal under any other circumstances and shall not be construed to permit the wholesale removal of such machinery and equipment by Tenant.

ARTICLE XI

Section 11.1. Alteration of Project. Tenant shall have and is hereby given the right, at its sole cost and expense, to make such additions, changes and alterations in and to any part of the Project as Tenant from time to time may deem necessary or advisable; provided, however, Tenant shall not make any major addition, change or alteration which will adversely affect the intended use or structural strength of any part of the Project. All additions, changes and alterations made by Tenant pursuant to the authority of this Article shall (a) be made in a workmanlike manner and in strict compliance with all laws and ordinances applicable thereto, (b) when commenced, be prosecuted to completion with due diligence, and (c) when completed, shall be deemed a part of the Project; provided, however, that additions of machinery, equipment and/or personal property of Tenant, not purchased or acquired from funds deposited with the Trustee hereunder and not constituting a part of the Project shall remain t he separate property of Tenant and may be removed by Tenant prior to expiration of the Term of this Lease; provided further, however, that all such additional machinery, equipment and/or personal property which remain in the Project after the termination of this Lease for any cause other than the purchase of the Project pursuant to Article XVII hereof shall, upon and in the event of such termination, become the separate and absolute property of Issuer.

ARTICLE XII

Section 12.1. Additional Improvements. Tenant shall have and is hereby give the right, at its sole cost and expense, to construct on the Land or within areas occupied by the Improvements, or in airspace above the Project, such additional buildings and improvements as Tenant from time to time may deem necessary or advisable. All additional buildings and improvements constructed by Tenant pursuant to the authority of this Article shall, during the Basic Term and any Additional Term, remain the property of Tenant and may be added to, altered or razed and removed by Tenant at any time during the Term hereof. Tenant covenants and agrees (a) to make all repairs and restorations, if any, required to be made to the Project because of the construction of, addition to, alteration or removal of, said additional buildings or improvements, (b) to keep and maintain said additional buildings and improvements in good condition and repair, ordinary wear and tear excepted (c) to promptly and with due diligen ce either raze and remove from the Land, in a good, workmanlike manner, or repair, replace or restore such of said additional buildings or improvements as may from time to time be damaged by fire or other casualty, and (d) that all additional buildings and improvements constructed by Tenant pursuant to this Article which remain in place after the termination of this Lease for any cause other than the purchase of the Project pursuant to Article XVII hereof shall, upon and in the event of such termination, become the separate and absolute property of Issuer.

ARTICLE XIII

Section 13.1. Securing of Permits and Authorizations. Tenant shall not do or permit others under its control to do any work in or in connection with the Project or related to any repair, rebuilding, restoration, replacement, alteration of or addition to the Project, or any part thereof, unless all requisite municipal and other governmental permits and authorizations shall have first been procured and paid for. All such work shall be done in a good and workmanlike manner and in compliance with all applicable building, zoning and other laws, ordinances, governmental regulations and requirements and in accordance with the requirements, rules and regulations of all insurers under the policies required to be carried under the provisions of this Lease.

Section 13.2. Mechanics' Liens. Tenant shall not do or suffer anything to be done whereby the Project, or any part thereof, may be encumbered by any mechanics' or other similar lien and if, whenever and so often as any mechanics' or other similar lien is filed against the Project, or any part thereof, Tenant shall discharge the same of record within Thirty (30) days after the date of filing. Notice is hereby given that Issuer does not authorize or consent to and shall not be liable for any labor or materials furnished to Tenant or anyone claiming by, through or under Tenant upon credit, and that no mechanics' or similar lien for any such labor, services or materials shall attach to or affect the reversionary or other estate of Issuer in and to the Project, or any part thereof.

Section 13.3. Contest of Liens. Tenant, notwithstanding the above, shall have the right to contest any such mechanics' or other similar lien if within said Thirty (30) day period stated above it (i) notifies Issuer in writing of its intention so to do, and if requested by Issuer, deposits with the Trustee a surety bond issued by a surety company acceptable to Issuer as surety, in favor of Issuer or cash, in the amount of the lien claim so contested, indemnifying and protecting Issuer from and against any liability, loss, damage, cost and expense of whatever kind or nature growing out of or in any way connected with said asserted lien and the contest thereof, and (ii) diligently prosecutes such contest, at all times effectively staying or preventing any official or judicial sale of the Project or any part thereof or interest therein, under execution or otherwise, and (iii) promptly pays or otherwise satisfies any final judgment adjudging or enforcing such contested lien claim and thereafter prom ptly procures record release or satisfaction thereof.

Section 13.4. Utilities. All utilities and utility services used by Tenant in, on or about the Project shall be contracted for by Tenant in Tenant's own name and Tenant shall, at its sole cost and expense, procure any and all permits, licenses or authorizations necessary in connection therewith.

ARTICLE XIV

Section 14.1. Indemnity. Tenant shall and hereby covenants and agrees to indemnify, protect, defend and save Issuer and the Trustee harmless from and against any and all claims, demands, liabilities and costs, including attorneys' fees, arising from damage or injury, actual or claimed, of whatsoever kind or character, to property or persons, occurring or allegedly occurring in, on or about the Project during the Term hereof, and upon timely written notice from Issuer or the Trustee, Tenant shall defend Issuer and the Trustee in any action or proceeding brought thereon; provided, however, that nothing contained in this Section shall be construed as requiring Tenant to indemnify Issuer of the Trustee for any claim resulting from any act or omission of Issuer or the Trustee, or their respective agents and employees.

ARTICLE XV

Section 15.1. Access to Project. Issuer, for itself and its duly authorized representatives and agents, including Trustee, reserves the right to enter the Project at all reasonable times during usual business hours throughout the Basic Term and the Additional Term for the purpose of (a) examining and inspecting the same, (b) performing such work made necessary by reason of Tenant's default under any of the provisions of this Lease, and (c) while an Event of Default is continuing hereunder, for the purpose of exhibiting the Project to prospective purchasers, lessees or mortgagees. Issuer may, during the progress of said work mentioned in (b) above, keep and store on the Project all necessary materials, supplies and equipment and shall not be liable for necessary inconvenience, annoyances, disturbances, loss of business or other damage suffered by reason of the performance of any such work or the storage of such materials, supplies and equipment.

ARTICLE XVI

Section 16.1. Option to Extend Term. Tenant shall have and is hereby given the right and option, to extend the term of this Lease for the Additional Term provided that (a) Tenant shall give Issuer written notice of its intention to exercise each such option at least Thirty (30) days prior to the expiration of the Basic Term and (b) Tenant is not in default hereunder in the payment of Basic Rent or Additional Rent the time it gives Issuer such notice or at the time the Additional Term commences. In the event Tenant exercises any of such options, the terms, covenants, conditions and provisions set forth in this Lease shall be in full force and effect and binding upon Issuer and Tenant during the Additional Term except that Tenant covenants and agrees that the Basic Rent during any extended term herein provided for shall be the sum of $100.00 per year, payable in advance on the first Business Day of such Additional Term.

ARTICLE XVII

Section 17.1. Option to Purchase Project. Subject to the provisions of this Article, Tenant shall have the right and option to purchase the Project at any time during the Term hereof. Tenant shall exercise its aforesaid option by giving Issuer written notice of Tenant's election to exercise its option and specifying the date, time and place of closing, which date (the "Closing Date") shall neither be earlier than Thirty (30) days nor later than One Hundred Eighty (180) days after the notice is given. Tenant may not, however, exercise its said option if Tenant is in default hereunder on the Closing Date.

Section 17.2. Quality of Title and Purchase Price. If said notice of election to purchase be given as aforesaid, Issuer shall and covenants and agrees to sell and convey its interests in and to the Project to Tenant on the Closing Date free and clear of all liens and encumbrances whatsoever except (a) those to which the title was subject on the date of Tenant's conveyance to Issuer of the Project, or to which title became subject with Tenant's written consent, or which resulted from any failure of Tenant to perform any of its covenants or obligations under this Lease, (b) taxes and assessments, general and special, if any, and (c) the rights, titles and interests of any party having condemned or who is attempting to condemn title to, or the use for a limited period of, all or any part of the Project, for the price and sum as follows (which Tenant shall and covenants and agrees to pay in cash at the time of delivery of Issuer's deed or other instrument or instruments of transfer to the Project t o Tenant as hereinafter provided):

(i) The full amount which is required to provide Issuer and the Trustee with funds sufficient, in accordance with the provisions of the Indenture, to pay at maturity or to redeem and pay in full (A) the principal of all of the Outstanding Bonds, (B) all interest due thereon to date of maturity or redemption, whichever first occurs, and (C) all costs, expenses and premiums incident to the redemption and payment of said Bonds in full, plus

(ii) $100.00.

Nothing in this Article shall release or discharge Tenant from its duty or obligation under this Lease to make any payment of Basic Rent or Additional Rent which, in accordance with the terms of this Lease, becomes due and payable prior to the Closing Date, or its duty and obligation to fully perform and observe all covenants and conditions herein stated to be performed and observed by Tenant prior to the Closing Date.

Section 17.3. Closing of Purchase. On the Closing Date Issuer shall deliver to Tenant its special warranty deed or other appropriate instrument or instruments of conveyance or assignment, properly executed and conveying the Project to Tenant free and clear of all liens and encumbrances whatsoever except as set forth in the preceding section above or conveying such other title to the Project as may be acceptable to Tenant, and then and there Tenant shall pay the full purchase price for the Project as follows: (a) the amount specified in clause (i) of Section 17.2 shall be paid to the Trustee who shall deposit the same in the Principal and Interest Payment Account and shall use the same to pay or redeem the Bonds and the interest thereon as provided in the Indenture, and (b) the amount specified in clause (ii) of said Section 17.2 shall be paid to Issuer; provided, however, nothing herein shall require Issuer to deliver its said special warranty deed or other appropriate instrument or instruments of assignment or conveyance to Tenant until after all duties and obligations of Tenant under this Lease to the date of such delivery have been fully performed and satisfied. Upon the delivery to Tenant of Issuer's said special warranty deed or other appropriate instrument or instruments of assignment or conveyance and payment of the purchase price by Tenant, this Lease shall, ipso facto, terminate.

Section 17.4. Effect of Failure to Complete Purchase. If, for any reason whatsoever, the purchase of the Project by Tenant pursuant to valid notice of election to purchase given as aforesaid is not effected on the Closing Date, this Lease shall be and remain in full force and effect according to its terms the same as though no notice of election to purchase had been given, except that:

(a) If such purchase is not effected on the Closing Date because of the failure or refusal of Tenant to fully perform and observe all of the covenants and conditions herein contained on Tenant's part to be performed or observed to the Closing Date, Tenant shall be deemed to be in default under this Lease and Issuer shall have such rights and Tenant shall have such duties and obligations as are stated in Article XX hereof with like effect as though written notice of default had been given and any grace period for the correction of such default had expired and said default remains unsatisfied.

(b) If such purchase is not effected on the Closing Date because on said date Issuer does not have and is unable to convey to Tenant such title to the Project as Tenant is required to accept, the Issuer shall use its best efforts to cure any such defect in its title to the Project. In the event the Issuer is unable to cure such defect in its title to the Project, Tenant shall have the right to cancel this Lease forthwith if, but only if, the principal of and interest on the Bonds and all costs incident to the redemption and payment of the Bonds have been paid in full.

Section 17.5. Application of Condemnation Awards if Tenant Purchases Project. The right of Tenant o exercise ion to purchase the Project under the provisions of this Article shall remain unimpaired notwithstanding any condemnation of title to, or the use for a limited period of, all or any part of the Project. If Tenant shall exercise its said option and pay the purchase price as provided in this Article, all of the condemnation awards received by Issuer after the payment of said purchase price, less all attorneys' fees and other expenses and costs incurred by Issuer in connection with such condemnation, shall belong and be paid to Tenant.

Section 17.6. Option Purchase Unimproved Portions of Land. Tenant shall have and is hereby given the right and option to purchase at any time, and from time to time, during the Term of this Lease a vacant part or vacant parts of the unimproved Land constituting a part of the Project; provided, however, Tenant shall furnish Issuer with a certificate of an Authorized Tenant Representative, dated not more than thirty (30) days prior to the date of the purchase and stating that, in the opinion of the Authorized Tenant Representative, (a) the portion of said Land with respect to which the option is exercised is not needed for the operation of the Project for the purposes herein stated and (b) the purchase will not impair the usefulness or operating efficiency or materially impair the value of the Project and will not destroy or materially impair the means of ingress thereto and egress, therefrom. Tenant shall exercise this option by giving Issuer written notice of Tenant's election to exercise its o ption and specifying the legal description and the date, time and place of closing, which date shall neither be earlier than forty-five (45) days nor later than sixty (60) days after the notice is given, and (c) specifying the appraised current fair market value of the portions of the Land with respect to which Tenant's Option is exercised as determined by an independent, qualified appraiser whose report shall be furnished to the Trustee together with Tenant's notice of election to purchase and (d) a certificate signed by the chief executive or chief financial officer of Tenant stating that no event has occurred and is continuing which, with notice or lapse of time or both, would constitute an Event of Default; provided, however, that Tenant may not exercise this option if there has occurred and is continuing any event which, with notice or lapse of time or both, would constitute an Event of Default at the time said notice is given and may not purchase said real property on the specified closing date if any such event has occurred and is continuing on said date. The option hereby given shall include the right to purchase a perpetual easement for right-of-way to and from the public roadway and the right to purchase such land as is necessary to assure that there will always be access between the real property purchase pursuant to these Section 17.6 through 17.10 and the public roadway.

Section 17.7. Quality of Title - Purchase Price. If said notice of election to purchase is given as provided in section 17.6 Issuer shall sell and convey the real property described in Tenant's aforesaid notice to Tenant on the specified date free and clear of all liens and encumbrances whatsoever except (i) those to which the title was subject on the date of commencement of the term of this Lease, or to which title became subject with Tenant's written consent, or which resulted from any failure of Tenant to perform any of its agreements or obligations under this Lease, (ii) taxes and assessments, general or special, if any, and (iii) the rights, titles and interests of any party having condemned or who is attempting to condemn title to, or the use for a limited period of, all or any part of the real property described in Tenant's aforesaid notice. The purchase price shall be an amount equal to the then current fair market value thereof, as determined with reference to the independent appraiser 's report furnished to the Trustee.

Section 17.8. Closing of Purchase. If Issuer has title to the real property free and clear of all liens and encumbrances whatsoever except as stated above or has such other title to the real property as may be acceptable to Tenant, then on the specified date, Issuer shall deliver to Tenant its special warranty deed, properly executed and conveying the real property of Tenant free and clear of all liens and encumbrances whatsoever except as stated above, and then and there Tenant shall pay the aforesaid purchase price, for the real property, said purchase price to be paid to the Trustee for the account of the Issuer and deposited by the Trustee in the Principal and Interest Account and shall be used to pay or redeem Bonds on the date the Bonds are first subject to redemption as provided in the Indenture; provided, however, nothing herein shall require Issuer to deliver its said special warranty deed to Tenant until after all duties and obligations of Tenant under this Lease to the date of such d elivery have been fully performed and satisfied.

Section 17.9. Effect of Purchase on Lease. The exercise by Tenant of the option granted under these Sections 17.6 to 17.10 and the purchase and sale and conveyance of a portion or portions of the Land constituting a part of the Project pursuant hereto shall in no way whatsoever affect this Lease, and all the terms and provisions hereof shall remain in full force and effect the same as though no notice of election to purchase had been given, and specifically, but not in limitation of the generality of the foregoing, exercise of such option shall not affect, alter, diminish, reduce or abate Tenant's obligations to pay all Basic Rent and Additional Rent required hereunder.

Section 17.10. Effect of Failure to Complete Purchase. If, for any reason whatsoever, the purchase by Tenant of the real property described in said notice is not effected on the specified date, this Lease shall be and remain in full force and effect according to its terms the same as though no notice of election to purchase had been given.

ARTICLE XVIII

Section 18.1. Damage and Destruction.

(a) If, during the Basic Term, the Project is damaged or destroyed, in whole or in part, by fire or other casualty, the Tenant shall promptly notify the Issuer and the Trustee in writing as to the nature and extent of such damage or loss and whether it is practicable and desirable to rebuild, repair, restore or replace such damage or loss.

(b) If the Tenant shall determine that such rebuilding, repairing, restoring or replacing is practicable and desirable, the Tenant shall forthwith proceed with and complete with reasonable dispatch such rebuilding, repairing, restoring or replacing. In such case, any Net Proceeds of casualty insurance required by this Lease and received with respect to any such damage or loss to the Project shall be paid to the Trustee and shall be deposited in the Project Replacement Fund and shall be used and applied for the purpose of paying the cost of such rebuilding, repairing, restoring or replacing such damage or loss. Any amount remaining in the Project Replacement Fund after such rebuilding, repairing, restoring or replacing shall be deposited into the Principal and Interest Payment Account.

(c) If the Tenant shall determine that rebuilding, repairing, restoring or replacing the Project are not practicable and desirable, any Net Proceeds of casualty insurance required by this Lease and received with respect to any such damage or loss to the Project shall be paid into the Principal and Interest Payment Account. The Tenant agrees that it shall be reasonable in exercising its judgment pursuant to this subsection (c).

(d) The Tenant shall not, by reason of its inability to use all or any part of the Project during any period in which the Project is damaged or destroyed, or is being repaired, rebuilt, restored or replaced nor by reason of the payment of the costs of such rebuilding, repairing, restoring or replacing, be entitled to any reimbursement or any abatement or diminution of the Basic Rent or Additional Rent payable by the Tenant under this Lease nor of any other obligations of the Tenant under this Lease except as expressly provided in this Section.

Section 18.2. Condemnation.

(a) If, during the Basic Term title to, or the temporary use of, all or any part of the Project shall be condemned by any authority exercising the power of eminent domain, the Tenant shall, within 90 days after the date of entry of a final order in any eminent domain proceedings granting condemnation, notify the Issuer and the Trustee in writing as to the nature and extent of such condemnation and whether it is practicable and desirable to acquire or construct substitute improvements.

(b) If the Tenant shall determine that such substitution is practicable and desirable, the Tenant shall forthwith proceed with and complete with reasonable dispatch the acquisition or construction of such substitute improvements. In such case, any Net Proceeds received from any award or awards with respect to the Project or any part thereof made in such condemnation or eminent domain proceeds shall be paid to the Trustee and shall be deposited in the Project Replacement Fund and shall be used and applied for the purpose of paying the cost of such substitution. Any amount remaining in the Project Replacement Fund after such acquisition or construction shall be deposited into the Principal and Interest Payment Account.

(c) If the Tenant shall determine that it is not practicable and desirable to acquire or construct substitute improvements, any Net Proceeds of condemnation awards received by the Tenant shall be paid into the Principal and Interest Payment Account. The Tenant agrees that it shall be reasonable in exercising its judgment pursuant to this subsection (c).

(d) The Tenant shall not, by reason of its inability to use all or any part of the Project during any such period of restoration or acquisition nor by reason of the payment of the costs of such restoration or acquisition, be entitled to any reimbursement or any abatement or diminution of the Basic Rent or Additional Rent payable by the Tenant under this Lease nor of any other obligations hereunder except as expressly provided in this Section.

(e) The Issuer shall cooperate fully with the Tenant in the handling and conduct of any prospective or pending condemnation proceedings with respect to the Project or any part thereof. In no event will the Issuer voluntarily settle or consent to the settlement of any prospective or pending condemnation proceedings with respect to the Project or any part thereof without the written consent of the Tenant.

Section 19.1. Termination by Reason of Change of Circumstances. If, at any time during the Basic Term, a Change of Circumstances occurs or the Bonds are called for redemption and payment upon the occurrence of a Determination of Taxability, then and in such event Tenant shall have the option to purchase the Project pursuant to Article XVII hereof or option to terminate this Lease by giving Issuer notice of such termination within Ninety (90) days after Tenant has actual knowledge of the event giving rise to such option; provided, however, that such termination shall not become effective unless and until none of the Bonds are Outstanding.

ARTICLE XX

Section 20.1. Remedies on Default. Whenever any Event of Default shall have happened and be continuing, the Issuer may take any one or more of the following remedial actions:

(a) By written notice to the Tenant upon acceleration of maturity of the Bonds as provided in the Indenture, the Trustee may declare the aggregate amount of all unpaid Basic Rent or Additional Rent then or thereafter required to be paid under this Lease by the Tenant to be immediately due and payable as liquidated damages from the Tenant, whereupon the same shall become immediately due and payable by the Tenant.

(b) Give Tenant written notice of intention to terminate this Lease on a date specified therein, which date shall not be earlier than Ten (10) days after such notice is given and, if all defaults have not then been cured on the date so specified, Tenant's rights to possession of the Project shall cease, and this Lease shall thereupon be terminated, and Issuer may re-enter and take possession of the Project as of Issuer's former estate; or

(c) without terminating the term hereof, or this Lease, re-enter the Project or take possession thereof pursuant to legal proceedings or pursuant to any notice provided for by law, and having elected to re-enter or take possession of the Project without terminating the term or this Lease, Issuer shall use reasonable diligence to relet the Project, or parts thereof, for such term or terms and at such rental and upon such other terms and conditions as Issuer may deem advisable, with the right to make alterations and repairs to the Project, and no such re-entry or taking of possession of the Project by Issuer shall be construed as an election on Issuer's part to terminate this Lease, and no such re-entry or taking of possession by Issuer shall relieve Tenant of its obligation to pay Basic Rent or Additional Rent (at the time or times provided herein), or of any of its other obligations under this Lease, all of which shall survive such re-entry or taking of possession, and Tenant shall continue to pay the Basic Rent and Additional Rent provided for in this Lease until the end of the Term, whether or not the Project shall have been relet, less the net proceeds, if any, of any reletting of the Project after deducting all of Issuer's expenses incurred in connection with such reletting, including without limitation, all repossession costs, brokerage commissions, legal expenses, expenses of employees, alteration costs and expenses of preparation of the Project for reletting.

Net proceeds of any reletting shall be deposited in the Principal and Interest Payment Account. Having elected to re-enter or take possession of the Project pursuant to subsection (c) hereunder, Issuer may (subject, however, to any restrictions against termination of this Lease in the Indenture), by notice to Tenant given at any time thereafter while Tenant is in default in the payment of Basic Rent of Additional Rent or in the performance of any other obligation under this Lease, elect to terminate this Lease in accordance with subsection (b) hereunder If, in accordance with any of the foregoing provisions of this Article, Issuer shall have the right to elect to re-enter and take possession of the Project, Issuer may enter and expel Tenant and those claiming through or under Tenant and remove the property and effects of both or either (forcibly if necessary) without being guilty of any manner of trespass and without prejudice to any remedies for arrears of Basic Rent or Additional Rent or preceding b reach of covenant.

Notwithstanding any provision of this Lease to the contrary and regardless of any election by Issuer or Trustee with respect to the exercise of any remedies provided herein, whenever an Event of Default shall have occurred and be continuing, Tenant shall not have the right to exercise any discretion or election with respect to the custody, use, application or other disposition of monies deposited or required to be deposited with Trustee by tenant or on behalf of Tenant, including but not limited to, proceeds of any insurance or condemnation awards.

Section 20.2. Survival of Obligations. Tenant covenants and agrees with Issuer and the Bondowners that until the Bonds and the interest thereon and redemption premium, if any, are paid in full or provision made for the payment thereof in accordance with the Indenture, its obligations under this Lease shall survive the cancellation and termination of this Lease, for any cause, and that Tenant shall continue to pay Basic Rent and Additional Rent and perform all other obligations provided for in this Lease, all at the time or times provided in this Lease.

Section 20.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Issuer is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Lease or now or hereafter existing at law or in equity or by statute, subject to the provisions of the Indenture. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power, or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than notice required herein.

ARTICLE XXI

Section 21.1. Performance of Tenant's Obligations by Issuer. If Tenant shall fail to keep or perform any of its obligations as provided in this Lease, then Issuer may (but shall not be obligated to do so) upon the continuance of such failure on Tenant's part for Ninety (90) days after notice of such failure is given Tenant by Issuer or the Trustee and without waiving of releasing Tenant from any obligation hereunder, as an additional but not exclusive remedy, make any such payment or perform any such obligation, and Tenant shall reimburse Issuer for all sums so paid by Issuer and all necessary or incidental costs and expenses incurred by Issuer in performing such obligations through payment of Additional Rent. If such Additional Rent is not so paid by Tenant within Ten (10) days of demand, Issuer shall have the same rights and remedies provided for in Article XX in the case of default by Tenant in the payment of Basic Rent.

ARTICLE XXII

Section 22.1. Surrender of Possession. Upon accrual of Issuer's right of re-entry as the result of Tenant's default hereunder or upon the cancellation or termination of this Lease by lapse of time or otherwise, Tenant shall peacefully surrender possession of the Project to Issuer in good condition and repair, ordinary wear and tear excepted; provided, however, Tenant shall have the right, prior to or within Sixty (60) days after the termination of this Lease, to remove from or about the Project the buildings, improvements, machinery, equipment, personal property, furniture and trade fixtures which Tenant owns under the provisions of this Lease and not constituting a part of the Project. All repairs to and restorations of the Project required to be made because of such removal shall be made by and at the sole cost and expense of Tenant. All buildings, improvements, machinery, equipment, personal property, furniture and trade fixtures owned by Tenant and which are not so removed from or about the Project prior to or within Sixty (60) days after the termination of this Lease shall become the separate and absolute property of Issuer.

ARTICLE XXIII

Section 23.1. Notices. All notices required or desired to be given hereunder shall be in writing and shall be delivered in person to the Notice Representative or mailed by registered or certified mail to the Notice Address. All notices given by certified or registered mail as aforesaid shall be deemed duly given as of the date they are so mailed.

ARTICLE XXIV

Section 24.1. Net Lease. The parties hereto agree (a) that this Lease is intended to be a net lease, (b) that the payments of Basic Rent and Additional Rent are designed to provide Issuer and the Trustee with funds adequate in amount to pay all principal of and interest on the Bonds as the same become due and payable and to pay and discharge all of the other duties and requirements set forth herein, and (c) that to the extent that the payments of Basic Rent and Additional Rent are not adequate to provide Issuer and the Trustee with funds sufficient for the purposes aforesaid, Tenant shall be obligated to pay, and it does hereby covenant and agree to pay, upon demand therefor, as Additional Rent, such further sums of money as may from time to time be required for such purposes.

Section 24.2. Funds Held by Trustee After Payment of Bonds. If, after the principal of and interest on the Bonds and all costs incident to the payment of Bonds have been paid in full, the Trustee holds unexpended funds received in accordance with the terms hereof, such unexpended funds shall, except as otherwise provided in this Lease and the Indenture and after payment therefrom to Issuer of any sums of money then due and owing by Tenant under the terms of this Lease, be the absolute property of and be paid over forthwith to Tenant.

ARTICLE XXV

Section 25.1. Rights and Remedies. The rights and remedies reserved by Issue and Tenant hereunder and those provided by law shall be construed as cumulative and continuing rights. No one of them shall be exhausted by the exercise thereof on one or more occasions. Issuer and Tenant shall each be entitled to specific performance and injunctive or other equitable relief for any breach or threatened breach of any of the provisions of this Lease, notwithstanding the availability of an adequate remedy at law, and each party hereby waives the right to raise such defense in any proceeding in equity.

Section 25.2. Waiver of Breach. No waiver of any breach of any covenant or agreement herein contained shall operate as a waiver of any subsequent breach of the same covenant or agreement or as a waiver of any breach of any other covenant or agreement, and in case of a breach by either party of any covenant, agreement or undertaking, the nondefaulting party may nevertheless accept from the other any payment or payments or performance hereunder without in any way waiving its right to exercise any of its rights and remedies provided for herein or otherwise with respect to any such default or defaults which were in existence at the time such payment or payments or performance were accepted by it.

Section 25.3. Issuer Shall Not Unreasonably Withhold Consents and Approvals. Wherever in this Lease it is provided that Issuer shall, may or must give its approval or consent, or execute supplemental agreements, exhibits or schedules, Issuer shall not unreasonably, arbitrarily or unnecessarily withhold or refuse to give such approvals or consents or refuse to execute such supplemental agreements, exhibits or schedules.

ARTICLE XXVI

Section 26.1. Financial Reports. So long as any Bonds are outstanding and unpaid and subject to the terms of the Indenture, Tenant shall furnish or cause to be furnished to Trustee, as soon as practicable after the end of each fiscal year and in any event within 120 days thereafter, duplicate copies of the financial statements of Tenant certified to by independent certified public accountants of recognized standing selected by Tenant. Such financial statements shall set forth in comparative form the figures for the previous fiscal year and such financial statements shall be prepared in accordance with generally accepted accounting principles consistently applied (except for any change in accounting principles with which such certified public accountants concur) and the examination of such accountants in connection with such financial statements shall be made in accordance with generally accepted auditing standards, and accordingly include such tests of the accounting records and such other auditing procedures as considered necessary in the circumstances.

Section 26.2. Quiet Enjoyment and Possession. So long as Tenant shall not be in default under this Lease, Tenant shall and may peaceably and quietly have, hold and enjoy the Project.

ARTICLE XXVII

Section 27.1. Tax Credits and Depreciation. Tenant shall be entitled to claim the full benefit of (i) any investment or other credit against federal or state income tax allowable with respect to expenditures of the character contemplated hereby under any federal or state income tax laws now or from time to time hereafter in effect, and (2) any deduction for depreciation with respect to the Project for purposes of federal or state income taxation. Issuer agrees that it will upon Tenant's request execute all such elections, returns or other documents which may be reasonably necessary or required to more fully assure the availability of such benefits to Tenant.

ARTICLE XXVIII

Section 28.1. Amendments. This Lease may be amended, changed or modified in the following manner:

(a) With respect to any amendment, change or modification which will materially adversely affect the security or rights of the Bondowners, by an agreement in writing executed by Issuer and Tenant and consented to in writing by the owners of at least Sixty-six and Two-thirds percent (66-2/3%) of the aggregate principal amount of the Bonds then outstanding.

(b) With respect to any amendment, change or modification which reduces the Basic Rent or Additional Rent, or any amendment which reduces the percentage of Bondowners whose consent is required for any such amendment, change or modification, by an agreement in writing executed by Issuer and Tenant and consented to in writing by the owners of One Hundred percent (100%) of the aggregate principal amount of the Bonds then outstanding; and

(c) With respect to all other amendments, changes, or modifications, by an agreement in writing executed by Issuer and Tenant.

At least Thirty (30) days prior to the execution of any agreement pursuant to (c) above, Issuer and Tenant shall furnish the Trustee and the Purchaser of the Bonds with a copy of the amendment, change or modification proposed to be made.

Section 28.2. Granting of Easements. If no Event of Default under this Lease shall have happened and be continuing, Tenant may, at any time or times, (a) grant easements, licenses and other rights or privileges in the nature of easements with respect to any property included in the Project, free from any rights of Issuer or the Bondowners, or (b) release existing easements, licenses, rights-of-way and other rights or privileges, all with or without consideration and upon such terms and conditions as Tenant shall determine, and Issuer agrees, to the extent that it may legally do so, that it will execute and deliver any instrument necessary or appropriate to confirm and grant or release any such easement, license, right-of-way or other right or privilege or any such agreement or other arrangement, upon receipt by Issuer of: (i) a copy of the instrument of grant or release or of the agreement or other arrangement, (ii) a written application signed by the Authorized Tenant Representative requesting such instrument and (iii) a certificate executed by Tenant stating (aa) that such grant or release is not detrimental to the proper conduct of the business of Tenant, and (bb) that such grant or release will not impair the effective use or interfere with the efficient and economical operation of the Project and will not materially adversely affect the security of the Bondowners. if the instrument of grant shall so provide, any such easement or right and the rights of such other parties thereunder shall be superior to the rights of Issuer and the Bondowners and shall not be affected by any termination of this Lease or default on the part of Tenant hereunder. If no Event of Default shall have happened and be continuing, any payments or other consideration received by Tenant for any such grant or with respect to or under any such agreement or other arrangement shall be and remain the property of Tenant, but, in the event of the termination of this Lease or default of Tenant, all rights then existing of Tenant with respect to or under such grant shall inure to the benefit of and be exercisable by Issuer.

Section 28.3. Security Interests. Issuer and Tenant agree to execute and deliver all instruments (including financing statements and statements of continuation thereof) necessary for perfection of and continuance of the security interest of Issuer in and to the Project. The Trustee shall file or cause to be filed all such instruments required to be so filed and shall continue or cause to be continued the liens of such instruments for so long as the Bonds shall be Outstanding.

Section 28.4. Incorporation by Reference. The provisions of the Indenture are hereby incorporated by reference as if fully set forth herein. In the event of any conflicts between the provision of the Indenture and this Lease, the provisions of the Indenture shall be controlling.

Section 28.5. Construction and Enforcement. This Lease shall be construed and enforced in accordance with the laws of the State. The provisions of this Lease shall be applied and interpreted in accordance with the rules of interpretation set forth in the Indenture. Wherever in this Lease it is provided that either party shall or will make any payment or perform or refrain from performing any act or obligation, each such provision shall, even though not so expressed, be construed as an express covenant to make such payment or to perform, or not to perform, as the case may be, such act or obligation.

Section 28.6. Invalidity of Provisions of Lease. If , for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shall not be affected thereby.

Section 28.7. Covenants Binding on Successors and Assigns. The covenants, agreements and conditions herein contained shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

Section 28.8. Section Headings. The section headings hereof are for the convenience of reference only and shall not be treated as a part of this Lease or as affecting the true meaning of the provisions hereof. The reference to section numbers herein or in the Indenture shall be deemed to refer to the numbers preceding each section.

Section 28.9. Execution of Counterparts. This Lease may be executed simultaneously in multiple counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

In Witness Whereof, the parties hereto have executed these presents as of the day and year first above written.

Reno County, Kansas

By: /s/ Larry Sharp

Larry Sharp, Chairman

[SEAL] Board of County Commissioners

ATTEST:

/s/ Shari Gagnebin

Shari Gagnebin, County Clerk

"ISSUER"

Wheeled Coach Industries, Inc.

By: /s/ Larry W. Sayre

Larry W. Sayre, Vice President of Finance & CFO.

"TENANT"

EX-10

AMENDMENT NO. 1 TO

LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT (this "Amendment") is dated as of October 15, 2002 and is made by and among (i) 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"), MOBILE-TECH CORPORATION, a Kansas corporation ("Mobile"), BRUTZER CORPORATION, an Ohio corporation ("Brutzer"), MID BUS, INC., an Ohio corporation ("Mid Bus"), MOBILE PRODUCTS, INC., a Kansas corporation ("Mobile Products"), and WORLD TRANS, INC., a Kansas corporation ("World Trans," and, together with Collins, Bus, WCI, Capacity, Mobile, Brutzer, Mid Bus, and Mobile Products, the "Borrowers" and each, a "Borrower"), (ii) the financial institutions party to the "Loan Agreement" (as hereinafter defined) from time to time as the Lenders (individ ually, a "Lender" and collectively, the "Lenders"), and (iii) FLEET CAPITAL CORPORATION, a Rhode Island corporation ("FCC"), as administrative agent for the Lenders (the "Agent").

Preliminary Statements

The Borrowers, the Lenders, and the Agent are parties to a Loan and Security Agreement dated as of May 17, 2002 (the "Loan Agreement"; terms defined in the Loan Agreement (and not otherwise defined herein) are used in this Amendment as defined in the Loan Agreement).

The Borrowers have requested that the Loan Agreement be modified (i) to increase the Applicable Percentage as to Eligible Special Inventory from 50% to 80% for a period commencing on March 1, 2003 through and until February 28, 2004, subject to a $4.4 million sublimit, and (ii) to increase the limit on net obligations of the Borrowers in respect of Interest Rate Protection Agreements to which the Agent, a Lender or any Affiliate of the Agent or any Lender is a counterparty before the Agent may set aside reserves against the Borrowing Base from $600 thousand to $1 million.

The Agent and Lenders have agreed to the aforementioned modifications subject to the provisions of this Amendment.

Accordingly, in consideration of the Loan Agreement, the Loans made by the Lenders and outstanding thereunder, the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Amendments to Loan Agreement. Effective as provided in Section 2 of this Amendment, the Loan Agreement is hereby amended as follows:
1. by amending Section 1.1 Definitions by inserting therein in appropriate alphabetical order, the following new definitions:

"Amendment No. 1 Effective Date" means the date on which the Amendment No. 1 to Loan and Security Agreement dated as of October 15, 2002 has become effective in accordance with its terms.

"Eligible Special Inventory" means, as of the date of determination, Inventory that (i) constitutes Eligible Raw Materials Inventory and (ii) conforms to the description of Special Inventory provided in the letter agreement among Borrowers, Agent and FCC dated as of October 15, 2002.

"Special Inventory Sublimit" means the sum of $4,400,000.

(b) by further amending Section 1.1 Definitions by amending the following definitions in their entireties to read as follows:

"Applicable Percentage" means, as applied to

(a) Eligible Accounts - 85%,

(b) Eligible Finished Goods Inventory - (i) 95% as to all Eligible Finished Goods Inventory described in clause (a) of the definition thereof, and (ii) 50% as to all Eligible Finished Goods Inventory described in clause (b) of the definition thereof,

(c) Eligible Chassis Inventory - 95%,

(d) Eligible Ford Finished Goods Inventory - 95%,

(e) Eligible Raw Materials Inventory (other than Eligible Special Inventory) - 50%,

(f) Eligible Used Vehicle Inventory - 50%, and

(g) Eligible Special Inventory - (i) 80% during the period from March 1, 2003 through and until February 28, 2004; and (ii) otherwise, 50%,

or in each case such lesser percentage as the Agent may in the exercise of its reasonable credit judgment determine from time to time.

"Borrowing Base" means, at any time, an amount equal to:

(a) the Applicable Percentage of the face value of Eligible Accounts due and owing to the Borrowers at such time, plus

(b) the lesser of (i) the Applicable Percentage of the Cost of Eligible Finished Goods Inventory, plus, from the Effective Date to and including December 31, 2002, the lesser of the Applicable Percentage of the Cost of Eligible Ford Finished Goods Inventory (exclusive of chassis incorporated in such Eligible Ford Finished Goods Inventory) and the Ford Finished Goods Inventory Sublimit and (ii) the Finished Goods Sublimit, plus

(c) the lesser of (i) the Applicable Percentage of the Cost of Eligible Chassis Inventory and (ii) the Chassis Sublimit, plus

(d) the lesser of (i) the Applicable Percentage of the Cost of Eligible Raw Materials Inventory (other than Eligible Special Inventory) and (ii) the Raw Materials Sublimit, plus

(e) the lesser of (i) the Applicable Percentage of the Cost of Eligible Used Vehicle Inventory and (ii) the Used Vehicle Sublimit, plus

(f) the lesser of (i) the Applicable Percentage of the Cost of Eligible Special Inventory and (ii) the Special Inventory Sublimit, minus

(g) the Rent Reserve, minus

(h) such other reserves as the Agent in its reasonable credit judgment may establish from time to time, including, without limitation, reserves for net obligations, in excess of $1,000,000, of the Borrowers in respect of Interest Rate Protection Agreements to which the Agent, a Lender or any Affiliate of the Agent or any Lender is a counterparty (the amount of any such obligations to be equal at any time to the termination value of the Interest Rate Protection Agreements giving rise to such obligations that would be payable by the Borrowers (or any of them) at such time), warranty claims, customer deposits (if not offset against accounts receivable), credit memos over 90 days old, and parts and supplies.

"Financed Capex" means Capital Expenditures (i) funded with the proceeds of Indebtedness (excluding Loans) or (ii) represented by Capitalized Lease Obligations.

"Long-Term Liabilities" means, with respect to any Person, the aggregate amount of all Liabilities of such Person other than Current Maturities.

"Term Note B" means any of the promissory notes made by the Borrowers, jointly and severally, payable to the order of a Lender evidencing the obligations of such Borrowers to pay the aggregate unpaid amount of Term Loan B made by such Lender to the Borrowers (and any promissory note or notes that may be issued from time to time in substitution, renewal, extension, replacement or exchange therefor whether payable to the same or different Lender, whether issued in connection with a Person becoming a Lender after the Effective Date or otherwise), substantially in the form of Exhibit B-2 hereto, with all blanks properly completed, either as originally executed or as the same may be from time to time be supplemented, modified, amended, renewed, extended or refinanced, and "Term Notes B" means more than one such Term Note B.

2. Effectiveness of Amendment. This Amendment shall be effective as of the first date (the "Amendment No. 1 Effective Date") on which the Agent has received each of the following, each in form and substance satisfactory to the Agent (terms defined in the Loan Agreement as amended by this Amendment being used in this Section 2 as so defined) and in a number of copies sufficient for each Lender:
1. four (4) copies of this Amendment duly executed and delivered by each Borrower and the Required Lenders;
2. a certificate of the secretary or of an assistant secretary of each Borrower having attached thereto the constituent documents of such Borrower (or containing the certification of said officer that such constituent documents have not been amended or modified since last delivered to the Lenders pursuant to the Loan Agreement), a copy of any corporate resolutions or evidence of any other corporate or other action taken by such Borrower to authorize the execution and delivery of this Amendment and performance of its obligations under the Loan Agreement as amended by this Amendment, and a listing of the names of the officers of such Borrower, and their specimen signatures, authorized to execute and deliver this Amendment and any related Loan Documents on behalf of such Borrower;
3. a certificate of the President of each Borrower or the chief financial officer of each Borrower to the effect that, after giving effect to this Amendment, the representations and warranties of the Borrowers set forth in the Loan Agreement are true and correct in all material respects, and that no Default or Event of Default exists; and
4. such other agreements, certificates, instruments and other documents as any Lender through the Agent may reasonably request in connection with the transactions contemplated hereby.
3. Lender Fee. As consideration for the Agent and Lenders entering into this Amendment, Borrowers agree that on or after December 15, 2002, the Agent shall charge to Borrowers' loan account the one-time principal sum of $40,000 for the ratable benefit of the Lenders.
4. Representations and Warranties. Each Borrower hereby represents and warrants to the Agent and the Lenders that it has the corporate or other power and has taken all actions necessary to authorize it to execute and deliver this Amendment and the other documents contemplated to be delivered by it pursuant to this Amendment and to perform its obligations under the Loan Agreement as amended by this Amendment and under such other documents; that this Amendment has been and each such other document when executed and delivered by such Borrower will have been, duly executed and delivered by such Borrower; and that the Loan Agreement as amended hereby and each such other document, constitute legal, valid and binding obligations of each Borrower, enforceable against each Borrower in accordance with their respective terms.
5. Effect of Amendment. From and after the effectiveness of this Amendment, all references in the Loan Agreement and in any other Loan Document to "this Agreement," "the Loan Agreement," "hereunder," "hereof" and words of like import referring to the Loan Agreement, shall mean and be references to the Loan Agreement as amended by this Amendment. Except as expressly amended hereby, the Loan Agreement and all terms, conditions and provisions thereof remain in full force and effect and are hereby ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.
6. Counterpart Execution; Governing Law; Costs and Expenses.
1. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement.
2. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Georgia.
3. Expenses. In furtherance and not in limitation of the provisions of the Loan Agreement, the Borrowers will pay or reimburse the Agent and the Lenders for the payment of, their costs and expenses, including reasonable fees and disbursements of counsel actually incurred, in connection with the preparation and delivery of this Amendment.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective officers thereunto duly authorized, as of the date first above written.

BORROWERS:

COLLINS INDUSTRIES, INC., a Missouri corporation

By: __/s/ Larry W. Sayre__________

Larry W. Sayre,

Vice President of Finance and

Chief Financial Officer

COLLINS BUS CORPORATION, a Kansas corporation

By: __/s/ Larry W. Sayre__________

Larry W. Sayre,

Vice President of Finance and

Chief Financial Officer

WHEELED COACH INDUSTRIES, INC., a Florida corporation

By: __/s/ Larry W. Sayre__________

Larry W. Sayre,

Vice President of Finance and

Chief Financial Officer

CAPACITY OF TEXAS, INC., a Texas corporation

By: __/s/ Larry W. Sayre__________

Larry W. Sayre,

Vice President of Finance and

Chief Financial Officer

[SIGNATURES CONTINUE ON NEXT PAGE]

[SIGNATURES CONTINUE FROM PRIOR PAGE]

MOBILE-TECH CORPORATION, a Kansas corporation

By: __/s/ Larry W. Sayre__________

Larry W. Sayre,

Vice President of Finance and

Chief Financial Officer

BRUTZER CORPORATION, an Ohio corporation

By: __/s/ Larry W. Sayre__________

Larry W. Sayre,

Vice President of Finance and

Chief Financial Officer

MID BUS, INC., an Ohio corporation

By: __/s/ Larry W. Sayre__________

Larry W. Sayre,

Vice President of Finance and

Chief Financial Officer

MOBILE PRODUCTS, INC., a Kansas corporation

By: __/s/ Larry W. Sayre__________

Larry W. Sayre,

Vice President of Finance and

Chief Financial Officer

[SIGNATURES CONTINUE ON NEXT PAGE]

[SIGNATURES CONTINUE FROM PRIOR PAGE]

WORLD TRANS, INC., a Kansas corporation

By: __/s/ Larry W. Sayre__________

Larry W. Sayre,

Vice President of Finance and

Chief Financial Officer

[SIGNATURES CONTINUE ON NEXT PAGE]

[SIGNATURES CONTINUE FROM PRIOR PAGE]

AGENT:

FLEET CAPITAL CORPORATION, a Rhode Island corporation, as Agent

By: _________________________________

Name:_______________________________

Title:________________________________

[SIGNATURES CONTINUE ON NEXT PAGE]

[SIGNATURES CONTINUE FROM PRIOR PAGE]

LENDER:

FLEET CAPITAL CORPORATION, a Rhode Island corporation

By: __________________________________

Name:_______________________________

Title:_________________________________

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

EX-10

FINANCING AGREEMENT

Dated as of October 16, 2002

by and between

ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY

(the "Issuer")

and

WHEELED COACH INDUSTRIES, INC.

(the "Borrower")

Relating to:

$2,000,000

Orange County Industrial Development Authority

INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 2002

(Wheeled Coach Industries, Inc. project)

The interest of the Orange County Industrial Development Authority in this Financing Agreement and all amounts receivable hereunder (except the right to receive payments, if any, under Sections 4.2(c), 5.2 and 6.3 hereof and the right to consent to any matter) has been assigned to Wells Fargo Bank Minnesota, National Association, as Trustee under the Indenture of Trust dated as of October 16, 2002 from the Orange County Industrial Development Authority.

Table of Contents

ARTICLE I DEFINITIONS

Section 1.1. Definition of Terms.

ARTICLE II REPRESENTATIONS

Section 2.1. Representations of the Issuer.

Section 2.2. Representations of the Borrower.

ARTICLE III CONSTRUCTION OF THE PROJECT; ISSUANCE OF THE BONDS

Section 3.1. Agreement to Construct and Equip the Project.

Section 3.2. Agreement to Issue Bonds; Application of Bond Proceeds.

Section 3.3. Use of Proceeds; Prohibited Use of Project; Disbursements from the Construction Fund.

Section 3.4. Establishment of Completion Date; Obligation of the Borrower to Complete.

Section 3.5. Investment of Moneys in Construction Fund and Bond Fund.

Section 3.6. Arbitrage Certifications.

ARTICLE IV LOAN; REPAYMENT PROVISIONS; OTHER PAYMENTS

Section 4.1. Loan of Bond Proceeds.

Section 4.2. Repayment of Loan; Other Amounts Payable.

Section 4.3 Security Interest Granted.

Section 4.4. No Defense or Set-Off; Unconditional Obligation.

Section 4.5. Assignment of Issuer's Rights.

ARTICLE V SPECIAL COVENANTS AND AGREEMENTS

Section 5.1. The Borrower to Maintain Its Corporate Existence; Conditions under Which Exceptions Permitted.

Section 5.2. Release and Indemnification Covenants.

Section 5.3. Validity and Tax Exempt Status of the Bonds.

Section 5.4. Economic Life of Project

Section 5.5. Insurance.

Section 5.6. Maintenance and Repair.

Section 5.7. Right to Discontinue Operation of Project.

Section 5.8. Insurance and Condemnation Awards.

Section 5.9. Qualification in Florida.

Section 5.10. Taxation of Project.

Section 5.11. Borrower's Performance Under Indenture.

Section 5.12. Arbitrage Rebate.

Section 5.13. Records and Financial Statements of the Borrower.

Section 5.14. Utility Charges.

ARTICLE VI EVENTS OF DEFAULT AND REMEDIES

Section 6.1. Events of Default.

Section 6.2. Remedies on Default.

Section 6.3. Agreement to Pay Attorneys' Fees and Expenses.

Section 6.4. No Remedy Exclusive.

Section 6.5. No Additional Waiver Implied by One Waiver.

ARTICLE VII OPTIONAL AND MANDATORY PREPAYMENT

Section 7.1. Obligation to Prepay Installments.

Section 7.2. Option to Prepay Installments.

Section 7.3. Amount of Prepayment in Certain Events.

Section 7.4. Option to Prepay Installments for Optional Redemption of Bonds.

Section 7.5. Notice of Prepayment.

Section 7.6. Redemption of Bonds with Prepayment Moneys.

ARTICLE VIII MISCELLANEOUS

Section 8.1. Notices.

Section 8.2. Assignments.

Section 8.3. Severability.

Section 8.4. Execution of Counterparts.

Section 8.5. Amounts Remaining in Bond Fund.

Section 8.6. Amendments, Changes and Modifications.

Section 8.7. Governing Law.

Section 8.8. Authorized Borrower Representatives.

Section 8.9. Term of the Agreement.

Section 8.10. Binding Effect.

FINANCING AGREEMENT

THIS FINANCING AGREEMENT, (the "Agreement") made and entered into as of October 16, 2002 by and between the ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a public body corporate and politic of the State of Florida, pursuant to Chapter 159, Part III, party of the first part (the "Issuer"), and WHEELED COACH INDUSTRIES, INC., a wholly owned subsidiary of Collins Industries, Inc. and a corporation organized and existing under the laws of the State of Florida, party of the second part (the "Borrower").

W I T N E S S E T H:

WHEREAS, the Issuer is empowered by the provisions of the Florida Industrial Development Financing Act, being Part III of Chapter 159, Florida Statutes, as supplemented and amended (the "Act"), to issue its revenue bonds (payable solely and only from the revenues derived from the repayment of the loan of the proceeds of such bonds) to finance "projects" within the meaning of the Act (including manufacturing facilities for the purposes set forth in the Act); and

WHEREAS, the Issuer has made necessary arrangements with the Borrower, for the financing of a portion of the costs of acquiring and installing certain equipment, including software necessary to operate the equipment located in Orange County, Florida (the "Project") for use by the Borrower in connection with its emergency vehicle manufacturing facility located at 2737 North Forsyth Road, Winter Park, Florida 32792 (the "Manufacturing Facility"); and

WHEREAS, the Issuer has entered into an Indenture of Trust dated as of October 16, 2002 (the "Indenture"), with Wells Fargo Bank Minnesota, National Association, as trustee, a national banking association duly organized under the laws of the United States of America, existing and authorized to accept and execute trusts of the character herein set out, with its principal corporate trust office located in Minneapolis, Minnesota (the "'Trustee"), specifying the terms and conditions of the acquisition and completion of construction by the Issuer of the Project, the loan of proceeds of the Issuer's Industrial Development Revenue Bonds, Series 2002 (Wheeled Coach Industries, Inc. Project) (the "Bonds") in the aggregate principal amount of $2,000,000 to the Issuer for the financing thereof, and the repayment of said loan; and

WHEREAS, all Bonds issued under the Indenture will be secured by a pledge and assignment of this Agreement (except as otherwise herein provided); and

WHEREAS, in consideration of the respective representations and agreements herein contained, the parties hereto agree as follows (provided, that in the performance of the agreements of the Issuer herein contained, any obligation it may thereby incur for the payment of money shall be a limited obligation of the Issuer, payable solely out of the proceeds derived from this Agreement and the sale of the Bonds referred to in Section 3.2 hereof, all as herein provided); and

WHEREAS, neither the Issuer nor the State of Florida or any political subdivision thereof shall in any way be obligated to pay the principal, premium, if any, or interest on the Bonds as the same shall become due, and the issuance of the Bonds shall not directly, indirectly or contingently obligate the Issuer, the State of Florida or any political subdivision thereof, to levy or pledge any form of taxation whatsoever therefor or to make any appropriation for their payment but shall be payable solely from the funds and revenues pledged under and pursuant to this Agreement and the Indenture.

NOW, THEREFORE, for and in consideration of the premises hereinafter contained, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1. Definition of Terms.

Certain terms used in this Agreement are hereinafter defined in this Section 1.1. When used herein, such terms shall have the meanings given to them by the language employed in this Article I defining such terms, and the plural includes the singular and the singular includes the plural, unless the context clearly indicates otherwise:

"Act" means the Florida Industrial Development Financing Act, being Part III of Chapter 159, Florida Statutes, as amended.

"Agreement" means this Agreement between the Issuer and the Borrower as from time to time supplemented and amended.

"Authorized Borrower Representative" means such person at the time and from time to time designated by written certificate furnished to the Issuer and the Trustee containing the specimen signature of such person and signed on behalf of the Borrower by the chairman, the president, any vice president, the treasurer or any assistant treasurer of the Borrower to act on behalf of the Borrower. Such certificate may designate an alternate or alternates.

"Bond Counsel" means Miller, Canfield, Paddock and Stone, P.L.C., or such other nationally recognized municipal bond counsel of recognized expertise with respect to such matters as may be mutually satisfactory to the Issuer, the Borrower (so long as no event of default is then existing under Section 6.1(a), (b) or (d) of this Agreement) and the Trustee.

"Bond Fund" means the Bond Fund created and established in Section 5.2 of the Indenture.

"Bonds" means the $2,000,000 original aggregate principal amount of Industrial Development Revenue Bonds, Series 2002 (Wheeled Coach Industries, Inc. Project) authorized to be issued by the Issuer pursuant to the terms and conditions of Sections 2.1 and 2.2 of the Indenture.

"Borrower" means (i) Wheeled Coach Industries, Inc., the party of the second part hereto, and its successors and assigns and (ii) any surviving, resulting or transferee corporation as provided in Section 5.1 hereof.

"Change in Law" means any event not included in the definition of the term "Event of Taxability," the effect of which shall be to render the interest on the Bonds includable for any period in the gross income of the Bondowners or former Bondowners (other than a Bondowner who is a "substantial user" or a "related person" thereto) for Federal Income Tax purposes, including, but not limited to, the enactment or adoption (as determined by Bond Counsel) of any provision or change in the Code, or in the laws of the State of Florida or the regulations of any agency or instrumentality thereof (regardless of the effective date thereof) subsequent to the date hereof. The term "Change in Law" shall not include any change of any provision of the Code the effect of which is to subject interest on the Bonds to treatment as a tax preference item for purposes of computing any alternative minimum tax or other similar tax imposed on any Bondowner.

"Code" means the Internal Revenue Code of 1986, as amended.

"Completion Date" means the date of completion of construction of the Project.

"Construction Fund" means the Construction Fund created and established in Section 5.6 of the Indenture.

"Construction Period" means the period between the beginning of construction of the Project or the date on which Bonds are first delivered to the purchasers thereof, whichever is earlier, and the Completion Date.

"Cost of the Project" means the sum of the items authorized to be paid from the Construction Fund pursuant to the provisions of Section 3.3 hereof.

"Determination of Taxability" means a determination that the interest on the Bonds is includable in gross income of the Holder or the Beneficial Owner thereof for purposes of federal income taxation. A Determination of Taxability shall be deemed to have occurred upon the receipt by the Bond Trustee of a written notice from a current or former holder of a Bond, from the Issuer or from the Borrower of:

(a) the issuance of a preliminary adverse determination letter or similar written communication from by the Internal Revenue Service, or

(b) a determination of any court of competent jurisdiction in the United States, to the effect that the interest payable on the Bonds is included in the gross income of the Holders thereof for federal income tax purposes. In the event that a Holder of a Bond is contacted by the Internal Revenue Service regarding an investigation into the status of the interest on the Bonds and neither the Borrower nor the Issuer has notice of such investigation, no such Determination of Taxability shall be considered to exist as to such Holder unless.

(i) the registered owner or former registered owner of the Bond involved in such proceeding or action (a) gives the Borrower, the Issuer and the Bond Trustee notice of the commencement thereof within sixty (60) days of receipt of written notice by such Holder of such investigation and (b) (if the Borrower agrees to pay all expenses in connection therewith) offers the Borrower and the Issuer the opportunity to control unconditionally the defense thereof; and

(ii) either (a) the Borrower does not agree within thirty (30) days of receipt of such offer to pay such expenses and liabilities and to control such defense or (b) the Borrower shall undertake such defense.

No Determination of Taxability described above will result from the inclusion of interest on any Bond in the computation of minimum or indirect taxes or if the events which would otherwise give rise to a Determination of Taxability are the result of a change in the Code or regulations under the Code adopted and becoming effective after the date of issuance of the Bonds.

"Escrow Account" means the separate escrow account created in the Construction Fund by Section 5.8 of the Indenture.

"Event of Taxability" means the payment or incurring of capital expenditures, by Borrower or by any other person in excess of those permitted in the Code, or any other action by the Borrower or any other person including, but not limited to, the use of Bond proceeds which has the effect of causing the interest on the Bonds to become includable for any period in the gross income for Federal Income Tax purposes of any Owner or former Owner of the Bonds (other than an Owner who is a "substantial user" of the Project or a "related person" thereto).

"Indenture" means the Indenture of Trust, including any supplements or amendments thereto as therein permitted, between the Issuer and the Trustee, of even date herewith, pursuant to which the Bonds are authorized to be issued and pursuant to which certain of the Issuer's right, title and interest in this Agreement is pledged as security for the payment of principal, premium, if any, and interest on the Bonds.

"Issuer" means the Orange County Industrial Development Authority, the party of the first part hereto, and any successor body to the duties or functions of the Issuer.

"Manufacturing Facility" means the manufacturing facility for emergency vehicles owned and operated by the Borrower located at 2737 North Forsyth Road, Winter Park, Florida 32792.

"Project" means certain manufacturing equipment, software to operate same, facilities, structures and related property described in Exhibit A hereto, which is to be acquired with proceeds from the Bonds and installed in the Borrower's Manufacturing Facility.

"Security Interest" has the same meaning as given in Section 671.201(37), Fla. Stat. (2001).

"Reserved Rights" means (a) any right of the Issuer to give or to withhold its consent to any matter, (b) the rights of the Issuer to receive notices, (c) the rights of the Issuer under Section 4.2(c), 5.2, 6.3, and 8.11 of this Agreement, and (d) the rights of the Issuer to receive from the Guarantor under the Guaranty payments that the Borrower would be required to make in respect of the Sections of this Agreement referenced in (c) above.

"Tax Agreement" means the Tax Exemption Certificate and Agreement, dated as of the date of issuance of the Bonds, among the Issuer, the Trustee and the Borrower.

"Trustee" means Wells Fargo Bank Minnesota, National Association, as trustee, a national banking association duly organized under the laws of the United States of America, with its principal corporate trust office located in Minneapolis, Minnesota and/or any separate or co-trustee at the time serving as such under the Indenture.

The words 'hereof', "herein", "hereunder", and other words of similar import refer to this Agreement as a whole.

Unless otherwise specified, references to Articles, Sections, and other subdivisions of this Agreement are to he designated Articles, Sections, and other subdivisions of this Agreement as originally executed.

The headings of this Agreement are for convenience only and shall not define or limit the provisions hereof.

Terms defined in the Indenture and used herein shall have the same meanings herein as set forth in the Indenture.

ARTICLE II

REPRESENTATIONS

Section 2.1. Representations of the Issuer.

The Issuer makes the following representations as the basis for the undertakings on its part herein contained:

(a) The Issuer is a public body corporate and politic of the State of Florida, duly organized and validly existing under the laws and Constitution of the State of Florida. The Issuer has the power, pursuant to the provisions of the Act, to enter into the transactions contemplated by this Agreement and to carry out its obligations hereunder and under the Indenture and the Bonds. By proper action of the Issuer, the Issuer has been duly authorized to execute and deliver this Agreement, the Indenture and the Tax Agreement.

(b) To provide for the financing of the Cost of the Project, on the terms and conditions contained in the Indenture, the Issuer will issue the Bonds which will mature and bear interest as set forth in Article II of the Indenture and which will be subject to redemption as set forth in Article III of the Indenture; provided, however, that the Issuer makes no representations with respect to the sufficiency of the proceeds of the Bonds to finance the Project.

(c) The Bonds are to be issued under and secured by the Indenture, pursuant to which certain of the Issuer's right, title and interests in this Agreement will be pledged to the Trustee as security for payment of the principal of, premium, if any, and interest on the Bonds.

(d) The Issuer has not and will not pledge or otherwise transfer its right, title and interest in this Agreement other than to the Trustee to secure the Bonds.

(e) The Issuer has not been notified of any listing or proposed listing of it by the Internal Revenue Service as a bond issuer whose arbitrage certifications may not be relied upon.

Section 2.2. Representations of the Borrower.

The Borrower makes the following representations as the basis for the undertakings on its part herein contained:

(a) The Borrower is a corporation duly incorporated under the laws of the State of Florida and is in good standing in the State of Florida, has power to enter into and by proper corporate action has been duly authorized to execute and deliver this Agreement and the Tax Agreement.

(b) Neither the execution and delivery of this Agreement or the Tax Agreement, the consummation of the transactions contemplated hereby or thereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement or the Tax Agreement conflicts with or results in a breach of any of the terms, conditions or provisions of any corporate restriction or any agreement or instrument to which the Borrower is now a party or by which it is bound, or (with or without the giving of notice or the lapse of time, or both) constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance prohibited by the terms of any instrument or agreement to which the Borrower is now a party or by which it is bound.

(c) To the best of the Borrower's knowledge, the statements, information and descriptions contained in the Project Certificate, as of the date hereof and at the time of delivery of the Bonds, are and will be true and correct.

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ARTICLE III

CONSTRUCTION OF THE PROJECT; ISSUANCE OF THE BONDS

Section 3.1. Agreement to Construct and Equip the Project.

The Borrower agrees that it will acquire or construct, or complete the acquisition and construction of, the Project and construct, acquire and install other facilities and real and personal property deemed necessary by the Borrower for the operation of the Project, substantially in accordance with the plans and specifications therefor prepared by the Borrower, including any and all supplements, amendments and additions (or deletions) thereto (or therefrom); provided, however, that such other facilities and property shall not materially impair the effective use of the Project contemplated by this Financing Agreement.

Exhibit A hereto may be amended or supplemented from time to time upon receipt by the Issuer and the Trustee of:

(i) a certificate of an Authorized Borrower Representative describing in detail the proposed changes; and

(ii) a copy of the proposed form of amendment or supplement to Exhibit A hereto and such other documents, certificates and showings as may be required by counsel rendering the opinion in clause (iii) of this paragraph; and

(iii) an opinion of Bond Counsel to the effect that such amendment complies with the requirements of this Section 3.1 and will not adversely affect the validity of the Bonds or the exemption from federal income taxes of the interest thereon.

An amendment or supplement to Exhibit A hereto in accordance with the provisions of this Section shall not be or be deemed to be an amendment of this Agreement within the meaning of Section 8.6 hereof or Article XII of the Indenture.

Section 3.2. Agreement to Issue Bonds; Application of Bond Proceeds.

In order to provide funds to lend to the Borrower to finance the Cost of the Project as provided in Section 4.1 hereof, the Issuer agrees that it will issue under the Indenture, sell and cause to be delivered to the Underwriter, the Bonds in the aggregate principal amount of $2,000,000, bearing interest and maturing as set forth in the Indenture. The Issuer will thereupon deposit the proceeds received from the sale of the Bonds as follows: (1) in the Bond Fund, a sum equal to the accrued interest, if any, paid by the Underwriter; and (2) the balance of the proceeds from the sale of the Bonds (net of underwriting discount) in the Construction Fund.

Section 3.3. Use of Proceeds; Prohibited Use of Project; Disbursements from the Construction Fund.

Prohibited Use of Project: Neither the Issuer nor the Borrower shall cause any proceeds of the Bonds to be expended, except pursuant to the Indenture and this Agreement. The Borrower shall not: (i) requisition or otherwise allow payment out of proceeds of the Bonds (A) if such payment is to be used for the acquisition of any property (or an interest therein) unless the first use of such property is pursuant to such acquisition, provided that this clause (A) shall not apply (1) to any building (and the equipment purchased as a part thereof, if any) if the "rehabilitation expenditures," as defined in Section 147(d) of the Code, with respect to the building equal or exceed 15% of the portion of the cost of acquiring the building (including such equipment) financed with the proceeds of the Bonds, or (2) to any other property if the rehabilitation expenditures with respect thereto equal 100% of the cost of acquiring such property financed with the proceeds of the Bonds, (B) if as a result of such payment, 25% or more of the proceeds of the Bonds would be considered as having been used directly or indirectly for the acquisition of land (or an interest therein), (C) if, as a result of such payment, less than 95% of the net proceeds of the Bonds, expended at the time of such acquisition would be considered as having been used for costs of (1) the acquisition, construction, or reconstruction or improvement of land or property of a character subject to the allowance for depreciation, within the meaning of Section 144(a)(1)(A) of the Code and (2) a "manufacturing facility" within the meaning of Section 144(a)(12)(C) of the Code ("Qualifying Costs"), or (D) if such payment is used to pay issuance costs (including counsel fees and placement fees) of the Bonds in excess of an amount equal to 2% of the principal amount of the Bonds; (ii) take or omit, or permit to be taken or omitted, any other action with respect to the use of such proceeds the taking or omission of which has or would result in the loss of the exclus ion of interest on the Bonds from gross income of the owners thereof for federal income tax purposes; or (iii) take or omit, or permit to be taken or omitted, any other action the taking or omission of which has or would cause the loss of such exclusion. Without limiting the generality of the foregoing, the Issuer and the Borrower will not used the proceeds of the Bonds, or permit such proceeds to be used directly or indirectly, for the acquisition of land (or an interest therein) to be used for farming purposes, or to provide (x) any facility the primary purpose of which is retail food and beverage services, automobile sales or service or the provision of recreation or entertainment, (y) any airplane, skybox or other private luxury box, any health club facility, any facility primarily used for gambling, any store the principal business of which is the sale of alcoholic beverages for consumption off premises, any private or commercial golf course, country club, massage parlor, tennis club, skating facility ( including roller skating, skateboard and ice skating), racquet spots facility (including any hand ball or racquetball court), hot tub facility, suntan facility, or race track, or (z) single or multi-family residences. The Borrower shall not permit the use of the Project by any person to whom any part of the aggregate authorized face amount of the Bonds would be allocated pursuant to Section 144(a)(10) of the Code if the amount so allocated when increased as provided in Section 144(a)(10) of the Code would exceed $40,000,000.

(b) Disbursements from the Construction Fund

The Issuer hereby authorizes and directs the Trustee, upon compliance with Section 5.7 of the Indenture, to disburse the moneys in the Construction Fund to or on behalf of the Borrower for the following purposes (but, subject to the provisions of Sections 3.4 and 3.5 hereof, for no other purpose):

(1) Payment to the Borrower of such amounts, if any, as shall be necessary to reimburse the Borrower in full for all advances and payments made by it at any time prior to or after the delivery of the Bonds for expenditures in connection with the preparation of plans and specifications for the Project (including any preliminary study or planning of the Project or any aspect thereof) and the construction and acquisition of the Project.

(2) Payment of the initial or acceptance fee of the Trustee, legal, financial and accounting fees and expenses, rating agency fees, and printing and engraving costs incurred in connection with the authorization, sale and issuance of the Bonds, the execution and filing of the Indenture and the preparation and recording or filing of all other documents in connection therewith, and payment of all fees, costs and expenses for the preparation of this Agreement, the Tax Agreement, the Indenture and all other documents in connection with the authorization, sale and issuance of the Bonds.

(3) Payment for labor, services, materials and supplies used or furnished in the construction and acquisition of the Project, and payment of amounts due under contracts for the acquisition, construction and installation of the Project, all as provided in the plans, specifications and work orders therefor.

(4) Payment of the fees, if any, for architectural, engineering, legal, underwriting and supervisory services with respect to the Project.

(5) To the extent not paid by a contractor for construction or installation with respect to any part of the Project, payment of the premiums on all insurance required to be taken out and maintained during the Construction Period.

(6) Payment of the taxes, assessments and other charges, if any, that may become payable during the Construction Period with respect to the Project, or reimbursement thereof if paid by the Borrower.

(7) Payment of expenses incurred in seeking to enforce any remedy against any contractor or subcontractor in respect of any default under a contract relating to the Project.

(8) Interest on the Bonds during the construction of the Project.

(9) Payment of any other costs which constitute part of the Cost of the Project in accordance with generally accepted accounting principles and which are permitted by the Act and will not adversely affect the exemption from federal income taxes of interest on any of the Bonds.

All moneys remaining in the Construction Fund after the Completion Date and after payment or provision for payment of all other items provided for in the preceding subsections (1) to (9), inclusive, of this Section, shall at the direction of the Borrower be used in accordance with Section 3.4 hereof.

Each of the payments referred to in this Section shall be made upon receipt by the Trustee of a written order complying with the form set forth in Section 5.7 of the Indenture signed by an Authorized Borrower Representative. If the Borrower is relying on Section 3.3(9) for payment, it will so notify the Trustee at the time it provides the Trustee with the order pursuant to Section 5.7 of the Indenture.

Section 3.4. Establishment of Completion Date; Obligation of the Borrower to Complete.

As soon as practicable after the completion of construction of the Project, the Borrower shall furnish to the Trustee a certificate signed by an Authorized Borrower Representative stating (i) that construction of the Project has been completed substantially in accordance with the plans, specifications and work orders therefor, (ii) the Completion Date, (iii) the Cost of the Project, (iv) the portion of the Cost of the Project which has then been paid and (v) the portion of the Cost of the Project which has not yet then been paid. Such certificate may state that is given without prejudice to any rights against third parties which exist at the date of such certificate or which may subsequently come into being. Moneys (including investment proceeds) remaining in the Construction Fund on the date of such certificate may be used, at the direction of an Authorized Borrower Representative, to the extent indicated, for one or more of the following purposes:

(1) for the payment, in accordance with the provisions of this Agreement, of any Cost of the Project not then paid as specified in the above-mentioned certificate; or

(2) for transfer to the Bond Fund, but only if, and to the extent that, the Trustee has been furnished with an opinion of Bond Counsel to the effect that such transfer is permitted by the Act and does not adversely affect the exemption from federal income taxes of interest on any of the Bonds.

Any moneys (including investment proceeds) remaining in the Construction Fund on the date of the aforesaid certificate and not set aside for the payment of the Cost of the Project as specified in (1) above or transferred to the Bond Fund pursuant to (2) above shall on such date be placed by the Trustee in the Escrow Account and used to pay all or part of the redemption price of Bonds at the redemption date or dates selected by the Borrower; provided that, until so used such moneys may also be used, at the direction of the Borrower, for one or more of the following purposes:

(a) to pay all or part of the price of purchasing Bonds on tender, in the open market or at private sale, on or before such date or dates, for the purpose of cancellation;

(b) for the payment of the cost of any additional project, provided that prior to such use this Agreement is amended in accordance with Section 3.1 hereof to include such additional facilities within the definition of Project as used herein;

(c) for any other purpose;

provided that, no moneys on deposit in such Escrow Account may be used for any of the purposes specified in (a), (b) or (c) in this paragraph unless and until the Borrower, at the Borrower's expense, causes Bond Counsel to deliver to the Trustee an opinion of Bond Counsel upon which the Trustee may rely to the effect that such use is permitted by the Act and does not adversely affect the exemption from federal income taxes of interest on any of the Bonds; and provided further that, until used for one or more of the foregoing purposes, moneys on deposit in the Escrow Account may be invested in investments authorized by the first paragraph of Section 3.5 of this Agreement, but may not be invested to produce a yield on such moneys (computed from the Completion Date and taking into account any investment of such moneys during the period from the Completion Date until such moneys were deposited in such Escrow Account) greater than the yield on the Bonds, all as such terms are used in and determined in accordan ce with relevant provisions of the Code and regulations promulgated or proposed thereunder.

In the event moneys remaining in the Construction Fund at the Completion Date are used for the purpose specified in (b) above, the provisions of this Agreement relating to and in effect during the acquisition, construction and equipping of the Project shall apply to such additional facilities.

In the event the moneys in the Construction Fund available for payment of the Cost of the Project should not be sufficient to pay the costs thereof in full, the Borrower agrees to pay directly, or to deposit in the Construction Fund moneys sufficient to pay, the costs of completing the Project as may be in excess of the moneys available therefor in the Construction Fund. The Issuer does not make any warranty, either express or implied, that the moneys which will be paid into the Construction Fund and which, under the provisions of this Agreement, will be available for payment of the Cost of the Project, will be sufficient to pay all the costs which will be incurred in that connection. The Borrower agrees that if after exhaustion of the moneys in the Construction Fund the Borrower should pay, or deposit moneys in the Construction Fund for the payment of, any portion of the Cost of the Project pursuant to the provisions of this Section, it shall not be entitled to any reimbursement therefor from the Issuer or from the Trustee or from the owners of any of the Bonds, nor shall it be entitled to any diminution of the amounts payable under Section 4.2 hereof.

Section 3.5. Investment of Moneys in Construction Fund and Bond Fund.

Any moneys held as a part of the Construction Fund or the Bond Fund shall at the written request (or the oral request confirmed in writing) of an Authorized Borrower Representative be invested or reinvested by the Trustee in the following: (i) any bonds or other obligations which as to principal and interest constitute direct obligations of or are unconditionally guaranteed by the United States of America, (ii) obligations of the Federal National Mortgage Association, (iii) obligations of the Federal Intermediate Credit Corporation, (iv) obligations of Federal Banks for Cooperatives, (v) certificates of deposit issued by, bankers acceptances or debt obligations of or repurchase agreement of, and interest bearing accounts in, commercial banks, including the Trustee or any of its affiliates and banks domiciled outside of the United States of America, which have a combined capital and surplus of at least $250,000,000, (vi) commercial paper of domestic corporations (as defined in Section 5.1 hereof), (vii) ob ligations of Federal Land Banks, (viii) obligations of Federal Home Loan Banks, (ix) obligations of the Government National Mortgage Association, (x) debt obligations of domestic corporations (as defined in Section 5.1 hereof), (xi) obligations issued by or on behalf of any state of the United States or any political subdivision thereof, or funds consisting solely of such obligations, (xii) shares of such open-end, SEC-registered money market mutual fund used by the Trustee for the investment of funds held by it and which fund invests its assets primarily in any of the securities described in clauses (i), (ii), (iii), (iv), (vii), (viii), (ix) or (xi) above, including, without limitation, any fund for which the Trustee or an affiliate of the Trustee serves as an investment advisor, administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (a) the Trustee or an affiliate of the Trustee charges fees and expenses from such fund for services rendered, (b) the Trustee char ges and collects fees and expenses for services rendered pursuant to the Indenture, and (c) services performed for such fund and pursuant to the Indenture may converge at any time, or (xiii) any other investments permitted by law; provided, that any such investment pursuant to (vi), (x), (xi) or (xiii) above shall be rated in one of the two highest rating categories by either Standard & Poor's Corporation or Moody's Investors Service, Inc. If the Borrower fails to direct the Trustee to make such investments, the Trustee shall invest moneys held as a part of the Construction Fund or the Bond Fund in the Trustee's tax-exempt money market fund (for which the Trustee shall be entitled to charge the Borrower its customary fee charged to other investors in such fund). For purposes of this Section, a rating category shall mean a generic rating category without regard to any refinement or gradation of such rating category by numerical modifier or otherwise. The Trustee may make any and all such investments throu gh its own trust investment department.

The investments so purchased shall be held by the Trustee and shall be deemed at all times a part of the Construction Fund or the Bond Fund, as the case may be, and the interest accruing thereon and any profit realized therefrom shall be credited to such fund and any net losses resulting from such investment shall be charged to such fund.

The Borrower covenants that any funds (including investment proceeds), except funds constituting a minor portion of the proceeds of the Bonds, on deposit in the Construction Fund more than three years after the date of the delivery of the Bonds will not be invested to produce a yield greater than the yield on the Bonds, all as such terms are used in and determined in accordance with the regulations promulgated or proposed under relevant provisions of the Code.

Section 3.6. Arbitrage Certifications.

The Borrower reasonably expects, based on its knowledge, information and belief, and hereby certifies and represents to the Issuer, and the Issuer hereby certifies that it reasonably expects, that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be classified as "arbitrage bonds" under Section 148 of the Code and regulations prescribed under that Section. The Issuer and the Borrower jointly and severally certify and covenant with all purchasers and owners of the Bonds from time to time outstanding that so long as any of the Bonds remain outstanding moneys on deposit in any fund or account in connection with the Bonds, whether or not such moneys were derived from the proceeds of the sale of the Bonds or from any other sources, will not be used in a manner which will cause the Bonds to be "arbitrage bonds" within the meaning of the Code, and any lawful regulations promulgated or proposed thereunder; provided that the Issuer will be deemed to have failed to comply with suc h certification and covenant only if it knows or should have known that a particular use might result in a violation thereof; provided further that the Issuer shall conclusively be deemed to have complied with such certification and covenant to the extent that it has relied upon an opinion of Bond Counsel.

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ARTICLE IV

LOAN; REPAYMENT PROVISIONS; OTHER PAYMENTS

Section 4.1. Loan of Bond Proceeds.

The Issuer agrees, upon the terms and conditions in this Agreement, to lend to the Borrower the proceeds (exclusive of accrued interest, if any) received by the Issuer from the sale of the Bonds in order to finance the Cost of the Project, and the Borrower agrees to apply the proceeds of such loan to the financing of the Cost of the Project.

Section 4.2. Repayment of Loan; Other Amounts Payable.

(a) On or before the Business Day prior to each date provided in or pursuant to the Indenture for the payment of principal of, premium, if any, and/or interest on the Bonds, until the principal of, premium, if any, and interest on the Bonds shall have been fully paid or provision for the payment thereof shall have been made in accordance with the Indenture, the Borrower covenants and agrees to pay to the Trustee in federal or other immediately available funds at the principal corporate trust office of the Trustee for deposit in the Bond Fund, as a repayment installment of the loan made to the Borrower out of Bond proceeds pursuant to Section 4.1 hereof, a sum equal to the amount payable on such date as principal (whether at maturity, or upon redemption or acceleration), premium, if any, and interest upon the Bonds as provided in the Indenture; provided, however, that the obligation of the Borrower to make any such payment shall be reduced by the amount of moneys on deposit in the Bond Fund on any such date and available to pay the principal of and premium, if any, and interest on the Bonds on such date (excluding moneys on deposit in the Bond Fund for the payment of past due principal of or premium, if any, or interest on Bonds in cases where Bonds have not been presented for payment or interest checks have not been cashed); provided further, that in any event the payments under this Section 4.2(a) shall at all times be sufficient to pay the principal of and premium, if any, and interest on the Bonds, and if on any date on which the payment of the principal of or premium, if any, or interest on Bonds is due, the Trustee shall not have sufficient moneys on deposit in the Bond Fund and available therefor to make each such payment in full, the Borrower shall immediately pay to the Trustee in immediately available funds an amount equal to such deficiency. Each payment made pursuant to this Section 4.2(a) shall be made during normal banking hours. In the event the Borrower should fail to make any of the paymen ts required in this Section 4.2(a), the item or installment so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid, and the Borrower agrees to pay the same with interest thereon to the extent permitted by law at the rate of interest borne by the Bonds from the due date thereof until paid.

(b) The Borrower agrees to pay the Trustee (1) the initial acceptance fee of the Trustee and reasonable costs and expenses, including reasonable attorneys' fees and expenses, incurred by the Trustee in entering into and executing the Indenture and (2) until the principal of, premium, if any, and interest on the Bonds shall have been fully paid or provision for the payment thereof shall have been made in accordance with the provisions of the Indenture, (i) an amount equal to the reasonable annual fee of the Trustee for the ordinary services of the Trustee, as trustee, rendered and its reasonable ordinary expenses incurred under the Indenture, as and when the same become due, (ii) the reasonable fees, charges and expenses of the Trustee as Registrar and as Paying Agent, as and when the same become due, (iii) the reasonable fees, charges and expenses (including reasonable attorneys' fees and expenses) of the Trustee for the necessary extraordinary services rendered by it and extraordinary expenses incurre d by it under the Indenture, as and when the same become due, and (iv) the cost of typing or printing any Bonds required to be furnished by the Issuer. The Borrower further agrees to indemnify the Trustee and its officers, employees and agents for, and to hold them harmless against, any loss, liability or expense incurred without negligence or bad faith on their part, arising out of or in connection with the issuance or sale of the Bonds or the acceptance or administration of the trusts under the Indenture, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers and duties under the Indenture. In the event the Borrower should fail to make any of the payments required in this Section 4.2(b), the item or installment so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid, and the Borrower agrees to pay the same with interest thereon to the extent permitted by law at the prime rate of the Trustee (or if the Trustee does not have a prime rate, the lowest prime rate of any of its affiliates) at the time of such failure from the due date thereof until paid.

(c) The Borrower also agrees to pay upon written request, reasonable expenses of the Issuer incurred in carrying out its duties and obligations under this Agreement. In the event the Borrower should fail to make any of the payments required in this Section 4.2(c), the item or installment so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid, and the Borrower agrees to pay the same with interest thereon to the extent permitted by law at the rate of interest borne by the Bonds from the due date thereof until paid. Notwithstanding anything to the contrary contained herein or in any of the Bonds, the Indenture or any other instrument or document executed by or on behalf of the Issuer in connection herewith, the Issuer shall not be obligated to take any action or execute any instrument pursuant to any provision hereof until it shall have been requested in writing to do so by the Borrower or the Trustee.

Section 4.3 Security Interest Granted.

To secure the prompt payment of the Loan and the performance by the Borrower of its other obligations hereunder, the Borrower, to the full extent permitted by law, hereby pledges to the Issuer and hereby grants to the Issuer a purchase money Security Interest in and agrees and acknowledges that the Issuer shall have and shall continue to have a Security Interest in the Project provided, that at any time when the Borrower is not in default in the performance of any term, condition or covenant hereof, if the Borrower in its discretion determines that any items of Project machinery or equipment have become inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary, the Borrower may remove and dispose of such items of machinery or equipment from the Project and sell, trade in, exchange or otherwise dispose of them (as a whole or in party) without any responsibility or accountability to the Issuer or the Trustee therefore, and free of the security interest granted herein, if the Borrower:

(a) Substitutes and installs other machinery or equipment having equal or greater value and utility (but not necessarily having the same function) in the operation of the project for its intended purpose (provided such removal and substitution shall not impair operating unity), all of which substituted machinery or equipment shall be free of all liens and encumbrances and shall become a part of the Project and shall be subject to the Security Interest granted to the issuer herein; or

(b) Pays over to the Trustee for deposit by the Trustee to the Redemption Account, (i) in the case of the trade-in of such machinery or equipment for other machinery or equipment not deemed a part of the Project, the amount of the credit received by it in such trade-in and (ii) in the case of any disposition other than as provided in clause (b)(i) an amount equal to the original cost thereof less depreciation at rates calculated in accordance with generally accepted accounting practices consistently followed by the Borrower; or

(c) In the event that the Borrower has acquired and installed, prior to such removal and disposal of an item of machinery or equipment from the Project other than under preceding subsection (a) of this Section, an additional item or items of machinery or equipment with its own funds, free of all liens and encumbrances, which have become part of the Project, and are subject to the Security Interest or Mortgage granted herein, the Borrower may take credit to the extent of the amount so spent against the requirement that it either substitute and install other machinery or equipment having equal or greater utility or that it make payment to the Trustee for deposit into the Redemption Account.

Prior to the removal, disposal or other disposition of any portion of the Project, the Borrower's Authorized Representative shall deliver to the Trustee a certificate that such removal, disposal or disposition will not affect the utility or value of the Project for the purposes set forth herein. The certificate shall specify which portions of the Project are to be removed or disposed of, and identify any additions or substitutions which have been or will be made part of the Project pursuant to the provisions of this section. The Borrower will also execute, record and deliver to the Trustee any documents deemed necessary by the Trustee to perfect and to maintain the lien on, pledge of, mortgage upon or Security Interest in such additions and substitutions.

The removal from the Project of any portion of the machinery or equipment and the substitution, payment or credit therefor pursuant to the provisions of this Section shall not entitle the Borrower to any delay, abatement or diminution of the installments payable under Section 4.2 hereby.

The Borrower shall file with the Trustee annually on or before October 16 in each year during the term of this Agreement, beginning October 16, 2003, an opinion of counsel (who may also be counsel for the Borrower) stating that all action has been taken with respect to the filing, recording, refilling and re-recording of financing statements or continuation statements or other notices as is necessary to perfect and to maintain the lien on, pledge of, mortgage of and security interest in the Project or any additions or substitutions which may be allowed as provided herein, and to preserve the priority of the lien on the Project represented by the Indenture, the Security Interest and the Mortgage.

Section 4.4. No Defense or Set-Off; Unconditional Obligation.

The obligations of the Borrower to make the payments required in Section 4.2 hereof and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional under any and all circumstances whatsoever, including without limitation irrespective of any defense or any rights of set-off, recoupment or counterclaim it might otherwise have against the Issuer or the Trustee, and the Borrower shall pay absolutely net during the term of this Agreement the payments to be made on account of the loan as prescribed in Section 4.2 and all other payments required hereunder free of any deductions and without abatement, diminution or set-off; and until such time as the principal of, premium, if any, and interest on the Bonds shall have been fully paid, or provision for the payment thereof shall have been made in accordance with the Indenture, the Borrower: (i) will not suspend or discontinue any payments provided for in Section 4.2 hereof; (ii) will perform and observe all of its oth er agreements contained in this Agreement; and (iii) except as provided in Article VII hereof, will not terminate this Agreement for any cause, including, without limiting the generality of the foregoing, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax laws of the United States of America or of the State of Florida or any political subdivision of either of these, or any failure of the Issuer or Trustee to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement or the Indenture, except to the extent permitted by this Agreement. Notwithstanding the foregoing, the Borrower shall be entitled to recover from the Trustee all costs and damages resulting from the failure of the Trustee to perform or observe any agreement, duty or obligation arising out of or connected with this Agreement, the Tax Agreement or the Indenture and shall be entitled to institute such action against the Issuer or the Trustee as the Borrower shall deem appropriate to compel performance of any agreement, duty or obligation under this Agreement, the Tax Agreement or the Indenture; provided, however, that the Issuer shall not be required to carry out any agreement, duty or obligation unless it is reimbursed for its costs and expenses by the Borrower. To the extent permitted by law, the Borrower hereby waives any defense of usury which may or might be applicable to its payments hereunder, including interest on overdue amounts.

Section 4.5. Assignment of Issuer's Rights.

As security for the payment of the Bonds, the Issuer will assign to the Trustee, without recourse, the Issuer's rights under this Agreement, except for the Reserved Rights, and the Issuer hereby directs the Borrower to make said payments (other than payments in respect of the Reserved Rights) directly to the Trustee. The Borrower herewith assents to such assignment and will make such payments (other than payments in respect of the Reserved Rights) directly to the Trustee without defense or set-off by reason of any dispute between the Borrower and the Issuer or the Trustee.

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ARTICLE V

SPECIAL COVENANTS AND AGREEMENTS

Section 5.1. The Borrower to Maintain Its Corporate Existence; Conditions under Which Exceptions Permitted.

The Borrower agrees that during the term of this Agreement it will maintain its corporate existence, will not dissolve or otherwise dispose of all or substantially all of its assets and will not consolidate with or merge into another corporation or permit one or more corporations to consolidate or merge into it; provided that the Borrower may, without violating the agreement contained in this Section, consolidate with or merge into another domestic corporation (i.e., a corporation incorporated and existing under the laws of one of the states of the United States or the District of Columbia), or permit one or more corporations to consolidate with or merge into it, or sell or otherwise transfer to another domestic corporation all or substantially all of its assets as an entirety and thereafter dissolve, provided, the surviving, resulting or transferee corporation, as the case may be, if it is other than the Borrower, (i) is a domestic corporation as aforesaid and qualified to do business in Florida and (ii) assumes in writing all of the obligations of the Borrower under this Agreement and the Tax Agreement.

Section 5.2. Release and Indemnification Covenants.

(a) The Borrower shall and hereby agrees to indemnify and save the Issuer and the Trustee harmless against and from all claims by or on behalf of any person, firm, corporation or other legal entity arising from the conduct or management of, or from any work or thing done on, the Project during the Term of Agreement, including without limitation, (1) any condition of the Project, (2) any breach or default on the part of the Borrower in the performance of any of its obligations under this Agreement, (3) any act or negligence of the Borrower or of any of its agents, contractors, servants, employees or licensees, or (4) any act or negligence of any assignee or lessee of the Borrower, or of any agents, contractors, servants, employees or licensees of any assignee or lessee of the Borrower. The Borrower shall indemnify and save the Issuer and the Trustee harmless from any such claim arising as aforesaid, or in connection with any action or proceeding brought thereon, and upon notice from the Issuer or th e Trustee, the Borrower shall defend them or either of them in any such action or proceeding using counsel reasonably acceptable to the indemnified parties.

(b) Notwithstanding the fact that it is the intention of the parties hereto that the Issuer shall not incur any pecuniary liability by reason of the terms of this Agreement or the Indenture or the undertakings required of the Issuer hereunder or thereunder, by reason of the issuance of the Bonds, by reason of the execution of the Indenture or by reason of the performance of any act requested of the Issuer by the Borrower, including all claims, liabilities or losses arising in connection with the violation of any statutes or regulation pertaining to the foregoing; nevertheless, if the Issuer should incur any such pecuniary liability, then in such event the Borrower shall indemnify and hold the Issuer harmless against all claims, demands or causes of action whatsoever, by or on behalf of any person, firm or corporation or other legal entity arising out of the same or out of any offering statement or lack of offering statement in connection with the sale or resale of the Bonds and all costs and expens es incurred in connection with any such claim or in connection with any action or proceeding brought thereon, and upon notice from the Issuer, the Borrower shall defend the Issuer in any such action or proceeding, using counsel reasonably acceptable to the indemnified parties. All references to the Issuer in this Section 5.2 shall be deemed to include its commissioners, members, directors, officers, employees, and agents.

(c) Notwithstanding anything to the contrary contained herein or in any of the Bonds, this Agreement, the Indenture or in any other instrument or document executed by or on behalf of the Issuer in connection herewith, (1) the Issuer shall have no obligation to take action under this Agreement, the Indenture, the Bonds or such other instruments or documents, unless the Issuer is requested in writing by an appropriate person to take such action and is provided with indemnity and assurances satisfactory to it or payment of or reimbursement for any expenses (including attorneys' fees) to be incurred in such action, (2) no member of the Issuer or any officer, attorney, employee or agent of the Issuer shall be personally liable to the Borrower, the Trustee or any other person for any action taken by the Issuer or by its officers, attorney, agents or employees, or for any failure to take action, under this Agreement, the Indenture, the Bonds or such other instruments or documents, except that the Issuer a grees to take or refrain from taking any action required by an injunction or required to comply with any final judgment for specific performance; and (3) any judgment rendered against the Issuer for breach of its obligations under this Agreement, the Indenture, the Bonds or obligations under this Agreement, the Indenture, the Bonds or such other instruments or documents, shall be payable solely from the Bond Fund, and no personal liability or charge payable directly or indirectly from any general funds of the Issuer shall arise therefrom.

(d) The foregoing provisions of this Section shall survive the payment, prepayment or redemption of the Bonds and the termination of this Agreement and the Indenture.

(e) Notwithstanding anything to the contrary contained herein, the Borrower shall have no liability to indemnify the Issuer or the Trustee against claims or damages resulting from the Issuer's or the Trustee's own gross negligence or willful misconduct.

Section 5.3. Validity and Tax Exempt Status of the Bonds.

The Borrower and the Issuer covenant and agree that they, and each of them, will not take or fail to take or authorize or permit any action to be taken or not taken and have not taken or not taken or authorized or permitted any action to be taken or not to be taken which results in interest paid on the Bonds being included in gross income of any owner thereof for purposes of federal income taxation (other than an owner who is a "substantial user" of the Project or a "related person" within the meaning of Section 147(a) of the Code and the applicable regulations thereunder) or adversely affects the validity of the Bonds; provided that the Issuer will be deemed to have violated the provisions of this Section only if it knows or should have known that any such action or inaction might result in such inclusion in gross income; provided further that the Issuer shall be conclusively deemed to have complied with the provisions of this Section to the extent that it relies upon an opinion of Bond Counsel.

Section 5.4. Economic Life of Project

The Borrower hereby represents that the weighted average maturity of the Bonds does not exceed 120% of the "average reasonably expected economic life" of the components comprising the Project, determined pursuant to Section 147(b) of the Code. The Borrower agrees that it will not make any changes in the Project which would, at the time made, cause 120% of the "average reasonably expected economic life" of the components of the Project, determined pursuant to Section 147(b) of the Code, to be less than the "weighted average maturity" of the Bonds.

Section 5.5. Insurance.

Subject to the provisions of Section 5.7 hereof, the Borrower agrees to maintain, or cause to be maintained, all necessary insurance with respect to the Project in accordance with its customary insurance practices, which may include self-insurance. All costs of maintaining insurance with respect to the Project shall be paid by the Borrower, and the Issuer shall have no obligation or liability in this regard.

Section 5.6. Maintenance and Repair.

Subject to the provisions of Section 5.7 hereof, the Borrower agrees that it will (i) maintain, or cause to be maintained, the Project in as reasonably safe condition as its operations shall permit and (ii) maintain, or cause to be maintained, the Project in good repair and in good operating condition, ordinary wear and tear excepted, making from time to time all necessary repairs thereto and renewals and replacements thereof. All costs of operating and maintaining the Project shall be paid by the Borrower, and the Issuer shall have no obligation or liability in this regard.

Section 5.7. Right to Discontinue Operation of Project.

Although the Borrower intends to operate, or cause to be operated, the Project for its designed purposes until the date on which no Bonds are outstanding, subject to the provisions of Section 5.3 hereof, the Borrower is not required by this Agreement to operate, or cause to be operated, any portion of the Project after the Borrower shall deem in its discretion that such continued operation is not advisable, and in such event the Borrower may sell, lease or retire all or any such portion of the Project. Subject to the provisions of Section 5.3 hereof, the net proceeds from such sale, lease or other disposition, if any, shall belong to, and may be used for any lawful purpose by, the Borrower. Upon discontinuance of operation of the Project in accordance with this Section 5.7, the Borrower shall be discharged from its obligations to insure, maintain and repair the Project as set forth in Sections 5.5 and 5.6 hereof.

Section 5.8. Insurance and Condemnation Awards.

Subject to the provisions of Section 5.3 hereof, the net proceeds of any insurance or condemnation award as a result of the destruction or condemnation of the Project or any portion thereof shall belong to, and may be used for any lawful purpose by, the Borrower.

Section 5.9. Qualification in Florida.

The Borrower agrees that throughout the term of this Agreement it will be qualified to do business in the State of Florida.

Section 5.10. Taxation of Project.

During the term of this Agreement, the Borrower will promptly remit when due any taxes, assessments or other charges levied or imposed in respect of the Project or the installments payable hereunder to the appropriate taxing body. The Borrower may, at its own expense and in its own name, in good faith contest any such taxes, assessments and other charges and, in the event of such contest, may permit the taxes, assessments or other charges contested to remain unpaid during the period of such contest and any appeal therefrom. All taxes, assessments and other charges levied or imposed with respect to the Project shall be the obligation of the Borrower, and the Issuer shall have no obligation or liability in this regard.

Section 5.11. Borrower's Performance Under Indenture.

The Borrower agrees, for the benefit of all owners of Bonds, to do and perform all requirements in the Indenture applicable to the Borrower.

The Borrower will, at its expense, take all necessary action to maintain and preserve the lien and security interest of the Indenture so long as any Bonds remain outstanding.

Section 5.12. Arbitrage Rebate.

(a) The Borrower acknowledges having read Sections 5.14 and 7.01 of the Indenture and agrees to perform all duties expressly or implicitly imposed upon it by such Sections and by the Rebate Memorandum referred to therein. Insofar as said Sections and the Rebate Memorandum expressly or implicitly impose duties and responsibilities on the Borrower, they are specifically incorporated herein by reference.

(b) Nothing contained in this Agreement or in the Indenture shall be interpreted or construed to require the Issuer to pay the Rebate Amount, such obligations being the sole responsibility of the Borrower.

Section 5.13. Records and Financial Statements of the Borrower.

The Trustee will be permitted at all reasonable times to examine the books and records of the Borrower with respect to the Project. The Borrower agrees that so long as any of the Bonds are outstanding, the Borrower shall furnish its annual report to its shareholders to the Trustee and to the owner of any Bond who shall have requested the same in writing by not later than 120 days following the end of the Borrower's fiscal year (presently, October 31 in each year), commencing with the annual report for the 2002 fiscal year, and to provide notices of the occurrence of certain events, if deemed by the Borrower to be material.. The Trustee shall have no responsibility with respect to such annual report except to make it available for reasonable examination by the owner of any Bond upon request. Delivery of such report to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute or actual notice of any information contained therein or determinable form information co ntained therein, including the Borrower's compliance with any of its covenants hereunder. The Trustee has no obligation to review or analyze the financial information included in the annual report provided by the Borrower.

Section 5.14. Utility Charges.

During the term of this Agreement, the Borrower shall pay all charges for utilities associated with the Project and, upon request by the Issuer, the Borrower shall provide the Issuer with written evidence of such payment.

ARTICLE VI

EVENTS OF DEFAULT AND REMEDIES

Section 6.1. Events of Default.

The occurrence and continuation of any one of the following shall constitute an Event of Default:

(a) failure by the Borrower to pay any amount required to be paid under Section 4.2(a) hereof with respect to principal of or premium on any Bond at the time specified therein; or

(b) failure by the Borrower to pay any amount required to be paid under Section 4.2(a) hereof with respect to interest on any Bond at the time specified therein and the continuation thereof for a period of 30 days; or

(c) failure by the Borrower to observe and perform any covenant, condition or agreement on its part to be observed or performed in this Agreement, other than as referred to in (a) or (b) above, for a period of 30 days after receipt by the Borrower of written notice, specifying such failure and requesting that it be remedied, given to the Borrower by the Issuer or the Trustee, unless the Issuer and the Trustee shall agree in writing to an extension of such time prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Issuer and the Trustee will not unreasonably withhold their consent to an extension of such time if corrective action is instituted within the applicable period and diligently pursued until the default is corrected; provided further, if any such failure obligates the Borrower to prepay installments pursuant to Section 7.1(b) hereof, and such prepayment is in fact made by the Borrower and Bonds are redeemed with suc h prepayment moneys as provided in the Indenture, then such failure by the Borrower shall not constitute an Event of Default under this Agreement; or

(d) the dissolution or liquidation of the Borrower or the filing by the Borrower of a voluntary petition in bankruptcy, or failure by the Borrower promptly to lift any execution, garnishment or attachment of such consequence as will impair its ability to carry on its obligations hereunder, or the commission by the Borrower of any act of bankruptcy, or adjudication of the Borrower as a bankrupt, or if a petition or answer proposing the adjudication of the Borrower as a bankrupt or its reorganization, arrangement or debt readjustment under any present or future federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within ninety days after the filing thereof, or if the Borrower shall admit in writing its inability to pay its debts generally as they become due, or a receiver, trustee or liquidator of the Borrower shall be appointed in any proceeding brought against the Borrower and shall not be discharged within ninety days after such appointment or if the Borrower shall consent to or acquiesce in such appointment, or assignment by the Borrower for the benefit of its creditors, or the entry by the Borrower into an agreement of composition with its creditors, or a bankruptcy, insolvency or similar proceeding shall be otherwise initiated by or against the Borrower under any applicable bankruptcy, reorganization or analogous law as now or hereafter in effect and if initiated against the Borrower shall remain undismissed (subject to no further appeal) for a period of ninety days; provided, the term "dissolution or liquidation of the Borrower", as used in this subsection, shall not be construed to include the cessation of the corporate existence of the Borrower resulting either from a merger or consolidation of the Borrower into or with another corporation or a dissolution or liquidation of the Borrower following a transfer of all or substantially all of its assets as an entirety, under the conditions permitting such act ions contained in Section 5.1 hereof; or

(e) the occurrence of an "event of default" under the Indenture.

Section 6.2. Remedies on Default.

Whenever the unpaid principal amount of the Bonds and interest accrued thereon has been declared to be immediately due and payable under the Indenture, then upon any such declaration the amounts payable under Section 4.2(a) hereof shall automatically become and shall be immediately due and payable in the amount set forth in Section 9.2 of the Indenture; provided, however, that any such automatic acceleration of unpaid loan repayment installments payable under Section 4.2(a) of this Agreement shall be deemed automatically rescinded upon any rescission by the Trustee of the corresponding declaration of acceleration of the Bonds under Section 9.11 of the Indenture.

Whenever any Event of Default shall have happened and is continuing, the Issuer, (with the consent of the Trustee or without the consent of the Trustee to the extent that such Event of Default relates solely to the Reserved Rights) or the Trustee may take whatever action at law or in equity may appear necessary or desirable to collect the payments and other amounts then due or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Agreement.

In case the Issuer, with the consent of the Trustee, or the Trustee shall have proceeded to enforce its rights under this Agreement and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Issuer and/or the Trustee, then and in every such case the Issuer, the Borrower and the Trustee shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Issuer, the Borrower and the Trustee shall continue as though no such proceeding had been taken.

The Borrower covenants that, in case an Event of Default shall occur with respect to the payment of any repayment installment payable under Section 4.2(a) hereof, then, upon demand of the Trustee, the Borrower will pay to the Trustee the whole amount that then shall have become due and payable under said Section 4.2(a), with interest (to the extent permitted by law) on such amount at the rate borne by the Bonds from the due date thereof until paid.

In case the Borrower shall fail forthwith to pay such amounts upon such demand, the Trustee shall be entitled and empowered to institute any action or proceeding at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Borrower and collect in the manner provided by law out of the property of the Borrower, the moneys adjudged or decreed to be payable.

If an Event of Default shall happen and be subsisting, in case there shall be pending proceedings for the bankruptcy or for the reorganization of the Borrower under the federal bankruptcy laws or any other applicable law, or in case a receiver or trustee shall have been appointed for the property of the Borrower or in the case of any other similar judicial proceedings relative to the Borrower, or to the creditors or property of the Borrower, the Trustee shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount owing and unpaid pursuant to this Agreement, irrespective of whether the principal of the Bonds or any amount hereunder shall then be due and payable as therein or herein expressed or by declaration or otherwise, and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 6.2 or of Section 9.2 of the Indenture, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee allowed in such judicial proceedings relative to the Borrower, its creditors, or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized to make such payments to the Trustee, and to pay to the Trustee any amount due it for compensation and expenses, including reasonable counsel fees and expenses incurred by it up to the date of such distribution.

Section 6.3. Agreement to Pay Attorneys' Fees and Expenses.

In the event the Borrower should default under any of the provisions of this Agreement and the Issuer should employ attorneys or incur other expenses for the collection of the payments due under this Agreement or the enforcement of performance or observance of any obligation or agreement on the part of the Borrower herein contained, the Borrower agrees that it will on demand therefor pay to the Issuer the reasonable fees and expenses of such attorneys and such other reasonable expenses so incurred by the Issuer. In the event the Borrower should default under any of the provisions of this Agreement and the Trustee should employ attorneys or incur other expenses for the collection of the payments due under this Agreement or the enforcement of performance or observance of any obligation or agreement on the part of the Borrower herein contained, the Borrower agrees that it will on demand therefor pay to the Trustee the reasonable fees and expenses of such attorneys and such other reasonable expenses so incurr ed by the Trustee.

Section 6.4. No Remedy Exclusive.

No remedy herein conferred upon or reserved to the Issuer is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute, except that the remedy of acceleration shall be exercised only in the manner set forth in Section 6.2 hereof. No delay or omission to exercise any right or power accruing upon any default or event of default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. Such rights and remedies as are given the Issuer hereunder shall also extend to the Trustee, and the Trustee and the owners of the Bonds shall be deemed third party beneficiaries of all covenants and agreements herein contained. In order to entitle the Issuer, with the consent of the Trustee, or the Trust ee to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice as may be herein expressly required.

Section 6.5. No Additional Waiver Implied by One Waiver.

In the event any agreement contained in this Agreement should be breached by the Borrower and thereafter waived by the Issuer or the Trustee, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.

ARTICLE VII

OPTIONAL AND MANDATORY PREPAYMENT

Section 7.1. Obligation to Prepay Installments.

The Borrower shall have the obligation to prepay installments payable hereunder in whole (or in the case of an event stated in (b) or (c) of this Section 7.1 in whole or in part, as provided in the Indenture), if any of the following shall have occurred:

(a) As a result of any changes in the Constitution of Florida or the Constitution of the United States of America or of legislative or administrative action (whether state or federal) or by final decree, judgment or order of any court or administrative body (whether state or federal) this Agreement shall have become void or unenforceable or impossible of performance in accordance with the intent and purposes of the parties as expressed in this Agreement;

(b) In the event of a Determination of Taxability with respect to the Bonds which is the result of an Event of Taxability, all of the Bonds then Outstanding are subject to redemption and payment on a redemption date established by the Issuer at a redemption price equal to three percent (3%) of the par value of the principal amount thereof.

(c) In the event of a Determination of Taxability which is the result of a Change in Law, the Bonds then Outstanding are subject to redemption and payment on a redemption date established by the Trustee at a redemption price equal to 100% of the par value of the principal amount of the Bonds to be redeemed.

Section 7.2. Option to Prepay Installments.

The Borrower shall have the option to prepay the installments payable hereunder in whole (or in the case of an event stated in (c) or (d) of this Section 7.2 in whole or in part, as provided in the Indenture) if any of the following shall have occurred:

(a) The Manufacturing Facility or the Project shall have been damaged or destroyed (in whole or in part) by fire or other casualty (i) to such extent that, in the opinion of the Borrower expressed in a certificate of an Authorized Borrower Representative filed with the Issuer and the Trustee, it is not practicable or desirable to rebuild, repair or restore the Manufacturing Facility or the Project within a period of six consecutive months following such damage or destruction, or (ii) to such extent that, in the opinion of the Borrower expressed in a certificate of an Authorized Borrower Representative filed with the Issuer and the Trustee, the Borrower is or will be thereby prevented from carrying on its normal operations at the Manufacturing Facility or the Project for a period of six consecutive months;

(b) Title to, or the temporary use of, all or substantially all the Manufacturing Facility or the Project shall have been taken under the exercise of the power of eminent domain by any governmental authority, or person, firm or corporation acting under governmental authority (including such a taking or takings as results or is likely to result, in the opinion of the Borrower expressed in a certificate of an Authorized Borrower Representative filed with the Issuer and the Trustee, in the Borrower being thereby prevented from carrying on its normal operations at the Manufacturing Facility or the Project for a period of six consecutive months, or results or is likely to result in rendering the Manufacturing Facility or the Project in the opinion of the Borrower expressed in a certificate of an Authorized Borrower Representative filed with the Issuer and the Trustee, unsuitable for use by the Borrower);

(c) A change in the economic availability of raw materials, operating supplies or facilities necessary for the efficient operation of the Manufacturing Facility or the operation of the Project for its designed purposes in accordance with applicable federal and state laws, including without limitation environmental laws, shall have occurred or such technological or environmental or other change shall have occurred (i) which in the Borrower's reasonable judgment, expressed in a certificate of an Authorized Borrower Representative filed with the Issuer and the Trustee, renders the operation of the Manufacturing Facility or the Project uneconomic or impractical or (ii) which would cause the Manufacturing Facility or the Project to be operated in such a manner that, as stated in an opinion of Bond Counsel filed with the Issuer and the Trustee, such operation might reasonably result in interest on the Bonds or any of them being includable for federal income tax purposes in the gross income of any owner of a Bond (other than an owner who is a "substantial user" of the Project or a "related person" within the meaning of Section 147(a) of the Code and the applicable regulations thereunder);

(d) Any permit necessary for the efficient operation of the Manufacturing Facility or the operation of the Project for its designed purposes in accordance with applicable federal and state laws, shall be or shall have become unavailable (i) which, in the Borrower's reasonable judgment expressed in a certificate of an Authorized Borrower Representative filed with the Issuer and the Trustee, renders the operation of the Manufacturing Facility or the Project uneconomical or impractical or (ii) which would cause the Manufacturing Facility or the Project to be operated in such a manner that, as stated in an opinion of Bond Counsel filed with the Issuer and the Trustee, such operation might reasonably result in interest on the Bonds or any of them being includable for federal income tax purposes in the gross income of any owner of a Bond (other than an owner who is a "substantial user" of the Project or a "related person" within the meaning of Section 147(a) of the Code and the applicable regulations thereun der); or

(e) Taxes are imposed on the loan repayment installments hereunder or unreasonable burdens or excessive liabilities (limited to federal, state or other ad valorem, value added, property, income or other taxes, other than ad valorem taxes presently being levied upon privately-owned property used for the same general purposes as the Project or the Manufacturing Facility) shall, in the opinion of the Borrower expressed in a certificate of an Authorized Borrower Representative filed with the Issuer and the Trustee, have been imposed with respect to the Project, the financing of the Project or the operation of the Manufacturing Facility.

If the Borrower elects to exercise an option granted in this Section 7.2, it must exercise such option and prepay within 180 days after it has notice or actual knowledge of the event permitting the exercise of such option.

Section 7.3. Amount of Prepayment in Certain Events.

To fulfill the obligation set forth in Section 7.1 hereof or to exercise the option granted in Section 7.2 hereof, the Borrower shall, within ninety (90) days after it receives notice or has actual knowledge of the event authorizing or requiring the exercise or fulfillment of such option or obligation, give written notice to the Issuer and to the Trustee as provided in Section 7.5 hereof. Such notice shall specify the date for the prepayment of the installments, which shall be on or before the redemption date for the Bonds; provided, that if the Borrower fails to give any such notice with respect to the obligation set forth in Section 7.1 hereof, the redemption date for the Bonds shall be fixed by the Trustee in accordance with Section 3.2 of the Indenture (the date for redemption of the Bonds being hereinafter called the "Redemption Date").

The amount payable by the Borrower in fulfillment of the obligation set forth in Section 7.1 (a) hereof or in the event of its exercise of the option granted in Section 7.2 hereof to prepay installments in whole shall be the sum of the following:

(1) an amount of money which, when added to the amount then on deposit in the Bond Fund, will be sufficient to redeem (or when invested in Governmental Obligations in which such money is required to be invested will without reinvestment mature as to principal and interest, if any, at times and in amounts sufficient to redeem) the outstanding Bonds on the Redemption Date, which amount shall consist of the principal amount thereof, all interest accrued and to accrue to the Redemption Date and expenses incurred or to be incurred in connection with the prepayment of installments and the redemption of the Bonds,

(2) an amount of money equal to the Trustee's fees and expenses under the Indenture accrued and to accrue until the Redemption Date, and

(3) an amount of money sufficient to discharge all other liabilities of the Borrower accrued under this Agreement.

Upon the occurrence of the event stated in Section 7.1(b) or (c) hereof (a) if all of the Bonds then outstanding are to be redeemed, as provided in Section 3.1(b) of the Indenture, the amount payable by the Borrower hereunder will be the sum of the amounts specified in the next preceding paragraph; and (b) if less than all of the Bonds then outstanding are to be redeemed, as provided in Section 3.1(b) of the Indenture, the amount payable by the Borrower hereunder will be an amount which will be sufficient to redeem (or when invested in Governmental Obligations in which such money is required to be invested will without reinvestment mature as to principal and interest, if any, at times and in amounts sufficient to redeem) the Bonds or portions thereof to be redeemed on the Redemption Date, which amount shall consist of the principal amount thereof, all interest accrued and to accrue thereon to said Redemption Date, and expenses incurred or to be incurred in connection with such prepayment of installments a nd such redemption of Bonds.

Section 7.4. Option to Prepay Installments for Optional Redemption of Bonds.

The Borrower shall have, and is hereby granted, the option to prepay from time to time repayment installments under this Agreement at prices sufficient to redeem (or when invested in Governmental Obligations in which such money is required to be invested will without reinvestment mature as to principal and interest, if any, at times and in amounts sufficient to redeem) all or part of the Bonds in accordance with the provisions of the Indenture.

Section 7.5. Notice of Prepayment.

To exercise an option granted in or fulfill an obligation required by this Article VII, the Borrower shall give written notice to the Issuer and the Trustee not less than 40 days prior to the Redemption Date (or such later date as is acceptable to the issuer and the Trustee) which shall specify therein the amount of such prepayment, the provisions of this Agreement permitting or requiring such prepayment and the date upon which such prepayment will be made, which date shall be not later than the Redemption Date, together with such other information, if any, as shall be reasonably necessary in order to enable the Trustee to call Bonds for redemption under the applicable provisions of the Indenture; provided, that if the Borrower fails to give a notice with respect to the obligation set forth in Section 7.1 hereof, the redemption date for the Bonds shall be fixed by the Trustee in accordance with Section 3.2 of the Indenture. The Issuer will forthwith take all steps necessary under the applicable provisions of the Indenture to effect redemption of all or part of the then outstanding Bonds, as may be the case, under applicable provisions of the Indenture.

Section 7.6. Redemption of Bonds with Prepayment Moneys.

By virtue of the assignment of the rights of the Issuer under this Agreement to the Trustee as provided in Section 4.4 hereof, the Borrower agrees to and shall pay any amount required or permitted to be paid by it under this Article VII directly to the Trustee. The Trustee shall use the moneys so paid to it by the Borrower to redeem (directly or through the application of maturing principal and interest, if any, of Governmental Obligations in which such moneys are required to be invested) the Bonds on the date set for such redemption pursuant to Sections 7.3 and 7.5 hereof.

ARTICLE VIII

MISCELLANEOUS

Section 8.1. Notices.

Unless otherwise specifically provided, any notice, request, complaint, demand, certificates or other communication shall be sufficiently given and shall be deemed given on the fourth day following the day on which the same has been mailed by first class mail, postage prepaid, addressed as follows: if to the Issuer at 301 East Pine Street, Suite 900, Orlando, Florida 32801, to the attention of the Issuer's Secretary; if to the Borrower, at 2737 North Forsyth Road, Winter Park, Florida 32792, Attention: Bob Collins; and if to the Trustee, at Corporate and Municipal Group, Sixth & Marquette - MAC N9303-110, Minneapolis, Minnesota 55479; provided, that any notice to the Trustee shall be deemed received only upon actual receipt by the Trustee. A duplicate copy of each notice, certificate or other communication given hereunder by either the Issuer or the Borrower shall also be given to the Trustee. The Issuer, the Borrower and the Trustee may, by notice given hereunder, designate any further or different a ddresses to which subsequent notices, certificates or other communications shall be sent.

Section 8.2. Assignments.

This Agreement may not be assigned by either party without consent of the other and the Trustee, except that the Issuer shall assign to the Trustee certain of its rights under this Agreement as provided by Section 4.4 hereof and the Borrower may assign to any transferee or any surviving or resulting corporation its rights under this Agreement as provided by Section 5.1 hereof.

Section 8.3. Severability.

If any provision of this Agreement shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever.

Section 8.4. Execution of Counterparts.

This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

Section 8.5. Amounts Remaining in Bond Fund.

It is agreed by the parties hereto that after payment in full of (i) the Bonds (or provision for the payment thereof having been made in accordance with the provisions of the Indenture), (ii) the fees, charges and expenses of the Trustee in accordance with the Indenture and (iii) all other amounts required to be paid under this Agreement, the Tax Agreement and the Indenture, any amounts remaining in the Bond Fund shall belong to and be paid to the Borrower by the Trustee.

Section 8.6. Amendments, Changes and Modifications.

Except as otherwise provided in this Agreement or the Indenture, subsequent to the issuance of Bonds and prior to their payment in full (or provision for payment thereof having been made in accordance with the provisions of the Indenture), this Agreement may not be effectively amended, changed, modified, altered or terminated without the written consent of the Trustee.

Section 8.7. Governing Law.

This Agreement shall be governed exclusively by and construed in accordance with the applicable laws of the State of Florida.

Section 8.8. Authorized Borrower Representatives.

Whenever under the provisions of this Agreement the approval of the Borrower is required or the Issuer or the Trustee is required to take some action at the request of the Borrower, such approval or such request shall be given for the Borrower by an Authorized Borrower Representative, and the Issuer and the Trustee shall be authorized to act on any such approval or request and neither party hereto shall have any complaint against the other or against the Trustee as a result of any such action taken.

Section 8.9. Term of the Agreement.

The term of this Agreement shall commence as of the date hereof and, unless sooner terminated as provided in this Agreement, shall expire on the date that all of the Bonds and all fees and charges of the Issuer and the Trustee have been fully paid or provision made for such payment. The protections and immunities from liability and the rights to indemnification shall survive the final payment of the Bonds for acts or omissions arising prior to final payment of the Bonds.

Section 8.10. Binding Effect.

This Agreement shall inure to the benefit of and shall be binding upon the Issuer, the Borrower and their respective successors and assigns; subject however, to the limitations contained in Sections 4.4, 5.1 and 8.2 hereof.

Section 8.11 Limitation on Issuer's Obligations.

Notwithstanding anything to the contrary contained herein or in any of the Bonds, this Agreement, the Indenture or in any other instrument or document executed by or on behalf of the Issuer in connection herewith, (a) the Issuer shall have no obligation to take action under this Agreement, the Indenture, the Bonds or such other instruments or documents, unless the Issuer is requested in writing by an appropriate person to take such action and is provided with indemnity and assurances satisfactory to it or payment of or reimbursement for any expenses (including attorneys' fees) to be incurred in such action, (b) no member of the Issuer or any officer, attorney, employee or agent of the Issuer shall be personally liable to the Company, the Trustee or any other person for any action taken by the Issuer or by its officers, attorney, agents or employees, or for any failure to take action, under this Agreement, the Indenture, the Bonds or such other instruments or documents, except that the Issuer agrees to tak e or refrain from taking any action required by an injunction or required to comply with any final judgment for specific performance; and (c) any judgment rendered against the Issuer for breach of its obligations under this Agreement, the Indenture, the Bonds or obligations under this Agreement, the Indenture, the Bonds or such other instruments or documents, shall be payable solely from the Bond Fund, and no personal liability or charge payable directly or indirectly from the general funds of the Issuer shall arise therefrom. The foregoing provisions of this Section shall survive the payment, prepayment or redemption of the Bonds and the termination of this Agreement and the Indenture.

IN WITNESS WHEREOF, the Orange County Industrial Development Authority has caused this Agreement to be executed in its corporate name by its duly authorized officer and its corporate seal to be hereunto affixed and attested by its duly authorized officer, and Wheeled Coach Industries, Inc. has caused this Agreement to be executed in its corporate name and attested by its duly authorized officer, all as of the date first above written.

Orange County Industrial

Development Authority

(SEAL)

By:____________________________________

Its: Chair or Vice Chairman

ATTEST:

By:__________________________________________

Its: Secretary or Assistant Secretary

WHEELED COACH INDUSTRIES, INC.

(SEAL)

By: /s/Larry W. Sayre____________

Its: Vice President of Finance & CFO

EX-23

Independent Auditors' Consent

The Board of Directors

Collins Indusries, Inc.

We consent to the incorporation by reference in the registration statements

(No. 333-24647 and No. 333-24651) on Form S-8 of Collins Industries, Inc. of our report dated November 21, 2002, with respect to the consolidated balance sheet of Collins Industries, Inc. as of October 31, 2002 and the related consolidated statement of income and comprehensive income, shareholders' investment and cash flows for the year then ended which report appears in the October 31, 2002, annual report on Form 10-K of Collins Industries, Inc.

KPMG LLP

Kansas City, Missouri

January 15, 2003

EX-99

EXHIBIT 99.1

CERTIFICATION OF PERIODIC REPORT

I, Donald Lynn Collins, Chairman and Chief Executive Officer of Collins Industries, Inc., certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) The Annual Report on Form 10-K of the Company for the period ended October 31, 2002 (the "Report") fully complies with the requirements of
Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	January 15, 2003
	By
		/s/ Donald Lynn Collins
		Donald Lynn Collins, President
		and Chief Executive Officer

EX-99

EXHIBIT 99.2

CERTIFICATION OF PERIODIC REPORT

I, Larry W. Sayre, Vice President-Finance and Chief Financial Officer of Collins Industries, Inc., certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) The Annual Report on Form 10-K of the Company for the period ended October 31, 2002 (the "Report") fully complies with the requirements of
Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	January 15, 2003
	By
		/s/ Larry W. Sayre
		Larry W. Sayre, Vice President of Finance
		and Chief Financial Officer