Annual Report

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HndMn5QHc154YsBw680fVKxmeSoqCIi1sptW45gGr19eDvjvM8WHZgTB0+OPqJy1 LJx3Ttq3UU/O5m10zxsxaA== 0000950137-03-001417.txt : 20030313 0000950137-03-001417.hdr.sgml : 20030313 20030313172142 ACCESSION NUMBER: 0000950137-03-001417 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUTLER MANUFACTURING CO CENTRAL INDEX KEY: 0000015840 STANDARD INDUSTRIAL CLASSIFICATION: PREFABRICATED METAL BUILDINGS & COMPONENTS [3448] IRS NUMBER: 440188420 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12335 FILM NUMBER: 03602914 BUSINESS ADDRESS: STREET 1: BMA TOWER PENN VALLEY PARK STREET 2: P O BOX 419917 CITY: KANSAS CITY STATE: MO ZIP: 64141 BUSINESS PHONE: 8169683000 MAIL ADDRESS: STREET 1: BMA TOWER PENN VALLEY MALL STREET 2: P O BOX 419917 CITY: KANSAS CITY STATE: MO ZIP: 64141 10-K 1 c75442e10vk.htm ANNUAL REPORT Annual Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark one)


[X]		ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

OR


[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 001-12335

BUTLER MANUFACTURING COMPANY

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		44-0188420 (I.R.S. Employer Identification Number)

1540 Genessee Street, (P.O. Box 419917), Kansas City, Missouri 64102
(Address of principal executive offices)

(816) 968-3000
(Registrant’s telephone number, including area code)

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


Title of each class Common Stock, no par value Preferred share purchase rights		Name of each exchange on which registered New York Stock Exchange New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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 Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

The aggregate market value of Registrant’s Common Stock held by non-affiliates based on the closing price of $27.45 on June 30, 2002, the end of the second fiscal quarter, was $172,440,735.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 or the Act. Yes X No .

The Registrant had 6,328,051 shares of no par value Common Stock issued and outstanding as of February 19, 2003.

DOCUMENTS INCORPORATED BY REFERENCE

1. Portions (pages 9 through 36) of Butler Manufacturing Company’s 2002 Annual Report (the “Annual Report”) are incorporated into Parts I and II as described herein.

2. Portions of Butler Manufacturing Company’s Notice of Annual Meeting of Stockholders and Proxy Statement, dated March 13, 2003 (the “Proxy Statement”) are incorporated into Parts I and III as described herein.

BUTLER MANUFACTURING COMPANY

FORM 10-K

For the Fiscal Year Ended December 31, 2002

TABLE OF CONTENTS


PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings.
	Item 4. Submissions of Matters to a Vote of Security Holders.
	Item 4A. Executive Officers of the Registrant.
PART II
	Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters.
	Item 6. Selected Financial Data.
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
	Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
	Item 8. Financial Statements and Supplementary Data.
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
PART III
	Item 10. Directors of Registrant.
	Item 11. Executive Compensation.
	Item 12. Security Ownership of Certain Beneficial Owners and Management.
	Item 13. Certain Relationships and Related Transactions.
	Item 14. Controls and Procedures.
PART IV
	Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
SIGNATURES
Certification of Principal Executive Officer
1st Amendment to the June 20, 2001 Note Agreement
1st Amendment to the March 1, 1998 Note Agreement
1st Amendment to the June 20, 2001 Note Agreement
Third Amendment to the Credit Agreement
Security Agreement
Intercreditor and Collateral Agency Agreement
Power of Attorney

CONTENTS


		Page

PART I
	Item 1. Business		3
	Item 2. Properties		6
	Item 3. Legal Proceedings		7
	Item 4. Submission of Matters to a Vote of Security Holders		8
	Item 4A. Executive Officers of the Registrant		8
PART II
	Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters		9
	Item 6. Selected Financial Data		9
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
	Item 7A. Quantitative and Qualitative Disclosure About Market Risk		10
	Item 8. Financial Statements and Supplementary Data		10
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		10
PART III
	Item 10. Directors of the Registrant		11
	Item 11. Executive Compensation		11
	Item 12. Security Ownership of Certain Beneficial Owners and Management		11
	Item 13. Certain Relationships and Related Transactions		11
	Item 14. Controls and Procedures		11
PART IV
	Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K		11
SIGNATURES			16
OFFICERS CERTIFICATION			17
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS			19
FINANCIAL STATEMENT SCHEDULES			S-1

PART I

Item 1. Business

(a) General Description of Business

Butler Manufacturing Company (the “company”) was founded as a partnership in 1901, incorporated in Missouri in 1902, and later reincorporated in Delaware in 1969. Its corporate headquarters are located in Kansas City, Missouri, and the company operates manufacturing facilities, engineering offices, and service centers throughout the continental United States, and 15 foreign countries. Principal international operations are conducted through a Chinese wholly-owned subsidiary, Butler (Shanghai) Inc., and Saudi Building Systems Ltd. and Vistawall International (UAE) Ltd., minority owned joint ventures in Saudi Arabia and the United Arab Emirates. In 2002 the company completed the sale of Butler Europe Kft., its European metal buildings business, to the Lindab AB Group.

The company is primarily engaged in the marketing, design, and production of building systems and components for nonresidential structures. Products and services fall into five principal business segments: (1) North American Building Systems, consisting primarily of custom designed and pre-engineered steel and wood frame building systems for commercial, community, industrial, governmental, and agricultural uses; (2) International Building Systems, consisting primarily of custom designed and pre-engineered steel buildings for commercial, community, industrial, and governmental use; 3) Architectural Products, consisting primarily of curtain wall and storefront framing systems, standard and custom window systems, skylights, and roof vents for low-rise, medium-rise, and high-rise nonresidential buildings; (4) Construction Services, providing construction management services for purchasers of large, complex, or multiple site building projects; and (5) Real Estate, providing build-to-suit-to-lease development services for corporations that prefer to lease rather than own their facilities.

The company’s products are sold, installed, and serviced through over 3,700 independent dealers or contractors that serve the commercial, community, industrial, agricultural, and governmental markets.

(b) Financial Information About Industry Segments

The information required by Item 1(b) is incorporated by reference to the note captioned “Business Segments” on pages 26 through 28 of the Company’s Annual Report, of which pages 9 through 37 are attached as Exhibit 13.1 to this report. See also items 6, 7, 7A, and 8 of this report.

North American Building Systems

The company’s largest segment, North American Building Systems, includes principally the United States, Canadian, and Latin American pre-engineered metal building systems businesses as well as the wood frame buildings business and Liberty Building Systems, Inc.

The company’s North American Building Systems Segment activities consist primarily of the design, engineering, fabrication, and distribution of one to five-story steel and one to two-story wood framed buildings for industrial, commercial, community, governmental, and agricultural uses, such as manufacturing facilities, warehouses, office buildings, schools, churches, shopping centers, restaurants, convenience stores, livestock, and farm buildings. Principal product components of the systems are structural members and a variety of pre-engineered wall and roof components. These are fabricated according to standard or customer specifications and shipped to building sites for assembly by independent dealers. Building components are manufactured for North American sales and export sales in plants located at Galesburg and Charleston, Illinois; Laurinburg, North Carolina; Birmingham, Alabama; Visalia, California; Annville, Pennsylvania; San Marcos, Texas; Lester Prairie, Minnesota; Selmer, Tennessee; and Clear Brook, Virginia.

The company also markets and engineers metal building systems for export to Central American, Caribbean, and select Latin American markets. Shipments are sourced primarily from Butler’s U.S. plants and local manufacturing alliances. The company also serves the Canadian market through a branch office in Burlington, Ontario.

Building Systems’ products are distributed throughout the world by independent Butler dealers. The dealers provide construction services, and in many cases, complete design and engineering capabilities.

Nonresidential pre-engineered buildings compete with conventional forms of building construction in the low-rise commercial, community, industrial, agricultural, and governmental markets. Competition is primarily based upon cost, time of construction, appearance, thermal efficiency, and other specific customer requirements.

The company also competes with numerous pre-engineered steel frame building manufacturers doing business within the United States, Canada, Europe, South America, and China. The company believes that its 2002 sales of steel frame pre-engineered building systems within the United States exceeded those of any other nonresidential steel frame pre-engineered building systems manufacturer, with its next largest competitors being NCI Building Systems, Inc., V. P. Buildings Inc., a wholly owned subsidiary of Grupo IMSA, S.A. de C.V. of Mexico, American Buildings Company, an operating unit of MAGNATRAX Corporation, and Ceco Building Systems and Star Building Systems, operating units of Robertson–Ceco Corporation. Competition among manufacturers of pre-engineered buildings is based primarily upon price, service, product design and performance, and marketing capabilities.

Lester Building Systems, the company’s wood frame buildings business, sells its products through independent dealers, and direct-sales operations, and is ranked third in sales to Morton Buildings, Inc. and Cleary Buildings, Inc.

Liberty Building Systems, produces entry level lower–cost metal buildings for use as retail or industrial facilities in smaller communities, and primarily competes with regional metal building manufacturers in the Southern and Western regions of the United States.

International Building Systems

The International building systems business segment includes Butler Shanghai Inc., and Butler Tianjin Inc., wholly owned Chinese metal building systems subsidiaries and Saudi Building Systems Ltd., a minority owned Saudi Arabian metal buildings joint venture.

The Chinese metal building system subsidiaries, markets, engineers, and fabricates metal building systems for Asian markets from a plant in Shanghai, and China. In early 2003, the company completed the construction of a second manufacturing plant in Tianjin, China for approximately $11 million. The plant commenced production in January 2003.

In July 2002, the company completed the sale of certain assets of its Hungarian metal building systems subsidiary, closed its European sales and engineering offices, and disposed of the remaining assets of the European operation. The relatively small scale of the European operation, the continued loss position of the business, and a business recession in Europe contributed to this decision. The company continues to market its product in Europe through licensee arrangements.

Saudi Building Systems, Ltd. manufactures pre-engineered steel frame buildings for Middle Eastern markets at manufacturing facilities located in Jeddah, Saudi Arabia.

Architectural Products

This segment includes the operations of the Vistawall group which designs, manufactures, and sells aluminum extruded curtain wall systems for mid and high-rise office markets. Vistawall also sells entry doors, standard and custom architectural window systems, translucent roof and wall systems, custom and standard skylights, and other standard storefront products for low-rise retail and commercial

markets. The Vistawall group’s products are distributed on a material supply basis to either curtain wall erection subcontractors or general contractors, and through its distribution warehouses, to glazing contractors for storefront and entry door applications. Manufacturing and distribution facilities are located in Warwick, Rhode Island; Newnan and Tucker, Georgia; Modesto, Hayward, and, Rancho Cucamonga, California; Denver, Colorado; Brooklyn Park, Minnesota; Cincinnati and Cleveland, Ohio; Midway, Tennessee; Terrell, Houston, and Dallas, Texas; Tampa, Florida; Chicago, Illinois; Jessup, Maryland; St. Louis, Missouri; Seattle, Washington; and Wausau, Wisconsin. In 2001 Vistawall added to its production capacity with a newly completed extruding and finishing facility located in Midway, Tennessee.

The Vistawall Group operates in highly competitive markets with other national manufacturers which operate multiple plants and distribution facilities, and with regional manufacturers. Competition is primarily based on price, engineering and installation capabilities, delivery, appearance, and other specific customer requirements.

In 2002 the business activity of and investments in Vistawall International Ltd, a 40% owned United Arab Emirates joint venture formed to design, manufacture, and sell architectural aluminum products in Middle Eastern markets were immaterial.

Construction Services

The company’s Construction Services segment consists of Butler Construction, a wholly owned construction subsidiary also known as BUCON, Inc., which provides comprehensive design, planning, execution, and construction management services to major purchasers of construction. Butler Heavy Structures is an operating unit of Butler Construction serving markets requiring large, complex building designs using fabricated mill steel in combination with Butler’s pre-engineered secondary structural and metal cladding systems. Revenues from the Construction Services segment are derived primarily from “material-erect” and “material only” subcontracts, and from selective turnkey construction projects using products from several company businesses, predominantly the company’s U.S. metal buildings businesses.

This business segment competes with numerous international, national, regional, and local general contracting firms, and whenever possible, performs projects in conjunction with independent Butler dealers. Competition is primarily based upon price, design, speed of project execution, and product performance.

Real Estate

This business segment consists solely of Butler Real Estate, Inc., a wholly owned subsidiary of the company, which provides value-added real estate development and leasing services to major corporations in cooperation with Butler dealers. Butler Real Estate, Inc. generally functions as a development and financing source during the lead procurement and construction process, and as a seller of the completed project. On the basis of commitments to lease obtained from credit worthy customers, Butler Real Estate, Inc. acquires building sites, arranges with Butler dealers for construction of build-to-suit projects, and sells the completed projects to permanent investors when the facilities are occupied by lessees.

Manufacturing and Materials

The company’s manufacturing facilities include most conventional metal fabricating operations, such as punching, shearing, welding, extruding, and forming of sheet and structural steel and aluminum. Other metal manufacturing processes include painting and anodizing. Wood frame manufacturing operations include sawing and truss fabrication. The principal materials used in the manufacture of products include steel, aluminum, wood, and purchased parts. Materials are presently available in sufficient quantities to meet current needs.

In March 2002, the United States invoked tariffs on certain steel product imports substantially increasing both domestic and international steel prices and the company’s material costs. Rising steel prices, as well as intense price competition among building systems manufacturers in a declining market, made it nearly impossible to pass on higher costs in 2002, resulting in the erosion of profit margins. Although the company does not foresee any disruption in the availability of steel or other raw materials, steel costs have remained high and could impact the level of both sales and profitability.

Business Cycles and Seasonal Demand

Historically, the company’s sales and net earnings have been affected by cycles in the general economy which influence nonresidential construction markets (see in particular Item 7 of this report). In 2002, global economic activity remained subdued, and domestic nonresidential constructions markets declined 10%. Although it is difficult to predict when demand will recover, little change is expected in the domestic nonresidential construction markets in 2003. The decline in the global economy, along with the continued concern over a possible war involving the United States and other countries and Iraq, could prolong the slow-down in non-residential construction and affect the company’s sales.

The company also experiences seasonal demand for products and services. Sales for the first, second, third, and fourth quarters of 2002 were $183 million, $213 million, $239 million, and $193 million, respectively.

Backlog

The company’s backlog of orders believed to be firm was $264 million at December 31, 2002, 14% lower than a year ago. The higher margin product backlog was about 2% less than the levels of the previous year, while the construction backlog was 40% lower.

Employees

At December 31, 2002 the company employed 4,418 persons, 3,870 of whom were non-union employees, and 548 of whom were hourly paid employees that were members of three unions.

Available Information

The company’s Internet website address is http://www.butlermfg.com. The company makes the following reports filed by it available, free of charge, in an “Investor Packet” on its website under the heading “Investor relations:”

• Annual Report on Form 10-K;

• Quarterly Reports on Form 10-Q;

• Current reports on Form 8-K; and

• Amendments to the foregoing reports.

The foregoing reports are made available on the Company’s website as soon as practicable after they are filed with the Securities and Exchange Commission (“SEC”).

Item 2. Properties

The principal plants and physical properties of the company consist of the manufacturing facilities described under Item 1 and its world headquarters office in Kansas City, Missouri. Through a subsidiary, the company also owns a land development venture with property located on approximately

75 acres in San Marcos, Texas. The property is recorded as “Assets held for sale” and described in a footnote on page 26 in the company’s Annual Report. All other plants and offices described under Item 1 are utilized by the company and are generally suitable and adequate for the business activity conducted therein. The company’s manufacturing facilities described under Item 1, along with current outsourcing agreements with various domestic and foreign fabricators, provide production capabilities sufficient to meet current and foreseeable needs.

Except for leased facilities listed below, all of the company’s principal plants and offices are owned:

(1) Leased space used for the company’s world headquarters offices in Kansas City, Missouri entered into in 2002 as a result of a sale and leaseback of the facility (154,000 sq. ft. lease expires at the end of 2022).

The sale leaseback transaction was effected through (i) the assignment by the company to the purchaser of the company’s rights (including an option to purchase) under a lease for the headquarters facility (land and building) from the Planned Industrial Expansion Authority of Kansas City (PIEA), under which the company has received sales and property tax abatement (ii) the assignment by the company of its interest as owner of PIEA bonds issued by PIEA to finance the facility and (iii) the lease of the facility by the purchaser to the company. The lease is a triple net lease and has a term of 20 years, with five ten-year renewal options. Rentals during the initial term range from $1.4 to $3.6 million. If the purchaser wishes to sell the facility, the company has a right of first refusal; however, with limited exceptions in the case of major catastrophes which are generally covered by insurance, the company has no option to purchase the property. The company has agreed to indemnify the purchaser/lessor from property taxes assessed on the property and certain other liabilities under the applicable provisions of the triple net lease and also remains liable to PIEA for certain contingent payments in lieu of property tax obligations if specified employee City earnings tax targets are not met, as well as for certain environmental and other matters.

(2) Leased space used for the Vistawall Division plant in Terrell, Texas (145,000 sq. ft. and 121,000 sq. ft. with leases expiring in 2009 and 2006, respectively, both containing options to renew), and fabrication and distribution facilities in Dallas and Houston, Texas; Jessep, Maryland; St. Louis, Missouri; Brooklyn Park, Minnesota; Detroit, Michigan; Chicago, Illinois; Cincinnati and Cleveland, Ohio; Atlanta and Newnan, Georgia; Tampa, Florida; Auburn, Washington; Modesto, Hayward, Rancho Cucamonga, and Sacramento, California; Warwick, Rhode Island; and Denver, Colorado (510,000 sq. ft. leased with various expiration dates).The company also leases a manufacturing facility (50,000 sq. ft. lease expiring in the year 2005 with three five year renewal options) located in Selmer, Tennessee.

(3) Leased space used for BUCON, Inc. in Kansas City, Missouri (74,000 sq. ft. lease expiring in the year 2007).

(4) The company leases various sales and engineering offices throughout the world.

Item 3. Legal Proceedings.

On October 15, 2002, a McLeod County Minnesota District Court Jury awarded Butler Manufacturing Company $29.6 million for its Lester Building business in its suit against Louisiana-Pacific Corporation. The suit pertained to Louisiana-Pacific’s Inner-Seal siding product. The award compensates the company for damages and other losses resulting from product purchased by the company and sold to its dealers.

On January 27, 2003, the District Court of McLeod County, Minnesota, entered a final judgment in the amount of $20.1 million after ruling on post trial motions. The final judgment excluded $11.2 million of the jury’s original award as a result of a permanent injunction entered by the U.S. District Court for the District of Oregon, enjoining the Minnesota state court from entering judgment in the sum of $11.2 million. The company has appealed the Oregon Court’s injunction to the U.S. Ninth Circuit Court of Appeals. The final judgment included an additional award of $1.7 million for interest and costs.

The company is unable to estimate the impact the award may have on its financial condition or results of operations at this time. However, if the entire award is paid, the company believes it will recognize approximately $15 million pretax as income for damages and recovery of prior costs in the period in which the award is paid. The trial court’s judgment is subject to appeal, which could delay the payment of the award.

There are no other material legal or environmental proceedings pending as of March 13, 2003, nor does the company have any known material environmental contingencies as of this date. Proceedings, other than the Louisiana-Pacific case, consist of matters normally incident to the business conducted by the company and taken together do not appear to be material.

Item 4. Submissions of Matters to a Vote of Security Holders.

No matters have been submitted to a vote of stockholders since the last annual meeting of stockholders on April 15, 2003.

Item 4A. Executive Officers of the Registrant.

The company’s Executive Officers, their ages, their positions and offices with the company, and their principal occupations during the past five years are shown below:

Corporate Executive Officers

John J. Holland — age 52, Chairman and Chief Executive Officer and Chairman of the Board Executive Committee. He joined Butler in 1980 and became Vice President — Controller in 1986, Vice President-Finance in 1990, Executive Vice President in 1998, and President and Chief Executive Officer in 1999, and was elected Chairman and Chief Executive Officer in November 2001. Mr. Holland is a director of Cooper Tire and Rubber Company, The Commerce Fund, and SCS Transportation, Inc. He also serves as a director of the National Association of Manufacturers, and the Greater Kansas City Chamber of Commerce. He is former chairman of Heart of America Family Services.

Ronald E. Rutledge — age 61, President and Director in November 2001. He Joined Butler in 1984 as President of the Vistawall Architectural Products Group, was elected Executive Vice President in April 2001, and President in November 2001. He is a currently director of Labconco Corporation, the Kansas City Council for the Boy Scouts of America, and the Terrell State Bank. He is past director of the Terrell, Texas Chamber of Commerce.

Barbara B. Bridger — age 45, Vice President-Human Resources since 1999. She joined Butler in 1980 and previously was Vice President- Human Resources for the Buildings Division.

John T. Cole — age 52, Controller since 1990. He joined Butler in 1977 and previously was Corporate Audit Manager.

John W. Huey — age 55, Vice President, General Counsel, and Secretary since 1999. He joined Butler in 1978 and became Vice President-Administration in 1993 and Assistant General Counsel and Assistant Secretary in 1987.

Lee E. Lichlyter — age 39, Vice President-Chief Information Officer since 2000, and previously was Vice President of Information Systems Building Division.

Paul F. Liljegren — age 48, Treasurer since 1998. He joined Butler in 1979 and was previously was Vice President and Controller of Lester Building Systems.

Larry C. Miller — age 46, Vice President-Finance since 1998. He joined Butler in 1980 and was previously the company’s Treasurer.

Division Executive Officers

Moufid (Mike) Alossi — age 60, President, Butler (Shanghai) Inc., since 1997. He joined Butler in 1968 and was previously President of Butler World Trade and Vice President-International Sales and Marketing.

John R. Hill — age 45, President, Lester Building Systems since 2000. He joined Butler in 1980. He was previously Senior Vice President of Sales of Lester Building Systems.

Robert M. Adams — age 47, President, Butler Real Estate, Inc. since February 2003 and was previously Vice President of Butler Real Estate since September 2002. Prior to joining Butler, he was a member of the firm of Lathrop & Gage LC.

Thomas W. Harris — age 50, President, Vistawall Group since 2001. He joined Butler in 1984. He previously was Vice President Sales and Marketing from 1997 to 2000, and Vice President Vistawall Central Region in 2001.

William L. Johnsmeyer — age 55, President, BUCON, Inc. since 1990. He joined Butler in 1982 and became President, Walker Division in 1984.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters.

Along with the information below incorporated by reference is the information under “Quarterly Financial Information (Unaudited)”, “Price Range of Common Stock (Unaudited)” and “Historical Review 2002-1998” on pages 35 and 36 of the Annual Report.

On January 21, 2003, the Board of Directors declared a regular dividend of 18 cents per share, payable on April 4, 2003, to shareholders of record on March 21, 2003. The company has restrictions on the payment of dividends under certain amendments to debt covenants contained in note agreements dated June 20, 2001, March 1, 1998, and June 1, 1994 between the company and insurance companies, and the bank credit agreement dated June 20, 2001incorporated by reference to the Forms 10-Q for the quarters ended June 30, 2001, March 31, 1998 and June 30, 1994 as indicated under Item 14 and amendments dated December 17, 2002 and February 28, 2003, filed on Forms and incorporated by reference which lowered the lines of credit from $50 million to $35 million in line with the company’s needs and provided security for the company’s lenders and note holders by pledging most of the company’s domestic assets. After giving effect to the February 28, 2003 amendments, the company had approximately $10 million of retained earnings available for cash dividends and share repurchases.

Item 6. Selected Financial Data.

The information within the “Historical Review 2002-1998” on page 36 of the Annual Report is incorporated herein by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The information within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 9 through 16 of the Annual Report is incorporated herein by reference.

As described in the company’s annual report, the company and its banks amended the company’s domestic credit agreement in the fourth quarter of 2002. In connection with this amendment, the company amended its private placement note agreements in February 2003 to permit the grant of a security interest in the company’s domestic cash, receivables, inventory, equipment and subsidiary stock.

Advances under the credit agreement bear interest at rates based on either (a) the administrative lender’s base rate plus a margin ranging from 1.00% to 1.25%, payable quarterly, or (b) LIBOR plus a margin ranging from 1.75% to 2.50%, which is payable at the end of periods ranging from one to six months. The credit agreement provides for a commitment fee on the unused commitment ranging from .20% to .30%.

Both the credit agreement, as amended, and the note agreements, as amended, contain certain operating covenants relating to such matters as restrictions on liens, investments, acquisitions, asset sales, mergers cash dividends and stock repurchases. Both the credit agreement and the note agreements contain provisions resulting in an acceleration of the company’s payment obligations upon a change in control, as defined.

The credit agreement requires the company to satisfy certain financial covenants, as defined, that adjust periodically, including a maximum capitalization ratio of 0.45, a leverage ratio ranging from 14:1 to 4:1, minimum domestic cash at all times and at quarter-end ranging from $35 million to $10 million, minimum domestic EBITDA ranging from $0 to $15 million, minimum tangible net worth of $95 million plus 50% of net income for each quarter after December 31, 2002 (with no deduction for losses) and maximum capital expenditures of $18.5 million for 2003.

The note agreements, as amended, require the company to satisfy certain financial covenants, as defined, that adjust periodically, including a minimum tangible net worth test of $110 million plus 50% of net income for each quarter after December 31, 2002 (with no deduction for losses), a capitalization ratio ranging from 0.50 to 0.55, a fixed charge coverage ratio ranging from 1:1 to 2:1 and a maximum subsidiary indebtedness test.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk.

The information within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk” on page 13 of the Annual Report is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data.

The information contained within the consolidated financial statements and related notes on pages 18 through 36 of the Annual Report is incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

As previously reported in the company’s Form 8-K report filed on May 16, 2002, the Board of Directors of the company, upon the recommendation of the Audit Committee, approved the dismissal of Arthur Andersen LLP as the company’s independent auditors and the appointment of KPMG LLP to serve as the company’s independent auditors for the year ending December 31, 2002. The were no disagreements with either KPMG LLP nor Arthur Andersen LLP.

PART III

Item 10. Directors of Registrant.

Information as to pages 2 through 5 of the Proxy Statement and at page 15 relating to “Section 16(a) Beneficial Ownership Reporting Compliance”.

Item 11. Executive Compensation.

Information related to Executive Compensation including information regarding the “Report of the Compensation and Benefits Committee on Executive Compensation,” “Summary Compensation Table,” “Option/SAR Grants In Last Fiscal Year, “ “Aggregated Option Exercises and Fiscal Year-End Option Value Table,” “Long Term Incentive Plan, “ “Pension Plan Table,” and “Restricted Stock Bonus Program” is incorporated herein by reference on pages 8 through 14 of the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

Information within the “Beneficial Ownership Table” on pages 6 through 7 of the Proxy Statement is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions.

None.

Item 14. Controls and Procedures.

The company maintains a set of disclosure controls and procedures, and internal controls designed to ensure that information requiring disclosure in our filings under the Securities Exchange Act of 1934 is recorded, summarized, and reported in the proper period in accordance with Securities and Exchange Commission rules. The company’s principal officers have evaluated the company’s disclosure controls within 90 days prior to the filing of this Annual Report on Form 10-K and have determined that disclosure controls and procedures are operating effectively as of the Evaluation Date.

Subsequent to the company’s evaluation there have been no significant changes in internal controls or any other factors that could significantly affect internal controls, including any corrective actions with regards to significant deficiencies and material weaknesses.

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

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

(1) Financial Statements:

• “Reports of Independent Public Accountants” for the three-year period ended December 31, 2002.

• Consolidated Balance Sheets as of December 31, 2002 and 2001.

• Consolidated Statements of Earnings and Retained Earnings for years Ended December 31, 2002, 2001, and 2000.

• Consolidated Statements of Comprehensive Income for years ended December 31, 2002, 2001, and 2000.

• Consolidated Statements of Cash Flows for years ended December 31, 2002, 2001, and 2000.

• Notes to Consolidated Financial Statements.

The foregoing have been incorporated by reference to the Annual Report as indicated under Item 8.

(2) Financial Statement Schedules:

Auditors’ Reports on Financial Statement and Schedule II, Valuation and Qualifying Accounts.

All other schedules are omitted because they are not applicable or the information is contained in the consolidated financial statements or notes thereto.

(3) Exhibits:


			3.1			Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the company’s form 10-Q for the quarter ended, March 31, 1996).

			3.2			Bylaws of Butler Manufacturing Company as amended effective November 27, 2001 (incorporated by reference to Exhibit 3.2 of the company’s 2001 Form 10-K).

			3.11			Certificate of Designation of SERIES A, CLASS, 1 PREFERRED STOCK of BUTLER MANUFACTURING COMPANY (Pursuant to Section 151 of the Delaware General Corporation Law), filed September 23, 1999, pursuant to Rights Agreement appended as Exhibit 4.3.

			4.1			Note Agreement between the company and four Insurance Companies dated as of June 1, 1994 (incorporated by reference to Exhibit 4 of the company’s Form 10-Q for the quarter ended June 30, 1994).

			4.1.1			First Amendment to the June 1, 1994 Note Agreement between the company and four Insurance Companies dated February 28, 2003.

			4.2			Note Agreement between the company and an Insurance Company dated as of March 1, 1998 (incorporated by reference to Exhibit 4 of the company’s Form 10-Q for the quarter ended March 31, 1998).

			4.2.1			First Amendment to the March 1, 1998 Note Agreement between the company and Insurance Companies dated February 28, 2003

			4.3.			Rights Agreement dated September 16, 1998, between Butler Manufacturing Company and UMB Bank, N.A. which includes the form of Rights as Exhibit C (incorporated by reference to Exhibit 1.1 to the company’s Form 8-A filed September 23, 1999.).

			4.4			Note Agreement between the company and Insurance Companies dated as of June 20, 2001 (incorporated by reference to Exhibit 4.2 of the company’s Form 10-Q for the quarter ended June 30, 2001).

			4.4.1			First Amendment to the June 20, 2001 Note Agreement between the company and Insurance Companies dated February 28, 2003.


			4.5			Credit Agreement between the company and its banks dated June 20, 2001 (incorporated by reference to Exhibit 4.1 of the company’s Form 10-Q for the quarter ended June 30, 2001).

			4.5.1			Second Amendment to the credit agreement between the company and its banks dated December 17, 2002 (incorporated by reference to Exhibit 4.1.1 of the company’s 8-K issued on December 19, 2002)

			4.5.2			Third Amendment to the credit agreement between the company and its banks dated February 28, 2003.

			4.6			Security Agreement between the company and the banks and note holders dated February 28, 2003.

			4.7			Intercreditor and Collateral Agency Agreement between the company its banks and note holders dated February 28, 2003.

			5.1			Notice of a Minnesota District court’s judgment awarded the company on October 15, 2002, pertaining to its suit with Louisiana-Pacific Corporate and its Innerseal siding product (incorporated by reference to Exhibit 5 of the company’s 8-K issued on October 17, 2002).

			5.2			Notice of a Minnesota District court’s final judgement awarded the company on January 27, 2003 pertaining to its suit with Louisiana-Pacific Corporation and its Innerseal siding product (incorporated by reference to Exhibit 5 of the company’s 8-K issued on January 30, 2003).

			10.1			Butler Manufacturing Company Executive Deferred Compensation Plan as amended (incorporated by reference to Exhibit 4 in the company’s Registration statement on Form S-8 filed December 20, 2000 (File No. 333-52338).

			10.2			Butler Manufacturing Company Stock Incentive Plan for 1987, as amended (incorporated by reference to Exhibit 10.1 to the company’s Form 10-K for the year ended December 31, 1990).

			10.3			Butler Manufacturing Company Stock Incentive Plan of 1979, as amended (incorporated by reference to Exhibit 10.2 to the company’s Form 10-K for the year ended December 31, 1990).

			10.4			Form of Change of Control Employment Agreements, as amended, between the company and each of six executive officers (incorporated by reference to Exhibit 10.3 to the company’s Form 10-K for the year ended December 31, 1990).

			10.5			Copy of Butler Manufacturing Company Supplemental Benefit Plan as amended and restated (incorporated by reference to Exhibit 10.5 to the company’s Form 10-K for the year ended December 31, 1994).

			10.6			Form of Butler Manufacturing Company Split Dollar Life Insurance Agreement (Collateral Assignment Method; Bonus Arrangement) entered into between the company and certain executive officers (incorporated by reference to Exhibit 10.6 to the company’s Form 10-K for the year ended December 31, 1994).Form of Butler Manufacturing Company Split Dollar Life Insurance Agreement (Collateral Assignment Method; Roll Out Arrangement) entered into between the company and certain executive officers (incorporated by reference to Exhibit 10.7 to the company’s Form 10-K for the year ended December 31, 1994).


			10.7			Butler Manufacturing Company Stock Incentive Plan of 1996 (incorporated by reference to Exhibit 4(a) to the company’s Registration Statement Number 333-02557 on S-8 filed April 17, 1996).

			10.9			Butler Manufacturing Company Director Stock Compensation Program, as amended June 20, 2000 (incorporated by reference to Exhibit 10.9 to the company’s December 31, 2000 Form 10-K).

			10.10			Butler Manufacturing Company Restricted Stock Compensation Program of 1996 (incorporated by reference Exhibit 10.10 to the company’s December 31, 1997 Form 10-K).

			10.11			Form of Butler Manufacturing Company Split Dollar Life Insurance Agreement (Collateral Assignment Agreement; Roll Out Arrangement) entered into between the company and certain executive officers for the year ended December 31, 2000 (incorporated by reference to Exhibit 10.11 to the company’s December 31, 2000 Form 10-K).

			10.12			Butler Manufacturing Company Director Deferred Fee Plan Dated July 1, 2000 (incorporated by reference to Exhibit 10.12 to the company’s December 31, 2000 Form 10-K).

			10.13			Summary of Butler Manufacturing Company’s Long Term Incentive Plan.

			13.1			Butler Manufacturing Company 2002 Annual Report Pages 9 through 36 only (the information expressly incorporated herein by reference).

			18.0			Accountants Preferability Letter dated August 9, 2001 and incorporated by reference to the company’s June 30, 2001 10-Q).

			22.1			Set forth below is a list as of February 20, 2003 of subsidiaries of the company and their respective jurisdictions of incorporation. Subsidiaries not listed, when considered in the aggregate as a single subsidiary, do not constitute a significant subsidiary.


		Jurisdiction of
Subsidiary		Incorporation

Butler Export, Inc.		Barbados
BMC Real Estate, Inc.		Delaware
BUCON, Inc.		Delaware
Butler Pacific, Inc.		Delaware
Butler Real Estate, Inc.		Delaware
Butler, S.A. de C.V.		Mexico
Butler (Shanghai) Inc.		China
Butler (Tianjin) Inc.		China
Global BMC (Mauritius) Holdings Ltd.		Mauritius
Butler Holdings, Inc.		Delaware
Comercial Butler Limitada		Chile
Lester’s of Minnesota, Inc.		Minnesota
Lester Holdings, Inc.		Delaware
Liberty Building Systems, Inc.		Delaware
Moduline Windows, Inc.		Wisconsin


23.1		Consent of KPMG LLP (incorporated by reference to page 18 of this report).


24.1		Power of Attorney to sign this Report by each director.

(b) The company has filed several reports on Form 8-K since the end of the third quarter ended September 30, 2002.

• Form 8-K dated October 17, 2003 referenced $29.6 million Jury Award.

• Form 8-K dated December 23, 2003 referenced Second Amendment to Bank Credit Agreement.

• Form 8-K dated January 30, 2003 referenced Jury Award.

• Form 8-K dated February 10, 2003 referenced Waiver and Amendment to Credit Agreement.

* * * * * *

The calculation of the aggregate market value the company’s Common Stock held by non-affiliates shown on the front of the cover page assumes that directors are affiliates. Such assumption does not reflect a belief by the company or any director that any director is an affiliate of the company.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 on this 6th day of March, 2003.


			BUTLER MANUFACTURING COMPANY

			BY /s/ John J. Holland John J. Holland Chairman and CEO

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


/S/ John J. Holland John J. Holland	Chairman and CEO and Director (Principal Executive Officer)	March 3, 2003

/S/ Ronald E. Rutledge Ronald E. Rutledge	President and Director	March 6, 2003

/S/ Larry C. Miller Larry C. Miller	Vice President-Finance (Principal Financial Officer)	March 3, 2003

/S/ John T. Cole John T. Cole	Controller (Principal Accounting Officer)	March 3, 2003

/S/ K. Dane Brooksher K. Dane Brooksher	Director	March 4, 2003

/S/ Gary M. Christensen Gary M. Christensen	Director	March 4, 2003

/S/ Susan F. Davis Susan F. Davis	Director	March 3, 2003

/S/ C.L. William Haw C.L. William Haw	Director	March 4, 2003

/S/ Mark A. McCollum Mark A. McCollum	Director	March 3, 2003

/S/ Gary L. Tapella Gary L. Tapella	Director	March 4, 2003

/S/ William D. Zollars William D. Zollars	Director	March 6, 2003

Certification of Principal Executive Officer

I, John J. Holland certify that:

1. I have reviewed this annual report on Form 10-K of Butler Manufacturing Company;

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 officers 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 we have:

a) 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;

b) 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

c) 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 officers 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 function):

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 officers and I have indicated in this annual report whether or not 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


March 13, 2003 Dated		/s/ John J. Holland John J. Holland Chairman and Chief Executive Officer

Certification Of Principal Financial Officer

I, Larry C. Miller certify that:

1. I have reviewed this annual report on Form 10-K of Butler Manufacturing Company;

b) 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

c) 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;

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


March 13, 2003 Dated		/s/ Larry C. Miller Larry C. Miller Vice President - Finance, and Chief Financial Officer

Independent Auditors’ Consent

The Board of Directors
Butler Manufacturing Company

We consent to the incorporation by reference in the registration statements (No. 333-14464, 2-63830, 2-55753, 333-02285, 333-02557, and 333-52338) on Form S-8 of Butler Manufacturing Company of our reports dated February 28, 2003, with respect to the consolidated balance sheet of Butler Manufacturing Company as of December 31, 2002 and the related consolidated statement of earnings and retained earnings, comprehensive income, and cash flows for the year then ended which reports appear in this 10-K and in the December 31, 2002, annual report incorporated by reference in this form 10-K.

KPMG LLP

Kansas City, Missouri,
March 13, 2003

BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES
KANSAS CITY, MISSOURI

Consolidated Financial Statement Schedules
(Form 10-K)

December 31, 2002, 2001, 2000

(With Auditors’ Reports Thereon)

Independent Auditors’ Report

To the Shareholders of Butler Manufacturing Company:

Under date of February 28, 2003, we reported on the consolidated balance sheet of Butler Manufacturing Company and subsidiaries as of December 31, 2002, and the related consolidated statements of income, stockholders’ equity and comprehensive income, and cash flows for the year then ended, which are incorporated by reference in this Form 10-K. In connection with our audit of the aforementioned consolidated financial statements, we also audited the related 2002 consolidated financial statement schedule in the Form 10-K. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement schedule based on our audit. The consolidated financial statements and schedules of the company as of December 31, 2001 and for the years ended December 31, 2001 and 2000 were audited by other auditors who have ceased operations. Those auditors’ report, dated January 29, 2002, on those financial statement schedules, expressed an unqualified opinion.

In our opinion, the 2002 financial statement schedule, when considered in relation to the basic 2002 consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

KPMG LLP

Kansas City, Missouri
February 28, 2003

Report of independent public accountants

To the Shareholders of Butler Manufacturing Company:

We have audited in accordance with auditing standards generally accepted in the United States, the consolidated financial statements included in Butler Manufacturing Company’s 2001 Annual Report to Shareholders, incorporated by reference in this Form 10-K, and have issued our report thereon dated January 29, 2002. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The Financial Statement Schedule listed in item 14 is the responsibility of the company’s management and is presented for the purpose of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements, and in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.

/S/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Kansas City, Missouri,
January 29, 2002

This audit report of Arthur Andersen LLP, our former independent public accountants, is a copy of the original report dated January 29, 2002 rendered by Arthur Andersen LLP on our consolidated financial statements incorporated by reference our form 10-K filed on March 26, 2002, and schedule included in our form 10-K filed on Schedule II and has not been reissued by Arthur Andersen LLP since that date. This report refers to financial statements and schedule not physically included in the annual report or this filing.

SCHEDULE II

BUTLER MANUFACTURING COMPANY AND SUBSIDIARIES

Valuation and Qualifying Accounts

(Thousands of Dollars)


		Balance at		Charged									Balance
		beginning		to						Less:			at end
Description		of year		earnings			Other			Deductions			of year

							(A)
Allowance for Losses on Accounts Receivable:
	2002	$	7,138	$	3,286		$	(1,213	)	$	1,715		$	7,496
	2001	$	5,130	$	3,768		$	(196	)	$	1,564		$	7,138
	2000	$	4,674	$	1,620		$	178		$	1,342		$	5,130
Restructuring Reserve:
	2002	$	2,105	$	1,367	(B)	$	—		$	1,947	(C)	$	1,525
	2001	$	—	$	3,854	(B)	$	—		$	1,749	(C)	$	2,105
	2000	$	885	$	—		$	(620	)	$	265		$	—

(A)		Includes reclasses, transfers, and/or recoveries of reserve balances including a recovery of a large receivable in the Construction Services segment in 2002.

(B)		Represents the Butler Europe accrual of Restructuring Reserves for employee separation and termination costs, Legal costs, and other related costs to dispose of the business. An additional amount was accrued in 2002 for Separation, termination, and legal costs association with the dissolution of the European building business.

(C)		Represents the utilization of the Butler Europe Restructuring Reserve in 2001 and 2002

EXHIBIT INDEX


EXHIBITS		DESCRIPTION
3.1		Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to company’s form 10-Q for the quarter ended, March 31, 1996).
3.2		Bylaws of Butler Manufacturing Company as amended effective November 27, 2001.
3.11		Certificate of Designation of SERIES A, CLASS, 1 PREFERRED STOCK of BUTLER Delaware General Corporation Law), MANUFACTURING COMPANY (Pursuant to Section 151 of the filed September 23, 1999, pursuant to Rights Agreement appended as Exhibit 4.3.
4.1		Note Agreement between the company and four Insurance Companies dated as of June 1, 1994 (incorporated by reference to Exhibit 4 of the company’s Form 10-Q for the quarter ended June 30, 1994).
4.1.1		First Amendment to the June 1, 1994 Note Agreement between the company and four Insurance Companies dated February 28, 2003.
4.2		Note Agreement between the company and an Insurance Company dated as of March 1, 1998 (incorporated by reference to Exhibit 4 of the company’s Form 10-Q for the quarter ended March 31, 1998).
4.2.1		First Amendment to the March 1, 1998 Note Agreement between the company and Insurance Companies dated February 28, 2003.
4.3		Rights Agreement dated September 16, 1998, between Butler Manufacturing Company and UMB Bank, N.A. which includes the form of Rights as Exhibit C (incorporated by reference to Exhibit 1.1 to the company’s Form 8-A filed September 23, 1999.
4.4		Note Agreement between the company and Insurance Companies dated as of June 20, 2001 (incorporated by reference to Exhibit 4.2 of the company’s Form 10-Q for the quarter ended Juned 30, 2001).
4.4.1		First Amendment to the June 20, 2001 Note Agreement between the company and Insurance Companies dated February 28, 2003.
4.5		Credit Agreement between the company and its banks dated June 20, 2001 (incorporated by reference to Exhibit 4.1 of the company’s Form 10-Q for the quarter ended June 30, 2001).
4.5.1		Second Amendment to the credit agreement between the company and its banks dated December 17, 2002 (incorporated by reference to Exhibit 4.1.1 of the company’s 8-K issued on December 19, 2002)
4.5.2		Third Amendment to the credit agreement between the company and its banks dated February 28, 2003
4.6		Security Agreement between the company its banks and note holders dated February 28, 2003.



4.7		Intercreditor and Collateral Agency Agreement between the company its banks and note holders dated February 28, 2003.
5.1		Notice of a Minnesota District court’s judgment awarded the company on October 15, 2002, pertaining to its suit with Louisiana-Pacific Corporate and its Innerseal siding product (incorporated by reference to Exhibit 5 of the company’s 8-K issued on October 17, 2002).
5.2		Notice of a Minnesota District court’s final judgement awarded the company on January 27, 2003 pertaining to its suit with Louisiana-Pacific Corporation and its Innerseal siding product (incorporated by reference to Exhibit 5 of the company’s 8-K issued on January 30, 2003).
10.1		Butler Manufacturing Company Executive Deferred Compensation Plan as amended (incorporated by reference to Exhibit 4 to the company’s Registration Statement on Form S-8 filed December 20, 2000 (File No 333-52338).
10.2		Butler Manufacturing Company Stock Incentive Plan for 1987, as amended (incorporated by reference to Exhibit 10.1 to the company’s Form 10-K for the year ended December 31, 1990).
10.3		Butler Manufacturing Company Stock Incentive Plan of 1979, as amended (incorporated by reference to Exhibit 10.2 to the company’s Form 10-K for the year ended December 31, 1990).
10.4		Form of Change of Control Employment Agreements, as amended, between the company and each of six executive officers (incorporated by reference to Exhibit 10.3 to the company’s Form 10-K for the year ended December 31, 1990).
10.5		Copy of Butler Manufacturing Company Supplemental Benefit Plan as amended and restated (incorporated by reference to Exhibit 10.5 to the company’s Form 10-K for the year ended December 31, 1994).
10.6		Form of Butler Manufacturing Company Split Dollar Life Insurance Agreement (Collateral Assignment Method; Bonus Arrangement) entered into between the company and certain executive officers (incorporated by reference to Exhibit 10.6 to the company’s Form 10-K for the year ended December 31, 1994).
10.7		Form of Butler Manufacturing Company Split Dollar Life Insurance Agreement (Collateral Assignment Method; Roll Out Arrangement) entered into between the company and certain executive officers (incorporated by reference to Exhibit 10.7 to the company’s Form 10-K for the year ended December 31,1994).
10.8		Butler Manufacturing Company Stock Incentive Plan of 1996 (incorporated by reference to Exhibit 4(a) to the company’s Registration Statement Number 333-02557 on S-8 filed April 17, 1996).
10.9		Butler Manufacturing Company Director Stock Compensation Program as amended June 20, 2000.


10.10		Butler Manufacturing Company Restricted Stock Compensation Program of 1996 (incorporated by reference to the Exhibit 10.10 to the company’s December 31, 1997 Form 10-K).
10.11		Form of Butler Manufacturing Company Split Dollar Life Insurance Agreement (Collateral Assignment Agreement; Roll Out Arrangement) entered into between the company and certain executive officers for the year ended December 31, 2000(incorporated by reference to Exhibit 10.11 to the company’s December 31, 2000 Form 10-K).
10.12		Butler Manufacturing Company Director Deferred Fee Plan Dated July 1, 2000 (incorporated by reference to Exhibit 10.12 to the company’s December 31, 2000 Form 10-K).
10.13		Summary of Butler Manufacturing Company’s Long Term Incentive Plan.
13.1		Butler Manufacturing Company 2002 Annual Report Pages 9 through 36 only (the information expressly incorporated herein by reference).
18.0		Accountants Preferability Letter dated August 9, 2001 and incorporated by reference to the company’s June 30, 2001 10-Q).
22.1		Set forth below is a list as of February 20, 2003 of subsidiaries of the company and their respective jurisdictions of incorporation. Subsidiaries not listed, when considered in the aggregate as a single subsidiary, do not constitute a significant subsidiary.


		Jurisdiction of
Subsidiary		Incorporation

Butler Export, Inc.		Barbados
BMC Real Estate, Inc.		Delaware
BUCON, Inc.		Delaware
Butler Pacific, Inc.		Delaware
Butler Real Estate, Inc.		Delaware
Butler, S.A. de C.V.		Mexico
Butler (Shanghai) Inc.		China
Butler (Tianjin) Inc.		China
Global BMC (Mauritius) Holdings Ltd.		Mauritius
Butler Holdings, Inc.		Delaware
Comercial Butler Limitada		Chile
Lester of Minnesota, Inc.		Minnesota
Lester Holdings, Inc.		Delaware
Liberty Building Systems, Inc.		Delaware
Moduline Windows, Inc.		Wisconsin


23.1		Consent of KPMG LLP (incorporated by reference to page 14 of this report).
24.1		Power of Attorney to sign this and other SEC Reports by each director.

EX-4.1.1 3 c75442exv4w1w1.htm 1ST AMENDMENT TO THE JUNE 20, 2001 NOTE AGREEMENT 1st Amendment to the June 20, 2001 Note Agreement

EXHIBIT 4.1.1

First Amendment
To the June 1, 1994
Note Agreement
Dated February 28, 2003

BUTLER MANUFACTURING COMPANY

FIRST AMENDMENT
TO NOTE AGREEMENT

$35,000,000 Principal Amount
8.02% Senior Notes
Due December 30, 2003

Dated as of February 28, 2003

To the Holders of Senior Notes
of Butler Manufacturing Company
Named in the Attached Schedule I

Ladies and Gentlemen:

Reference is made to the Note Agreement dated as of June 1, 1994 among Butler Manufacturing Company (the “Company”) and the Purchasers named in Schedule I thereto (as amended, the “Note Agreement”), pursuant to which the Company issued $35,000,000 principal amount of its 8.02% Senior Notes due December 30, 2003 (the “Notes You are referred to herein individually as a “Holder” and collectively as the “Holders.” Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Note Agreement.

The Company has requested the modification of certain of the covenants and other provisions contained in the Note Agreement. In addition, the Company has recently entered into a Second Amendment to its Credit Agreement with the Banks pursuant to which it has agreed that, among other things, the obligations to the Banks under the Credit Agreement will be secured pursuant to certain security documents. Concurrently with the execution of this First Amendment, the Company is entering into a First Amendment to its Note Agreement dated as of March 1, 1998 with the noteholders party thereto (the “1998 Amendment”) and a First Amendment to its Note Purchase Agreement dated as of June 20, 2001 with the noteholders party thereto (“2001 Amendment”).

The Holders are willing to grant an amendment on the terms and conditions set forth in this First Amendment.

In consideration of the premises and for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Company and the Holders agree as follows:

SECTION 1. AMENDMENTS

1.1. Amendment of Section 1.1. Section 1.1 is amended to include the following after the third sentence thereof:

“The Notes will be secured until the Collateral Release Date pursuant to the Security Documents by a Lien on the Collateral in favor of the Collateral Agent appointed by the holders of the Notes, the holders of the Other Notes and the Banks under the Intercreditor Agreement.”

1.2. Amendment of Section 2.1. Section 2.1 is amended to include the following second paragraph:

“In the event of a Change of Control Event, the Company, upon notice as provided below, shall offer to prepay the entire principal amount outstanding of the Notes at 100% of the principal amount thereof, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company shall give notice of any offer to prepay the Notes to each holder of the Notes within three Business Days after any executive officer has knowledge that a Change of Control Event is likely to occur and in any event not later than the date of such Change of Control Event. Such notice shall be certified by the principal accounting officer or principal financial officer and shall specify (i) the nature of the Change of Control Event, (ii) the date fixed for prepayment, which shall not be later than 30 calendar days following the Change of Control Event, (iii) the estimated date of the Change of Control Event, if it has not occurred, (iv) the accrued and unpaid interest applicable to the prepayment, (v) the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of prepayment), setting forth the details of such computation, and (vi) the date by which any holder of a Note that wishes to accept such offer must deliver notice thereof to the Company, which shall not be later than 10 calendar days prior to the date fixed for prepayment. Not earlier than seven calendar days prior to the date fixed for prepayment, the Company shall give written notice to each holder of the Notes of those holders who have given notices of acceptance of the Company’s offer, and the principal amount of Notes held by each, and thereafter any holder may change its response to the Company’s offer by written notice to such

effect delivered to the Company not less than three calendar days prior to the date fixed for prepayment. Upon receipt by the Company of any non-revoked notice of acceptance from any holder within the required time period, the aggregate principal amount of Notes held by such holder shall become due and payable on the prepayment date. Failure of a holder to respond to a notice shall be deemed to be a rejection by such holder of the offer to prepay.”

1.3. Amendment of Section 5.1.

1.3.1. Section 5.1 is amended to include the following defined terms:

“Banks — The institutions that are now or hereafter become party to the Credit Agreement in their capacity as a lender or agent thereunder.”

“Change of Control Event — the (i) acquisition through purchase or otherwise, without the written consent of the Company, by any Person, or group of Persons acting in concert, directly or indirectly, in one or more transactions, of beneficial ownership or control of securities representing more than 50% of the combined voting power of the Company’s Voting Stock (including the agreement to act in concert by Persons who beneficially own or control securities representing more than 50% of the combined voting power of the Company’s Voting Stock); or (ii) acquisition through purchase or otherwise, with the written consent of the Company, by any Person, or group of Persons acting in concert, directly or indirectly, in one or more transactions, of beneficial ownership or control of securities representing more than 50% of the combined voting power of the Company’s Voting Stock (including the agreement to act in concert by Persons who beneficially own or control securities representing more than 50% of the combined voting power of the Company’s Voting Stock) and where less than one-third of the Directors of the Company serving immediately prior to such acquisition, continue to serve as Directors of the

Company (or any successor thereof) after the consummation of such acquisition.”

“Collateral — As defined in the Security Documents.”

“Collateral Agent — Bank of America, N.A. and its successors and assigns.”

“Collateral Release Date — The earlier to occur of (i) the date the Liens against the Collateral are released in accordance with the Intercreditor Agreement and (ii) the date the Liens against the Collateral are released under the Security Documents, whether as provided in the Security Documents, by operation of law or otherwise.”

“Consolidated Income Available for Fixed Charges — For any period, the sum of (i) EBITDA for such period and (ii) Rentals for such period under all leases other than Capitalized Leases.”

“Consolidated Interest Expense — For any period, the consolidated interest expense of the Company and its Restricted Subsidiaries for such period determined in accordance with generally accepted accounting principles (including imputed interest under Capitalized Leases and all debt discount and expense amortized in such period).”

“Consolidated Net Worth — As of any date, the consolidated shareholders’ equity of the Company and its Restricted Subsidiaries as of such date determined in accordance with generally accepted accounting principles.”

“EBITDA — For any period, the sum of Consolidated Net Income for such period, plus, to the extent deducted in determining such Consolidated Net Income, (i) federal, state, local and foreign income, value added and similar taxes, (ii) Consolidated Interest Expense and (iii) depreciation and amortization expense.”

“Effective Date of the Change of Control — The date on which a Change of Control Event occurs.”

“First Amendment — The First Amendment to Note Agreement dated as of February 28, 2003 between the Company and the institution named in the signature pages thereto.”

“Fixed Charges — For any period, the sum of (i) Rentals for such period under all leases other than Capitalized Leases and (ii) Consolidated Interest Expense for such period.”

“holder — with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 10.2.”

“Intercreditor Agreement — That certain Intercreditor and Collateral Agency Agreement dated February 28, 2003 among the Collateral Agent, the Banks, the holders of the Notes and the holders of the Other Notes, as the same may be amended, modified or restated from time to time.”

“Non-Recourse Debt — Non-recourse Indebtedness secured by Liens granted on real estate, the improvements thereon and related property purchased or held for development and sale, including any completed project until its sale to a customer, not to exceed $35,000,000 in aggregate amount outstanding at any time and in which the Company or its Restricted Subsidiaries do not invest at any time more than 45% of the purchase and development costs of such real estate, improvements and related property. For purposes of this definition, “related property” for a particular real estate project includes: leases, rents, profits and security deposits for the project; books and records for the project; condemnation rights, insurance payments (including deductible amounts) and proceeds related thereto; permits, licenses, certificates of occupancy and other governmental authorizations for the project; franchise, management, service, governmental (including tax incentive) and other agreements related to the project; trademarks and trade names for the project; construction contracts, architect’s and engineer’s agreements, plans, specifications, drawings, surveys, models, sample materials and other items for the construction, fixturing, renovation or improvement of the project; and deposit accounts used exclusively for the project.”

“Other Note Agreements — The Note Agreement dated as of March 1, 1998 among the Company and the institutions named therein and the Note Purchase Agreement dated as of June 20, 2001 among the Company and the institutions named therein.”

“Other Notes — The 6.57% Senior Notes due March 20, 2013 issued by the Company pursuant to the Note Agreement dated as of March 1, 1998 and the 7.87% Senior Notes due December 30, 2016 issued by the Company pursuant to the Note Purchase Agreement dated as of June 20, 2001.”

“Security Documents — The mortgages, deeds of trust, security agreements, financing statements and any other agreements or documents entered into by the Company or any Subsidiary creating Liens securing the Notes and other obligations payable by the Company or any Subsidiary pursuant to this Agreement, as the same may be amended from time to time in accordance with the Intercreditor Agreement.”

1.3.2. The following definitions are amended to read in their entirety as follows:

“Consolidated Total Capitalization — As of any date, the sum of Consolidated Indebtedness and Consolidated Net Worth as of such date.”

“Credit Agreement — That certain Credit Agreement among the Company, certain Lenders (as identified therein) and Bank of America, N.A., as Administrative Lender, dated as of June 20, 2001, as such agreement may be amended, modified, supplemented, replaced or restated from time to time.”

“Material Adverse Effect” — (i) A material adverse effect on the business, properties, assets, results of operations, prospects or condition, financial or otherwise, of the Company and its Subsidiaries, taken as a whole, (ii) the material impairment of the ability of the Company to perform its obligations under this Agreement, the Notes or any Security Document, (iii) the material impairment of the ability of any Guarantor or group of Guarantors, which individually or collectively are material to the Company and its Subsidiaries as a whole, to perform its or their obligations under the Subsidiary Guaranty or any Security Document, or (iv) the impairment of the ability of the holders of the Notes to enforce any of such obligations.”

1.3.3. Section 5.1 is amended to delete the definitions of “Adjusted Consolidated Net Worth”, “Funded Debt” and “Short-Term Debt”.

1.4. Amendment of Section 6.6.

1.4.1. The references in clause (ii)(y) of Section 6.6(c) to “Sections 7.1 through 7.13” and “Sections 7.1 through 7.9” are each amended to read “Sections 7.1 through 7.16”.

1.4.2. Section 6.6(i) is redesignated as Section 6.6(j) and a new Section 6.6(i) is added to read in its entirety as follows:

"(i) Concurrently with their delivery to the Banks, copies of all reports concerning the Collateral and any other reports or information (including compliance reports) related to the Company’s compliance under the Credit Agreement that are provided to the Banks; and"

1.5. Addition of Section 6.12. New Section 6.12 is added to read as follows:

“6.12. Engagement of Financial Advisor. If requested by the holders of the Notes at any time when any other holder of Indebtedness has a similar right and without limiting the Company’s obligations under Section 11.1, the Company covenants and agrees that it shall, and shall cause each of its Subsidiaries to, (i) cooperate in all reasonable respects and (ii) reimburse the holders of the Notes for any reasonable fees, costs or expenses incurred, in connection with a financial advisor engaged by special counsel to such holders on their behalf, including, but not limited to, the Company granting the financial advisor reasonable access to its facilities, files, records and reports and providing reasonable access to its officers and directors until the engagement has been completed, as the scope of such engagement may be amended from time to time in the discretion of the holders of the Notes. If acceptable to the holders of other Indebtedness, including the holders of the Other Notes, the holders of the Notes agree that one financial advisor may be engaged on behalf of all holders of Indebtedness.”

1.6. Addition of Section 6.13. New Section 6.13 shall be added to read as follows:

“6.13. Interest. In consideration of the holders of the Notes entering into the First Amendment, the Company will pay:

(i) additional interest equal to 0.50% of the outstanding principal amount of the Notes per annum (computed on the basis of a 360-day year comprised of twelve 30-day months), payable semi-annually on the interest payment dates set forth in the Notes, commencing on the effective date of the First Amendment and ending at such time as the Banks and the holders of the Notes have equal and ratable priority in any Collateral;

(ii) additional interest equal to 0.75% of the outstanding principal amount of the Notes per annum (computed on the basis of a 360-day year comprised of twelve 30-day months), payable semi-annually on the interest payment dates set forth in the Notes, commencing on the effective date of the First Amendment and ending on the later of (1) such time as the Banks and the holders of the Notes have equal and ratable priority in any Collateral, and (2) such time as the ratio referred to in Section 7.14 has been at least 2.25 times for the period of four fiscal quarters ending on the last day of each of two consecutive fiscal quarters; and

(iii) additional interest equal to 0.25% of the outstanding principal amount of the Notes per annum (computed on the basis of a 360-day year comprised of twelve 30-day months), payable semi-annually on the interest payment dates set forth in the Notes, commencing on the effective date of the First Amendment.

Solely for purposes of the calculation pursuant to clause (ii)(2), the additional interest referred to in clause (i) (to the extent otherwise included) shall be excluded for all periods covered by such calculation. Any Notes issued after the effective date of the First Amendment will be substantially in the form set out in Exhibit A as amended by such First Amendment, which form will reflect the additional interest described in clause (iii) of this Section. For purposes of this Agreement, including Section 8.1(a), the amounts due under this Section 6.13 shall be deemed to be interest on the Notes.”

1.7. Amendment of Section 7.1. Section 7.1 is amended to read in its entirety as follows:

“7.1. Net Worth. The Company will not permit at any time its Adjusted Consolidated Tangible Net Worth to be less than $110,000,000 plus the cumulative sum of 50% of Consolidated Net Income (but only if a positive number) for each fiscal quarter ending after December 31, 2002.”

1.8. Amendment of Section 7.2. Section 7.2 is amended to read in its entirety as follows:

“7.2. Consolidated Indebtedness. The Company will not permit at any time Consolidated Indebtedness to exceed:

(i) 50% of Consolidated Total Capitalization as of the then most recently ended fiscal quarter until the later of (1) such time as the Banks and the holders of the Notes have equal and ratable priority in any Collateral and (2) such time as the ratio referred to in Section 7.13 has been at least 2.25 times for the period of four fiscal quarters ending on the last day of each of two consecutive fiscal quarters; and

(ii) 55% of Consolidated Total Capitalization as of the then most recently ended fiscal quarter thereafter.”

1.9. Amendment of Section 7.3. Section 7.3 is amended to read in its entirety as follows:

“7.3. Reserved.”

1.10. Section 7.4 is amended to read in its entirety as follows:

“7.4. Indebtedness of Subsidiaries. The Company will not permit at any time Indebtedness of Restricted Subsidiaries (other than (i) Non-Recourse Debt,

and (ii) Indebtedness to the Company or another Restricted Subsidiary) to exceed 5% of Adjusted Consolidated Tangible Net Worth.”

1.11. Amendment of Section 7.5.

1.11.1. Clause (g) of Section 7.5 is amended to read in its entirety as follows:

"(g) Liens not otherwise permitted by paragraphs (a) through (f), (h), (i) and (j) incurred subsequent to the Closing Date to secure Indebtedness; provided that (i) the Indebtedness of the Company and its Restricted Subsidiaries secured by Liens incurred pursuant to this paragraph (g) does not exceed 5% of Adjusted Consolidated Tangible Net Worth and (ii) such Liens are not used to secure Indebtedness outstanding at the time of incurrence of such Lien (or which could then be incurred under the revolving credit portion of the Credit Agreement) or any extension, renewal, replacement, refunding or refinancing of such Indebtedness; and;”

1.11.2. The period at the end of Section 7.5(h) is replaced with “; and” and the following new Section 7.5(i) is added:

"(i) Liens in favor of the Collateral Agent under the Security Documents for the benefit of the holders of the Notes, the Other Notes and the Banks. Notwithstanding anything contained herein to the contrary, the Company will not permit to exist, create, assume or incur, directly or indirectly, any Lien in favor of the Banks other than as contemplated by this paragraph (i); and"

1.11.3. The following new Section 7.5(j) is added to read as follows:

"(j) Liens granted in connection with Non-Recourse Debt.”

1.12. Amendment of Section 7.6. Section 7.6 is amended to read in its entirety as follows:

“7.6. Restricted Payments. The Company will not, except as hereinafter provided:

(b) directly or indirectly, or through any Subsidiary, purchase, redeem or retire any shares of its capital stock of any class or any warrants, rights or options to purchase or acquire any shares of its capital stock; or

(c) make any other payment or distribution, directly or indirectly, or through any Subsidiary, in respect of its capital stock;

(all such declarations, payments, purchases, redemptions, retirements and distributions described in clauses (a) through (c) being herein collectively referred to as “Restricted Payments”) if, after giving effect thereto, (i) the aggregate amount of Restricted Payments made after March 31, 2003 to and including the date of the making of the Restricted Payment in question would exceed the sum of (A) $10,000,000, plus (B) 75% of Consolidated Net Income (or less 100% of any deficit) for each fiscal quarter (or portion thereof) of the Company subsequent to March 31, 2003, plus (C) the net cash proceeds received by the Company after March 31, 2003 from the sale of shares of any class of its common or nonredeemable preferred stock and (ii) no Default or Event of Default exists or would exist. Notwithstanding anything contained in this Section 7.6 to the contrary, the Company will not make any Restricted Payments from the date of this First Amendment through and including March 31, 2003.”

1.13. Amendment of Section 7.7. The semicolon at the end of clause (a)(i) of Section 7.7 is replaced with “; and”, and clause (a)(iii) is amended to read in its entirety as follows:

"(iii) Reserved.”

1.14. Amendment of Section 7.10. Section 7.10 is amended to read in its entirety as follows:

“7.10. Designation of Unrestricted and Restricted Subsidiaries. The Company may designate any Restricted Subsidiary as an Unrestricted Subsidiary and any Unrestricted Subsidiary as a Restricted Subsidiary; provided that,

(a) the Company may not designate a Restricted Subsidiary as an Unrestricted Subsidiary unless: (i) such Restricted Subsidiary does not own, directly or indirectly, any Indebtedness or capital stock of the Company or any other Restricted Subsidiary, (ii) such designation, considered as a sale of assets, is permitted pursuant to Section 7.8(a)(i) and (a)(ii) and Section 7.9, and (iii) immediately before and after such designation there exists no Default or Event of Default; and

(b) each Guarantor must be designated a Restricted Subsidiary.”

1.15. Addition of Section 7.14. New Section 7.14 is added to read as follows:

“7.14. Fixed Charge Coverage. The Company will not permit the ratio (calculated as of the end of each fiscal quarter) of Consolidated Income Available for Fixed Charges to Fixed Charges for the period of four fiscal quarters ending as of the last day of each fiscal quarter to be less than:

(i) 1.0 to 1.0 for the period of four fiscal quarters ending March 31, 2003 and June 30, 2003;

(ii) 1.25 to 1.0 for the period of four fiscal quarters ending September 30, 2003, December 31, 2003, March 31, 2004 and June 30, 2004;

(iii) 1.5 to 1.0 for the period of four fiscal quarters ending September 30, 2004 and December 31, 2004;

(iv) 1.75 to 1.0 for the period of four fiscal quarters ending March 31, 2005;

(v) 2.0 to 1.0 for the period of four fiscal quarters ending June 30, 2005 and thereafter.”

1.16. Addition of Section 7.15. New Section 7.15 is added to read as follows:

“7.15. Letters of Credit. The Company will not permit to be outstanding at any time in excess of $30,000,000 aggregate face amount of letters of credit as to which it or any Restricted Subsidiary has any reimbursement obligation, contingent or otherwise, that obligates it or such Restricted Subsidiary to provide cash collateral for such obligation.”

1.17. Addition of Section 7.16. New Section 7.16 is added to read as follows:

“7.16. Most Favored Nation. On the effective date of the First Amendment, any financial covenant (together with any defined terms and schedules related thereto) imposed under the Credit Agreement is incorporated into this Agreement and shall apply as if fully set forth herein.

on the date of the First Amendment) more favorable to such Bank or holder than is contained in the Note Agreement, the Company shall promptly notify, and furnish a copy thereof to, each holder of the Notes, and the Note Agreement shall be deemed to be amended automatically to incorporate such additional, more restrictive or more favorable financial covenant (together with any defined terms and schedules related thereto).”

1.18. Amendment of Section 8.

1.18.1. Section 8.1(c) is amended to read in its entirety as follows:

"(c) (i) the Company or any Restricted Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least $1,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any Restricted Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least $1,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into equity interests), (x) the Company or any Restricted Subsidiary has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $1,000,000, or (y) one or more Persons have the right to require the Company or any Restricted Subsidiary so to purchase or repay such Indebtedness; or;”

1.18.2. Section 8.1(d) is amended to read in its entirety as follows:

"(d) Any default in the observance of any covenant or agreement contained in (i) Sections 7.1 through 7.15, (ii) Section 8.7, or (iii) any covenant incorporated by reference pursuant to Section 7.16 or any term contained in any Security Document and such default continues beyond any period of grace provided therein.”

1.18.3. Section 8.1(f) is amended to read in its entirety as follows:

"(f) Any representation or warranty made by the Company in this Agreement, any Security Document or in any written statement or certificate furnished by the Company in connection with the issuance and sale of the Notes, or furnished by the Company pursuant to this Agreement or any Security Document, proves incorrect in any material respect as of the date of the issuance or making thereof;”

1.18.4. The period at the end of Section 8.1(h) is replaced with a semicolon followed by the word “or” and new Section 8.1(i) is added as follows:

"(i) a default or event of default occurs under any of the Security Documents and such default or event of default continues beyond any period of grace with respect thereto or any of the Security Documents are deemed or are judicially determined not to be valid, binding or enforceable.”

1.19. Amendment of Section 11.1. Section 11.1 is amended to read in its entirety as follows:

“11.1. Expenses. Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable attorneys’ fees of a special counsel and, if reasonably required, local or other counsel) incurred by you and each other holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement, the Subsidiary Guaranty, the Notes or any Security Document (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, the Subsidiary Guaranty, the Notes or any Security Document or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the Subsidiary Guaranty, the Notes or any Security Document, or by reason of being a holder of any Note, and (b) the costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Company will pay, and will save you and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses if any, of brokers and finders (other than those retained by you).”

1.20. Addition of Section 11.11. New Section 11.11 is added to read as follows:

“11.11. Release of Guarantors. You and each subsequent holder of a Note agree to release each Guarantor from the Subsidiary Guaranty (i) if such Guarantor ceases to be such as a result of a Disposition permitted by Sections 7.7 or 7.8 or (ii) at such time as the banks party to the Credit Agreement release such Subsidiary Guarantor from any Guaranty of Indebtedness under the Credit Agreement; provided, however, that such Guarantor shall not be released from the Subsidiary Guaranty under the circumstances contemplated by clause (ii), if (A) a Default or Event of Default has occurred and is continuing, (B) such Guarantor is to become a borrower under the Credit Agreement, (C) such release is part of a plan of financing that contemplates such Guarantor guaranteeing any other Indebtedness of the Company or (D) the banks party to the Credit Agreement have received, directly or indirectly, any fee or other consideration, including a material modification to any financial or other covenants in the Credit Agreement, as inducement for the release of such Guarantor. The release of any Guarantor from the Subsidiary Guaranty is conditioned upon your prior receipt of a certificate from a senior financial officer of the Company stating that none of the circumstances described in clauses (A), (B), (C) and (D) above exist.”

1.21. Amendment of Exhibit A. Exhibit A to the Note Agreement is amended in the form attached as Exhibit A to this First Amendment.

SECTION 2. REAFFIRMATION; REPRESENTATIONS AND WARRANTIES

2.1. Reaffirmation of Note Agreement. The Company reaffirms its agreement to comply with each of the covenants, agreements and other provisions of the Note Agreement and the Notes, including the additions and amendments of such provisions effected by this First Amendment.

2.2. Note Agreement. The Company represents and warrants that, subject to the effectiveness of this First Amendment, the representations and warranties contained in the Note Agreement are true and correct as of the date hereof, except for such changes, facts, transactions and occurrences that have arisen since June 28, 1994 in the ordinary course of business or as contemplated by this First Amendment and such other matters as have been previously disclosed in writing by the Company to the Holders, and except that any representation made in the Note Agreement that specifies a certain date is only affirmed to be true and correct as of such date.

2.3. No Default or Event of Default. The Company represents and warrants that, after giving effect to the transactions contemplated hereby, there will exist no Default or Event of Default.

2.4. Authorization. The Company represents and warrants that:

2.4.1. Company. The execution, delivery and performance by the Company of this First Amendment and each Security Document to which it is a party have been duly authorized by all necessary corporate or other action and, except as provided herein, do not and will not require any registration with, consent or approval of, notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable. The Note Agreement, this First Amendment and such Security Documents each constitute the legal, valid

and binding obligations of the Company, enforceable against it in accordance with its respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

2.4.2. Subsidiaries. The execution, delivery and performance by each Subsidiary of each Security Document to which it is a party have been duly authorized by all necessary corporate or other action and, except as provided herein, do not and will not require any registration with, consent or approval of, notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable. Such Security Documents each constitute the legal, valid and binding obligations of such Subsidiary, enforceable in accordance with their respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

2.5. Compliance with Laws, Other Instruments, etc. The Company represents and warrants that:

2.5.1. Company. The execution, delivery and performance by the Company of this First Amendment and each Security Document to which it is a party will not, except as contemplated herein, (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument by which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary.

2.5.2. Subsidiaries. The execution, delivery and performance by each Subsidiary of each Security Document to which it is a party will not, except as contemplated herein, (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of such Subsidiary under any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument by which such Subsidiary is bound or by which any of its properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to such Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to such Subsidiary.

SECTION 3. EFFECTIVE DATE

This First Amendment shall become effective as of the date set forth above upon satisfaction of the following conditions:

3.1. Consent of Holders to First Amendment The Holders of 100% of the aggregate principal amount of the Notes outstanding shall have executed counterparts of this First Amendment.

3.2. Amendment of Other Note Agreements. The holders of the Other Notes shall have entered into the 1998 Amendment and the 2001 Amendment, as appropriate.

3.3. Intercreditor Agreement. The Holders shall have entered into the Intercreditor Agreement on terms satisfactory to it with the Banks, the holders of the Other Notes, and the Collateral Agent.

3.4. Security Interest. The Holders shall have received executed Security Documents satisfactory to it that create perfected Liens on the Collateral as provided therein and evidence of the perfection of such Liens.

3.5. Amendment to Credit Agreement. The Holders shall have received a copy of an executed Third Amendment to the Credit Agreement.

3.6. Amendment Fee. Each Holder, whether or not such Holder executes this First Amendment, shall have received payment of an amendment fee equal to 0.50% of the principal amount of the outstanding Notes held by such Holder.

3.7. Opinion of Company Counsel. The Holders shall have received an opinion of counsel for the Company, in form and substance satisfactory to the Holders and their special counsel, to the effect set forth in Sections 2.4 and 2.5.

3.8. Expenses. The Company shall have paid the fees and expenses of special counsel to the Holders.

SECTION 4. MISCELLANEOUS

4.1. Ratification. Except to the extent amended, modified, deleted or added to hereby, the terms and provisions of the Note Agreement, including the representations and warranties contained therein, shall remain in full force and effect and are ratified, confirmed, remade and approved in all respects as of the date hereof.

4.2. Reference to and Effect on the Note Agreement. Upon the final effectiveness of this First Amendment, each reference in the Note Agreement and in other documents describing or referencing the Note Agreement to the “Agreement,” “Note Agreement,” “hereunder,” “hereof,” “herein,” or words of like import referring to the Note Agreement, shall mean and be a reference to the Note Agreement, as amended hereby.

4.3. Actions in Respect of Future Collateral. The Company agrees to provide such information, take such action, execute such Security Documents and make such other filings as may be necessary to grant the Collateral Agent a Lien on any property now or hereafter constituting Collateral for the equal and ratable benefit of the holders of the Notes, the holders of the Other Notes and the Banks.

4.4. Binding Effect. This First Amendment shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto.

4.5. Governing Law. This First Amendment shall be governed by and construed in accordance with Illinois law.

4.6. Counterparts. This First Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but altogether only one instrument.

4.7. Exchange of Notes. It shall not be necessary for the Holders to surrender their Notes in exchange for new Notes. However, upon any surrender for exchange or transfer, Notes issued in exchange or in connection with a transfer shall be in the form of the attached Exhibit A.

4.8. Notices to the Company. Pursuant to Section 11.2 of the Note Agreement, the Company hereby designates the following address for the receipt of all notices and communications provided in connection with the Note Agreement:

Butler Manufacturing Company
1540 Genessee
Kansas City, MO 64102
Attn: Chief Financial Officer
Telephone: (816) 968-3216
Facsimile: (816) 968-6504
Electronic: lcmiller@butlermfg.com

With a copy to:

Butler Manufacturing Company
1540 Genessee
Kansas City, MO 64102
Attn: General Counsel
Telephone: (816) 968-3214
Facsimile: (816) 968-3211
Electronic: jwhuey@butlermfg.com

If you are in agreement with the foregoing, please sign the accompanying counterpart of this First Amendment and return it to the Company, whereupon the foregoing shall become a binding agreement between you and the Company upon satisfaction of the conditions set forth in Section 3 of this First Amendment.


	BUTLER MANUFACTURING COMPANY

	By: /s/ Larry C. Miller Name: Larry C. Miller Title: Vice President - Finance

Acknowledged and agreed to
by each Guarantor:

BMC REAL ESTATE, INC.
BUCON, INC.
BUTLER HOLDINGS, INC.
BUTLER REAL ESTATE, INC.
LESTER BUILDINGS, INC.
BUTLER PACIFIC, INC.
MODULINE WINDOWS, INC.
LIBERTY BUILDING SYSTEMS, INC.

By: /s/ Larry C. Miller
Larry C. Miller
Vice President - Finance

S-1

The foregoing is hereby agreed
to as of the date thereof

PRINCIPAL LIFE INSURANCE
COMPANY,
an Iowa corporation


By:		Principal Global Investors, LLC a Delaware limited liability company, its authorized signatory

		By: /s/ L.S. Valentine Its: Counsel

		By: /s/ Stephen G. Skrivanek Its: Counsel

MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY

By: David L. Babson & Company Inc.,
as Investment Adviser

By: /s/ Emeka O. Onukwugha
Name: Emeka O. Onukwugha
Title: Managing Director

BUSINESS MEN’S ASSURANCE
COMPANY OF AMERICA

By: /s/ Robert N. Sawyer
Name: Robert N. Sawyer
Title: Senior Vice President

S-2

NATIONWIDE LIFE INSURANCE
COMPANY OF AMERICA

By: /s/ Joseph P. Young
Name: Joseph P. Young
Title: Credit Officer
Fixed Income Securities

NATIONWIDE LIFE AND ANNUITY
INSURANCE COMPANY OF AMERICA

By: /s/ Joseph P. Young
Name: Joseph P. Young
Title: Credit Officer
Fixed Income Securities

S-3

EXHIBIT A

[FORM OF NOTE]

BUTLER MANUFACTURING COMPANY

8.27% SENIOR NOTE

Due December 30, 2003

THIS NOTE MAY BE SUBJECT TO A HOME OFFICE PAYMENT AGREEMENT AND ACCORDINGLY ANY PROSPECTIVE PURCHASER SHOULD FIRST VERIFY THE UNPAID PRINCIPAL AMOUNT WITH THE COMPANY.


Registered Note No. R- $				[Date] PPN: [ ]

BUTLER MANUFACTURING COMPANY, a Delaware corporation (the “Company”), for value received, promises to pay to or registered assigns, on December 30, 2003, 2013, the principal amount of Million Dollars ($ ) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the principal amount from time to time remaining unpaid hereon at the rate of 8.27% per annum from the date hereof until maturity, payable on June 30 and December 30 in each year, commencing December 30, 1994, and at maturity, and to pay interest on overdue principal, Make-Whole Amount and (to the extent legally enforceable) on any overdue installment of interest at the rate of 10.27% per annum until paid. Payments of the principal of, the Make-Whole Amount, if any, and interest on this Note shall be made in lawful money of the United States of America in the manner and at the place provided in Section 2.5 of the Note Agreement as hereinafter defined.

This Note is issued under and pursuant to the terms and provisions of the Note Agreement, dated as of June 1, 1994, entered into by the Company with the Purchaser named in Schedule I thereto (the “Note Agreement”), and this Note and any holder hereof are entitled to all of the benefits provided for by such Note Agreement or

Exhibit A

referred to therein. Reference is made to the Note Agreement for a statement of such benefits. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Note Agreement.

As provided in the Note Agreement, upon surrender of this Note for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder hereof or its attorney duly authorized in writing, a new Note for a like unpaid principal amount will be issued to, and registered in the name of, the transferee upon the payment of the taxes or other governmental charges, if any, that may be imposed in connection therewith. The Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.

This Note may be declared due prior to its expressed maturity date, voluntary prepayments may be made hereon and certain prepayments are required to be made, all in the events, on the terms and in the manner as provided in the Note Agreement. Such prepayments include required prepayments on December 30 in each year, commencing December 30, 1997 through December 30, 2002, inclusive, and certain optional prepayments with a Make-Whole Amount.

Should the indebtedness represented by this Note or any part thereof be collected in any proceeding provided for in the Note Agreement or be placed in the hands of attorneys for collection, the Company agrees to pay, in addition to the principal, Make-Whole Amount, if any, and interest due and payable hereon, all costs of collecting this Note, including reasonable attorneys’ fees and expenses.

Payment of the principal of, and interest and Make-Whole Amount, if any, on this Note, and all other amounts due under the Note Agreement, is guaranteed pursuant to the terms of a Subsidiary Guaranty dated as of March 1, 1998 of certain Subsidiaries of the Company.*

This Note and the Note Agreement are governed by and construed in accordance with the laws of the State of Illinois.

BUTLER MANUFACTURING COMPANY

This paragraph must be removed at such time as there are no Subsidiary Guarantors.

Exhibit A


	By:
	Its:

Exhibit A

SCHEDULE I

Information as to Holder of Notes


					Percentage of
					Total
	Principal		Total Principal		Principal
Note Holder	Amount of Note		Amount		Outstanding
Principal Life Insurance	$	16,000,000	$	2,857,143		57.14	%
Company		4,000,000
Massachusetts Mutual Life	$	5,000,000	$	714,286		14.29	%
Insurance Company
Business Men’s Assurance	$	5,000,000	$	714,286		14.29	%
Company of America
Nationwide Life Insurance	$	1,500,000	$	214,286		4.29	%
Company of America(2)
Nationwide Life Insurance	$	2,000,000	$	285,714		5.71	%
Company of America(3)
Nationwide Life and Annuity	$	1,500,000	$	214,286		4.29	%
Insurance Company of America(4)
TOTAL	$	35,000,000	$	5,000,000		100.00	%

		(2) Formerly Provident Mutual Life Insurance Company of Philadelphia, SPDA

		(3) Formerly Provident Mutual Life Insurance Company — CALIC

		(4) Provident Mutual Life and Annuity Company of America

23 EX-4.2.1 4 c75442exv4w2w1.htm 1ST AMENDMENT TO THE MARCH 1, 1998 NOTE AGREEMENT 1st Amendment to the March 1, 1998 Note Agreement

EXHIBIT 4.2.1

First Amendment
To The March 1, 1998
Note Agreement
Dated February 28, 2003

BUTLER MANUFACTURING COMPANY

FIRST AMENDMENT
TO NOTE AGREEMENT

$35,000,000 Principal Amount
6.57% Senior Notes
Due March 20, 2013

Dated as of February 28, 2003

To the Holder of Senior Notes
of Butler Manufacturing Company
Named in the Attached Schedule I

Ladies and Gentlemen:

Reference is made to the Note Agreement dated as of March 1, 1998 among Butler Manufacturing Company (the “Company”) and the Purchaser named in Schedule I thereto (as amended, the “Note Agreement”), pursuant to which the Company issued $35,000,000 principal amount of its 6.57% Senior Notes due March 20, 2013 (the “Notes”). You are referred to herein as the “Holder.” Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Note Agreement.

a First Amendment to its Note Agreement dated as of June 1, 1994 with the noteholders party thereto (the “1994 Amendment”) and a First Amendment to its Note Purchase Agreement dated as of June 20, 2001 with the noteholders party thereto (“2001 Amendment”).

The Holder is willing to grant an amendment on the terms and conditions set forth in this First Amendment.

In consideration of the premises and for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Company and the Holder agree as follows:

SECTION 5. AMENDMENTS

5.1. Amendment of Section 1.1. Section 1.1 is amended to include the following after the third sentence thereof:

5.2. Amendment of Section 2.1. Section 2.1(b) is amended to read in its entirety as follows:

"(b) In the event of a Change of Control Event, the Company, upon notice as provided below, shall offer to prepay the entire principal amount outstanding of the Notes at 100% of the principal amount thereof, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company shall give notice of any offer to prepay the Notes to each holder of the Notes within three Business Days after any executive officer has knowledge that a Change of Control Event is likely to occur and in any event not later than the date of such Change of Control Event. Such notice shall be certified by the principal accounting officer or principal financial officer and shall specify (i) the nature of the Change of Control Event, (ii) the date fixed for prepayment, which shall not be later than 30 calendar days following the Change of Control Event, (iii) the estimated date of the Change of Control Event, if it has not occurred, (iv) the accrued and unpaid interest applicable to the prepayment, (v) the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of prepayment), setting forth the details of such computation, and (vi) the date by which any holder of a Note that wishes to accept such offer must deliver notice thereof to the Company, which shall not be later than 10 calendar days prior to the date fixed for prepayment. Not earlier

than seven calendar days prior to the date fixed for prepayment, the Company shall give written notice to each holder of the Notes of those holders who have given notices of acceptance of the Company’s offer, and the principal amount of Notes held by each, and thereafter any holder may change its response to the Company’s offer by written notice to such effect delivered to the Company not less than three calendar days prior to the date fixed for prepayment. Upon receipt by the Company of any non-revoked notice of acceptance from any holder within the required time period, the aggregate principal amount of Notes held by such holder shall become due and payable on the prepayment date. Failure of a holder to respond to a notice shall be deemed to be a rejection by such holder of the offer to prepay.”

5.3. Amendment of Section 5.1.

5.3.1. Section 5.1 is amended to include the following defined terms:

     “Adjusted Consolidated Tangible Net Worth — As of any date, consolidated stockholders’ equity of the Company and its Restricted Subsidiaries on such date, determined in accordance with generally accepted accounting principles, less the sum or all goodwill, trademarks, trade names, service marks, brand names, copyrights, patents and unamortized debt discount and expense, and other similar intangibles properly classified as such in accordance with generally accepted accounting principles, less the amount by which outstanding Restricted Investments on such date exceed 5% of consolidated stockholders’ equity of the Company and its Restricted Subsidiaries.”

     “Banks — The institutions that are now or hereafter become party to the Credit Agreement in their capacity as a lender or agent thereunder.”

     “Collateral — As defined in the Security Documents.”

     “Collateral Agent — Bank of America, N.A. and its successors and assigns.”

     “Collateral Release Date — The earlier to occur of (i) the date the Liens against the Collateral are released in accordance with the Intercreditor Agreement and (ii) the date the Liens against the Collateral are released under the Security Documents, whether as provided in the Security Documents, by operation of law or otherwise.”

     “Consolidated Income Available for Fixed Charges — For any period, the sum of (i) EBITDA for such period and (ii) Rentals for such period under all leases other than Capitalized Leases.”

     “Consolidated Indebtedness — As of any date, Indebtedness of the Company and its Restricted Subsidiaries as of such date determined on a consolidated basis in accordance with generally accepted accounting principles.”

     “Consolidated Interest Expense — For any period, the consolidated interest expense of the Company and its Restricted Subsidiaries for such period determined in accordance with generally accepted accounting principles (including imputed interest under Capitalized Leases and all debt discount and expense amortized in such period).”

     “Consolidated Net Worth — As of any date, the consolidated shareholders’ equity of the Company and its Restricted Subsidiaries as of such date determined in accordance with generally accepted accounting principles.”

     “EBITDA — For any period, the sum of Consolidated Net Income for such period, plus, to the extent deducted in determining such Consolidated Net Income, (i) federal, state, local and foreign income, value added and similar taxes, (ii) Consolidated Interest Expense and (iii) depreciation and amortization expense.”

     “First Amendment — The First Amendment to Note Agreement dated as of February 28, 2003 between the Company and the institution named in the signature pages thereto.”

     “Fixed Charges — For any period, the sum of (i) Rentals for such period under all leases other than Capitalized Leases and (ii) Consolidated Interest Expense for such period.”

     “holder — with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 10.2.”

     “Intercreditor Agreement — That certain Intercreditor and Collateral Agency Agreement dated February 28, 2003 among the Collateral Agent, the Banks, the holders of the Notes and the holders of the Other Notes, as the same may be amended, modified or restated from time to time.”

     “Non-Recourse Debt — Non-recourse Indebtedness secured by Liens granted on real estate, the improvements thereon and related property purchased or held for development and sale, including any completed project until its sale to a customer, not to exceed $35,000,000 in aggregate

amount outstanding at any time and in which the Company or its Restricted Subsidiaries do not invest at any time more than 45% of the purchase and development costs of such real estate, improvements and related property. For purposes of this definition, “related property” for a particular real estate project includes: leases, rents, profits and security deposits for the project; books and records for the project; condemnation rights, insurance payments (including deductible amounts) and proceeds related thereto; permits, licenses, certificates of occupancy and other governmental authorizations for the project; franchise, management, service, governmental (including tax incentive) and other agreements related to the project; trademarks and trade names for the project; construction contracts, architect’s and engineer’s agreements, plans, specifications, drawings, surveys, models, sample materials and other items for the construction, fixturing, renovation or improvement of the project; and deposit accounts used exclusively for the project.”

     “Other Note Agreements — The Note Agreement dated as of June 1, 1994 among the Company and the institutions named therein and the Note Purchase Agreement dated as of June 20, 2001 among the Company and the institutions named therein.”

     “Other Notes — The 8.02% Senior Notes due December 30, 2003 issued by the Company pursuant to the Note Agreement dated as of June 1, 1994 and the 7.87% Senior Notes due December 30, 2016 issued by the Company pursuant to the Note Purchase Agreement dated as of June 20, 2001.”

     “Security Documents — The mortgages, deeds of trust, security agreements, financing statements and any other agreements or documents entered into by the Company or any Subsidiary creating Liens securing the Notes and other obligations payable by the Company or any Subsidiary pursuant to this Agreement, as the same may be amended from time to time in accordance with the Intercreditor Agreement.”

     5.3.2. The following definitions are amended to read in their entirety as follows:

“Consolidated Total Capitalization — As of any date, the sum of Consolidated Indebtedness and Consolidated Net Worth as of such date.”

“Material Adverse Effect” — (i) A material adverse effect on the business, properties, assets, results of operations, prospects or condition, financial or otherwise, of the Company and its Restricted Subsidiaries, taken as a whole, (ii) the material impairment of the ability of the Company to perform its obligations under this Agreement, the Notes or any Security Document, (iii) the material impairment of the ability of any Guarantor or group of Guarantors, which individually or collectively are material to the Company and its Restricted Subsidiaries as a whole, to perform its or their obligations under the Subsidiary Guaranty or any Security Document, or (iv) the impairment of the ability of the holders of the Notes to enforce any of such obligations.”

5.3.3. Section 5.1 is amended to delete the definitions of “Adjusted Consolidated Net Worth” and “Funded Debt”.

5.4. Amendment of Section 6.6.

5.4.1. The references in clause (ii)(y) of Section 6.6(c) to “Sections 7.1 through 7.2” and “Sections 7.1 through 7.8” are each amended to read “Sections 7.1 through 7.15.”

5.4.2. Section 6.6(i) is redesignated as Section 6.6(j) and a new Section 6.6(i) is added to read in its entirety as follows:

5.5. Addition of Section 6.12. New Section 6.12 is added to read as follows:

5.6. Addition of Section 6.13. New Section 6.13 shall be added to read as follows:

“6.13. Interest. In consideration of the holders of the Notes entering into the First Amendment, the Company will pay:

(ii) additional interest equal to 0.75% of the outstanding principal amount of the Notes per annum (computed on the basis of a 360-day year comprised of twelve 30-day months), payable semi-annually on the interest payment dates set forth in the Notes, commencing on the effective date of the First Amendment and ending on the later of (1) such time as the Banks and the holders of the Notes have equal and ratable priority in any Collateral, and (2) such time as the ratio referred to in Section 7.13 has been at least 2.25 times for the period of four fiscal quarters ending on the last day of each of two consecutive fiscal quarters; and

5.7. Amendment of Section 7.1. Section 7.1 is amended to read in its entirety as follows:

5.8. Amendment of Section 7.2. Section 7.2 is amended to read in its entirety as follows:

“7.2. Consolidated Indebtedness. The Company will not permit at any time Consolidated Indebtedness to exceed:

(i)50% of Consolidated Total Capitalization as of the then most recently ended fiscal quarter until the later of (1) such time as the Banks and the holders of the Notes have equal and ratable priority in any Collateral and (2) such time as the ratio referred to in Section 7.13 has been at least 2.25 times for the period of four fiscal quarters ending on the last day of each of two consecutive fiscal quarters; and

(ii)55% of Consolidated Total Capitalization as of the then most recently ended fiscal quarter thereafter.”

5.9. Amendment of Section 7.3. Section 7.3 is amended to read in its entirety as follows:

“7.3. Indebtedness of Subsidiaries. The Company will not permit at any time Indebtedness of Restricted Subsidiaries (other than (i) Non-Recourse Debt, and (ii) Indebtedness to the Company or another Restricted Subsidiary) to exceed 5% of Adjusted Consolidated Tangible Net Worth.”

5.10. Amendment of Section 7.4.

5.10.1. Clause (g) of Section 7.4 is amended to read in its entirety as follows:

5.10.2. The period at the end of Section 7.4(h) is replaced with “; and” and the following new Section 7.4(i) is added:

5.10.3. The following new Section 7.4(j) is added to read as follows:

"(j) Liens granted in connection with Non-Recourse Debt.”

5.11. Amendment of Section 7.5. Section 7.5 is amended to read in its entirety as follows:

“7.5. Restricted Payments. The Company will not, except as hereinafter provided:

     (a) declare or pay any dividends, either in cash or property, on any shares of its capital stock of any class (except dividends or other distributions payable solely in shares of common stock of the Company);

     (b) directly or indirectly, or through any Subsidiary, purchase, redeem or retire any shares of its capital stock of any class or any warrants, rights or options to purchase or acquire any shares of its capital stock; or

     (c) make any other payment or distribution, directly or indirectly, or through any Subsidiary, in respect of its capital stock;

(all such declarations, payments, purchases, redemptions, retirements and distributions described in clauses (a) through (c) being herein collectively referred to as “Restricted Payments”) if, after giving effect thereto, (i) the aggregate amount of Restricted Payments made after March 31, 2003 to and including the date of the making of the Restricted Payment in question would exceed the sum of (A) $10,000,000, plus (B) 75% of Consolidated Net Income (or less 100% of any deficit) for each fiscal quarter (or portion thereof) of the Company subsequent to March 31, 2003, plus (C) the net cash proceeds received by the Company after March 31, 2003 from the sale of shares of any class of its common or nonredeemable preferred stock and (ii) no Default or Event of Default exists or would exist. Notwithstanding anything contained in this Section 7.5 to the contrary, the Company will not make any Restricted Payments from the date of this First Amendment through and including March 31, 2003.”

5.12. Amendment of Section 7.6. The semicolon at the end of clause (a)(i) of Section 7.6 is replaced with “; and” and clause (a)(iii) is amended to read in its entirety as follows:

"(iii) Reserved.”

5.13. Amendment of Section 7.9. Section 7.9 is amended to read in its entirety as follows:

     “7.9. Designation of Unrestricted and Restricted Subsidiaries. The Company may designate any Restricted Subsidiary as an Unrestricted Subsidiary and any Unrestricted Subsidiary as a Restricted Subsidiary; provided that,

     (a) the Company may not designate a Restricted Subsidiary as an Unrestricted Subsidiary unless: (i) such Restricted Subsidiary does not own, directly or indirectly, any Indebtedness or capital stock of the Company or any other Restricted Subsidiary, (ii) such designation, considered as a sale of assets, is permitted pursuant to Section 7.7(a)(i) and (a)(ii) and Section 7.8, and (iii) immediately before and after such designation there exists no Default or Event of Default; and

     (b) each Guarantor must be designated a Restricted Subsidiary.”

5.14. Addition of Section 7.13. New Section 7.13 is added to read as follows:

“7.13. Fixed Charge Coverage. The Company will not permit the ratio (calculated as of the end of each fiscal quarter) of Consolidated Income Available for Fixed Charges to Fixed Charges for the period of four fiscal quarters ending as of the last day of each fiscal quarter to be less than:

     (i)1.0 to 1.0 for the period of four fiscal quarters ending March 31, 2003 and June 30, 2003;

     (ii)1.25 to 1.0 for the period of four fiscal quarters ending September 30, 2003, December 31, 2003, March 31, 2004 and June 30, 2004;

     (iii)1.5 to 1.0 for the period of four fiscal quarters ending September 30, 2004 and December 31, 2004;

     (iv)1.75 to 1.0 for the period of four fiscal quarters ending March 31, 2005;

     (v)2.0 to 1.0 for the period of four fiscal quarters ending June 30, 2005 and thereafter.”

5.15. Addition of Section 7.14. New Section 7.14 is added to read as follows:

“7.14. Letters of Credit. The Company will not permit to be outstanding at any time in excess of $30,000,000 aggregate face amount of letters of credit as to which it or any Restricted Subsidiary has any reimbursement obligation, contingent or otherwise, that obligates it or such Restricted Subsidiary to provide cash collateral for such obligation.”

5.16. Addition of Section 7.15. New Section 7.15 is added to read as follows:

“7.15. Most Favored Nation. On the effective date of the First Amendment, any financial covenant (together with any defined terms and schedules related thereto) imposed under the Credit Agreement is incorporated into this Agreement and shall apply as if fully set forth herein.

If, after the effective date of the First Amendment, the Banks or any other holder of Indebtedness of the Company impose any additional or more restrictive covenant (including by amendment of an existing covenant, by waiver or consent or otherwise) of the type contained in Article 7 of the Credit Agreement (as such Credit Agreement exists on the date of the First Amendment), or the Company grants to any Bank or other holder of Indebtedness any new covenant of the type contained in Article 7 of the Credit Agreement (as such Credit Agreement exists on the date of the First Amendment) more favorable to such Bank or holder than is contained in the Note Agreement, the Company shall promptly notify, and furnish a copy thereof to, each holder of the Notes, and the Note Agreement shall be deemed to be amended automatically to incorporate such additional, more restrictive or more favorable financial covenant (together with any defined terms and schedules related thereto).”

5.17. Amendment of Section 8.

5.17.1. Section 8.1(c) is amended to read in its entirety as follows:

consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into equity interests), (x) the Company or any Restricted Subsidiary has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $5,000,000, or (y) one or more Persons have the right to require the Company or any Restricted Subsidiary so to purchase or repay such Indebtedness; or;”

     5.17.2. Section 8.1(d) is amended to read in its entirety as follows:

     "(d) Any default in the observance of any covenant or agreement contained in (i) Sections 7.1 through 7.14, (ii) Section 8.7, or (iii) any covenant incorporated by reference pursuant to Section 7.15 or any term contained in any Security Document and such default continues beyond any period of grace provided therein.”

     5.17.3. Section 8.1(f) is amended to read in its entirety as follows:

     "(f) Any representation or warranty made by the Company in this Agreement, any Security Document or in any written statement or certificate furnished by the Company in connection with the issuance and sale of the Notes, or furnished by the Company pursuant to this Agreement or any Security Document, proves incorrect in any material respect as of the date of the issuance or making thereof;”

     5.17.4. The period at the end of Section 8.1(h) is replaced with a semicolon followed by the word “or” and new Section 8.1(i) is added as follows:

     "(i) a default or event of default occurs under any of the Security Documents and such default or event of default continues beyond any period of grace with respect thereto or any of the Security Documents are deemed or are judicially determined not to be valid, binding or enforceable.”

5.18. Amendment of Section 11.1. Section 11.1 is amended to read in its entirety as follows:

investigative demand issued in connection with this Agreement, the Subsidiary Guaranty, the Notes or any Security Document, or by reason of being a holder of any Note, and (b) the costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Company will pay, and will save you and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses if any, of brokers and finders (other than those retained by you).”

5.19. Addition of Section 11.11. New Section 11.11 is added to read as follows:

“11.11. Release of Guarantors. You and each subsequent holder of a Note agree to release each Guarantor from the Subsidiary Guaranty (i) if such Guarantor ceases to be such as a result of a Disposition permitted by Sections 7.6 or 7.7 or (ii) at such time as the banks party to the Credit Agreement release such Subsidiary Guarantor from any Guaranty of Indebtedness under the Credit Agreement; provided, however, that such Guarantor shall not be released from the Subsidiary Guaranty under the circumstances contemplated by clause (ii), if (A) a Default or Event of Default has occurred and is continuing, (B) such Guarantor is to become a borrower under the Credit Agreement, (C) such release is part of a plan of financing that contemplates such Guarantor guaranteeing any other Indebtedness of the Company or (D) the banks party to the Credit Agreement have received, directly or indirectly, any fee or other consideration, including a material modification to any financial or other covenants in the Credit Agreement, as inducement for the release of such Guarantor. The release of any Guarantor from the Subsidiary Guaranty is conditioned upon your prior receipt of a certificate from a senior financial officer of the Company stating that none of the circumstances described in clauses (A), (B), (C) and (D) above exist.”

5.20. Amendment of Exhibit A. Exhibit A to the Note Agreement is amended in the form attached as Exhibit A to this First Amendment.

SECTION 6. REAFFIRMATION; REPRESENTATIONS AND WARRANTIES

6.1. Reaffirmation of Note Agreement. The Company reaffirms its agreement to comply with each of the covenants, agreements and other provisions of the Note Agreement and the Notes, including the additions and amendments of such provisions effected by this First Amendment.

6.2. Note Agreement. The Company represents and warrants that, subject to the effectiveness of this First Amendment, the representations and warranties contained in the Note Agreement are true and correct as of the date hereof, except for such changes, facts, transactions and occurrences that have arisen since March 20, 1998 in the ordinary course of business or as contemplated by this First Amendment and such other matters as have been previously disclosed in writing by the Company to the Holder, and except that any representation made in the Note Agreement that specifies a certain date is only affirmed to be true and correct as of such date.

6.3. No Default or Event of Default. The Company represents and warrants that, after giving effect to the transactions contemplated hereby, there will exist no Default or Event of Default.

6.4. Authorization. The Company represents and warrants that:

6.4.1. Company. The execution, delivery and performance by the Company of this First Amendment and each Security Document to which it is a party have been duly authorized by all necessary corporate or other action and, except as provided herein, do not and will not require any registration with, consent or approval of, notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable. The Note Agreement, this First Amendment and such Security Documents each constitute the legal, valid and binding obligations of the Company, enforceable against it in accordance with its respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

6.4.2. Subsidiaries. The execution, delivery and performance by each Subsidiary of each Security Document to which it is a party have been duly authorized by all necessary corporate or other action and, except as provided herein, do not and will not require any registration with, consent or approval of, notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable. Such Security Documents each constitute the legal, valid and binding obligations of such Subsidiary, enforceable in accordance with their respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

6.5. Compliance with Laws, Other Instruments, etc. The Company represents and warrants that:

6.5.1. Company. The execution, delivery and performance by the Company of this First Amendment and each Security Document to which it is a party will not, except as contemplated herein, (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument by which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary.

6.5.2. Subsidiaries. The execution, delivery and performance by each Subsidiary of each Security Document to which it is a party will not, except as contemplated

herein, (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of such Subsidiary under any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument by which such Subsidiary is bound or by which any of its properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to such Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to such Subsidiary.

SECTION 7. EFFECTIVE DATE

This First Amendment shall become effective as of the date set forth above upon satisfaction of the following conditions:

7.1. Consent of Holder to First Amendment. The Holder shall have executed a counterpart of this First Amendment.

7.2. Amendment of Other Note Agreements. The holders of the Other Notes shall have entered into the 1994 Amendment and the 2001 Amendment, as appropriate.

7.3. Intercreditor Agreement. The Holder shall have entered into the Intercreditor Agreement on terms satisfactory to it with the Banks, the holders of the Other Notes, and the Collateral Agent.

7.4. Security Interest. The Holder shall have received executed Security Documents satisfactory to it that create perfected Liens on the Collateral as provided therein and evidence of the perfection of such Liens.

7.5. Amendment to Credit Agreement. The Holder shall have received a copy of an executed Third Amendment to the Credit Agreement.

7.6. Amendment Fee. The Holder shall have received payment of an amendment fee equal to 0.50% of the principal amount of the outstanding Notes.

7.7. Opinion of Company Counsel. The Holder shall have received an opinion of counsel for the Company, in form and substance satisfactory to the Holder and its special counsel, to the effect set forth in Sections 2.4 and 2.5.

7.8. Expenses. The Company shall have paid the fees and expenses of special counsel to the Holder.

SECTION 8. MISCELLANEOUS

8.1. Ratification. Except to the extent amended, modified, deleted or added to hereby, the terms and provisions of the Note Agreement, including the representations and warranties contained therein, shall remain in full force and effect and are ratified, confirmed, remade and approved in all respects as of the date hereof.

8.2. Reference to and Effect on the Note Agreement. Upon the final effectiveness of this First Amendment, each reference in the Note Agreement and in other documents describing or referencing the Note Agreement to the “Agreement,” “Note Agreement,” “hereunder,” “hereof,” “herein,” or words of like import referring to the Note Agreement, shall mean and be a reference to the Note Agreement, as amended hereby.

8.3. Actions in Respect of Future Collateral. The Company agrees to provide such information, take such action, execute such Security Documents and make such other filings as may be necessary to grant the Collateral Agent a Lien on any property now or hereafter constituting Collateral for the equal and ratable benefit of the holders of the Notes, the holders of the Other Notes and the Banks.

8.4. Binding Effect. This First Amendment shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto.

8.5. Governing Law. This First Amendment shall be governed by and construed in accordance with Illinois law.

8.6. Counterparts. This First Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but altogether only one instrument.

8.7. Exchange of Notes. It shall not be necessary for the Holder to surrender its Note in exchange for a new Note. However, upon any surrender for exchange or transfer, Notes issued in exchange or in connection with a transfer shall be in the form of the attached Exhibit A.

8.8. Notices to the Company. Pursuant to Section 11.2 of the Note Agreement, the Company hereby designates the following address for the receipt of all notices and communications provided in connection with the Note Agreement:


		Butler Manufacturing Company 1540 Genessee Kansas City, MO 64102 Attn: Chief Financial Officer Telephone: (816) 968-3216 Facsimile: (816) 968-6504 Electronic: lcmiller@butlermfg.com



	With a copy to:



		Butler Manufacturing Company 1540 Genessee Kansas City, MO 64102 Attn: General Counsel Telephone: (816) 968-3214 Facsimile: (816) 968-3211 Electronic: jwhuey@butlermfg.com


	BUTLER MANUFACTURING COMPANY

	By: /s/ Larry C. Miller Name: Larry C. Miller Title: Vice President - Finance

Acknowledged and agreed to
by each Guarantor:

BMC REAL ESTATE, INC.
BUCON, INC.
BUTLER HOLDINGS, INC.
BUTLER REAL ESTATE, INC.
LESTER BUILDINGS, INC.
BUTLER PACIFIC, INC.
MODULINE WINDOWS, INC.
LIBERTY BUILDING SYSTEMS, INC.

     By: /s/ Larry C. Miller
            Larry C. Miller
             Vice President — Finance

S-1

The foregoing is hereby agreed to as of the date thereof.

METROPOLITAN LIFE INSURANCE COMPANY

By: /s/ Timothy L. Powell
Name: Timothy L. Powell
Title:Director

S-2

EXHIBIT A

[FORM OF NOTE]

BUTLER MANUFACTURING COMPANY

6.82% SENIOR NOTE

Due March 20, 2013

THIS NOTE MAY BE SUBJECT TO A HOME OFFICE PAYMENT AGREEMENT AND ACCORDINGLY ANY PROSPECTIVE PURCHASER SHOULD FIRST VERIFY THE UNPAID PRINCIPAL AMOUNT WITH THE COMPANY.

Registered Note No. R- [Date]

$ PPN: [ ]

BUTLER MANUFACTURING COMPANY, a Delaware corporation (the “Company”), for value received, promises to pay to or registered assigns, on March 20, 2013, the principal amount of Million Dollars ($ )and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the principal amount from time to time remaining unpaid hereon at the rate of 6.82% per annum from the date hereof until maturity, payable on March 20 and September 20 in each year, commencing September 20, 1998, and at maturity, and to pay interest on overdue principal, Make-Whole Amount and (to the extent legally enforceable) on any overdue installment of interest at a rate equal to the greater of (i) 8.82% per annum or (ii) 2% over the rate of interest publicly announced by Nations Bank of Texas, N.A., as its “base” or “prime” rate. Payments of the principal of, the Make-Whole Amount, if any, and interest on this Note shall be made in lawful money of the United States of America in the manner and at the place provided in Section 2.5 of the Note Agreement as hereinafter defined.

This Note is issued under and pursuant to the terms and provisions of the Note Agreement, dated as of March 1, 1998, entered into by the Company with the Purchaser

named in Schedule I thereto (the “Note Agreement”), and this Note and any holder hereof are entitled to all of the benefits provided for by such Note Agreement or referred to therein. Reference is made to the Note Agreement for a statement of such benefits. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Note Agreement.

This Note may be declared due prior to its expressed maturity date, voluntary prepayments may be made hereon and certain prepayments are required to be made, all in the events, on the terms and in the manner as provided in the Note Agreement. Such prepayments include required prepayments on March 20 in each year, commencing March 20, 2004 through March 20, 2012, inclusive, and certain optional prepayments with a Make-Whole Amount.

This Note and the Note Agreement are governed by and construed in accordance with the laws of the State of Illinois.

BUTLER MANUFACTURING COMPANY

This paragraph must be removed at such time as there are no Subsidiary Guarantors.

By:
Its:

SCHEDULE I

Information as to Holder of Notes


			Percentage of
			Total
	Principal	Total Principal	Principal
Note Holder	Amount of Note	Amount	Outstanding

Metropolitan Life
Insurance Company	$35,000,000	$35,000,000	100.00%
TOTAL	$35,000,000	$35,000,000	100.00%

EX-4.4.1 5 c75442exv4w4w1.htm 1ST AMENDMENT TO THE JUNE 20, 2001 NOTE AGREEMENT 1st Amendment to the June 20, 2001 Note Agreement

EXHIBIT 4.4.1

First Amendment
To The June 20,2001
Note Agreement
Dated February 28, 2003

BUTLER MANUFACTURING COMPANY

FIRST AMENDMENT
TO NOTE PURCHASE AGREEMENT

$50,000,000 Principal Amount
7.87% Senior Notes
Due December 30, 2016

Dated as of February 28, 2003

To Each of the Holders of Senior Notes
of Butler Manufacturing Company
Named in the Attached Schedule I

Ladies and Gentlemen:

Reference is made to the Note Purchase Agreement dated as of June 20, 2001 among Butler Manufacturing Company (the “Company”) and each of the Purchasers named in Schedule A thereto (as amended, the “Note Agreement”), pursuant to which the Company issued $50,000,000 principal amount of its 7.87% Senior Notes due December 30, 2016 (the “Notes”). You are referred to herein individually as a “Holder” and collectively as the “Holders.” Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Note Agreement.

party thereto (the “1994 Amendment”) and a First Amendment to its Note Purchase Agreement dated as of March 1, 1998 with the noteholders party thereto (“1998 Amendment”).

The Holders are willing to grant an amendment on the terms and conditions set forth in this First Amendment.

In consideration of the premises and for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Company and the Holders agree as follows:

SECTION 9. AMENDMENTS

9.1. Amendment of Section 1. Section 1 is amended to include the following final sentence:

9.2. Amendment of Section 7.1. Section 7.1 is amended by redesignating Section 7.1(h) as Section 7.1(i) and by adding a new Section 7.1(h) to read in its entirety as follows:

"(h) Collateral and Other Reports and Information — copies of all reports concerning the Collateral and any other reports or information (including compliance reports) related to the Company’s compliance under the Credit Agreement that are provided to the Banks, concurrently with their delivery to the Banks; and"

9.3. Amendment of Section 7.2. The reference in Section 7.2(a) to “Section 10.13” is amended to read “Section 10.16.”

9.4. Amendment of Section 8.3. Section 8.3 is amended to read in its entirety as follows:

"8.3. Change of Control.

In the event of a Change of Control Event, the Company, upon notice as provided below, shall offer to prepay the entire principal amount outstanding of the Notes at 100% of the principal amount thereof, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company shall give notice of any offer to prepay the Notes to each holder of the Notes within three Business Days after any executive officer has knowledge that a Change of Control Event is likely to occur and in any event not later than the date of such Change

of Control Event. Such notice shall be certified by the principal accounting officer or principal financial officer and shall specify (i) the nature of the Change of Control Event, (ii) the date fixed for prepayment, which shall not be later than 30 calendar days following the Change of Control Event, (iii) the estimated date of the Change of Control Event, if it has not occurred, (iv) the accrued and unpaid interest applicable to the prepayment, (v) the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of prepayment), setting forth the details of such computation, and (vi) the date by which any holder of a Note that wishes to accept such offer must deliver notice thereof to the Company, which shall not be later than 10 calendar days prior to the date fixed for prepayment. Not earlier than seven calendar days prior to the date fixed for prepayment, the Company shall give written notice to each holder of the Notes of those holders who have given notices of acceptance of the Company’s offer, and the principal amount of Notes held by each, and thereafter any holder may change its response to the Company’s offer by written notice to such effect delivered to the Company not less than three calendar days prior to the date fixed for prepayment. Upon receipt by the Company of any non-revoked notice of acceptance from any holder within the required time period, the aggregate principal amount of Notes held by such holder shall become due and payable on the prepayment date. Failure of a holder to respond to a notice shall be deemed to be a rejection by such holder of the offer to prepay.”

9.5. Addition of Section 9.6. New Section 9.6 is added to read as follows:

"9.6. Engagement of Financial Advisor.

If requested by the holders of the Notes at any time when any other holder of Indebtedness has a similar right and without limiting the Company’s obligations under Section 15, the Company covenants and agrees that it shall, and shall cause each of its Subsidiaries to, (i) cooperate in all reasonable respects and (ii) reimburse the holders of the Notes for any reasonable fees, costs or expenses incurred, in connection with a financial advisor engaged by special counsel to such holders on their behalf, including, but not limited to, the Company granting the financial advisor reasonable access to its facilities, files, records and reports and providing reasonable access to its officers and directors until the engagement has been completed, as the scope of such engagement may be amended from time to time in the discretion of the holders of the Notes. If acceptable to the holders of other Indebtedness, including the holders of the Other Notes, the holders of the Notes agree that one financial advisor may be engaged on behalf of all holders of Indebtedness.”

9.6. Addition of Section 9.7. New Section 9.7 shall be added to read as follows:

"9.7 Interest.

In consideration of the holders of the Notes entering into the First Amendment, the Company will pay:

(ii) additional interest equal to 0.75% of the outstanding principal amount of the Notes per annum (computed on the basis of a 360-day year comprised of twelve 30-day months), payable semi-annually on the interest payment dates set forth in the Notes, commencing on the effective date of the First Amendment and ending on the later of (1) such time as the Banks and the holders of the Notes have equal and ratable priority in any Collateral, and (2) such time as the ratio referred to in Section 10.5 has been at least 2.25 times for the period of four fiscal quarters ending on the last day of each of two consecutive fiscal quarters; and

Solely for purposes of the calculation pursuant to clause (ii)(2), the additional interest referred to in clause (i) (to the extent otherwise included) shall be excluded for all periods covered by such calculation. Any Notes issued after the effective date of the First Amendment will be substantially in the form set out in Exhibit 1(a) as amended by such First Amendment, which form will reflect the additional interest described in clause (iii) of this Section. For purposes of this Agreement, including Section 11(b), the amounts due under this Section 9.7 shall be deemed to be interest on the Notes.”

9.7. Amendment of Section 10.1. Section 10.1 is amended to read in its entirety as follows:

"10.1. Net Worth.

The Company will not permit at any time its Adjusted Consolidated Tangible Net Worth to be less than $110,000,000 plus the

cumulative sum of 50% of Consolidated Net Income (but only if a positive number) for each fiscal quarter ending after December 31, 2002.”

9.8. Amendment of Section 10.2. Section 10.2 is amended to read in its entirety as follows:

"10.2. Consolidated Indebtedness.

The Company will not permit at any time Consolidated Indebtedness to exceed:

(i)50% of Consolidated Total Capitalization as of the then most recently ended fiscal quarter until the later of (1) such time as the Banks and the holders of the Notes have equal and ratable priority in any Collateral and (2) such time as the ratio referred to in Section 10.5 has been at least 2.25 times for the period of four fiscal quarters ending on the last day of each of two consecutive fiscal quarters; and

(ii)55% of Consolidated Total Capitalization as of the then most recently ended fiscal quarter thereafter.”

9.9. Amendment of Section 10.3. Section 10.3 is amended to read in its entirety as follows:

"10.3. Reserved.”

9.10. Amendment of Section 10.4. Section 10.4 is amended to read in its entirety as follows:

"10.4. Indebtedness of Subsidiaries.

The Company will not permit at any time Indebtedness of Restricted Subsidiaries (other than (i) Non-Recourse Debt, and (ii) Indebtedness to the Company or another Restricted Subsidiary) to exceed 5% of Adjusted Consolidated Tangible Net Worth.”

9.11. Amendment of Section 10.5. Section 10.5 is amended to read in its entirety as follows:

"10.5. Fixed Charge Coverage.

The Company will not permit the ratio (calculated as of the end of each fiscal quarter) of Consolidated Income Available for Fixed Charges to Fixed Charges for the period of four fiscal quarters ending as of the last day of each fiscal quarter to be less than:

(i)1.0 to 1.0 for the period of four fiscal quarters ending March 31, 2003 and June 30, 2003;

(ii)1.25 to 1.0 for the period of four fiscal quarters ending September 30, 2003, December 31, 2003, March 31, 2004 and June 30, 2004;

(iii)1.5 to 1.0 for the period of four fiscal quarters ending September 30, 2004 and December 31, 2004;

(iv)1.75 to 1.0 for the period of four fiscal quarters ending March 31, 2005;

(v)2.0 to 1.0 for the period of four fiscal quarters ending June 30, 2005 and thereafter.”

9.12. Amendment of Section 10.6.

9.12.1. Clause (g) of Section 10.6 is amended to read in its entirety as follows:

"(g) Liens granted in connection with Non-Recourse Debt.”

9.12.2. Clause (h) of Section 10.6 is amended to read in its entirety as follows:

"(h) Liens not otherwise permitted by paragraphs (a) through (g), (i) and (j) incurred subsequent to the Closing Date to secure Indebtedness; provided that the Indebtedness of the Company and its Restricted Subsidiaries secured by Liens incurred pursuant to this paragraph (h) does not exceed 5% of Adjusted Consolidated Tangible Net Worth;”

9.12.3. The period at the end of Section 10.6(i) is replaced with “; and” and the following new Section 10.6(j) is added:

"(j) Liens in favor of the Collateral Agent under the Security Documents for the benefit of the holders of the Notes, the Other Notes and the Banks. Notwithstanding anything contained herein to the contrary, the Company will not permit to exist, create, assume or incur, directly or indirectly, any Lien in favor of the Banks other than as contemplated by this paragraph (j).”

9.13. Amendment of Section 10.7. The period at the end of clause (a)(i) of Section 10.7 is replaced with “; and” and clause (a)(ii) is amended to read in its entirety as follows:

"(ii) Reserved.”

9.14. Amendment of Section 10.10. Section 10.10 is amended to read in its entirety as follows:

"10.10. Designation of Unrestricted and Restricted Subsidiaries.

The Company may designate any Restricted Subsidiary as an Unrestricted Subsidiary and any Unrestricted Subsidiary as a Restricted Subsidiary; provided that,

(a) the Company may not designate a Restricted Subsidiary as an Unrestricted Subsidiary unless: (i) such Restricted Subsidiary does not own, directly or indirectly, any Indebtedness or capital stock of the Company or any other Restricted Subsidiary, (ii) such designation, considered as a sale of assets, is permitted pursuant to Section 10.8(c)(ii) and (c)(iii) and Section 10.9, and (iii) immediately before and after such designation there exists no Default or Event of Default; and

(b) each Subsidiary Guarantor must be designated a Restricted Subsidiary.”

9.15.Addition of Section 10.14. New Section 10.14 is added to read as follows:

"10.14. Restricted Payments.

The Company will not, except as hereinafter provided:

(c) make any other payment or distribution, directly or indirectly, or through any Subsidiary, in respect of its capital stock;

(all such declarations, payments, purchases, redemptions, retirements and distributions described in clauses (a) through (c) being herein collectively referred to as “Restricted Payments”) if, after giving effect thereto, (i) the aggregate amount of Restricted Payments made after March 31, 2003 to and including the date of the making of the Restricted Payment in question would exceed the sum of (A) $10,000,000, plus (B) 75% of Consolidated Net Income (or less 100% of any deficit) for each fiscal quarter (or portion thereof) of the Company subsequent to March 31, 2003, plus (C) the net cash proceeds received by the Company after March 31, 2003 from the sale of shares of any class of its common or nonredeemable preferred stock and (ii) no Default or Event of Default exists or would exist. Notwithstanding anything contained in this Section 10.14 to the contrary, the Company will not make any Restricted Payments from the date of this First Amendment through and including March 31, 2003.”

9.16. Addition of Section 10.15. New Section 10.15 is added to read as follows:

"10.15. Letters of Credit.

The Company will not permit to be outstanding at any time in excess of $30,000,000 aggregate face amount of letters of credit as to which it or any Restricted Subsidiary has any reimbursement obligation, contingent or otherwise, that obligates it or such Restricted Subsidiary to provide cash collateral for such obligation.”

9.17. Addition of Section 10.16. New Section 10.16 is added to read as follows:

"10.16. Most Favored Nation.

On the effective date of the First Amendment, any financial covenant (together with any defined terms and schedules related thereto) imposed under the Credit Agreement is incorporated into this Agreement and shall apply as if fully set forth herein.

restrictive or more favorable financial covenant (together with any defined terms and schedules related thereto).”

9.18. Amendment of Section 11.

9.18.1. Section 11(c) is amended to read in its entirety as follows:

"(c) the Company defaults in the performance of or compliance with (i) any term contained in Section 7.1(e), (ii) Sections 10.1 through 10.15, or (iii) any covenant incorporated by reference pursuant to Section 10.16 or any term contained in any Security Document and such default continues beyond any period of grace provided therein.”

9.18.2. Section 11(e) is amended to read in its entirety as follows:

"(e) any representation or warranty made in writing by or on behalf of the Company, any Subsidiary or by any officer of thereof in this Agreement or any Security Document, or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or"

9.18.3. Section 11(f) is amended to read in its entirety as follows:

"(f) (i) the Company or any Restricted Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least $5,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any Restricted Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least $5,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into equity interests), (x) the Company or any Restricted Subsidiary has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $5,000,000, or (y) one or more Persons have the right to require the Company or any Restricted Subsidiary so to purchase or repay such Indebtedness; or;”

9.18.4. The period at the end of Section 11(k) is replaced with a semicolon followed by the word “or” and new Section 11(l) is added as follows:

"(l) a default or event of default occurs under any of the Security Documents and such default or event of default continues beyond any period of grace with respect thereto or any of the Security Documents are deemed or are judicially determined not to be valid, binding or enforceable.”

9.19. Amendment of Section 15. Section 15 is amended to read in its entirety as follows:

“15. Transaction Expenses.

Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable attorneys’ fees of a special counsel and, if reasonably required, local or other counsel) incurred by you and each Other Purchaser or holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement, the Subsidiary Guaranty, the Notes or any Security Document (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, the Subsidiary Guaranty, the Notes or any Security Document or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the Subsidiary Guaranty, the Notes or any Security Document, or by reason of being a holder of any Note, and (b) the costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Company will pay, and will save you and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses if any, of brokers and finders (other than those retained by you).”

9.20. Amendment of Schedule B.

9.20.1. Schedule B is amended to include the following defined terms:

“Adjusted Consolidated Tangible Net Worth” means, as of any date, consolidated stockholders’ equity of the Company and its Restricted Subsidiaries on such date, determined in accordance with GAAP, less the sum or all goodwill, trademarks, trade names, service marks, brand names, copyrights, patents and unamortized debt discount and expense,

and other similar intangibles properly classified as such in accordance with GAAP, less the amount by which outstanding Restricted Investments on such date exceed 5% of consolidated stockholders’ equity of the Company and its Restricted Subsidiaries.”

“Banks” means the institutions that are now or hereafter become party to the Credit Agreement in their capacity as a lender or agent thereunder.

“Collateral” has the meaning given thereto in the Security Documents.

“Collateral Agent” means Bank of America, N.A. and its successors and assigns.

“Collateral Release Date” means the earlier to occur of (i) the date the Liens against the Collateral are released in accordance with the Intercreditor Agreement and (ii) the date the Liens against the Collateral are released under the Security Documents, whether as provided in the Security Documents, by operation of law or otherwise.

“First Amendment” means the First Amendment to Note Purchase Agreement dated as of February 28, 2003 between the Company and each other institution named in the signature pages thereto.

“Intercreditor Agreement” means that certain Intercreditor and Collateral Agency Agreement dated February 28, 2003 among the Collateral Agent, the Banks, the holders of the Notes and the holders of the Other Notes, as the same may be amended, modified or restated from time to time.

“Non-Recourse Debt” means non-recourse Indebtedness secured by Liens granted on real estate, the improvements thereon and related property purchased or held for development and sale, including any completed project until its sale to a customer, not to exceed $35,000,000 in aggregate amount outstanding at any time and in which the Company or its Restricted Subsidiaries do not invest at any time more than 45% of the purchase and development costs of such real estate, improvements and related property. For purposes of this definition, “related property” for a particular real estate project includes: leases, rents, profits and security deposits for the project; books and records for the project; condemnation rights, insurance payments (including deductible amounts) and proceeds related thereto; permits, licenses, certificates of occupancy and other governmental authorizations for the project; franchise, management, service, governmental (including tax incentive) and other agreements related to the project; trademarks and trade names for the project;

construction contracts, architect’s and engineer’s agreements, plans, specifications, drawings, surveys, models, sample materials and other items for the construction, fixturing, renovation or improvement of the project; and deposit accounts used exclusively for the project.

“Other Note Agreements” means the Note Agreement dated as of June 1, 1994 among the Company and the institutions named therein and the Note Agreement dated as of March 1, 1998 among the Company and the institutions named therein.

“Other Notes” means the 8.02% Senior Notes due December 30, 2003 issued by the Company pursuant to the Note Agreement dated as of June 1, 1994 and the 6.57% Senior Notes due March 20, 2013 issued by the Company pursuant to the Note Agreement dated as of March 1, 1998.

“Restricted Payments” is defined in Section 10.14.

“Security Documents” means the mortgages, deeds of trust, security agreements, financing statements and any other agreements or documents entered into by the Company or any Subsidiary creating Liens securing the Notes and other obligations payable by the Company or any Subsidiary pursuant to this Agreement, as the same may be amended from time to time in accordance with the Intercreditor Agreement.

9.20.2. The following definition is amended to read in its entirety as follows:

“Material Adverse Effect” means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Restricted Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement, the Notes or any Security Document, or (c) the ability of any Subsidiary Guarantor to perform its obligations under the Subsidiary Guaranty or any Security Document, or (d) the validity or enforceability of this Agreement, the Notes, the Subsidiary Guaranty, any Security Document or the Liens created by the Security Documents.

9.20.3. Schedule B is amended to delete the definitions of “Adjusted Consolidated Net Worth”, “Funded Debt”, and “Short-Term Debt”.

9.21. Amendment of Exhibit 1(a). Exhibit 1(a) to the Note Agreement is amended in the form attached as Exhibit 1(a) to this First Amendment.

SECTION 10. REAFFIRMATION; REPRESENTATIONS AND WARRANTIES

10.1. Reaffirmation of Note Agreement. The Company reaffirms its agreement to comply with each of the covenants, agreements and other provisions of the Note Agreement and the Notes, including the additions and amendments of such provisions effected by this First Amendment.

10.2. Note Agreement. The Company represents and warrants that, subject to the effectiveness of this First Amendment, the representations and warranties contained in the Note Agreement are true and correct as of the date hereof, except for such changes, facts, transactions and occurrences that have arisen since June 27, 2001 in the ordinary course of business or as contemplated by this First Amendment and such other matters as have been previously disclosed in writing by the Company to the Holders, and except that any representation made in the Note Agreement that specifies a certain date is only affirmed to be true and correct as of such date.

10.3. No Default or Event of Default. The Company represents and warrants that, after giving effect to the transactions contemplated hereby, there will exist no Default or Event of Default.

10.4. Authorization. The Company represents and warrants that:

10.4.1. Company. The execution, delivery and performance by the Company of this First Amendment and each Security Document to which it is a party have been duly authorized by all necessary corporate or other action and, except as provided herein, do not and will not require any registration with, consent or approval of, notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable. The Note Agreement, this First Amendment and such Security Documents each constitute the legal, valid and binding obligations of the Company, enforceable against it in accordance with its respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

10.4.2. Subsidiaries. The execution, delivery and performance by each Subsidiary of each Security Document to which it is a party have been duly authorized by all necessary corporate or other action and, except as provided herein, do not and will not require any registration with, consent or approval of, notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable. Such Security Documents each constitute the legal, valid and binding obligations of such Subsidiary, enforceable in accordance with their respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

10.5. Compliance with Laws, Other Instruments, etc. The Company represents and warrants that:

10.5.1. Company. The execution, delivery and performance by the Company of this First Amendment and each Security Document to which it is a party will not, except as contemplated herein, (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument by which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary.

10.5.2. Subsidiaries. The execution, delivery and performance by each Subsidiary of each Security Document to which it is a party will not, except as contemplated herein, (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of such Subsidiary under any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument by which such Subsidiary is bound or by which any of its properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to such Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to such Subsidiary.

SECTION 11. EFFECTIVE DATE

This First Amendment shall become effective as of the date set forth above upon satisfaction of the following conditions:

11.1. Consent of Holders to First Amendment. The Holders of 100% of the aggregate principal amount of the Notes outstanding shall have executed counterparts of this First Amendment.

11.2. Amendment of Other Note Agreements. The holders of the Other Notes shall have entered into the 1994 Amendment and the 1998 Amendment, as appropriate.

11.3. Intercreditor Agreement. The Holders shall have entered into the Intercreditor Agreement on terms satisfactory to them with the Banks, the holders of the Other Notes, and the Collateral Agent.

11.4. Security Interest. The Holders shall have received executed Security Documents satisfactory to them that create perfected Liens on the Collateral as provided therein and evidence of the perfection of such Liens.

11.5. Amendment to Credit Agreement. The Holders shall have received a copy of an executed Third Amendment to the Credit Agreement.

11.6. Amendment Fee. Each Holder, whether or not such Holder executes this First Amendment, shall have received payment of an amendment fee equal to 0.50% of the principal amount of the outstanding Notes held by such Holder.

11.7. Opinion of Company Counsel. The Holders shall have received an opinion of counsel for the Company, in form and substance satisfactory to the Holders and their special counsel, to the effect set forth in Sections 2.4 and 2.5.

11.8. Expenses. The Company shall have paid the fees and expenses of special counsel to the Holders.

SECTION 12. MISCELLANEOUS

12.1. Ratification. Except to the extent amended, modified, deleted or added to hereby, the terms and provisions of the Note Agreement, including the representations and warranties contained therein, shall remain in full force and effect and are ratified, confirmed, remade and approved in all respects as of the date hereof.

12.2. Reference to and Effect on the Note Agreement. Upon the final effectiveness of this First Amendment, each reference in the Note Agreement and in other documents describing or referencing the Note Agreement to the “Agreement,” “Note Agreement,” “hereunder,” “hereof,” “herein,” or words of like import referring to the Note Agreement, shall mean and be a reference to the Note Agreement, as amended hereby.

12.3. Actions in Respect of Future Collateral. The Company agrees to provide such information, take such action, execute such Security Documents and make such other filings as may be necessary to grant the Collateral Agent a Lien on any property now or hereafter constituting Collateral for the equal and ratable benefit of the holders of the Notes, the holders of the Other Notes and the Banks.

12.4. Binding Effect. This First Amendment shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto.

12.5. Governing Law. This First Amendment shall be governed by and construed in accordance with Illinois law.

12.6. Counterparts. This First Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but altogether only one instrument.

12.7. Exchange of Notes. It shall not be necessary for the Holders to surrender their Notes in exchange for new Notes. However, upon any surrender for exchange or transfer, Notes issued in exchange or in connection with a transfer shall be in the form of the attached Exhibit 1(a).

12.8. Notices to the Company. Pursuant to Section 18 of the Note Agreement, the Company hereby designates the following address for the receipt of all notices and communications provided in connection with the Note Agreement:

Butler Manufacturing Company
1540 Genessee
Kansas City, MO 64102
Attn: Chief Financial Officer
Telephone: (816) 968-3216
Facsimile: (816) 968-6504
Electronic: lcmiller@butlermfg.com

With a copy to:

Butler Manufacturing Company
1540 Genessee
Kansas City, MO 64102
Attn: General Counsel
Telephone: (816) 968-3214
Facsimile: (816) 968-3211
Electronic: jwhuey@butlermfg.com

BUTLER MANUFACTURING COMPANY

By: /s/ Larry C. Miller
Name: Larry C. Miller
Title: Vice President - Finance

Acknowledged and agreed to
by each Subsidiary Guarantor:

BMC REAL ESTATE, INC.
BUCON, INC.
BUTLER HOLDINGS, INC.
BUTLER REAL ESTATE, INC.
LESTER BUILDINGS, INC.
BUTLER PACIFIC, INC.
MODULINE WINDOWS, INC.
LIBERTY BUILDING SYSTEMS, INC.

By: /s/ Larry C. Miller
Larry C. Miller
Vice President - Finance

S-1

The foregoing is hereby agreed
to as of the date thereof.

ALLSTATE LIFE INSURANCE COMPANY

By: /s/ Rhonda L. Hopps
Name: Rhonda L. Hopps

By: /s/ Jerry D. Zinkula
Name: Jerry D. Zinkula

Authorized Signatories

METROPOLITAN LIFE INSURANCE COMPANY

By: /s/ Timothy L. Powell
Name: Timothy L. Powell
Title: Director

PRINCIPAL LIFE INSURANCE
COMPANY, an Iowa corporation

By: Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory

By: /s/ L.S. Valentine
Its: Counsel

By: /s/ Stephen G. Skrivanek
Its: Counsel

CGU LIFE INSURANCE COMPANY OF
AMERICA, a Delaware corporation

By: Principal Global Investors, LLC, a
Delaware limited liability company,
its attorney in fact

By: /s/ L.S. Valentine
Its: Counsel

S-2

By: /s/ Stephen G. Skrivanek
Its: Counsel

JOHN HANCOCK LIFE INSURANCE
COMPANY

By: /s/ Michael L. Short
Name: Michael L. Short
Title: Managing Director

JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY

By: /s/ Michael L. Short
Name: Michael L. Short
Title: Authorized Signatory

NATIONWIDE INDEMNITY COMPANY

By: /s/ Joseph P. Young
Name: Joseph P. Young
Title: Credit Officer

Fixed Income Securities

NATIONWIDE MUTUAL FIRE
INSURANCE COMPANY

By: /s/ Joseph P. Young
Name: Joseph P. Young
Title: Credit Officer

Fixed Income Securities

NATIONWIDE LIFE INSURANCE
COMPANY OF AMERICA

By: /s/ Joseph P. Young
Name: Joseph P. Young
Title: Credit Officer

Fixed Income Securities

S-3

EXHIBIT 1(a)

[FORM OF NOTE]

BUTLER MANUFACTURING COMPANY

8.12% SENIOR NOTE
DUE DECEMBER 30, 2016


No. [ ] $[ ]		[Date] PPN

FOR VALUE RECEIVED, the undersigned, BUTLER MANUFACTURING COMPANY (herein called the “Company”), a corporation organized and existing under the laws of the State of Delaware, promises to pay to [ ], or registered assigns, the principal sum of [ ] DOLLARS on December 30, 2016 with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 8.12% per annum from the date hereof, payable semiannually, on the June 30 and December 30 in each year, commencing with the June 30 or December 30 next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 10.12% or (ii) 2.0% over the rate of interest publicly announced by Bank of America from time to time in Chicago, Illinois as its “base” or “prime” rate.

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of Bank of America in Chicago or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is one of the Senior Notes (herein called the “Notes”) issued pursuant to the Note Purchase Agreement, dated as of June 20, 2001 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made

Exhibit 1(a)

the representations set forth in Section 6.2 and the second sentence of Section 6.1 of the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement. This Note is also subject to prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

Payment of the principal of, and interest and Make-Whole Amount, if any, on this Note, and all other amounts due under the Note Purchase Agreement, is guaranteed pursuant to the terms of a Subsidiary Guaranty dated as of June 20, 2001 of certain Subsidiaries of the Company.*

This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Illinois excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.

BUTLER MANUFACTURING
COMPANY

By:

Name:

Title:

This paragraph must be removed at such time as there are no Subsidiary Guarantors.

Exhibit 1(a)

SCHEDULE I

Information as to Holders of Notes


					Percentage of
					Total
	Principal		Total Principal		Principal
Note Holder	Amount of Note		Amount		Outstanding

Allstate Life Insurance Company	$	8,000,000	$	16,000,000		32.00	%
		8,000,000
Metropolitan Life Insurance Company	$	10,000,000	$	10,000,000		20.00	%
Principal Life Insurance Company	$	4,250,000	$	7,000,000		14.00	%
		1,000,000
		1,000,000
		750,000
Commercial Union Life Insurance Company of America	$	1,000,000	$	1,000,000		2.00	%
John Hancock Life Insurance Company	$	7,750,000	$	7,750,000		15.50	%
John Hancock Variable Life Insurance Company	$	250,000	$	250,000		.50	%
Nationwide Indemnity Company	$	3,000,000	$	3,000,000		6.00	%
Nationwide Mutual Fire Insurance Company	$	3,000,000	$	3,000,000		6.00	%
Nationwide Life Insurance Company of America⁵	$	2,000,000	$	2,000,000		4.00	%
TOTAL	$	50,000,000	$	50,000,000		100.00	%

⁵ Formerly Provident Mutual Life Insurance Company.

EX-4.5.2 6 c75442exv4w5w2.htm THIRD AMENDMENT TO THE CREDIT AGREEMENT Third Amendment to the Credit Agreement

EXHIBIT 4.5.2

THIRD AMENDMENT TO CREDIT AGREEMENT

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Third Amendment”), dated as of February 28th, 2003, (the “Third Amendment Date”) is entered into among BUTLER MANUFACTURING COMPANY, a Delaware corporation (“Borrower”), the banks listed on the signature pages hereof (collectively, the “Lenders”), and BANK OF AMERICA, N.A., as Administrative Lender (in said capacity, the “Administrative Lender”).

Borrower, the Lenders and Administrative Lender are parties to that certain Credit Agreement, dated as of June 20, 2001, as amended by that First Amendment to Credit Agreement dated as of December 4, 2001, as amended by that certain Waiver and Amendment dated as of February 3, 2003, as amended by the Second Amendment to Credit Agreement dated as of December 17, 2002 (the “Second Amendment”) (as amended, the “Credit Agreement”; the terms defined in the Credit Agreement and not otherwise defined herein shall be used herein as defined in the Credit Agreement). Borrower has requested that the Administrative Lender and the Lenders amend the Credit Agreement. Lenders and Administrative Lender have agreed to amend the Credit Agreement under certain terms and conditions, which include the Borrower and the Guarantors granting the Collateral Agent a first priority security interest in the Collateral, subject to Permitted Liens that was a condition to the relief granted to Borrower by the Lenders in connection with the Second Amendment. Borrower and the Guarantors are willing to grant such security interests in the Collateral. But for Borrower and the Guarantors’ covenant to grant such security interests, the Administrative Lender and the Lenders would not have been willing to enter into the Second Amendment or be willing to enter into this Third Amendment.

NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are all hereby acknowledged, Borrower, Lenders and Administrative Lender covenant and agree as follows:

1. AMENDMENTS TO THE CREDIT AGREEMENT. (a) Section 1.1 of the Credit Agreement is hereby amended by adding a new definition of “Intercreditor Agreement” thereto in proper alphabetical order to read as follows:

“Intercreditor Agreement” means that certain Intercreditor and Agency Services Agreement among Bank of America, N.A., as administrative agent, issuing bank and collateral agent, the Lenders, the 2001 noteholders, the 1998 noteholders and the 1994 noteholders, and consented to by the Borrower and the Guarantors dated as of February 28, 2003, as amended, restated, supplemented or otherwise modified from time to time.

(b) Section 1.1 of the Credit Agreement is hereby amended by amending and restating the definition of “Non-recourse Debt” thereto in proper alphabetical order to read as follows:

“Non-recourse Debt” means (i) non-recourse Debt secured by Liens granted on real estate, the improvements thereon and related property purchased or held for development and sale, including any completed project until its sale to a customer, not to exceed $35,000,000 in aggregate amount outstanding at any time and in which the Borrower or its Subsidiaries do not invest at any time more than 45% of the purchase and development costs of such real estate, improvements and related property and (ii) Debt of Foreign Subsidiaries that is non-recourse to the Borrower and the Guarantors (a) which is listed on Schedule 7.13 and is existing on the Third Amendment Date and (b) not to exceed $15,000,000 in aggregate amount outstanding at any time if not listed on Schedule 7.13. As used in (i) above, “related property” for a particular real estate project includes: leases, rents, profits and security deposits for the project; books and records for the project; condemnation rights, insurance payments (including deductive amounts) and proceeds related thereto; permits, licenses, certificates of occupancy and other governmental

authorizations for the project; franchise, management, service, governmental (including tax incentive) and other agreements related to the project; trademarks and trade names for the project; construction contracts, architect’s and engineer’s agreements, plans, specifications, drawings, surveys, models, sample materal and other items for the construction, fixturing, renovation or improvement of the project; and deposit accounts used exclusively for the project.

(c) Section 1.1 of the Credit Agreement is hereby amended by adding a new definition of “Third Amendment” thereto in proper alphabetical order to read as follows:

“Third Amendment” means that certain third amendment to this Agreement dated as of February 28, 2003.

(d) Section 7.13 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     Section 7.13 Debt. The Borrower shall not, and shall not permit any Subsidiary to, create, assume, incur or otherwise become or remain obligated in respect of, or permit to be outstanding, any Debt, except any or all of the following:

     (a) Existing Debt described on Schedule 7.13 hereto and renewals, refinancings and extensions, but not increases thereof, on terms and conditions not otherwise materially different from the terms and conditions thereof immediately preceding such renewal, refinancing or extension;

     (b) In addition to the Existing Debt described on Schedule 7.13 hereto, provided no Default or Event of Default exists both before and after giving effect thereto, Non-recourse Debt, provided that such Debt shall not be payable from the proceeds of Investments of the Borrower or any Domestic Subsidiary in any Foreign Subsidiary;

     (c) In addition to the Existing Debt described on Schedule 7.13 hereto, provided no Default or Event of Default exists both before and after giving effect thereto, purchase money Debt or Capitalized Lease Obligations not to exceed $12,000,000 at any time outstanding;

     (d) In addition to the Existing Debt described on Schedule 7.13 hereto, provided no Default or Event of Default exists both before and after giving effect thereto, Swap Contracts in respect of interest rates, foreign exchange or aluminum contracts, in each case that are (i) not for the purpose of speculation and (ii) on an unsecured basis; and

     (e) in addition to the existing Debt described on Schedule 7.13 hereto, provided no Default or Event of Default exists both before and after giving effect thereto, letters of credit securing manufacturing and factory equipment purchases not to exceed $500,000 at any time outstanding.

(e) New Section 7.21 of the Credit Agreement is hereby added to the Credit Agreement to read as follows:

7.21. Incorporation By Reference. On the effective date of the Third Amendment, each financial covenant (together with any defined terms and schedules related thereto) imposed under the Note Agreements (as defined in the Intercreditor Agreement) is incorporated into this Agreement and shall apply as if fully set forth herein.

If, after the effective date of the Third Amendment, the Noteholders (as defined in the Intercreditor Agreement) or any other holder of Indebtedness of the Borrower impose any additional or more restrictive covenant (including by amendment of an existing covenant, by waiver or consent or otherwise) of the type or similar to the type contained in Article 7 of the this

Agreement (as such this Agreement exists on the date of the Third Amendment), or the Borrower grants to any Noteholder (as defined in the Intercreditor Agreement) or other holder of Indebtedness of the Borrower any new covenant of the type or similar to the type contained in Article 7 of this Agreement (as this Agreement exists on the date of the Third Amendment) more favorable to such Noteholder (as defined in the Intercreditor Agreement) or other holder or Indebtedness of the Borrower than such covenants or similar covenants contained in this Agreement, the Borrower shall promptly notify, and furnish a copy thereof to, each holder of the Administrative Agent, and this Agreement shall be deemed to be amended automatically to incorporate such additional, more restrictive or more favorable financial covenant (together with any defined terms and schedules related thereto).

(f) Section 11.1(a) of the Credit Agreement is hereby amended to change the notice address for Borrower under heading (i) to read as follows:

Butler Manufacturing Company
1540 Genessee
Kansas City, MO 64102
Attn: Chief Financial Officer
Telephone: (816) 968-3216
Facsimile: (816) 968-6504
Electronic: lcmiller@butlermfg.com

with a copy to:

Butler Manufacturing Company
1540 Genessee
Kansas City, MO 64102
Attn: General Counsel
Telephone: (816) 968-3214
Facsimile: (816) 968-3211
Electronic: jwhuey@butlermfg.com

2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution and delivery hereof, Borrower represents and warrants that, as of the date hereof and after giving effect to the amendments contemplated by the foregoing Section 1 and the effectiveness of the First Amendments to the Note Agreements (as defined in the Intercreditor Agreement), as amended:

the representations and warranties contained in the Credit Agreement are true and correct on and as of the date hereof as if made on and as of such date; no event has occurred and is continuing which constitutes a Default or an Event of Default;

Borrower has full power and authority to execute and deliver this Third Amendment, and this Third Amendment and the Credit Agreement, as amended hereby, constitute the legal, valid and binding obligations of Borrower, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable debtor relief laws and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and except as rights to indemnity may be limited by federal or state securities laws;

neither the execution, delivery and performance of this Third Amendment or the Credit Agreement, as amended hereby, nor the consummation of any transactions contemplated herein or therein, will conflict with any Law to which Borrower or any of its Subsidiaries is subject, or any indenture, agreement or other instrument to which Borrower or any of its Subsidiaries or any of their respective property is subject;

no authorization, approval, consent, or other action by, notice to, or filing with, any governmental authority or other Person (other than the Board of Directors of the Borrower and the Guarantors), is required for the execution, delivery or performance by (i) Borrower of this Third Amendment or (ii) the acknowledgment of this Third Amendment by each Guarantor; and

each Material Domestic Subsidiary has executed a Subsidiary Guaranty.

3. CONDITIONS OF EFFECTIVENESS. This Third Amendment shall be effective as of the Third Amendment Date first set forth above, subject to the following:

(a) Administrative Lender shall have received counterparts of this Third Amendment executed by all Lenders, the Borrower and the Guarantors;

(b) there shall be no Default or Event of Default under the Credit Agreement after giving effect to this Third Amendment;

(c) Borrower shall cause to be delivered to the Administrative Lender a legal opinion in connection with the Third Amendment in form and substance reasonably acceptable to Special Counsel;

(d) Borrower shall have delivered to the Administrative Lender a secretary’s certificate, with incumbency provision, certifying the effective corporate resolutions of the Borrower authorizing the Borrower to enter into this Third Amendment and deliver the Collateral;

(e) Borrower shall have caused to be delivered to the Administrative Lender a secretary’s certificate, with incumbency provision, from each Guarantor certifying to the effective corporate resolution of such Guarantor authorizing such Guarantor to execute their respective acknowledgment of this Third Amendment and if applicable, the delivery of the Collateral;

(f) Borrower shall deliver to Administrative Lender a fully executed security agreement of even date therewith together with such other related documents as the Administrative Lender may require, each on terms and conditions acceptable to the Administrative Lender;

(g) Borrower shall deliver or cause to be delivered a fully executed intercreditor agreement of even date herewith on terms and conditions acceptable to the Administrative Lender;

(h) Borrower shall have reimbursed the Administrative Lender for all of the Administrative Lenders costs, fees and expenses, including attorney fees and expenses of Special Counsel, incurred in connection with due diligence, negotiations, drafting and the consummation of the Credit Agreement, the Loan Documents and this Third Amendment; and

(i) Administrative Lender and Lenders shall have received in form and substance satisfactory to Administrative Lender and Lenders, such other documents and certificates as Lenders shall require.

4. GUARANTOR ACKNOWLEDGMENT. By signing below, each Guarantor (a) acknowledges, consents and agrees to the execution by the Borrower of this Third Amendment, (b) acknowledges and agrees that its obligations in respect of its Subsidiary Guaranty are not released, diminished, waived, modified, impaired or affected in any manner by this Third Amendment or any of the provisions contemplated herein, (c) ratifies and confirms its obligations under its Subsidiary Guaranty, (d) acknowledges and agrees that it has no claims or offsets against, or defenses or counterclaims to, its Subsidiary Guaranty, (e) acknowledges, consents and agrees to each of the release provisions contained in Section 7 of this Third Amendment and (f) to the extent applicable, agrees to deliver or assist in the delivery of the Collateral.

5. CONSENT REGARDING DISSOLUTION OF SUBSIDIARY. The Lenders and the Administrative Lender hereby consent to the dissolution and liquidation of Innovative Building Technology, Inc. and acknowledge that upon its dissolution and liquidation, it shall no longer be considered as a Subsidiary for purposes of the Credit Agreement, provided that it transfers its ownership of all assets of Innovative Building Technology, Inc. remaining after payment or provision for payment of its claims or obligations to the Borrower within 20 calendar days of filing its certificate of dissolution with the Delaware Secretary of State.

6. REFERENCE TO THE CREDIT AGREEMENT. (a) Upon the effectiveness of this Third Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, or words of like import shall mean and be a reference to the Credit Agreement, as affected and amended by this Third Amendment. (b) The Credit Agreement, as amended by this Third Amendment, and all other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.

7. COSTS, EXPENSES AND TAXES. Borrower agrees to pay on demand all costs and expenses of Administrative Lender in connection with the preparation, reproduction, execution and delivery of this Third Amendment and the other instruments and documents to be delivered hereunder (including the reasonable fees and out-of-pocket expenses of counsel for Administrative Lender with respect thereto and with respect to advising Administrative Lender as to its rights and responsibilities under the Credit Agreement, as amended by this Third Amendment).

8. RELEASE. (a) Borrower and each of its Subsidiaries (collectively, the “Borrower Parties”) hereby unconditionally and irrevocably remises, acquits, and fully and forever releases and discharges the Administrative Lender and the Lenders and all respective Affiliates and subsidiaries of the Administrative Lender and the Lenders, their respective officers, servants, employees, agents, attorneys, financial advisors, principals, directors and shareholders, and their respective heirs, legal representatives, successors and assigns (collectively, the “Released Lender Parties”) from any and all claims, demands, causes of action, obligations, remedies, suits, damages and liabilities of any nature whatsoever, whether now known, suspected or claimed, whether arising under common law, in equity or under statute, which any Borrower Party ever had or now has against the Released Lender Parties which may have arisen at any time on or prior to the date of this Third Amendment and which were in any manner related to any of the Loan Documents or the enforcement or attempted enforcement by the Administrative Lender or the Lenders of rights, remedies or recourses related thereto which shall include all Borrower claims related to the Credit Agreement and the other Loan Documents (collectively, the “Borrower Claims”). (b) Each Borrower Party covenants and agrees never to commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against any of the Released Lender Parties any of the Borrower Claims which may have arisen at any time on or prior to the date of this Third Amendment and were in any manner related to any of the Loan Documents.

9. EXECUTION IN COUNTERPARTS. This Third 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 instrument.

10. GOVERNING LAW; BINDING EFFECT. This Third Amendment shall be governed by and construed in accordance with the laws of the State of Texas and shall be binding upon Borrower and each Lender and their respective successors and assigns.

11. HEADINGS. Section headings in this Third Amendment are included herein for convenience of reference only and shall not constitute a part of this Third Amendment for any other purpose.

12. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS THIRD AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE SUBJECT MATTER THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment as of the date first above written.


BORROWER:
	BUTLER MANUFACTURING COMPANY

	By:	/s/ Larry C. Miller

		Name: Larry C. Miller

		Title: Vice President — Finance


ADMINISTRATIVE LENDER:
	BANK OF AMERICA, N.A., as Administrative Lender

	By:	/s/ John K. Barrett

		Name: John K. Barrett

		Title: Managing Director

LENDERS:
	BANK OF AMERICA, N.A., as a Lender and as the Issuing Bank

	By:	/s/ John K. Barrett

		Name: John K. Barrett

		Title: Managing Director


		COMMERCE BANK, N.A.

		By:		/s/ Martin Nay

				Name: Martin Nay

				Title: Vice President


		U.S. BANK NATIONAL ASSOCIATION, as a Lender and as the Issuing Bank

		By:		/s/ Barry P. Sullivan

				Name: Barry P. Sullivan

				Title: Vice President


ACKNOWLEDGED AND AGREED:

BMC REAL ESTATE, INC.

By:		/s/ Larry C. Miller

		Name: Larry C. Miller

		Title: Vice President — Finance


BUCON, INC.

By:		/s/ Larry C. Miller

		Name: Larry C. Miller

		Title: Vice President — Finance


BUTLER HOLDINGS, INC.

By:		/s/ Larry C. Miller

		Name: Larry C. Miller

		Title: Vice President — Finance


BUTLER REAL ESTATE, INC.

By:		/s/ Larry C. Miller

		Name: Larry C. Miller

		Title: Vice President — Finance


LESTER BUILDINGS, INC.

By:		/s/ Larry C. Miller

		Name: Larry C. Miller

		Title: Vice President — Finance


BUTLER PACIFIC, INC.

By:		/s/ Larry C. Miller

		Name: Larry C. Miller

		Title: Vice President — Finance


MODULINE WINDOWS, INC.

By:		/s/ Larry C. Miller

		Name: Larry C. Miller

		Title: Vice President — Finance


LIBERTY BUILDING SYSTEMS, INC.

By:		/s/ Larry C. Miller

		Name: Larry C. Miller

		Title: Vice President — Finance

12 EX-4.6 7 c75442exv4w6.htm SECURITY AGREEMENT Security Agreement

EXHIBIT 4.6

SECURITY AGREEMENT

Among

The Grantors Named Herein
as Grantors

and

BANK OF AMERICA, N.A.
as Collateral Agent

February 28, 2003

TABLE OF CONTENTS


		Page

ARTICLE I Grant			3
	Section 1.1 Assignment and Grant of Security		3
	Section 1.2 Description of Obligations		3
	Section 1.3 Grantor Remains Liable		5
	Section 1.4 Delivery of Instruments and Securities Collateral		5
	Section 1.5 Exclusions from Collateral		5
ARTICLE II Representations and Warranties			5
	Section 2.1 Representations and Warranties		5
ARTICLE III Covenants			6
	Section 3.1 Further Assurances		6
	Section 3.2 Equipment and Inventory		7
	Section 3.3 Insurance		8
	Section 3.4 Place of Perfection; Records; Collection of Receivables, Chattel Paper and Instruments		8
	Section 3.5 Transfers and Other Liens		9
	Section 3.6 Rights to Dividends and Distributions		9
	Section 3.7 Right of the Collateral Agent to Notify Issuers		9
	Section 3.8 The Collateral Agent Appointed Attorney-in-Fact		9
ARTICLE IV Rights and Powers of the Collateral Agent			11
	Section 4.1 The Collateral Agent May Perform		11
	Section 4.2 The Collateral Agent’s Duties		11
	Section 4.3 Remedies		11
	Section 4.4 Further Approvals Required		13
	Section 4.5 INDEMNITY AND EXPENSES		14
ARTICLE V Miscellaneous			15
	Section 5.1 Cumulative Rights		15
	Section 5.2 Modifications; Amendments; Etc.		15
	Section 5.3 Continuing Security Interest		15
	Section 5.4 GOVERNING LAW; TERMS		15
	Section 5.5 WAIVER OF JURY TRIAL		15
	Section 5.6 The Collateral Agent’s Right to Use Agents		15
	Section 5.7 Waivers of Rights Inhibiting Enforcement		16
	Section 5.8 Notices and Deliveries		16
	Section 5.9 Successors and Assigns		16
	Section 5.10 Consent to Jurisdiction; Waiver of Immunities		16
	Section 5.11 Severability		16
	Section 5.12 Obligations Not Affected		16
	Section 5.13 Counterparts		16
	Section 5.14 ENTIRE AGREEMENT		16

SCHEDULES

Schedule 1 Jurisdiction of Incorporation and Trade Names; Locations of Equipment, Inventory, Books and Records
Schedule 2 Restricted Accounts
Schedule 3 Securities Collateral
Schedule 4 Existing Liens

EXHIBITS
Exhibit A Instructions for Registration of Pledge of Uncertificated Securities Collateral
Exhibit B Initial Transaction Statement
Exhibit C Securities Collateral Stop Transfer Letter

SECURITY AGREEMENT

SECURITY AGREEMENT (this “Agreement”), dated as of February 28, 2003, made among Butler Manufacturing Company, a Delaware corporation (the “Borrower”), the Subsidiaries of the Borrower party hereto (collectively, the “Guarantors” and each a “Guarantor” and together with the Borrower, collectively, the “Grantors” and each a “Grantor”) and Bank of America, N.A., a national banking association, in its capacity as collateral agent (in such capacity, and together with its successors and assigns, the “Collateral Agent”).

BACKGROUND

(1) The Borrower, Bank of America, N.A., as agent (in such capacity, the “Bank Agent”), and the lenders named therein (collectively, together with the other lenders from time to time party to the Credit Agreement and their successors and assigns, the “Banks” and each a “Bank”) are parties to that certain Credit Agreement, dated as of June 20, 2001, as amended by that certain First Amendment to Credit Agreement, dated as of December 4, 2001 (the “First Amendment”), as further amended by that certain Second Amendment to Credit Agreement dated as of December 17, 2002 (the “Second Amendment”), as further amended by that certain Third Amendment to Credit Agreement, dated this date (said Credit Agreement, as amended, modified, supplemented, replaced or restated from time to time, the “Credit Agreement”). Term used and not otherwise defined herein shall have the meanings set forth in the Credit Agreement.

(2) The Borrower and each of the holders of 8.02% Senior Notes due December 30, 2003 (together with their successors and assigns, the “1994 Noteholders”), the holders of the Borrower’s 6.57% Senior Notes due March 20, 2013 (together with their successors and assigns, the “1998 Noteholders”) the holders of the Company’s 7.87% Senior Notes due December 30, 2016 (together with their successors and assigns, the “2001 Noteholders” and, together with the 1994 Noteholders and the 1998 Noteholders, collectively the “Noteholders” and individually a “Noteholder”) entered into the Note Purchase Agreements as described below.

(3) The Borrower and the 1994 Noteholders entered into a Note Agreement, dated as of June 1, 1994, as amended by a First Amendment to Note Agreement dated this date (as so amended and as it may hereafter be further amended, supplemented or otherwise modified from time to time, the “1994 Note Purchase Agreement”), pursuant to which the Borrower issued and sold to the 1994 Noteholders its 8.02% Senior Notes due December 30, 2003 (the “1994 Notes”) in the original aggregate principal amount of $35,000,000.

(4) The Borrower and the 1998 Noteholders entered into a Note Agreement, dated as of March 1, 1998, as amended by a First Amendment to Note Agreement dated this date (as so amended as it may hereafter be further amended, supplemented or otherwise modified from time to time, the “1998 Note Purchase Agreement”), pursuant to which the Borrower issued and sold to the 1998 Noteholders its 6.57% Senior Notes due March 20, 2013 (the “1998 Notes”) in the original aggregate principal amount of $35,000,000.

(5) The Borrower and the 2001 Noteholders entered into a Note Purchase Agreement, dated as of June 20, 2001, as amended by a First Amendment to Note Purchase Agreement dated this date (as so amended and as it may hereafter be further amended, supplemented or otherwise modified from time to time, the “2001 Note Purchase Agreement” and, together with the 1994 Note Purchase Agreement and the 1998 Note Purchase Agreement, each a “Note Purchase Agreement” and, collectively, the “Note Purchase Agreements”), pursuant to which the Borrower issued and sold to the 2001 Noteholders its 7.87% Senior Notes due December 30, 2016 (the “2001 Notes” and, together with the 1994 Notes and the 1998 Notes, the “Notes”) in the original aggregate principal amount of $50,000,000 (each Note Purchase Agreement, Note and each other document related directly thereto, collectively the “Note Documents”).

(6) The Collateral Agent has been designated as such pursuant to that certain Intercreditor and Collateral Agency Agreement, dated this date (as amended, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among the Secured Parties (as defined below), and the Collateral Agent is acting as such under the Intercreditor Agreement for the benefit of (i) itself, as the Collateral Agent and the Bank Agent, (ii) each Bank (and affiliate thereof that has entered into a Swap Contract (as defined in the Credit Agreement) with any Grantor) and (iii) each Noteholder (the Collateral Agent, the Bank Agent, the Banks and the Noteholders singularly a “Secured Party”, and all are collectively, the “Secured Parties”).

(7) In consideration for the agreements of the Banks under the Second Amendment and the Noteholders under each respective First Amendment to Note Purchase Agreement dated this date, the Borrower agreed, and agreed to cause each of Guarantors to, grant a first priority security interest in certain of their respective property.

(8) Accordingly, it is the intention of the parties hereto that this Agreement create a first priority security interest in certain property of the Grantors securing the payment of the Secured Obligations set forth in Section 1.2 hereof for the benefit of the Secured Parties.

AGREEMENT

NOW, THEREFORE, in consideration of the premises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Grantors hereby agree with the Collateral Agent, for the benefit of the Secured Parties as hereinafter set forth.

Grant
Assignment and Grant of Security. Each Grantor hereby grants to the Collateral Agent for the benefit of the Secured Parties a security interest in the entire right, title and interest of such Grantor in and to the following assets of such Grantor, whether now owned or hereafter acquired (“Collateral”):

all Chattel Paper;

all Equipment;

all Instruments;

all Inventory;

all Accounts;

all cash in Deposit Accounts controlled by any Secured Party (including, but not limited to, any surplus cash after repayment of a funding under a cash collateralized letter of credit and all fees and expenses related thereto) (the “Deposit Accounts”);

all right, title and interest of such Grantor in and to the lesser of (i) 100% of the owned equity interests of each direct foreign Subsidiary of such Grantor (to the extent that such Grantor owns 65% or less of the equity interests of any foreign Subsidiary) or (ii) 65% of the aggregate of all outstanding equity interests of each direct foreign Subsidiary of such Grantor, including, without limitation, the shares of each class of capital stock in any Person incorporated under the laws of a country other than the United States that is a corporation, each class of partnership interests in any Person organized under the laws of a country other than the United States that is a partnership, and each class of membership interests in any Person organized under the laws of a country other than the United States that is a limited liability company, together with all dividends, increases, proceeds, profits, instruments, distributions and other property from time to time distributed in respect thereof and any rights to acquire or convertible into any such equity interests, whether by purchase, exercise of any type of options, warrants, conversion of debt or otherwise (“Securities Collateral”);

all right, title and interest of such Grantor in, to and under each contract and other agreement relating to the lease, sale or other disposition of Collateral;

all rights, claims and benefits of such Grantor against any Person arising out of, relating to or in connection with Collateral purchased by such Grantor, including, without limitation, any such rights, claims or benefits against any Person storing or transporting such Collateral;

all property similar to the above hereafter acquired by such Grantor; and

all accessions to, substitutions for and replacements, proceeds and products of any and all of the foregoing Collateral (including, without limitation, proceeds which constitute property of the types described in this Section 1.1) and, to the extent not otherwise included, all (i) payments under insurance (whether or not the Collateral Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral and (ii) cash proceeds.

Description of Obligations. This Agreement creates an enforceable security interest in the Collateral to secure the payment and performance of the following obligations (collectively, “Secured Obligations”):

All debt, obligations, liabilities and agreements of any nature of the Grantors to the Secured Parties or any Secured Party, whether matured or unmatured, fixed or contingent, including all future advances, now or hereafter existing, arising pursuant to or in connection with (i) this Agreement; (ii) the obligations of the Grantors under the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement and used herein), including but not limited to principal, interest, premiums, fees, expenses and indemnities; (iii) the obligations of the Grantors under the Note Purchase Agreements, the Notes and the other Note Documents, including but not limited to, principal, interest, premiums, any Make-Whole Amount (as defined in the Note Purchase Agreements), fees, expenses and indemnities; and (iv) all amendments, modifications or supplements (but not any replacements or refinancings unless consented to in writing by the Required Secured Parties as defined in Section 5.2 of this Agreement) of any of the foregoing.

All costs incurred by any Secured Party to obtain, preserve, perfect and enforce this Agreement, the pledge and security interest granted hereby, collect the Secured Obligations, and maintain, preserve, collect and enforce the Collateral, including, without limitation, taxes, assessments, reasonable attorneys’ fees and legal expenses, and expenses of sale.

Interest on the above amounts as agreed between the Borrower and the Secured Parties, including, without limitation, interest, fees and other charges that would accrue or become owing both prior to and subsequent to and but for the commencement of any proceeding against or with respect to the Borrower under any chapter of the Bankruptcy Code of 1978, 11 U.S.C. §101 et seq. whether or not a claim is allowed for the same in any such proceeding,

Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Secured Obligations and would be owed by any Grantor to any Secured Party under the Credit Agreement, any other Loan Document, the Note Purchase Agreements, the Notes or any other Note Document, but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding under any Debtor Law involving such Grantor or any other Person (including all such amounts which would become due or would be secured but for the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding of such Grantor or any other Person under any Debtor Law.

With respect to each Grantor other than the Borrower, notwithstanding anything herein to the contrary, in any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally if the security interests granted by any such Grantor herein shall be held void, invalid or unenforceable, or subordinated to the liens or claims of any other creditors, on account of the amount of the Secured Obligations secured by such security interests, then, the amount of the Secured Obligations secured by such security interests shall, without any action by such Grantor, the Collateral Agent, any other Secured Party or any other Persons, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding.

Grantor Remains Liable. Anything herein to the contrary notwithstanding, (a) the Grantors shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Collateral Agent of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral, and (c) neither the Collateral Agent nor any Secured Party shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Collateral Agent or any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

Delivery of Instruments and Securities Collateral. All certificates or instruments representing or evidencing the Collateral shall be delivered to and held by or on behalf of the Collateral Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Collateral Agent. The Collateral Agent shall have the right, to the extent provided in Section 3.6, to transfer to or to register in the name of the Collateral Agent or any of its nominees any or all of the Securities Collateral. Except as provided in Section 3.8(d), the Grantors maintain all voting rights in the Securities Collateral.

Exclusions from Collateral. Notwithstanding Section 1.1 hereof, to the extent any of such assets and properties of any Grantor would otherwise be included in the Collateral, the Collateral does not include:

the Corporate Headquarters (as defined in the Credit Agreement), together with all other property included in the Corporate Headquarters Sale and Leaseback (as defined in the Credit Agreement);

any real estate purchased or held for development and sale, and the improvements thereon and personal property related thereto, including any completed real estate project until its sale to a customer;

any assets and properties subject to Existing Liens (as defined in the Credit Agreement) as set forth on Schedule 4 hereto, to the extent that such Existing Liens remain in place;

any assets owned by any foreign subsidiary of any Grantor, including stock of another foreign subsidiary hold by a foreign subsidiary;

more than 65% of the issued and outstanding capital stock of any direct foreign subsidiary of any Grantor; and

(f) any intellectual property of any Grantor.

Representations and Warranties
Representations and Warranties. Each Grantor represents and warrants to the Collateral Agent, for the benefit of the Secured Parties with respect to itself and the Collateral now owned or hereafter acquired by it, as follows:

All of the Equipment and Inventory pledged by such Grantor hereunder are located at the places specified on Schedule 1 hereto (as supplemented from time to time by such Grantor by written notice to the Collateral Agent as permitted herein) or in transit to a place specified on Schedule 1 hereto (as supplemented from time to time by such Grantor by written notice to Collateral Agent as permitted herein) or in transit for sale to a third-party purchaser that upon such sale will become the obligor under a Receivable or promptly pay for such Equipment, Fixtures and

Inventory. Each Grantor’s jurisdiction of incorporation, chief place of business and chief executive office of such Grantor and the offices where such Grantor keeps all of its records concerning the Receivables are as specified on Schedule 1 hereto. Schedule 1 is a complete and correct list of, as to any leased property on which any Collateral is located, the description of such property sufficient for recording purposes and the name of the record owner of such property.

Such Grantor is the legal and beneficial owner of the Collateral pledged by it free and clear of any Lien, other than Liens of the type described in clauses (b) through (e) of the definition of Permitted Liens under the Credit Agreement. No effective financing statement or other similar document used to perfect and preserve a security interest under the laws of any jurisdiction covering all or any part of the Collateral is on file in any recording office, except such as may have been filed in favor of the Collateral Agent relating to this Agreement. As of the date hereof, such Grantor has the trade names set forth on Schedule 1 (and no others). Such Grantor (including any corporate or partnership predecessor) has not existed or operated under any name other than as stated on Schedule 1 since the date seven years preceding the date of this Agreement.

This Agreement and the grant of a security interest in the Collateral pursuant hereto, together with the filing of financing statements containing the description of the Collateral in the jurisdictions of incorporation set forth on Schedule 1, which will be made immediately following the date of this Agreement, creates a valid and perfected first priority security interest in the Collateral in which a security interest can be perfected by filing a UCC financing statement, securing the payment of the Secured Obligations; provided that additional actions may be required with respect to the perfection of proceeds of the Collateral; and further provided that the Collateral Agent retains physical possession of any Collateral, the possession of which is required for perfection or for a first priority security interest. No consent of any Person (including any Governmental Authority) is required (i) for the pledge by such Grantor of the Collateral pledged by it hereunder, for the grant by such Grantor of the security interest granted hereby or for the execution, delivery or performance of this Agreement by such Grantor, (ii) for the perfection or maintenance of the pledge, assignment and security interest created hereby (including the first priority nature of such pledge, assignment and security interest as provided herein) (except for the filing of financing and continuation statements under the UCC) or (iii) for the exercise by the Collateral Agent of the rights provided for in this Agreement, except, in each case, for such consents that already have been obtained by such Grantor (assuming the effectiveness of the First Amendment to each Note Purchase Agreement) or as provided in Sections 4.3(e) and 4.4 hereof. None of the Securities Collateral is subject to any unpaid capital call or dispute, any buy-sell, voting trust, transfer restriction, preferential right to purchase or similar agreement or any option, warrant, put or call or similar agreement or other rights or restrictions in favor of third Persons. All of the Securities Collateral are duly authorized, validly issued and non-assessable and were not issued in violation of the Rights (as defined in the Credit Agreement and as used herein) of any Person. No Securities Collateral obligates such Grantor to make any additional capital contributions with respect thereto. Schedule 3 accurately describes, as of the date of this Agreement, the Securities Collateral owned by such Grantor, the issuer, the percentage owned by such Grantor, the nature of equity interest owned, and, if applicable, the number and type of shares of capital stock owned. No material dispute, right of setoff, counterclaim or defense exists with respect to any portion of the Collateral, except for Set-Off Rights (as defined in the Intercreditor Agreement) of the Banks and the Noteholders.

All Inventory produced in the United States of America has been produced in substantial compliance with the Fair Labor Standards Act.

Covenants
Further Assurances.
Each Grantor agrees that where any agreement existing as of the date hereof or hereafter to which such Grantor is a party contains any restriction that could reasonably be expected to prohibit such Grantor from granting any security interest under this Agreement, upon request of the Collateral Agent such Grantor will use its best efforts to obtain the necessary consent to or waiver of such restriction from any Person so as to enable such Grantor to effectively grant to the Collateral Agent such security interest under this Agreement, and the obtaining of any such consent or waiver shall cure for all purposes of this Agreement and the Obligations any default arising as a result of such restriction.

Each Grantor agrees that from time to time, at the expense of such Grantor, such Grantor will promptly execute and deliver all further instruments and documents (including supplements to all schedules), and take all further action, that may be necessary, and that the Collateral Agent may request, in order to perfect and protect any pledge, assignment or security interest granted or purported to be granted hereby, and the priority thereof, or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, upon request by the Collateral Agent, such Grantor will: (i) mark conspicuously each Chattel Paper, and each of its records pertaining to the Collateral with the following legend:

THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN PURSUANT TO A SECURITY AGREEMENT DATED AS OF FEBRUARY 28, 2003 (AS THE SAME HAS BEEN AND MAY HEREAFTER BE AMENDED, MODIFIED OR RESTATED) MADE BY GRANTOR IN FAVOR OF BANK OF AMERICA, N.A., AS COLLATERAL AGENT.

or such other legend, in form and substance satisfactory to and as specified by the Collateral Agent, indicating that such Chattel Paper or Collateral is subject to the pledge, assignment and security interest granted hereby; (ii) if any Collateral shall be evidenced by an Instrument or be Chattel Paper, deliver and pledge to the Collateral Agent hereunder each such Instrument or Chattel Paper duly indorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Collateral Agent; and (iii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary, or as the Collateral Agent may request, in order to perfect and preserve the pledge, assignment and security interest granted or purported to be granted hereby.

In addition to such other information as shall be specifically provided for herein, the Grantors will furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral and such other lists, documents, reports, and product, service and sales documents in connection with the Collateral as the Collateral Agent may

request, all in reasonable detail. In connection with its enforcement of the security interest, the Collateral Agent may use such information or transfer it to any Secured Party.

Each Grantor hereby authorizes the Collateral Agent to file one or more continuation statements and during the continuance of an Event of Default, financing statements, relating to all or any part of the Collateral without the signature of such Grantor where permitted by Applicable Law (as defined in the Credit Agreement and as used herein). A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by Applicable Law.

Certain securities included in the Securities Collateral are “uncertificated securities” within the meaning of the UCC or are otherwise not evidenced by any stock certificate or similar certificate or instrument, as set forth on Schedule 3 hereto. As to such uncertificated securities and any other uncertificated securities hereafter included in the Securities Collateral, Grantor agrees to promptly notify the Collateral Agent and take all actions required to perfect the security interest of the Collateral Agent under Applicable Law, including, as applicable, under Article 8 or 9 of the UCC, and, without limitation of the foregoing, prior to or concurrently with the pledge hereunder of any Securities Collateral to which this section applies, (i) where deemed applicable by the Collateral Agent, deliver to the relevant corporation, partnership, limited liability company, joint venture or other Person a fully completed and duly executed letter in the form of Exhibit A hereto, to obtain from such corporation, partnership, limited liability company, joint venture or other Person, and deliver to the Collateral Agent, promptly upon registration of such pledge on the books of the issuer, a fully completed and duly executed letter in the form of Exhibit B hereto, and (ii) where deemed applicable by the Collateral Agent, deliver to the Collateral Agent a fully completed and duly executed “Securities Collateral Stop Transfer Letter” in the form of Exhibit C hereto.

Equipment and Inventory. No Grantor shall keep the Equipment and Inventory pledged by it hereunder (other than (i) Inventory sold in the ordinary course of business, (ii) Inventory and Equipment in transit in the ordinary course of business and (iii) Equipment out for repairs) in any location other than the places specified in Schedule 1 unless no later than 60 days prior to removal from any such location such

Grantor has delivered to the Collateral Agent a financing statement for such Equipment, fixtures and Inventory kept by such Grantor at such other location or such other documentation in the opinion of the Collateral Agent which is necessary to properly perfect or maintain the perfection of the security interest granted herein in such Collateral.

Insurance. Each Guarantor shall, at its own expense, maintain insurance with respect to the Collateral in accordance with the terms set forth in Section 5.5 of the Credit Agreement, Section 9.2 of the 2001 Note Purchase Agreement and Section 6.2 of the 1994 and 1998 Note Purchase Agreements. Each Grantor further covenants and agrees to keep the Collateral insured in such amounts, against such risks and with such insurers as is consistent with customary and usual in the industry for companies of similar size and capability, provided that none of such insurance shall be in amounts less than the greater of (a) the replacement value and (b) the original cost of the covered property (less any deduction standard in the industry for such type of property). All such policies of insurance shall show the Collateral Agent as loss payee, as its interests may appear, and shall provide for at least thirty days’ prior written notice of cancellation or change of coverage to the Collateral Agent, the Agent and the Holders. Each Grantor shall promptly furnish to the Collateral Agent evidence of such insurance in form and content reasonably satisfactory to the Collateral Agent, the Agent and the Holders. If any Grantor fails to maintain the insurance it is required to maintain with respect to the Collateral in accordance with this Section 3.3, upon written notice to such Grantor, the Collateral Agent may at its own option obtain insurance in such Collateral, any premium thereby paid by the Collateral Agent to become part of the Secured Obligations, bear interest prior to the existence of an Event of Default (as defined in the Credit Agreement or the Note Purchase Agreements), at the then applicable Base Rate (as defined in the Credit Agreement), and during the occurrence of an Event of Default, at the Highest Lawful Rate (as defined in the Credit Agreement). In the event the Collateral Agent maintains such substitute insurance, the additional premium for such insurance shall be due on demand and payable by such Grantor to the Collateral Agent in accordance with any notice delivered to any Grantor by the Collateral Agent. Proceeds of insurance shall be applied as follows: first, to reimburse the Collateral Agent for all reasonable costs and expenses, if any, including reasonable attorneys’ fees, incurred in connection with the collection of such proceeds; second, if an Event of Default has not occurred and is not continuing, the proceeds shall be reinvested in productive, tangible assets used in the business of such Grantor, and such Grantor shall provide the Collateral Agent, the Agent and the Holders with evidence reasonably satisfactory to the Collateral of such use; and third, if an Event of Default has occurred and is continuing, the proceeds shall, at the Collateral Agent’s direction, be used to replace the Collateral or applied to the Secured Obligations as provided in Section 4.3 of this Agreement.

Place of Perfection; Records; Collection of Receivables, Chattel Paper and Instruments.

Each Grantor shall keep its jurisdiction of incorporation, chief place of business and chief executive office and the office where it keeps its records concerning the Receivables, and the originals of all Chattel Paper and Instruments that have not been endorsed and delivered to the Collateral Agent as provided in Section 3.1(b) hereof, at the locations therefor specified on Schedule 1, in each case which may be changed upon written notice to the Collateral Agent at least 60 days prior to such change. Each Grantor will hold and preserve such records and Chattel Paper and Instruments and will permit representatives of the Collateral Agent at any time during normal business hours to inspect and make abstracts from and copies of such records and Chattel Paper and Instruments.

Except as otherwise provided in this Section 3.4(b), each Grantor shall continue to collect, at its own expense, all amounts due or to become due such Grantor under the Receivables, Chattel Paper and Instruments. In connection with such collections, such Grantor may take (and, during the continuance of an Event of Default at the Collateral Agent’s direction, shall take) such action as such Grantor or, during the continuance of an Event of Default, the Collateral Agent, may deem necessary to enforce collection of the Receivables, Chattel Paper and Instruments; provided, however, that the Collateral Agent shall have the right (during the continuance of an Event of Default) to notify the account debtors or obligors under any Receivables, Chattel Paper and Instruments of the assignment of such Receivables, Chattel Paper and Instruments to the Collateral Agent and to direct such account debtors or obligors to make payment of all amounts due or to become due to such Grantor thereunder directly to the Collateral Agent and, upon such notification at the expense of such Grantor, to enforce collection of any such Receivables, Chattel Paper and Instruments, and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done or as the Collateral Agent deems necessary. During the continuance of an Event of Default, all amounts and proceeds (including Instruments) received by such Grantor in respect of the Receivables, Chattel Paper and Instruments shall be received in trust for the benefit of the Collateral Agent hereunder, shall be segregated from other funds of such Grantor and, after receipt of written notice from the Collateral Agent, shall be forthwith paid over to the Collateral Agent in the same form as so received (with any necessary indorsement) to be applied as provided in Section 4.3(b) of this Agreement. During the continuation of an Event of Default, such Grantor shall not adjust, settle or compromise the amount or payment of any Receivable, Chattel Paper or Instrument, release wholly or partly any account debtor or obligor thereof, or allow any credit or discount thereon.

Transfers and Other Liens. No Grantor shall (a) sell, assign (by operation of Applicable Law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, except for sales and dispositions in the ordinary course of business and except for any sales and dispositions other than in the ordinary course of business as permitted under the Credit Agreement and the Note Purchase Agreements, or (b) create or permit to exist any security interest upon any of the Collateral.

Rights to Dividends and Distributions. With respect to any Securities Collateral, the Collateral Agent shall have authority during the continuance of an Event of Default, to the extent the Collateral Agent determines that such transfer or registration is necessary to perfect a first priority security interest in such Securities Collateral, either to have the same registered in the Collateral Agent’s name or in the name of a nominee. If any Grantor shall become entitled to receive or shall receive any Dividend (as defined in the Credit Agreement and as used herein) or interest in or certificate (including, without limitation, any interest in or certificate representing a Dividend in connection with any reclassification, increase, reduction of capital, or reorganization), or any option or rights arising from or relating to any of the Collateral that is evidenced by a certificate or other instrument or security, whether as an addition to, in substitution of, as a conversion of, or in exchange for any of the Collateral, or otherwise, such Grantor agrees to accept the same as the Collateral Agent’s agent and to hold the same in trust on behalf of and for the benefit of the Collateral Agent, and, after receipt of written notice from the Collateral Agent, to deliver the same promptly to the Collateral Agent in the exact form received, with appropriate undated stock or similar powers, duly executed in blank, to be held by the Collateral Agent, subject to the terms hereof, as Collateral. Unless an Event of Default is in existence, such Grantor shall be entitled to receive all cash Dividends paid in respect of any of the Collateral. During the continuance of an Event of Default, the Collateral Agent shall be entitled to all Dividends, and to any sums paid upon or in respect of any Collateral, and to any additional securities issued in respect of the Securities Collateral, upon the liquidation, dissolution, or reorganization of the issuer thereof, all of which shall be paid to the Collateral Agent to be held by it as additional Collateral and applied to the Secured Obligations pursuant to Section 4.3(b) of this Agreement. All Dividends paid or distributed in respect of the Collateral which are received by any Grantor in violation of this Agreement shall, until paid or delivered to the Collateral Agent, be held by such Grantor in trust as additional Collateral.

Right of the Collateral Agent to Notify Issuers. At any time during the continuance of an Event of Default, the Collateral Agent may notify issuers of the Securities Collateral to make payments of all Dividends directly to the Collateral Agent and the Collateral Agent may take control of all proceeds of any Securities Collateral.

The Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints the Collateral Agent such Grantor’s attorney-in-fact (exercisable only during the continuance of an Event of Default), with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise to take any action and to execute any instrument (in accordance with this Agreement) which the Collateral Agent may deem necessary to accomplish the purposes of this Agreement, including, without limitation:

to obtain and adjust insurance required to be maintained by such Grantor in accordance with Section 3.3,
to ask for, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due or to become due under or in connection with the Collateral,
to receive, indorse, and collect any drafts or other Instruments, documents and Chattel Paper in connection with clauses (a) or (b) above, and
to file any claims or take any action or institute any proceedings which the Collateral Agent may deem necessary for the collection of any of the Collateral or otherwise to enforce compliance with the terms and conditions of any Collateral or the rights of the Collateral Agent with respect to any of the Collateral. EACH GRANTOR HEREBY IRREVOCABLY GRANTS TO THE COLLATERAL AGENT SUCH GRANTOR’S PROXY (EXERCISABLE ONLY DURING THE CONTINUANCE OF AN EVENT OF DEFAULT AND AFTER THE COLLATERAL AGENT’S WRITTEN NOTICE OF ITS INTENT TO EXERCISE SUCH RIGHT) TO VOTE ANY SECURITIES COLLATERAL AND APPOINTS THE COLLATERAL AGENT SUCH GRANTOR’S ATTORNEY-IN-FACT (EXERCISABLE ONLY DURING THE CONTINUANCE OF AN EVENT OF DEFAULT) TO PERFORM ALL OBLIGATIONS OF SUCH GRANTOR UNDER THIS AGREEMENT. THE PROXY AND EACH POWER OF ATTORNEY HEREIN GRANTED ARE COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR TO THE DATE THAT THE SECURED OBLIGATIONS ARE PAID IN FULL AND ALL OBLIGATIONS IF ANY, OF ANY SECURED PARTY UNDER THE CREDIT AGREEMENT, ANY LOAN DOCUMENT, THE NOTE PURCHASE AGREEMENT AND ANY NOTE DOCUMENT HAVE BEEN TERMINATED. TO THE EXTENT PERMITTED BY LAW, EACH GRANTOR HEREBY RATIFIES ALL THAT SAID ATTORNEY SHALL LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.

This appointment as attorney-in-fact and this proxy shall terminate upon the termination of this Agreement pursuant to Section 5.3 hereof.

Section 3.9 Deposit Accounts. For each Deposit Account included in the Collateral, the Grantor shall, at the Collateral Agent’s request and option, pursuant to an agreement in form and substance satisfactory to the Collateral Agent, cause the depositary bank to comply at all times with instructions from the Collateral Agent to such depositary bank directing the disposition of funds from time to time credited to such Deposit Account during the continuance of an Event of Default, without the further consent of such Grantor.

Section 3.10 Collateral in the Possession of a Bailee. If any Collateral is at any time in the possession of a bailee, the Grantor thereof shall promptly notify the Collateral Agent thereof and, at the Collateral Agent’s request and option, shall promptly obtain an acknowledgement from the bailee, in form and substance reasonably satisfactory to the Collateral Agent, that the bailee holds such Collateral for the benefit of the Collateral Agent, and that such bailee agrees to comply, without further consent of such Grantor, with instructions from the Collateral Agent as to such Collateral; provided, however, that until such instructions are given by the Collateral Agent, the Grantor may withdraw such Collateral and otherwise deal with such Collateral. The Collateral Agent agrees with the Grantor that the Collateral Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the Grantor with respect to the bailee.

Section 3.11 Electronic Chattel Paper and Transferable Records. If any Grantor at any time holds or acquires an interest in any electronic chattel paper or any “transferable record,” as that term is defined in Section 201 of the federal Electronic Signatures in Global and National Commerce Act, or in §16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, such Grantor shall promptly notify the Collateral Agent thereof and, at the request and option of the Collateral Agent, shall take such action as the Collateral Agent may reasonably request to vest in the Collateral Agent control, under UCC §9-105, of such electronic chattel paper or control under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, §16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The

Collateral Agent agrees with such Grantor that the Collateral Agent will arrange, pursuant to procedures satisfactory to the Collateral Agent and so long as such procedures will not result in the Collateral Agent’s loss of control, for such Grantor to make alterations to the electronic chattel paper or transferable record permitted under UCC §9-105 or, as the case may be, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or §16 of the Uniform Electronic Transactions Act for a party in control to make without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such electronic chattel paper or transferable record.

Rights and Powers of the Collateral Agent
The Collateral Agent May Perform. If any Grantor fails to perform any agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement, and the reasonable out-of-pocket expenses of the Collateral Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 4.5 hereof.

The Collateral Agent’s Duties. The powers conferred in the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the duty to exercise reasonable care in respect of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not the Collateral Agent has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against prior parties. The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property. Except as provided in this Section 4.2 or under the UCC and except to the extent of any gross negligence or willful misconduct of the Collateral Agent, the Collateral Agent shall not have any duty or liability to protect or preserve any Collateral or to preserve rights pertaining thereto. Nothing contained in this Agreement shall be construed as requiring or obligating the Collateral Agent, and the Collateral Agent shall not be required or obligated, to (i) present or file any claim or notice or take any action, with respect to any Collateral or in connection therewith or (ii) notify any Grantor of any decline in the value of any Collateral.

Remedies. If any Event of Default shall have occurred and be continuing:

The Collateral Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC at that time (to the extent not prohibited by Applicable Law whether or not the UCC applies to the affected Collateral), and also may (i) require any Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Collateral Agent forthwith, assemble all or part of the Collateral which is capable of being assembled as directed by the Collateral Agent and make it available to the Collateral Agent at a place to be designated by the Collateral Agent which is reasonably convenient to both parties or (ii) without notice, except as specified below, sell the Collateral or any portion thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by Applicable Law, ten days’ written notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification, provided that ten days’ written notice does not violate any Applicable Law. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. To the extent not prohibited by Applicable Law, the Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. All proceeds received by the Collateral Agent upon any sale of, collection of, or other realization upon, all or any part of the Collateral shall be applied as follows:

     First: To the payment of all reasonable out-of-pocket costs and expenses incurred in connection with the sale of, collection of or other realization upon Collateral, including reasonable attorneys’ fees and disbursements;

     Second: To the payment of the Secured Obligations, which payment shall be shared by the Secured Parties as set forth in the Intercreditor Agreement or as may otherwise be agreed to in writing by the Secured Parties (with the Borrower remaining liable for any deficiency); and

     Third: To the extent of the balance (if any) of such proceeds, to the payment to the Borrower or other Person legally entitled thereto.

All payments received by such Grantor under or in connection with any Collateral shall be received in trust for the benefit of the Collateral Agent, shall be segregated from other funds of such Grantor and, after receipt of written notice from the Collateral Agent, shall be forthwith paid over to the Collateral Agent in the same form as so received (with any necessary indorsement). Any non-cash proceeds shall have the value attributed thereto in connection with the sale or other disposition of the Collateral giving rise to such non-cash proceeds for all purposes of this Agreement.

Because of the Securities Act of 1933, as amended (“Securities Act”), and other Applicable Laws, including without limitation state “blue sky” laws, or contractual restrictions or agreements, there may be legal restrictions or limitations affecting the Collateral Agent in any attempts to dispose of the Collateral and the enforcement of its rights hereunder. For these reasons, the Collateral Agent is hereby authorized by each Grantor, but not obligated, during the continuance of any Event of Default, to sell or otherwise dispose of any of the Collateral at private sale, subject to an investment letter, or in any other manner which will not require the Collateral, or any part thereof, to be registered in accordance with the Securities Act, or the rules and regulations promulgated thereunder, or any other Applicable Law. Each Grantor clearly understands that the Collateral Agent may in its discretion approach a restricted number of potential purchasers and that a sale under such circumstances may yield a lower price for the Collateral than would otherwise be obtainable if same were registered and sold in the open market. No sale so made in good faith by the Collateral Agent shall be deemed to be not “commercially reasonable” because so made. Each Grantor agrees that in the event the Collateral Agent shall, during the continuance of an Event of Default, sell the Collateral or any portion thereof at any private sale or sales, the Collateral Agent shall have the right to rely upon the advice and opinion of independent appraisers and other Persons, which appraisers and other Persons are acceptable to the Collateral Agent, as to the best price obtainable upon such a private sale thereof.

12.10 Each Grantor will maintain the accounts listed as restricted and blocked accounts on Schedule 2 (the “Restricted Accounts”) with the Collateral Agent, in the name of such Grantor, but such Restricted Accounts shall be under the sole control and dominion of the Collateral Agent.

It shall be a term and condition of each Restricted Account, notwithstanding any term or condition to the contrary in any other agreement relating to such Restricted Account (other than the Credit Agreement and the Note Purchase Agreements), that, while an Event of Default has occurred and is continuing, no amount (including interest and other proceeds of the cash and other property in the Restricted Account) shall be paid or released to or for the account of, or withdrawn by or for the account of, such Grantor or any other Person from such Restricted Account.

At the request of the Collateral Agent, such Grantor will promptly instruct each account debtor in respect of Receivables arising from any sale of Inventory in the ordinary course of business to make payment to the Restricted Accounts.

The Collateral Agent may remove amounts from the Restricted Accounts from time to time and use the amounts to reduce the Obligations in accordance with the terms of the Credit Agreement and the Note Purchase Agreements.

Each Grantor hereby grants the Collateral Agent a non-exclusive, royalty free, limited license to use all or any part of such Grantor’s intellectual property to sell or otherwise dispose of the Collateral in accordance with UCC Article 9 and this Agreement, except to the extent such license expressly violates an anti-sublicensing provision contained in any license, agreement or other obligation that is binding upon such Grantor with respect to such intellectual property.

Further Approvals Required.

In connection with the exercise by the Collateral Agent of its rights hereunder that effects the disposition of or use of any Collateral, it may be necessary to obtain the prior consent or approval of Governmental Authorities and other Persons to a transfer or assignment of Collateral. Each Grantor hereby agrees, during the continuance of an Event of Default, to execute, deliver, and file, and hereby appoints the Collateral Agent as its attorney-in-fact, during the continuance of an Event of Default, to execute, deliver, and file on such Grantor’s behalf and in such Grantor’s name, all applications, certificates, filings, instruments, and other documents (including without limitation any application for an assignment or transfer of control or ownership) that may be necessary, in the Collateral Agent’s reasonable opinion, to obtain such consents, waivers, or approvals. Upon request by the Collateral Agent, each Grantor further agrees to use its reasonable best efforts to obtain the foregoing consents, waivers, and approvals. Each Grantor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section 4.4 and that such failure would not be adequately compensable in damages, and therefore agrees that this Section 4.4 may be specifically enforced. This appointment as attorney-in-fact shall terminate upon the termination of this Agreement pursuant to Section 5.3 hereof.

INDEMNITY AND EXPENSES.

EACH GRANTOR AGREES TO INDEMNIFY THE COLLATERAL AGENT AND EACH OTHER SECURED PARTY AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES (COLLECTIVELY, THE “INDEMNIFIED PARTIES”) FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES AND LIABILITIES (INCLUDING REASONABLE ATTORNEYS’ FEES) ARISING OR RESULTING FROM THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, ENFORCEMENT OF THIS AGREEMENT), EXPRESSLY INCLUDING SUCH CLAIMS, LOSSES OR LIABILITIES ARISING OUT OF OR RESULTING FROM, IN WHOLE OR IN PART, NEGLIGENCE OR STRICT LIABILITY OF ANY INDEMNIFIED PARTY, EXCEPT CLAIMS, LOSSES OR LIABILITIES AS FINALLY JUDICIALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, BUT EXCLUDING (i) ANY CLAIM OR LIABILITY THAT ARISES AS A DIRECT RESULT OF THE OPERATION OF ANY COLLATERAL BY ANY INDEMNIFIED PARTY AFTER TAKING POSSESSION THEREOF BY FORECLOSURE OR BY TRANSFER IN LIEU OF FORECLOSURE (PROVIDED THAT SUCH CLAIM OR LIABILITY DOES NOT RELATE TO ANY CONDITION EXISTING ON OR WITH RESPECT TO SUCH COLLATERAL PRIOR TO FORECLOSURE OR TRANSFER IN LIEU OF FORECLOSURE), AND (ii) MATTERS RAISED EXCLUSIVELY BY ANY SECURED PARTY AGAINST THE COLLATERAL AGENT OR ANY OTHER SECURED PARTY.

The Grantors will, jointly and severally, upon demand pay to the Collateral Agent the amount of any and all reasonable out-of-pocket expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which the Collateral Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of the Collateral Agent hereunder or (iv) the failure by the Grantors to perform or observe any of the provisions hereof.

Section 4.6 Marshalling. The Collateral Agent shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of Collateral Agent’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.

Miscellaneous
Cumulative Rights. All rights of the Secured Parties under the Loan Documents, the Note Purchase Agreements, the Notes and the other Note Documents are cumulative of each other and of every other right which the Secured Parties may otherwise have at law or in equity or under any other contract or other writing for the enforcement of the security interest herein or the collection of the Secured Obligations. The exercise of one or more rights shall not prejudice or impair the concurrent or subsequent exercise of other rights.

Modifications; Amendments; Etc. No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Grantor here from, shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent (and such Grantor, in case of amendment). Each Grantor acknowledges that the Collateral Agent may need to obtain the approval of the Required Lenders under the Intercreditor Agreement in connection therewith.

Continuing Security Interest. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the Secured Obligations are paid in full and all commitments of any Secured Party under the Loan Documents, the Note Purchase Agreements and the other Note Documents have been terminated, (b) be binding upon each Grantor, its successors and assigns, and (c) inure to the benefit of, and be enforceable by, the Secured Parties and their successors, transferee and assigns. Upon any such termination, the Collateral Agent will, at such Grantor’s expense, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination. Each Grantor agrees that to the extent that any Secured Party receives any payment or benefit and such payment or benefit, or any part thereof, is subsequently invalidated, declared to be fraudulent or preferential, set aside or is required to be repaid to a trustee, receiver, or any other party under any Debtor Law, then to the extent of such payment or benefit, the Secured Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or benefit had not been made and, further, any such repayment by such Secured Party, to the extent that such Secured Party did not directly receive a corresponding cash payment, shall be added to and be additional Secured Obligations payable upon demand by such Secured Party and secured hereby, and, if the lien and security interest hereof shall have been released, such lien and security interest shall be reinstated with the same effect and priority as on the date of execution hereof all as if no release of such lien or security interest had ever occurred, to the extent not prohibited by Applicable Law.

GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW) AND THE APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS. ALL OF THE TERMS USED IN THIS AGREEMENT THAT ARE DEFINED IN REVISED ARTICLE 9 OF THE TEXAS UNIFORM COMMERCIAL CODE (“UCC”) HAVE THE MEANING GIVEN TO THEM IN THE UCC.

WAIVER OF JURY TRIAL. THE COLLATERAL AGENT AND EACH GRANTOR HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

The Collateral Agent’s Right to Use Agents. The Collateral Agent may exercise its rights under this Agreement through an agent or other designee.

Waivers of Rights Inhibiting Enforcement. To the extent not prohibited by Applicable Law, each Grantor waives all rights of redemption, appraisal, valuation or to the marshaling of assets.

Notices and Deliveries.

Manner of Delivery. All notices and other communications provided for hereunder shall be effectuated in the manner provided for in Section 11.1 of the Credit Agreement, Section 18 of the 2001 Note Purchase Agreement and Section 11.2 of the 1994 and 1998 Note Purchase Agreements, and to the extent that a notice or communication is sent to a Grantor other than the Borrower, said notice shall be addressed to such Grantor, in care of the Borrower.

Successors and Assigns. All of the provisions of this Agreement shall be binding and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, no Grantor may assign its liabilities and obligations under this Agreement without the prior written consent of the Collateral Agent and the Secured Parties.

Consent to Jurisdiction; Waiver of Immunities.

Each Grantor, the Collateral Agent and each other Secured Party each hereby irrevocably submits to the non-exclusive jurisdiction of any United States Federal or State courts sitting in Dallas, Texas in any action or proceeding arising out of or relating to this Agreement, and each Grantor, the Collateral Agent and each other Secured Party each hereby irrevocably waives any objection it may now or hereafter have as to the venue of any such suit, action or proceeding brought in such court or that such court is an inconvenient forum. Nothing in this section shall limit the right of any Grantor, the Collateral Agent or any other Secured Party to bring any action or proceeding against any other party or its property in the courts of any other jurisdictions.

Severability. Any provision of this Agreement which is for any reason prohibited or found or held invalid or unenforceable by any court or governmental agency shall be ineffective to the extent of such prohibition or invalidity or unenforceability, without invalidating the remaining provisions hereof in such jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

Obligations Not Affected. To the fullest extent permitted by Applicable Law, the obligations of each Grantor under this Agreement shall remain in full force and effect without regard to, and shall not be impaired or affected by:
any amendment, modification, addition or supplement to the Credit Agreement, any other Loan Document, the Note Purchase Agreement, any Note, any other Note Document, any instrument delivered in connection therewith, or any assignment or transfer thereof;
any exercise, non-exercise, or waiver by the Collateral Agent or any other Secured Party of any right, remedy, power or privilege under or in respect of, or any release of any guaranty, any collateral or the Collateral or any part thereof provided pursuant to, this Agreement, any other Loan Document, the Note Purchase Agreement, any other Note Document or any Note;
any waiver, consent, extension, indulgence or other action or inaction in respect of this Agreement, any other Loan Document, the Note Purchase Agreement, any Note, any other Note Document or any assignment or transfer of any thereof; or
any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of such Grantor, or any other Person, whether or not such Grantor shall have notice or knowledge of any of the foregoing.

Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH THE CREDIT AGREEMENT, THE OTHER LOAN DOCUMENTS, THE NOTE PURCHASE AGREEMENT, THE OTHER NOTE DOCUMENTS AND THE NOTES, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

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


				GRANTORS:

				BUTLER MANUFACTURING COMPANY

		By:		/s/ Larry C. Miller Name: Larry C. Miller Title:Vice President — Finance

				BMC REAL ESTATE, INC.

		By:		/s/ Larry C. Miller Name: Larry C. Miller Title: Vice President — Finance

				BUCON, INC.

		By:		/s/ Larry C. Miller Name: Larry C. Miller Title:Vice President — Finance

				BUTLER HOLDINGS, INC.

		By:		/s/ Larry C. Miller Name: Larry C. Miller Title:Vice President -vFinance


				BUTLER PACIFIC, INC.

		By:		/s/ Larry C. Miller Name: Larry C. Miller Title:Vice President — Finance


		BUTLER REAL ESTATE, INC.

		By:		/s/ Larry C. Miller Name: Larry C. Miller
				Title:Vice President — Finance

		LESTER BUILDING, INC.

		By:		/s/ Larry C. Miller Name: Larry C. Miller Title: Vice President — Finance

		LIBERTY BUILDING SYSTEMS, INC.

		By:		/s/ Larry C. Miller Name: Larry C. Miller Title: Vice President — Finance

		MODULINE WINDOWS, INC.

		By:		/s/ Larry C. Miller Name: Larry C. Miller Title: Vice President — Finance


		COLLATERAL AGENT:



		BANK OF AMERICA, N.A.

		By:		/s/ John K. Barrett Name: John K. Barrett Title: Managing Director

Schedule 1
Jurisdiction of Incorporation and Trade Names

Loctions of Equipment, Inventroy, Books and Records


			Chief Executive
Grantor and	State or Country of		Office and Chief
Trade Name	Incorporation	Other Trade Names	Place of Business	Other Locations

Butler Manufacturing Company	Delaware	Buildings Division, Vistawall,	1540 Genessee Kansas City, MO

			803 Airport Road Terrell, TX 75160

BMC Real Estate, Inc.	Delaware		1540 Genessee Kansas City, MO 6601 Executive Drive Kansas City, MO 64120

BUCON, Inc.	Delaware		64120

Butler Holdings, Inc.	Delaware		1540 Genessee Kansas City, MO

Butler Pacific, Inc. (pending its dissolution and release as a Guarantor)	Delaware		1540 Genessee Kansas City, MO

Butler Real Estate, Inc.	Delaware		1540 Genessee Kansas City, MO

Lester Building, Inc.	Minnesota		1540 Gennessee Kansas City, MO

Liberty Building Systems, Inc.	Delaware		6591 Summer Knoll Cove Bartlett, TN 38134

Moduline Windows, Inc.	Wisconsin		930 Single Ave. Wausau, WI 54403


			Chief Executive
Grantor and	State or Country of		Office and Chief
Trade Name	Incorporation	Other Trade Names	Place of Business	Other Locations

Butler Holdings, Inc.	Delaware		1540 Genessee Kansas City, MO

Butler Pacific, Inc. (pending its dissolution and release as a Guarantor)	Delaware		1540 Genessee Kansas City, MO


			Chief Executive
Grantor and	State or Country of		Office and Chief
Trade Name	Incorporation	Other Trade Names	Place of Business	Other Locations

Butler Real Estate, Inc.	Delaware		1540 Genessee Kansas City, MO

Lester Building, Inc.	Minnesota		1540 Gennessee Kansas City, MO

Liberty Building Systems, Inc.	Delaware		6591 Summer Knoll Cove Bartlett, TN 38134


			Chief Executive
Grantor and	State or Country of		Office and Chief
Trade Name	Incorporation	Other Trade Names	Place of Business	Other Locations

Moduline Windows, Inc.	Wisconsin		930 Single Ave. Wausau, WI 54403

Schedule 1
Jurisdiction of Incorporation and Trade Names

Locations of Equipment, Inventory, Books and Records

Gaurantor and or Trade Name Other Locations


Bucon, Inc.	6050 Stilwell Street	Kansas City	MO
Bucon, Inc.	6601 Executive Drive	Kansas City	MO
Buildings Division	7440 West Doe Avenue	Visalia	CA
Buildings Division	1020 S. Henderson St	Galesburg	IL
Buildings Division	931 Avenue “W” Ensley	Birmingham	AL
Buildings Division	Highway 74	Laurinburg	NC
Buildings Division	7440 West Doe Avenue	Visalia	CA
Buildings Division	400 N. Weaber Street	Annville Twnshp	PA
Buildings Division	San Marcos Ind Park	San Marcos	TX
Butler Headquarters	1540 Genesee Street	Kansas City	MO
KC Cave Storage	1501 West 31st Street	Kansas City	MO
Lester Buildings	PO Box 9, West Rte 316	Charleston	IL
Lester Buildings	276 Woodbine	Clearbrook	VA
Lester Buildings — Headquarters	1111 2nd Avenue (S)	Lester Prairie	MN
Liberty Building Systems	335 Tennessee Ave	Selmer	TN
Liberty Building Systems	6591 Summer Knoll Cove	Memphis	TN
Modu-Line Windows (Vistawall)	930 Single Ave	Wausau	WI
Research Facility	13500 Botts Road	Grandview	MO
Vistawall	5088-A South Royal Atlanta Dr	Tucker	GA
Vistawall	1225 Greenbrair Drive	Addison	IL
Vistawall	5150 Havana	Denver	CO
Vistawall	8655 Elm Fair Blvd; Bldg 4	Tampa	FL
Vistawall	301 Garden Oaks Blvd	Houston	TX
Vistawall	10590 King William Drive	Dallas	TX
Vistawall	4434 Mulhauser Road, Suite 600	Hamilton	OH
Vistawall	17500 Engle Lake Drive	Cleveland	OH

Schedule 1
Jurisdiction of Incorporation and Trade Names

Locations of Equipment, Inventory, Books and Records


Vistawall	8230 Preston Court	Jessup	MD
Vistawall	333 Strawberry Field Road	Warwick	RI
Vistawall	920 Pottertown Road	Midway	TN
Vistawall	9272 Hyssop Drive	Rancho Cucamonga	CA
Vistawall	11652 Fairgrove Ind Blvd	Maryland Heights	MO
Vistawall	2157 Commerce Place	Hayward	CA
Vistawall	4620 “B” St. NW, Ste. 102	Auburn	WA
Vistawall	214 Walt Sanders Memorial Blvd	Newnan	GA
Vistawall Division	814 Kiernan Avenue	Modesto	CA
Vistawall Service Center	803 Airport Road	Terrell	TX
Vistawall Warehouses, Bldgs 1-5, Maint.,
Vinyl, Annodizing, & Training Bldgs	803 Airport Road	Terrell	TX

Schedule 3
Securities Collateral

No. of

State or Country of

Percentage of

No. of

Shares

Issuer of Security

Incorporation

Ownership

Shares

Pledged

Parent Companies

Domestic Subsidiaries — Active

BMC Real Estate,
Inc.

Delaware

100%

100

Butler Manufacturing
Company

BUCON, Inc.

Delaware

100%

200

Butler Manufacturing

Butler Construction, Inc.

Kansas

100%

200

Butler Manufacturing
Company

Butler Holdings, Inc.

Delaware

100%

100

Butler Manufacturing
Company

Butler Pacific, Inc. (pending its dissolution)

Delaware

100%

100

Butler Holdings, Inc.

Butler Real Estate, Inc.

Delaware

100%

1,000

Butler Manufacturing
Company

Innovative Building Technology, Inc.

Delaware

100%

200

Butler Manufacturing
Company

Lester Building, Inc. f/k/a Lester’s of

Butler Manufacturing

Minnesota, Inc.

Minnesota

100%

547,500

Company

Liberty Building Systems, Inc.

Delaware

100%

100

Butler Manufacturing
Company

Moduline Windows, Inc.

Wisconsin

100%

66,187.5

Butler Manufacturing
Company

VW Corp. f/k/a National

Northeast
Corporation

Delaware

100%

100

Butler Manufacturing
Company

Foreign Subsidiaries — First Tier Restricted Subsidiaries with certificated stock

Butler, S.A. de C.V.

Mexico

99.98%

4,999

3,250

Butler Holdings, Inc.

Butler Argentina, S.A.*

Argentina

99%
1%

11,880
120

7,772
78

Butler Holdings, Inc.
Butler Manufacturing
Company

Butler Construcciones, S.A. de C.V.

Mexico

99.98%

4,499

2,925

Butler Holdings, Inc.

Butler Export, Inc.*

Barbados

100%

1,000

650

Butler Holdings, Inc.

Foreign Subsidiaries — First Tier Restricted Subsidiaries that are limited companies with uncertificated stock Butler Do Brasil Ltda.**

Commercial Butler Limitada**

Brazil

Chile

99.9%
0.1%
99%
1%

N/A
N/A

Butler Manufacturing Company Butler Holdings, Inc. Butler Holdings, Inc. Butler Manufacturing Company

Global BMC (Mauritius) Holdings Ltd.**

Mauritius

100%

N/A

Butler Pacific, Inc. [will be Butler Holdings, Inc. after dissolution]

*		To be delivered post-execution of the Security Agreement.

**		Exhibits A and B to be delivered post-execution of the Security Agreement

Schedule 4
Existing Liens


LIEN TYPE AND PROPERTY	LIENHOLDER	AMOUNT OF DEBT	MATURITY DATE

Mortgage on real estate owned by a Joint Venture in which BRE is a partner. Recourse is to real estate only, not the Joint Venture or any partner:
Joint Venture interest in Corporate Acres Real Estate Development, (Sedelia, MO)	Third National Bank	$60,934 50% of Loan balance	December 2004
Joint Venture interest in Franklin Towne Center Real Estate Development (Mesquite, Texas)	Gold Bank	$2,550,000 50% of Loan balance	January 2003
Capital Leases:
Various transport and factory equipment of Lester Buildings	Various	$349,000	Various
CNC machine	ICX	$165,000	Dec 2007
Furniture, fixtures and equipment at World Headquarter, Kansas City	GE Finance	$4,000,000	Jan 2008
Various Computer equipment, server’s etc.	GE Finance	$400,000	Jan 2006
Debt secured by Liens:
Industrial Revenue Bonds (Buildings Division) San Marcos, Texas	San Marcos Industrial Development Authority	$6,250,000	April 2015
Vistawall TVA Loan	Tennessee Valley Authority	$1,600,000	2008
Europe Line of Credit: Butler Europe,	CIB Central-European		Renewable Revolver:
Hungary	International Bank	$500,000	2003
China #1 Line of Credit: Butler Shanghai Inc.	Bank of Communication	$8,000,000 60M(RMB)	Renewable Revolver: 2003
Short-term debt, Umbrella & International Liability premium payments secured by insurance proceeds	March & AFCO	$400,000	December 2003
China #2 Line of Credit: Butler Tianjin Inc.	To be Determined	To be Determined	To be Determined
Nominal ownership by tax-exempt entity in connection with bond issues for tax abatement or tax reduction purposes:
Office, manufacturing and Warehouse facility for Vistawall Division, Newman, GA	Coweta County Development Authority	$2,306,000	January 2013

Schedule 4
Existing Liens


Land, Business and Factory Midway City, TN	Industrial Development Board of Greene County, TN	$	24,000,000	December 2006
Headquarters Project Kansas City, MO	Planned Industrial Expansion Authority, Kansas City, MO	$	28,000,000	2022

EXHIBIT A

INSTRUCTIONS FOR REGISTRATION OF PLEDGE
OF
UNCERTIFICATED SECURITIES

Date: — To: [name of corporation, partnership, joint venture or other Person] —

You are hereby instructed to register the pledge of the following uncertificated securities to Bank of America, N.A., as Collateral Agent under that certain Security Agreement, dated as of [Insert date of Agreement], by and among Butler Manufacturing Company, a Delaware corporation (the “Borrower”), certain Subsidiaries of the Borrower, and Bank of America, N.A., as Collateral Agent:

Section 1.33 A [insert written percentage of interest] ( %) [insert description of interest, e.g. General Partnership Interest];

Section 1.34 [insert similar description of any other interests].

This being all of the interest of [insert name of Pledgor] in [name of corporation, partnership, joint venture or other Person].


		Very truly yours,

		[GRANTOR]

		By:

		Name:

		Title:

EXHIBIT B

INITIAL TRANSACTION STATEMENT

Date:

To: Bank of America, N.A.

This is to advise you that a pledge to Bank of America, N.A., as Collateral Agent, under that certain Security Agreement, dated as of [insert date of agreement], by and among Butler Manufacturing Company, a Delaware corporation (the “Borrower”), certain Subsidiaries of the Borrower, and Bank of America, N.A., as Collateral Agent, of the following uncertificated securities owned by [insert name of Pledgor], a [ ] corporation has been registered on the books of [name of corporation, partnership, joint venture or other Person]:

Section 1.35 A [insert written percentage of interest] ( %) [insert description of interest, e.g. General Partnership Interest];

Section 1.36 [insert similar description of any other interests].

This being all of the interest of [insert name of Pledgor] in, as shown on books and records of, [name of corporation, partnership, joint venture or other Person].

There are no liens or restrictions of the undersigned, nor any adverse claims, in each case registered on the books of the undersigned, to which the interests described hereinabove are subject.

The pledge referred to above was registered on , .

THIS STATEMENT IS MERELY A RECORD OF THE REGISTRATION OF THE PLEDGE OF THE ADDRESSEES AS OF THE TIME OF THE ISSUANCE HEREOF. DELIVERY OF THIS STATEMENT, IN ITSELF, CONFERS NO RIGHTS ON THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A SECURITY.


		Very truly yours,

		[NAME OF CORPORATION, PARTNERSHIP, JOINT VENTURE OR OTHER PERSON]

		[By:		]

		By:

		Name:

		Title:

EXHIBIT C

_________________, 2003

Ladies and Gentlemen:

This is to advise you that , a (“Pledgor”), has granted to Bank of America, N.A., as Collateral Agent (in such capacity, “Collateral Agent”) under that certain Security Agreement, dated as of [insert date of agreement], by and among Butler Manufacturing Company, a Delaware corporation (the “Borrower”), certain Subsidiaries of the Borrower, and Bank of America, N.A., as Collateral Agent, a security interest in [describe amount and description of interest, e.g. shares of the common capital stock] of (the “Company”), and all other [repeat description of interest] of the Company now owned as well as hereafter acquired by Pledgor (together with any distributions, interests, stock, liquidating dividends, stock dividends, preemptive rights, dividends paid in cash or securities, or other properties to which Pledgor may hereafter be entitled to receive on account of such [repeat description of interest]), which [repeat description of interest] presently constitutes % of the issued and outstanding [repeat description of interest] of the Company, any other equity interest or right to acquire any equity interest in Company now owned as well as hereafter acquired by Pledgor, and all proceeds and products of the foregoing (“Pledged Rights”).

Until notified otherwise in writing by an authorized officer of Collateral Agent, you are hereby directed (and you hereby agree) to deliver after the date hereof all non-cash dividends and other distributions and any and all other shares of stock, warrants or other property (other than cash) in which the Secured Parties (as defined in the Security Agreement described above) have a security interest to Collateral Agent, 901 Main Street, 67th Floor, Dallas, Texas 75202, Attn: , Facsimile: ( ) . Upon written notice from an authorized officer of Collateral Agent, you are directed (and you hereby agree) to deliver after the date of such notice, all dividends, distributions and other property in the form of cash directly to Collateral Agent at the address mentioned in the preceding sentence. Unless notified otherwise in writing by an authorized officer of Collateral Agent, you are hereby directed (and you hereby agree) to not acknowledge any encumbrance in favor of any party other than Collateral Agent with respect to the Pledged Rights, assign any interest in, encumber, subdivide, issue additional or different certificates for or otherwise transfer any interest in the Pledged Rights.


		Very truly yours,

		By:

		Name:

		Title:


		BANK OF AMERICA, N.A., as Collateral Agent

		By:

		Name:

		Title:
Accepted and Agreed this day of ,
		By:

		Name:

		Title:

EX-4.7 8 c75442exv4w7.htm INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT Intercreditor and Collateral Agency Agreement

EXHIBIT 4.7

INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

THIS INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT (this “Agreement”), dated as of February 28, 2003, is made by and among the holders of 8.02% Senior Notes due December 30, 2003 (together with their successors and assigns, the “1994 Noteholders”) of Butler Manufacturing Company (the “Company"), the holders of the Company’s 6.57% Senior Notes due March 20, 2013 (together with their successors and assigns, the “1998 Noteholders") and the holders of the Company’s 7.87% Senior Notes due December 30, 2016 (together with their successors and assigns, the “2001 Noteholders” and, together with the 1994 Noteholders and the 1998 Noteholders, collectively the “Noteholders” and individually a “Noteholder"); the following banks or other lenders: Bank of America, N.A., Commerce Bank, N.A. and U.S. Bank National Association (collectively, together with the other lenders from time to time party to the Credit Agreement (as defined below) and their successors and assigns, the “Banks” and each individually a “Bank”); and Bank of America, N.A., in its capacities as the Issuing Bank (in such capacity the “Issuing Bank”) and the administrative lender for the Banks (in such capacity the “Bank Agent”) to the extent and in the manner provided for in the Credit Agreement, in its capacity as collateral agent hereunder (in such capacity, and together with its successors and assigns, the “Collateral Agent”) for the Banks, the Issuing Bank, the Bank Agent, the Noteholders and the other Lenders (as hereinafter defined) from time to time parties hereto, and in its capacity as escrow agent hereunder (in such capacity, and together with its successors and assigns, the “Escrow Agent”) for the Banks, the Issuing Bank, the Bank Agent, the Noteholders and the other Lenders from time to time parties hereto.

RECITALS

A. The Company and the 1994 Noteholders entered into a Note Agreement, dated as of June 1, 1994, as amended by a First Amendment to Note Agreement dated as of the date hereof (as so amended and as it may hereafter be further amended, supplemented or otherwise modified from time to time in compliance with Section 5.2 hereof, the “1994 Note Purchase Agreement”), pursuant to which the Company issued and sold to the 1994 Noteholders its 8.02% Senior Notes due December 30, 2003 (the “1994 Notes”) in the original aggregate principal amount of $35,000,000.

B. The Company and the 1998 Noteholders entered into a Note Agreement, dated as of March 1, 1998, as amended by a First Amendment to Note Agreement dated as of the date hereof (as so amended and as it may hereafter be further amended, supplemented or otherwise modified from time to time in compliance with Section 5.2 hereof, the “1998 Note Purchase Agreement”), pursuant to which the Company issued and sold to the 1998 Noteholders its 6.57% Senior Notes due March 20, 2013 (the “1998 Notes”) in the original aggregate principal amount of $35,000,000.

C. The Company and the 2001 Noteholders entered into a Note Purchase Agreement, dated as of June 20, 2001, as amended by a First Amendment to Note Purchase Agreement dated as of the date

hereof (as so amended and as it may hereafter be further amended, supplemented or otherwise modified from time to time in compliance with Section 5.2 hereof, the “2001 Note Purchase Agreement” and, together with the 1994 Note Purchase Agreement and the 1998 Note Purchase Agreement, the “Note Agreements"), pursuant to which the Company issued and sold to the 2001 Noteholders its 7.87% Senior Notes due December 30, 2016 (the “2001 Notes” and, together with the 1994 Notes and the 1998 Notes, the “Notes") in the original aggregate principal amount of $50,000,000.

D. Payment of the Notes and all other amounts due, and performance and observance of all other obligations of the Company and its Subsidiaries arising, under or in connection with the 1994 Note Purchase Agreement, the 1998 Note Purchase Agreement and the 2001 Note Purchase Agreement are guaranteed by certain of the Company’s existing Domestic Subsidiaries (collectively, the “Current Guarantors”), and will also be guaranteed by all subsequently organized or acquired Domestic Subsidiaries (such present and future guaranties as amended, supplemented or otherwise modified and in effect from time to time, collectively, the “Note Guaranties”).

E. The Banks have agreed to extend credit to the Company in an aggregate principal amount of up to $35,000,000, evidenced by promissory notes of the Company (including any notes delivered in substitution or exchange therefor, the “Bank Notes”), under a Credit Agreement, dated as of June 20, 2001, as amended by that certain First Amendment to Credit Agreement, dated as of December 4, 2001, and by that certain Second Amendment to Credit Agreement, dated as of December 17, 2002, as amended by that certain Waiver and Amendment dated as of February 3, 2003, as amended by that certain Third Amendment to Credit Agreement, dated as of the date hereof (as so amended and as the same may be further amended, modified, supplemented, replaced or restated from time to time in compliance with Section 5.2 hereof, the “Credit Agreement”), among the Company, the Banks, the Issuing Bank and the Bank Agent (the Banks, the Issuing Bank and the Bank Agent are collectively referred to as the “Bank Creditors” and individually as a “Bank Creditor”).

F. Payment of the Bank Notes and performance and observance of all other obligations of the Company and its Subsidiaries arising under or in connection with the Credit Agreement are presently guaranteed by the Current Guarantors and will also be guaranteed by all domestic Subsidiaries of the Company organized or acquired after the date hereof (such present and future guaranties as amended, supplemented or otherwise modified and in effect from time to time, collectively, the “Bank Guaranties” and, together with the Note Guaranties, the “Guaranties”).

G. Concurrently with the execution and delivery of this Agreement, the Company and the each of the Company’s domestic Subsidiaries have executed and delivered the security agreements, pledge agreements, assignments, financing statements and other documents identified in the attached Schedule A (the foregoing, together with any amendments, restatements, supplements and other modifications thereto, collectively, the “Security Documents”) relating to the Collateral, providing liens and security interests in the property described in such Security Documents in favor of the Collateral Agent for the benefit of the Lenders in order to secure (a) the obligations under and in respect of the Notes, the Note Agreements and the Note Guaranties and (b) the obligations under and in respect of the Bank Notes, the Credit Agreement and the Bank Guaranties.

H. (a) Under applicable law and, if applicable, the terms of the Credit Agreement and the Bank Guaranties, any Bank Creditor will be entitled to set off, appropriate and apply (i) any deposits and any other indebtedness at any time held or owing by such Bank Creditor to or for the credit or account of the Company against and on account of liabilities of the Company under the Credit Agreement, pursuant to law and, if applicable, the terms of the Credit Agreement and (ii) any deposits and any other indebtedness at any time held or owing by such Bank Creditor, to or for the credit or account of a Subsidiary providing a Bank Guaranty against and on account of liabilities of such Subsidiary under such Bank Guaranty, and

(b) under applicable law, any Noteholder may be entitled to set off (i) indebtedness owing by such Noteholder to or for the credit of the Company, against and on account of liabilities of the Company under the Note Agreements, and (ii) indebtedness owing by any Noteholder to or for the credit of a Subsidiary providing a Note Guaranty against and on account of liabilities of such Subsidiary under such Note Guaranty (collectively, the “Set-Off Rights”).

I. The Bank Creditors and the Noteholders desire to make certain commitments to each other concerning the Bank Notes, the Credit Agreement, the Notes, the Note Agreements, the Guaranties and the Security Documents.

J. The Company, the Bank Creditors and the Noteholders have agreed that the obligations of the Company and the Guarantors under and in respect of the Credit Agreement, the Bank Notes and the Bank Guaranties are to be secured by the Collateral (as defined herein) and treated with respect to the Collateral on a pari passu basis with the obligations of the Company and the Guarantors under and in respect of the Note Agreements, the Notes and the Note Guaranties other than (i) the Cash Collateralized Letters of Credit, which cash collateral will be pledged only to secure the reimbursement obligations under such Cash Collateralized Letters of Credit and (ii) as otherwise provided in this Agreement.

K. The Bank Creditors, the Noteholders, the Collateral Agent and the Escrow Agent are entering into this Agreement in order to (a) set forth certain responsibilities and obligations of the Collateral Agent and Escrow Agent and (b) establish among the Lenders their respective rights with respect to certain payments that may be received (i) by the Collateral Agent in respect of the Collateral, (ii) by the Noteholders in respect of the Note Guaranties, (iii) by the Banks in respect of the Bank Guaranties, (iv) by the Escrow Agent in respect of Proceeds and (v) otherwise by any of the Lenders under, in connection with or pursuant to their respective Credit Facilities (as hereinafter defined), including pursuant to any Set-Off Rights.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

DEFINITIONS

Uniform Definitions; Cross-references. The capitalized terms used herein and defined in the Note Agreements and the Credit Agreement but not otherwise defined in this Agreement are used herein with the meaning therein specified as of the date hereof. Each reference to a particular Section, paragraph or other provision of, or definition in, any Financing Document is a reference to such Section, paragraph, provision or definition as in effect on the date hereof. Each term shall include the plural as well as the singular and vice-versa.

Additional Definitions. The following terms, as used herein, have the following meanings:

"1994 Note Purchase Agreement” has the meaning specified in Recital A of this Agreement.

"1998 Note Purchase Agreement” has the meaning specified in Recital B of this Agreement.

"2001 Note Purchase Agreement” has the meaning specified in Recital C of this Agreement.

"1994 Notes” has the meaning specified in Recital A of this Agreement.

"1998 Notes” has the meaning specified in Recital B of this Agreement.

"2001 Notes” has the meaning specified in Recital C of this Agreement.

"Acceleration” means the acceleration of the maturity of any amount outstanding under a Credit Facility or the requiring of cash collateral for reimbursement obligations under Letters of Credit other than the Cash Collateralized Letters of Credit.

"Advance” is as defined in the Credit Agreement.

"Assignee” means any assignee or other transferee of any portion of the right, title or interest of any Lender under any Credit Facility, except for any such transferee that becomes a Lender for purposes hereof in accordance with Section 9.2.

"Bank” has the meaning specified in the preamble of this Agreement.

"Bank Agent” shall have the meaning specified in the preamble of this Agreement.

"Bank Creditors” has the meaning specified in Recital E of this Agreement.

"Bank Guaranties” has the meaning specified in Recital F of this Agreement.

"Bank Notes” has the meaning specified in Recital E of this Agreement.

"Bankruptcy Distributions” means any payment of Financial Obligations to a Lender at any time that any of the circumstances covered by the definition of Bankruptcy Event are still in effect, including pursuant to any plan, settlement or other resolution thereof.

"Bankruptcy Event” shall mean an event with respect to the Company or any of its Subsidiaries specified in Section 8.1(h) of the 1994 Note Purchase Agreement, Section 8.1(h) of the 1998 Note Purchase Agreement, Sections 11(g) or 11(h) of the 2001 Note Purchase Agreement or any similar provision of the Credit Agreement.

"Breakage Costs” means, at any time, amounts then payable by the Company under Section 2.9 of the Credit Agreement.

"Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York, or Dallas, Texas are required or authorized to be closed.

"Cash Collateralized Letters of Credit” means those certain Letters of Credit (i) not exceeding $30,000,000 in face amount outstanding at any time, (ii) issued pursuant to the Credit Agreement, (iii) that at the time of issuance by the Issuing Bank have an expiration date that extends beyond the maturity date of the Credit Agreement as of the date hereof, (iv) that are collateralized by the grant of a perfected first priority security interest in cash collateral to be held by the Bank Agent in an amount not more than 105% of the face amount of each such issued and outstanding Letter of Credit, and (v) that the Bank Agent has not been prohibited from realizing upon any or all of the cash held as security for such Letters of Credit.

"Collateral” means any and all property, security or other interest, tangible or intangible, securing the obligations of the Company and the Guarantors under any or all of the Financing Documents.

"Collateral Agent” has the meaning specified in the preamble to this Agreement.

"Collateral Proceeds” means any and all proceeds received by the Collateral Agent, the Escrow Agent, any Bank Creditor or any Noteholder as a result of, or in connection with, the sale or other

disposition of any of the Collateral in connection with or as a result of the exercise by the Collateral Agent or any Lender of its rights or remedies as the holder of a Lien on any of the Collateral, including any proceeds received or obtained through Set-Offs other than the Bank Agent or any Bank Creditor exercising its Set-Off Rights against the Cash Collateralized Letters of Credit.

"Commitment” has the meaning specified in the Credit Agreement.

"Contingent LC Indebtedness” means, at any time, the aggregate undrawn face amount of all outstanding Letters of Credit at such time.

"Costs” has the meaning specified in Section 8.3(e).

"Credit Agreement” has the meaning specified in Recital D of this Agreement.

"Credit Facilities” means the Note Agreements, the Notes, the Credit Agreement, the Bank Notes and all other evidences of indebtedness issued pursuant to any of the foregoing, and “Credit Facility” means any of the foregoing.

"Current Guarantors” has the meaning specified in Recital D of this Agreement.

"Default” means a “Default” as defined in Note Agreement or the Credit Agreement, as the context requires.

"Dollars” means lawful currency of the United States of America.

"Escrow Account” has the meaning specified in Section 8.1.

"Escrow Agent” has the meaning specified in the preamble to this Agreement.

"Escrow Funds” means those certain Collateral Proceeds turned over by the Collateral Agent to the Escrow Agent pursuant to Section 3.2 hereof.

"Event of Default” means an “Event of Default” as defined in Note Agreement or the Credit Agreement, as the context requires.

"Financial Obligations” means, with respect to any Lender under any Credit Facility such Lender’s Funded Obligations and Other Obligations under such Credit Facility.

"Financing Documents” means the Note Agreements, the Notes, the Credit Agreement, the Bank Notes, the other Loan Documents, the Guaranties and the Security Documents; provided that any Loan Documents executed in connection with the cash collateralization of the Cash Collateralized Letters of Credit shall not be deemed to be Financing Documents for any purposes under this Agreement.

"Funded Obligations” shall mean, with respect to any Lender under any Credit Facility, the aggregate amount payable (whether or not then due) to such Lender under such Credit Facility in respect of principal, interest, Make-Whole Amount and Breakage Costs (determined in accordance with the applicable provisions of such Credit Facility, but only to the extent accrued through the applicable determination date and in the case of the Credit Agreement treating as principal all LC Indebtedness and Contingent LC Indebtedness). Funded Obligations consisting of Contingent LC Indebtedness shall be reduced by the amount of any Proceeds held as collateral therefor pursuant to Section 3.2(c)(i) and any Proceeds allocable thereto that are held by the Escrow Agent pursuant to Section 3.2(c)(ii).

"Guaranties” has the meaning specified in Recital F of this Agreement.

"Guarantor Payments” means any payment of Financial Obligations made by any Guarantor under any of the Guaranties.

"Guarantors” means, collectively, each of the Current Guarantors and the other domestic Subsidiaries of the Company party to a Guaranty.

"LC Indebtedness” means the aggregate amount of all unreimbursed obligations on Letters of Credit which have been drawn and honored.

"Lenders” means the Noteholders, the Banks, the Issuing Bank and each financial institution that hereafter becomes a “Lender” for purposes hereof in accordance with Article 9, and “Lender” means any one of them.

"Letter of Credit” has the meaning specified in the Credit Agreement.

"Loan Commitment” means the aggregate Commitment of all Banks under the Credit Agreement, which shall not exceed $35,000,000 in the aggregate.

"Loan Documents” has the meaning specified in the Credit Agreement.

"Make-Whole Amount” with respect to any Note has the meaning specified in the applicable Note Agreement pursuant to which such Note has been issued.

"Note Guaranties” has the meaning specified in Recital E of this Agreement.

"Notice of Event of Default” has the meaning specified in Section 6.1.

"Obligations” means, with respect to any Lender, at any time, the aggregate of (a) all Financial Obligations to that Lender under the Credit Facility or Credit Facilities to which it is a party and (b) in the case of all Credit Facilities, the amount which that Lender remains committed to lend under the Credit Facility or Credit Facilities to which it is a party.

"Other Obligations” means, with respect to any Lender under any Credit Facility, the aggregate amount payable (whether or not then due) to such Lender under such Credit Facility other than its Funded Obligations thereunder, including, without limitation, fees, costs, indemnities and expenses.

"Outstandings” means, (i) as to any Noteholder as of any date, the aggregate principal amount outstanding under the Notes held by such Noteholder on such date, together with Purchased Financial Obligations purchased by such Noteholder and (ii) as to any Bank Creditor as of any date, the sum of (a) the aggregate principal amount of all Advances owing to such Bank Creditor then outstanding under the Credit Agreement, plus (b) all LC Indebtedness owing to such Bank Creditor (to the extent not included in clause (a) of this definition), plus (c) all Contingent LC Indebtedness owing to such Bank Creditor, outstanding on such date (to the extent not included in clause (a) of this definition), together with Purchased Financial Obligations purchased by such Bank.

"Paying Lender” has the meaning specified in Section 2.3(a).

"Proceeds” means all Collateral Proceeds, Guarantor Payments and all other amounts received or obtained after a Sharing Commencement Date by the Collateral Agent, the Escrow Agent or any Lender

from the Company or any Subsidiary in respect of the Credit Facilities, including cash no longer required as collateral for Cash Collateralized Letters of Credit as provided in Section 3.3(b).

"Purchased Financial Obligations” has the meaning specified in Section 4.1(a).

"Purchaser” has the meaning specified in Section 9.2.

"Purchasing Lender(s)” has the meaning specified in Section 4.1(a).

"Purchasing Lender’s Financing Documents” has the meaning specified in Section 4.1(a).

"Reallocable Payment” has the meaning specified in Section 2.2.

"Relevant Amount” has the meaning specified in Section 2.3(b).

"Repaying Lender” has the meaning specified in Section 2.4(a).

"Reduced Lender” has the meaning specified in Section 2.4(b).

"Required Lenders” means (a) Noteholders holding, in the aggregate, at least 51% of the outstanding principal amount of Notes (other than Purchased Financial Obligations consisting of Notes) (for so long as any such Notes remain outstanding) plus (b) at least two of the Banks and/or Assignees holding, in the aggregate, more than 50% of the principal amount outstanding under the Credit Agreement (including the aggregate LC Indebtedness then outstanding) (other than Purchased Financial Obligations consisting of Financial Obligations under the Credit Agreement) (for so long as Obligations (other than Purchased Financial Obligations) remain outstanding under the Credit Agreement).

"Retained Financial Obligations” has the meaning specified in Section 4.1(a).

"Security Documents” has the meaning specified in Recital G of this Agreement.

"Selling Lender(s)” has the meaning specified in Section 4.1(a).

"Selling Lender’s Financing Documents” has the meaning specified in Section 4.1(a).

"Set-Off Rights” has the meaning specified in Recital H of this Agreement.

"Set-Offs” means amounts set off by any Bank Creditor or any Noteholder by the exercise of any Set-Off Right.

"Sharing Commencement Date” has the meaning specified in Section 2.2.

"Sharing Lender” has the meaning specified in Section 2.3.

"Sharing Notice” means a notice given by the Collateral Agent pursuant to Section 2.1 of this Agreement.

"Sharing Percentage” means, as to any Lender as of any date, a percentage equal to (a)(i) such Lender’s Outstandings as of such date divided by (ii) Total Outstandings as of such date multiplied by (b) one hundred (100).

"Total Funded Obligations” means, at any time, the aggregate of all Funded Obligations of all Lenders then outstanding under the Credit Facilities.

"Total Outstandings” means, at any time, the aggregate of all Outstandings of all Lenders then outstanding under the Credit Facilities.

SHARING AMONG LENDERS

Sharing Notice. Upon obtaining knowledge of the occurrence of any Default, a Lender (or the Bank Agent with respect to a Default under the Credit Agreement) shall immediately notify the Collateral Agent and the Collateral Agent shall immediately give notice (a “Sharing Notice”) to each of the Lenders informing them that the provisions of this Agreement are to be implemented and requiring each Lender to provide it with all necessary information to enable it to calculate (a) such Lender’s Funded Obligations and Financial Obligations (including, without limitation, an itemization of all principal, interest, Breakage Costs, Make-Whole Amount, fees, costs and expenses owing to such Lender) as of the Sharing Commencement Date, (b) the Sharing Percentage of such Lender as of the Sharing Commencement Date and (c) any other amounts required to be calculated under this Agreement. If any necessary information is not received by the Collateral Agent within three days after the Collateral Agent delivers the Sharing Notice, the Collateral Agent may request such information from any other Lender that is a party to the applicable Credit Facility. If any such necessary information has not been provided to the Collateral Agent within two days after the Collateral Agent makes such supplemental request, the Collateral Agent may proceed with its calculations based upon the other information available to it and which it reasonably and in good faith believes to be correct. Once the Collateral Agent has either received such necessary information or has determined to proceed based upon such other information available to it, the Collateral Agent shall calculate and promptly notify the Lenders as to the relevant calculations, which notice shall demonstrate such calculations in reasonable detail. If the Collateral Agent thereafter receives information which demonstrates that the Collateral Agent’s prior calculations were erroneous, the Collateral Agent shall recalculate such calculations and shall promptly notify all Lenders of such recalculations and, if any payments pursuant to this Agreement have been made based upon such erroneous prior calculations, the amount to be repaid by or paid to such Lender as a result of such recalculations. Each Lender that has received an excess payment as a result of such erroneous prior calculations shall promptly (and in any event within five Business Days after its receipt of the Collateral Agent’s recalculations) repay to the Collateral Agent for the account of the other appropriate Lenders the excess portion of any payments previously received by it.

Payments.

If, at any time that any Financial Obligations owed to any of the Lenders under any of the Credit Facilities remain outstanding, any Lender (or any Assignee of any Lender) obtains any amount in respect of any Credit Facility by virtue of any voluntary or involuntary payment or prepayment made by or for the account of the Company or any of its Subsidiaries (other than payments made on or prior to the date hereof and payments of Advances during the 30 day remedy period specified in clause (4) below, but only to the extent of Advances made during such period), by virtue of the application of any provision of any of the Financing Documents, or by virtue of` an exercise of any Set-Off Rights or similar mechanism other than Set-Offs in connection with the Cash Collateralized Letters of Credit, if any, or in any other manner except pursuant to this Agreement, during the period commencing on the earliest of (such commencement date, the “Sharing Commencement Date”):

if a Notice of Event of Default is given by a Lender pursuant to Section 6.1(d) (or was required by that Section to be given) with respect to any Events of Default specified in Sections 8.1(b) through 8.1(d) or Sections 8.1(f), (g) or (i) of the 1994 Note Purchase Agreement or 1998 Note Purchase Agreement or Sections 11(a), (c), (e), (f), (i), (j), (k) or (l) of the 2001 Note Purchase Agreement or Sections 8.1(a), (c) or (k) through (m) of the Credit Agreement, the date of such Event of Default ;

if any Default occurs with respect to Section 8.1(b) of the Credit Agreement, the date of such Default, provided, that if such Default is remedied within two days after the date of such Default and no Event of Default specified in clause (1) above has occurred since the date of such Default, then this clause (2) shall not apply;

if any Default occurs with respect to Section 8.1(a) of the 1994 Note Purchase Agreement or 1998 Note Purchase Agreement or Section 11.1(b) of the 2001 Note Purchase Agreement, the date of such Default, provided, that if such Default is remedied within five business days after the date of

such Default and no Event of Default specified in (1) or (2) above has occurred since the date of such Default, then this clause (3) shall not apply; if any other Default occurs with respect to any other provision other than as described in (1), (2) or (3) above or (5) or (6) below as set forth in Article 8 of the 1994 Note Purchase Agreement or the 1998 Note Purchase Agreement, Article 11 of the 2001 Note Purchase Agreement or Article 8 of the Credit Agreement, the date of such Default, provided, that if such Default is remedied within 30 days after the date of such Default and no Event of Default specified in (1), (2) or (3) above has occurred since the date of such Default, then this clause (4) shall not apply the date on which Acceleration occurs; and the date on which a Bankruptcy Event occurs.

such Lender shall forthwith notify the Collateral Agent thereof of its (or such Assignee’s) obtaining the same (such amount, a “Reallocable Payment”) and after receipt of a Sharing Notice, pay such Reallocable Payment to the Collateral Agent within five (5) Business Days after receipt of such Sharing Notice for the account of the Lenders to be applied pursuant to Section 3.2.

Upon any distribution made pursuant to clause (a), the Lender making such payment shall be deemed to have purchased from each other Lender an assignment of a portion of the Financial Obligations of such other Lender; provided, however, that such assignment shall be deemed to be of the same class of obligations (i.e., Funded Obligations or Other Obligations) for purposes of this Agreement as the class of obligations to which the Reallocable Payment related.

Preferences, etc. If any Lender or its Assignee (a “Paying Lender”) makes any payment pursuant to this Agreement; and the amount obtained by the Paying Lender which gave rise to such payment or any part thereof (the “Relevant Amount”) is required to be repaid, and is repaid, by the Paying Lender to the Company or any other Person; then the Collateral Agent (if it shall then hold the same) and each of the other Lenders which has received any part thereof (each, a “Sharing Lender”) shall promptly (and in any event within five Business Days after its receipt of notification from the Collateral Agent requiring such repayment, which notification the Collateral Agent shall dispatch promptly upon its determining the amount of the repayment required from the relevant Sharing Lender) repay the portion of the relevant amount received by the Collateral Agent or such Sharing Lender, as the case may be, to the Paying Lender, together with such amount as is equal to the appropriate portion of the interest, if any (in respect of the period during which the Collateral Agent or such Sharing Lender (as the case may be) held such portion of the Relevant Amount), the Paying Lender shall have repaid when repaying such Relevant Amount.

Adjustments to Sharing Percentages. If, at any time after the date of a Sharing Notice, a Lender or its Assignee (a “Repaying Lender”) is required to repay to the Company or any other Person all or any portion of an amount received on or prior to the date of such Sharing Notice, with the result that the Repaying Lender’s Financial Obligations are increased, then, after such repayment has been made and the Repaying Lender has notified the Collateral Agent thereof, the Collateral Agent shall recalculate any calculations made pursuant to Section 2.1 as if the Repaying Lender’s Financial Obligations reflected such increase as of the relevant date of such calculations and shall promptly notify all Lenders of such recalculations and, if any payments pursuant to this Agreement have been made based upon such prior calculations, the amount to be repaid by or to such Lender as a result of such recalculations. Each Lender that has received an excess payment as a result of such prior calculations shall promptly (and in any event within five Business Days after its receipt of the Collateral Agent’s recalculations) repay to the Collateral Agent for the account of the other appropriate Lenders the excess portion of any payments previously received by it, together with such amount (if any) as is equal to the appropriate portion of any interest (in respect of the period during which such other Lender held such amount) the Repaying Lender shall have repaid when repaying such amount as aforesaid, or an amount originally included in the Funded Obligations of a Lender (including its Assignees, a “Reduced Lender”) under its Credit Facility as a contingent. obligation (such as a letter of credit) ceases to be an obligation because of its expiry, reduction, cancellation or otherwise, with the result that such Funded Obligations are reduced, then the Reduced Lender shall promptly notify the Collateral Agent thereof, and the Sharing Percentages of the Lenders shall be adjusted on the first Business Day following the Collateral Agent’s receipt of such notification to reflect such decrease (and the resultant increase in the Sharing Percentages of the Lenders other than the Reduced Lender) and the Reduced Lender shall promptly repay to the Collateral Agent for the account of the respective other Lenders the portion of any payments previously received by it under Section 2.2 in excess of its Sharing Percentage thereof as so redetermined.

PROCEEDS

Sharing. The Lenders agree that until payment in full of all Financial Obligations owed to all Lenders, the Lenders shall be entitled to receive and shall be paid Guarantor Payments and all payments, distributions, collections or recoveries and all other matters relating to the Collateral hereunder and under each of the Security Documents other than the Cash Collateralized Letters of Credit as provided in Section 3.2.

Distribution of Proceeds. All Proceeds and all payments to be made pursuant to Section 2.2 shall be paid by the Collateral Agent or Escrow Agent, as applicable and applied as follows:

Expenses. First, to the payment of all reasonable out-of-pocket costs and expenses incurred by the Collateral Agent and the Lenders other than costs and expenses actually paid pursuant to Section 3.3(b) in connection with the collection or enforcement of the Financial Obligations of the Lenders or the preservation of, or sale of, collection of, or other realization upon, the Collateral under the Security Documents, including, without limitation, reasonable attorney’s fees and disbursements and reasonable costs and expenses incurred by the Collateral Agent in connection with the defense of any claim, suit, action or proceeding against the Collateral Agent, as provided below in Section 7.11;

Funded Obligations of the Noteholders. Second, to the extent that the Bank Agent has realized on cash securing any Cash Collateralized Letters of Credit, to the payment of the Funded Obligations of the Noteholders with respect to the Credit Facilities applicable to them, to be shared ratably by the Noteholders according to their respective proportions of such Funded Obligations until an aggregate of the amount realized by the Bank Agent in liquidating the cash securing Cash Collateralized Letters of Credit, minus related expenses, has been paid to such Noteholders pursuant to Section 3.2(c)(ii)(B)(2) or (C)(1) or this Section 3.2(b);

Funded Obligations of All Lenders. Third, to the payment of all remaining Funded Obligations of the Lenders with respect to the Credit Facilities, to be shared ratably by all the Lenders according to their respective proportions of such Funded Obligations, provided that:

(i) with respect to Funded Obligations consisting of the undrawn amount of any outstanding non-Cash Collateralized Letter of Credit, payment shall be made to the Collateral Agent, to be retained as Collateral for the ratable portion of the Funded Obligations consisting of such undrawn amount, it being understood that

(A) if such Letter of Credit is drawn upon, the Collateral Agent shall pay to the Issuing Bank the ratable portion of the amount of cash held as Collateral therefor pursuant to this clause that is allocable to the amount drawn upon such Letter of Credit and

(B) if and to the extent that such Letter of Credit shall expire or terminate, the amount of cash held as Collateral therefor shall be applied in accordance with this Section 3.2; and

(ii) with respect to Funded Obligations consisting of the undrawn amount of Cash Collateralized Letters of Credit, payment shall be made to the Escrow Agent for the ratable portion of the Funded Obligations consisting of such undrawn amount to be applied by the Escrow Agent as hereinafter provided:

(A) If any Cash Collateralized Letter of Credit is drawn upon and the Bank Agent is not able to realize upon the cash securing such Letter of Credit and advises the Escrow Agent and each Noteholder in writing that the Bank Agent and the Issuing Bank relinquish any claim in or to such cash, the Escrow Agent shall pay to the Issuing Bank the ratable portion of cash held in respect of the amount drawn on such Cash Collateralized Letter of Credit, if any; and

(B) If any Cash Collateralized Letter of Credit is drawn upon and the Bank Agent is able to realize on the cash securing such Letter of Credit:

(1) the Bank Agent shall pay over any remaining proceeds from such cash collateral to the Collateral Agent to be distributed in accordance with this Section 3.2, and

(2) to the extent the Escrow Agent holds any Proceeds allocable to such Cash Collateralized Letter of Credit, the Escrow Agent shall pay to the Noteholders an amount from such Collateral Proceeds equal to the amount realized by the Bank Agent in connection with the liquidation of the cash securing such Cash Collateralized Letter of Credit minus any expenses incurred in such liquidation.

(1) the Escrow Agent shall pay to the Noteholders an amount equal to the lesser of the face amount of such expiring or terminating Cash Collateralized Letter of Credit or the amount of any Proceeds allocable thereto that are then held by the Escrow Agent and

(2) the Bank Agent shall pay to the Collateral Agent all cash held as Collateral for such expired or terminated Cash Collateralized Letter of

Credit, less any expenses, to be applied in accordance with this Section 3.2;

Other Obligations. Fourth, to the payment of the Other Obligations of the Lenders with respect to the Credit Facilities, which payment shall be shared ratably by the Lenders according to their respective proportions of such Other Obligations;

Surplus. Fifth, to the payment to the Company or its Subsidiaries, or their respective successors or assigns, or as a court of competent jurisdiction may direct, or otherwise as required by law, if any surplus is then remaining from such proceeds.

Such proceeds being so disbursed to the Lenders shall be deemed applied to the Financial Obligations held by such Lenders upon the receipt by such Lenders of good, collected funds in respect thereof and in the order provided for in Sections 3.2(a) through 3.2(d), inclusive.

Cash Collateralizing Cash Collateralized Letters of Credit. Cash held by the Bank Agent as collateral for the Cash Collateralized Letters of Credit (and to the extent there is any surplus, as bailee of the surplus cash collateral under the Security Documents) shall be applied by the Bank Agent as follows:

Reimbursement Obligations. First, to the payment of any reimbursement obligation due the Issuing Bank at the time a Cash Collateralized Letter of Credit is drawn upon;

Expenses. Second, to the payment of all reasonable out-of-pocket costs and expenses incurred by the Bank Agent or the Bank Creditors in connection with the Cash Collateralized Letters of Credit;

Surplus. If and to the extent that a Cash Collateralized Letter of Credit shall expire, terminate or be fully drawn, the amount of cash held as collateral therefor after payment of all amounts due and owing in respect of such Cash Collateralized Letter of Credit shall be paid over by the Bank Agent to the Collateral Agent as Proceeds and applied as provided in Section 3.2.

ASSIGNMENTS OF FINANCIAL OBLIGATIONS

Purchase of Assignments.

Following a Bankruptcy Event, if a Lender or Lenders are deemed pursuant to Section 2.2(b) to have purchased (the “Purchasing Lender(s)”) from each other Lender (the “Selling Lenders(s)”) assignments of a portion of the Financial Obligations of such other Lenders (the “Purchased Financial Obligations"), the Purchased Financial Obligations retain all of their rights under the applicable Financing Documents under which such Purchased Financial Obligations arose (the “Selling Lender’s Financing Documents”) except, (a) the Purchasing Lender(s) shall vote as a separate and distinct class on all matters with regard to the Purchased Financial Obligations in accordance with the terms of the Financing Documents to which the Purchasing Lender(s) are parties (other than by assignment pursuant to this Agreement) (the “Purchasing Lender’s Financing Documents”) and the Selling Lender(s) shall vote as a separate and distinct class on all matters with regard to the Financial Obligations they retain under the Selling Lender’s Financing Documents after such assignment (the “Retained Financial Obligations”) in accordance with the terms of the Selling Lender’s Financing Documents, such that items regarding the Purchased Financial Obligations similar or comparable to those in the Purchasing Lender’s Financing Documents will be voted on by the Purchasing Lender(s) in the same manner as provided in the Purchasing Lender’s Financing Documents (as if such class had been issued pursuant to and governed by separate instruments, adjusted as aforesaid), (b) each such class may take action, vote, consent, amend, waive or do like things with respect to its Purchased Financial Obligations or Retained Financial Obligations, as the case may be, independently of the other class (as if each class had been issued pursuant to and governed by separate instruments, adjusted as aforesaid), and (c) all rights under such Purchased Financial Obligations are equal to and pari passu with all rights under the Retained Financial Obligations, and all payments on the Purchased Financial Obligations and Retained Financial Obligations will be applied pro rata based upon the outstanding principal amount of the Purchased Financial Obligations and Retained Financial Obligations. Financial Obligations arising under the Credit Agreement to be purchased by the Noteholders shall consist of Advances (and not any other type of Obligations under the Credit Agreement) to the maximum extent possible.

Mechanics of Further Assignments. Any further assignment of Financial Obligations required to be made shall be made by (i) reducing previous assignments made pursuant to the terms and provisions of this Agreement, and/or (ii) purchasing assignments of Financial Obligations pursuant to this Agreement so that, after giving effect thereto, the aggregate amount of Financial Obligations required pursuant to the terms and provisions of this Agreement shall have been purchased by the Banks or the Noteholders, as the case may be.

Several Obligation. The obligation of each Bank and each Noteholder to purchase assignments of Financial Obligations in accordance with the terms of this Agreement is a several and not a joint obligation.

APPLICATION OF PAYMENTS; CHANGES TO OBLIGATIONS AND FINANCING DOCUMENTS

Application of Payments of Financial Obligations. Notwithstanding the terms of this Agreement, each Bank Creditor and Noteholder may apply payments on its Financial Obligations on its own books and records for internal purposes in whatever order and manner it chooses, provided that no such internal application shall affect the manner in which payments with respect to the Credit Facilities are treated under this Agreement.

Changes to Obligations and Financing Documents. None of the parties hereto will do or permit any of the following without the consent of the Required Lenders (a) increase the maximum aggregate principal amount of Notes that may be outstanding under any of the Note Agreements or relend to the Company any portion of the aggregate amount of principal payments previously made in respect of the Notes, (b) permit (i) any increase in the Loan Commitment above $35,000,000 or (ii) the aggregate face amount of outstanding Letters of Credit to exceed an amount equal to $30,000,000, (c) increase the rate of interest (or discount), or any default interest or other penalty interest or fees, that accrues on the principal balance or face amount of the Notes, the Advances or the Letters of Credit (or any reimbursement obligations in respect thereof) outstanding from time to time to a rate of interest in excess of the rate of interest provided for in the Credit Agreement or the Notes, respectively, as such agreements and instruments are in effect on the date hereof, (d) increase or add any fees provided for in the Credit Agreement, the Notes or the Note Agreements, as such agreements and instruments are in effect on the date hereof, (e) pay or require any fees in respect of any Letter of Credit in excess of those specified in the Credit Agreement with respect to such Letter of Credit as of the date hereof, (f) change any term or provision of the Note Agreements or Notes with regard to the method of calculating the Make-Whole Amount (other than technical changes regarding the sources of data to be used in calculating any amounts due in respect thereof) so as to increase the Make-Whole Amount due, if any, (g) amend or change the scheduled payments on the Notes so that any required reduction or payment would be made sooner than its presently scheduled date, (h) shorten the final maturity of the Advances made under the Credit Agreement to a term maturing on or before June 20, 2004 (i) amend the definition of “Commitment” in Section 1.1 of the Credit Agreement, (j) accept any additional security, assets, or other property except on behalf of the Collateral Agent for the ratable benefit of the Lenders other than the Cash Collateralized Letters of Credit as provided herein or (l) accept any additional guaranty or subordination for the benefit of, or any other credit support for, the obligations of the Company or any of its Subsidiaries under any Credit Facility or any Financing Document unless the Lenders under all Credit Facilities receive an equal and ratable guarantee, subordination or other credit support, as the case may be.

COOPERATION AMONG LENDERS

Cooperation. Each Lender agrees with each of the other Lenders, the Collateral Agent and the Escrow Agent that: it will (and will cause each of its Assignees to) from time to time provide such information to the Collateral Agent as may be necessary to enable the Collateral Agent to make any calculation required for any purpose hereof and to notify the Collateral Agent of any Default, Event of Default, Acceleration or Bankruptcy Event; it will (and will cause each of its Assignees to) from time to time consult with the Collateral Agent and the other Lenders in good faith regarding the enforcement of its and each of its Assignee’s rights with a view to recovering amounts due under the Credit Facilities; it will (and will cause each of its Assignees to) in the case of any Default with respect to which it shall have received notice from, or provided notice to, the Company, give the Collateral Agent immediate notice, and if such notice is oral, confirmed in writing, of such Default; it will (and will cause each of its Assignees to) upon becoming aware of the occurrence of any Event of Default, give the Collateral Agent immediate notice, and if such notice is oral, confirmed in writing, of

such Event of Default and stating that the same constitutes a Notice of Event of Default (a “Notice of Event of Default”); and it will (and will cause each of its Assignees to) give the Collateral Agent immediate written notice of any acceleration of any of its or its Assignee’s Financial Obligations or suspension of all or any portion of its Obligations.

COLLATERAL AGENT

Appointment and Authority of Collateral Agent. In order to expedite the enforcement of the rights and remedies set forth in the Security Documents, the Collateral Agent is hereby appointed to act as agent for the Lenders hereunder and thereunder. The Collateral Agent is hereby authorized and directed to take such action on behalf of the Lenders under the terms and provisions of the Security Documents and to exercise such rights and remedies hereunder and thereunder as are specifically delegated to or required of the Collateral Agent under the terms and provisions hereof and thereof. The Collateral Agent is hereby expressly authorized as Collateral Agent on behalf of the Lenders, without hereby limiting the foregoing, and subject to, and in accordance with, the terms and conditions of this Agreement: to receive on behalf of each of the Lenders any payment of monies paid to the Collateral Agent in accordance with the Security Documents, and to distribute to each Lender its respective portion of all payments so received in accordance with the terms of this Agreement; to receive all documents and items to be furnished under the Security Documents; to maintain physical possession of any of the Collateral as contemplated in any of the Security Documents; to act on behalf of the Lenders in and under the Security Documents; to execute and deliver to the Company, its Subsidiaries and others requests, demands, notices, approvals, consents and other communications received from the Lenders in connection with the Security Documents, subject to the terms and conditions set forth herein and therein; to the extent permitted by this Agreement and the Security Documents, to exercise on behalf of each Lender all remedies of the Lenders upon the occurrence of any Default or Event of Default under any of the Security Documents; and to take such other actions, other than as specified in Section 7.2 hereof, as may be requested by the Required Lenders or as are reasonably incident to any powers granted to the Collateral Agent hereunder and not in conflict with applicable law or regulation or any Financing Document.

Modification of Security Documents. The Collateral Agent shall not, without the prior written consent of the Required Lenders, enter into any amendment, modification or supplement of any of the Security Documents.

Non-Reliance on Collateral Agent and Other Lenders. Each Lender agrees that it has, independently and without reliance on the Collateral Agent or any other Lender, and based upon such documents and information as it has deemed appropriate, made its own credit analysis of the Company, the Company’s Subsidiaries and the Collateral, and its independent decision to enter into this Agreement and the Security Documents, and that it will, independently and without reliance upon the Collateral Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement and the Security Documents. The Collateral Agent shall not be required to keep the Lenders informed as to the performance or observance by the Company or its Subsidiaries of the Note Purchase Agreement, the Credit Agreement, the Security Documents or any other document, instrument or agreement, referred to or provided for therein or to inspect the properties or books of the Company or any of its Subsidiaries. The Collateral Agent shall not have any duty, responsibility or liability to provide any Lender with any credit or other information, concerning the affairs, financial condition or business of the Company which may come into the possession of Collateral Agent; provided, however, the Collateral Agent shall send to the Lenders written notice of any Default, Event of Default, Acceleration or Bankruptcy Event of which the Collateral Agent (in its capacity as such) has knowledge or of which it has been given

written notice, and all payments and repayments of amounts required hereunder to be paid to the Lenders received by the Collateral Agent under or in connection with the Security Documents or this Agreement; and the Collateral Agent shall provide each Lender with a schedule of all costs and expenses which the Collateral Agent has paid or proposes to pay from the proceeds of such payments or repayments as permitted hereunder.

Collateral Agent and Affiliates. Bank of America, N.A. and any successor Collateral Agent, in its capacity as a Lender, shall have the same rights and powers under the Financing Documents and may exercise or refrain from exercising the same as though it were not the Collateral Agent hereunder, and such Lender and its affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust, hedging or other business with or for any Lender, the Company or any of the Company’s Subsidiaries, or any of their respective affiliates, as if it were not acting as Collateral Agent hereunder.

Action by Collateral Agent. The obligations of the Collateral Agent hereunder and under the Financing Documents are only those expressly set forth herein and therein. Notwithstanding anything contained herein or in any Financing Document to the contrary, the Collateral Agent shall not be required to take any action with respect to any Default, Event of Default, Acceleration or Bankruptcy Event, except as expressly provided herein and therein.

Consultation with Experts. The Collateral Agent may consult with legal counsel, independent public accountants and any other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.

Liability of Collateral Agent. The Collateral Agent shall be entitled to rely on any communication or document believed by it to be genuine and correct and to have been communicated or signed by the person by whom it purports to be communicated or signed and shall not be liable to any Lender for any of the consequences of such reliance. Neither the Collateral Agent nor any director, officer, employee or agent of the Collateral Agent (as used in the immediately following sentence “Collateral Agent” means all of the foregoing) shall be liable for any action taken or not taken by it, him or them under, or in connection with, this Agreement or any of the Financing Documents in the absence of its, his or their gross negligence or willful misconduct. THIS FOREGOING IS INTENDED TO INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS THE COLLATERAL AGENT AGAINST ALL RISKS, FORESEEABLE OR UNFORESEEABLE, INVOLVED IN THE SUBJECT TRANSACTIONS, INCLUDING, WITHOUT LIMITATION, THE NEGLIGENCE OR ALLEGED NEGLIGENCE (WHETHER SOLE, COMPARATIVE, CONTRIBUTORY OR OTHERWISE) OF THE COLLATERAL AGENT, ALL OF WHICH RISKS ARE HEREBY ASSUMED BY THE LENDERS; PROVIDED, HOWEVER, THE COLLATERAL AGENT SHALL NOT BE ENTITLED TO INDEMNIFICATION FOR INDEMNIFIED COSTS TO THE EXTENT SUCH INDEMNIFIED COSTS ARE DIRECTLY CAUSED BY ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A COURT OF COMPETENT JURISDICTION. As to any matters not expressly provided for herein or in the Financing Documents, the Collateral Agent shall act or refrain from acting in accordance with written instructions from the Required Lenders or, in the absence of such instructions, in accordance with its discretion, taking into account the interests of all Lenders. The Collateral Agent shall not be obligated to follow any such written directions to the extent that it shall determine that such directions are in conflict with any provision hereof or of any applicable law or regulation or any Financing Document. Neither the Collateral Agent nor any director, officer, employee or agent of the Collateral Agent shall be responsible for or have any duty to ascertain, inquire into or verify (a) any statement, warranty or representation made in connection with any of the Financing Documents or any payment thereunder; (b) the performance or observance of any of the covenants or agreements of the Company, any of its Subsidiaries or any Lender under any of the Financing Documents; (c) the validity, effectiveness or genuineness of the Financing Documents or any other instrument or writing furnished in connection therewith; or (d) the existence, genuineness or value of any of the Collateral or the validity, effectiveness, perfection, priority or enforceability of the security interests in or liens on any of the Collateral.

Indemnification of Collateral Agent; Defense of Claims.

Each Lender hereby agrees to indemnify the Collateral Agent and each of the Collateral Agent’s directors, officers, affiliates, representatives, attorneys, consultants and agents (as used in this Section 7.8 “Collateral Agent” means all of the foregoing) against all loss, cost, liability and expense (to the extent not paid by the Company and not arising out of or as a result of gross negligence or willful misconduct on the part of the Collateral Agent), including reasonable attorneys’ fees, resulting from any action taken or to be taken by it as Collateral Agent on behalf of the Lenders within the scope of its authority as provided in this Agreement or any of the Security Documents, to the extent of such Lender’s pro rata share (based upon its pro rata percentage of the Total Funded Obligations) of any such loss, cost, liability and expense. THIS FOREGOING IS INTENDED TO INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS THE COLLATERAL AGENT AGAINST ALL RISKS, FORESEEABLE OR UNFORESEEABLE, INVOLVED IN THE SUBJECT TRANSACTIONS, INCLUDING, WITHOUT LIMITATION, THE NEGLIGENCE OR ALLEGED NEGLIGENCE (WHETHER SOLE, COMPARATIVE, CONTRIBUTORY OR OTHERWISE) OF THE COLLATERAL AGENT, ALL OF WHICH RISKS ARE HEREBY ASSUMED BY THE LENDERS; PROVIDED, HOWEVER, THE COLLATERAL AGENT SHALL NOT BE ENTITLED TO INDEMNIFICATION FOR INDEMNIFIED COSTS TO THE EXTENT SUCH INDEMNIFIED COSTS ARE DIRECTLY CAUSED BY ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.

The Collateral Agent shall notify each Lender as promptly as is reasonably practicable of the written assertion of, or the commencement of, any claim, suit, action or proceeding filed against the Collateral Agent arising out of, or in connection with, the acceptance or administration of the duties imposed upon the Collateral Agent hereunder or under any of the Financing Documents or any action or omission taken or made within the scope of the rights or powers conferred upon the Collateral Agent hereunder or under the Financing Documents promptly after the Collateral Agent shall have received the written assertion or have been served with the summons or other first legal process giving information as to the nature and basis of the lawsuit. Each Lender shall be entitled to participate in and assume, at its own expense, the defense of any such claim, suit, action or proceeding, and such defense shall be conducted by counsel chosen by such Lender and reasonably satisfactory to the Collateral Agent, provided, however, that (i) if any Lender has not assumed the defense of such claim, suit, action or proceeding, (ii) if the attorneys handling the defense are not reasonably satisfactory to the Collateral Agent, or (iii) if the defendants in any such action include both the Collateral Agent and the Lenders and the Collateral Agent shall have been advised by its counsel that there may be legal defenses available to it that are different from or additional to those available to the Lenders, which in the reasonable opinion of such counsel are sufficient to make it undesirable for the same counsel to represent both the Lenders and the Collateral Agent, the Collateral Agent shall have the right to employ its own counsel in all such instances described in (i), (ii) or (iii) above, and shall be entitled to recover from any proceeds received pursuant to Section 3.2 all reasonable fees of such counsel. If more than one Lender gives notice of assumption of defense, the matter shall be presented to all the Lenders and, unless the Collateral Agent receives notice from the Required Lenders specifying the Lender that is to assume the defense, the Collateral Agent shall proceed itself with the defense. Except as provided above, the Collateral Agent’s right to recover its reasonable counsel fees from proceeds received pursuant to Section 3.2 shall cease upon any Lender’s assumption of the defense of the claim, suit, action or proceeding. Each Lender and the Collateral Agent is always entitled to defend itself at its own expense. Neither the Lenders nor the Collateral Agent shall be bound by any settlement entered into by the other parties without such party’s consent.

Resignation or Removal of Collateral Agent. Subject to the appointment and acceptance of a successor Collateral Agent as provided below, the Collateral Agent may resign at any time by giving notice thereof to each Lender. Upon any such resignation, a successor Collateral Agent may be appointed by the Required Lenders. If no successor Collateral Agent shall have been appointed as aforesaid and shall have accepted such appointment within 30 days after the retiring Collateral Agent’s

giving of notice of resignation, then the retiring Collateral Agent may, on behalf of the Lenders, appoint a successor Collateral Agent which shall be a depository institution with capital and surplus greater than $250,000,000 and which shall be qualified to perform its duties hereunder and under the Security Documents.

If the Collateral Agent shall fail or refuse to perform or commence performing any act set forth in written instructions delivered pursuant to, and in accordance with the terms and conditions of, this Agreement (other than where such nonperformance is beyond the control of the Collateral Agent or where such performance would entail a violation of applicable law or conflict with the provisions of this Agreement or any Financing Document), and such failure continues for a period of 15 days from the date of receipt of said written instructions, the Collateral Agent may be removed by the Lender(s) directing the action which the Collateral Agent failed or refused to take. Such Lender(s) shall also have the right to appoint a successor Collateral Agent with the consent of the other Lenders (other than the Lender so removed as Collateral Agent), and if no successor Collateral Agent shall have been so appointed and shall have accepted such appointment within five Business Days after removal, then the Lender(s) which directed the action which the Collateral Agent failed or refused to take may, on behalf of the Lenders, appoint a successor Collateral Agent which shall be a depository institution with capital and surplus greater than $250,000,000 and which shall be qualified to perform its duties hereunder and under the Security Documents.

Upon the acceptance of any appointment as Collateral Agent hereunder by a successor Collateral Agent, such successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder, except to the extent provided above for acts or omissions prior to the resignation or termination. After any retiring Collateral Agent’s resignation or removal hereunder as Collateral Agent, (a) the provisions of Sections 7.7 and 7.8 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Collateral Agent, (b) any Collateral held in possession of the retiring Collateral Agent shall be delivered to the successor Collateral Agent, and (c) the retiring Collateral Agent shall assign all of its rights as secured party, mortgagee, assignee, deed of trust beneficiary or other similar position with respect to all of the Collateral to the successor Collateral Agent for the pro rata benefit of the Lenders.

Appointment of Co-Agents. At any time or times, in order to comply with any legal requirement in any jurisdiction, the Collateral Agent may appoint another bank or trust company or one or more other persons, either to act as co-agent or co-agents, jointly with the Collateral Agent, or to act as separate agent or agents on behalf of the Lenders with such power and authority as may be necessary for the effectual operation of the provisions hereof and may be specified in the instrument of appointment (which may, in the discretion of the Collateral Agent, include provisions for the protection of such co-agent or separate agent similar to the provisions of this Article 7).

Compensation of Collateral Agent; Expenses. Any successor Collateral Agent appointed pursuant to Section 7.9 shall be compensated by the Company on a scheduled basis which shall be approved by the Required Lenders. The Lenders agree that such compensation paid to any successor Collateral Agent and all reasonable out-of-pocket expenses incurred by the Collateral Agent or such successor Collateral Agent on behalf of the Lenders incident to the exercise or enforcement of any terms or provisions of the Security Documents shall be indebtedness to the Collateral Agent or such successor Collateral Agent, secured by the Collateral. Upon the request of the Collateral Agent or such successor Collateral Agent, however, the Lenders will reimburse the Collateral Agent or such successor Collateral Agent, to the extent not paid by the Company, for any such expenses (but in no event any fees) in accordance with each Lender’s pro rata percentage of the Total Funded Obligations.

Release of Collateral. The Company may from time to time request the Collateral Agent in writing, with copies thereof delivered simultaneously to all Lenders, to release portions of the Collateral, if and to the extent such Collateral is required to be released in connection with any sale of Collateral that is

permitted under each of the Credit Facilities. Promptly after the Collateral Agent receives (a) such written request from the Company and (b) written notice from the Required Lenders that the proposed disposition is permitted under the terms of the applicable Credit Facility, the Collateral Agent shall release such Collateral.

ESCROW AGENT

Establishment of Escrow Account. Collateral Agent will deliver the Escrow Funds to Escrow Agent in immediately available funds. Upon receipt of the Escrow Funds, the Escrow Agent shall place the Escrow Funds into an interest bearing account (the “Escrow Account”) at Bank of America, N.A., which will be opened and maintained by the Escrow Agent in accordance with the terms of this Agreement, and the Escrow Agent shall be the only party authorized to make disbursements from the Escrow Account. The Escrow Account shall not be commingled with other assets owned or held by the Escrow Agent. The Escrow Account shall be titled in Escrow Agent’s name.

Disbursement of Escrow Account. The Escrow Account shall be held and disbursed by the Escrow Agent; provided, however, that the Escrow Agent shall not disburse any Escrow Funds from the Escrow Account unless and until the Escrow Agent has received written instruction, signed by the Collateral Agent, to do so. Disbursements from the Escrow Account by the Escrow Agent hereunder may be made by bank certified, cashier’s or Escrow Agent’s trust account check or by wire transfer.

Rights and Limitations upon Duties of Escrow Agent. The Escrow Agent shall not be responsible for the identity, authority or rights of any person, firm or corporation executing or delivering or purporting to execute or deliver this Agreement or any document or instrument deposited hereunder or any endorsement thereon or assignment thereof. The Escrow Agent acts hereunder as a depository only and shall not be responsible or liable in any manner whatsoever for the genuineness, sufficiency, correctness, or validity of any agreement, document, certificate, instrument, or item deposited with it or any notice, consent, approval, direction, or instruction given to it, and the Escrow Agent shall be fully protected, under Sections 3(c) and 3(e) below, for all acts taken in accordance with any written instruction, final order or instrument given to it hereunder, and reasonably believed by the Escrow Agent to be genuine and what it purports to be.

It is understood and agreed that the duties of the Escrow Agent hereunder are purely ministerial in nature and that the Escrow Agent shall not be liable for any error of judgment, fact, or law, or any act done or omitted to be done, except for its own willful misconduct or gross negligence or that of its partners, employees, and agents. The Escrow Agent’s determination as to whether an event or condition has occurred, or been met or satisfied, or as to whether a provision of this Agreement has been complied with, or as to whether sufficient evidence of the event or condition or compliance with the provision has been furnished to it, shall not subject the Escrow Agent to any claim, liability, or obligation whatsoever, even if it shall be found that such determination was improper and incorrect; provided that the Escrow Agent and its partners, employees, and agents shall not have been guilty of willful misconduct or gross negligence in making such determination. In the event any property held by the Escrow Agent hereunder shall be attached, garnished or levied upon under any court order, or if the delivery of such property shall be stayed or enjoined by any court order, or if any court order, judgment or decree shall be made or entered affecting such property or affecting any act by the Escrow Agent, the Escrow Agent may, in its sole discretion, obey and comply with all writs, orders, judgments or decrees so entered or issued, whether with or without jurisdiction, notwithstanding any provision of this Agreement to the contrary. If the Escrow Agent obeys and complies with any such writs, orders, judgments or decrees, it shall not be liable to any of the parties hereto or to any other person, firm, corporation or other entity, by reason of such compliance, notwithstanding that such writs, orders, judgments or decrees may be subsequently reversed, modified, annulled, set aside or vacated.

Lenders each jointly and severally agree to indemnify the Escrow Agent for, and to hold it harmless against, any loss, liability, or expense (“Costs”) incurred without gross negligence or willful misconduct

on the part of the Escrow Agent, arising out of or in connection with its entering into this Agreement and carrying out its duties hereunder, including costs and expenses of defending itself against any claim of liability in connection herewith or therewith other than in connection with a finding of gross negligence or willful misconduct. The right to indemnification set forth in the preceding sentence shall include the right to be paid by Lenders in respect of Costs as they are incurred (including Costs incurred in connection with defending itself against any claim of liability in connection herewith), provided that upon a determination of gross negligence or willful misconduct, the Escrow Agent will promptly reimburse the Lenders for any Costs previously paid or advanced by the Lenders.

The Escrow Agent shall not be required to take any action under this Agreement if the Escrow Agent shall reasonably determine, or shall have been advised by counsel, that such action is likely to result in personal liability, or is contrary to the terms hereof, or otherwise contrary to law. If at any time the Escrow Agent shall receive conflicting notices, claims, demands, or instructions with respect to the Escrow Account, or if for any other reason it shall in good faith be unable to determine the party or parties entitled to receive any of the Escrow Account, or any part thereof, the Escrow Agent may refuse to make any distribution or payment and may retain the Escrow Account in its possession until it shall have received instructions in writing concurred in by all parties in interest, or until directed by a final order or judgment of a court of competent jurisdiction from which no appeal is or can be taken, whereupon the Escrow Agent shall make such disposition in accordance with such instructions or such order. Alternatively, the Escrow Agent may proceeds under Section 8.4.

The Escrow Agent may consult with, and obtain advice from, legal counsel in the event of any dispute or question as to the construction of any of the provisions hereof or its duties hereunder, and it shall incur no liability and shall be fully protected and indemnified under Sections 3(c) and 3(e) above for all acts taken, in the absence of gross negligence or willful misconduct, in accordance with the opinion and instructions of such counsel, and the costs of such counsel shall be subject to reimbursement under Section 3(e) above. The Escrow Agent may resign at any time upon giving the other parties hereto thirty (30) days notice to that effect. In that event the successor escrow agent shall be such person, firm, corporation or other entity as Lenders shall mutually select. It is understood and agreed that the Escrow Agent’s resignation shall not be effective until a successor escrow agent agrees to act hereunder; provided, however, that in the event no successor escrow agent is appointed and acting hereunder within thirty (30) days of such notice, the Escrow Agent may pay and deliver the Escrow Account into a court of competent jurisdiction; and provided, further, that the Escrow Agent may appoint a successor escrow agent hereunder at any time so long as such successor shall accept and agree to be bound by the terms of this Agreement (except that any such successor escrow agent shall be entitled to customary fees payable as provided herein) and shall be a bank or trust company insured by the Federal Deposit Insurance Corporation and shall be reasonably acceptable to the Required Lenders.

No person, firm, corporation or other entity will be recognized by the Escrow Agent as a successor or assignee of Lenders until there shall be presented to the Escrow Agent evidence satisfactory to it of such succession or assignment.

Interpleader Action. In the event of any disagreement between the Lenders about the interpretation of this Agreement, or about the rights and obligations or the propriety of any action contemplated by the Escrow Agent hereunder or upon the resignation of the Escrow Agent and the failure of the parties hereto to timely engage a successor, the Escrow Agent may, at its sole but reasonable discretion, file an action or bill in interpleader in any court of competent jurisdiction to determine the rights of the parties hereto and deposit the balance of the Escrow Account with such court. The Escrow Agent shall be indemnified by the parties hereto, jointly and severally, for all costs, including reasonable attorney’s fees, in connection with the aforesaid interpleader action.

Term.

If at any time the Escrow Agent shall receive a joint written notice signed by or on behalf of the Lenders that this escrow arrangement has been terminated and instructing the Escrow Agent with respect to the disposition of the Escrow Account, the Escrow Agent shall disburse the Escrow Account in accordance

with the instructions contained in such notice, and upon such disbursement this escrow arrangement shall be deemed terminated, and the Escrow Agent shall be released and discharged from all further obligations hereunder. Section 8.3(e) hereof shall survive termination of this Agreement.

ENFORCEMENT OF REMEDIES

Waivers of Rights. Except as otherwise expressly set forth herein, so long as the Obligations remain unpaid, the Lenders hereby agree to refrain from exercising any and all rights each may individually (i.e., other than through the Collateral Agent) now or hereafter have to exercise any right pursuant to the Security Documents, the Uniform Commercial Code as in effect in any applicable jurisdiction, or under similar provisions of the laws of any jurisdiction or otherwise dispose of or retain any of the Collateral other than with respect to the Cash Collateralized Letters of Credit. The Lenders hereby agree not to take any action whatsoever to enforce any term or provision of the Security Documents or to enforce any right with respect to the Collateral, in conflict with this Agreement or the terms and provisions of the Security Documents.

Permitted Action by the Lenders. Any Lender may (but in no event shall be required to), without instruction from the Collateral Agent, take action permitted by applicable law or in accordance with the terms of the Security Documents and this Agreement to preserve their rights and Liens in any item of Collateral securing the payment and performance of the Obligations, including but not limited to curing any default or alleged default under any contract entered into by the Company or any of its Subsidiaries, paying any tax, fee or expense on behalf of the Company or any of its Subsidiaries, exercising any offset or recoupment rights and paying insurance premiums on behalf of the Company or any of its Subsidiaries so long as such action shall not impair the rights of the Collateral Agent or of any other Lender.

Right to Instruct Collateral Agent. Upon an Event of Default, Acceleration or Bankruptcy Event, the Required Lenders may instruct the Collateral Agent to liquidate the Collateral in the manner described in the Security Documents.

SUCCESSORS AND ASSIGNS; JOINDER BY BANK

Assignees. No provision of this Agreement shall restrict in any manner the assignment, participation or other transfer by any Lender of all or any part of its right, title or interest under any Credit Facility; provided that, unless the transferee becomes a Lender for purposes hereof in accordance with Section 9.2 the transferor Lender shall remain responsible for performance of this Agreement with respect to the interest transferred, all as more fully set forth herein, and the Collateral Agent shall have no responsibilities to and need not acknowledge the interests of such transferee.

Additional Lenders. In connection with an assignment of all, or of a proportionate part of all, of its right, title and interest under any Credit Facility to any bank, insurance company, other financial institution or other Person (the “Purchaser”), all in accordance with the applicable provisions of the relevant Credit Facility, such Purchaser shall become a Lender hereunder only upon (i) the written agreement of such transferor Lender and such Purchaser and (ii) the receipt by the Collateral Agent of a Supplement to lntercreditor and Collateral Agency Agreement substantially in the form of Exhibit A hereto executed and delivered by such Purchaser.

MISCELLANEOUS

No Partnership or Joint Venture. Nothing contained in this Agreement, and no action taken by the Collateral Agent, the Escrow Agent or the Lenders (or any of them) pursuant hereto, is intended to constitute or shall be deemed to constitute the Lenders a partnership, association, joint venture or other entity.

Notices. Unless otherwise specified herein, all notices, requests and other communications to any party hereunder shall be in writing (including overnight delivery service, bank wire, telex, facsimile copy or similar writing) and shall be given to such party at its address or telex or facsimile number specified

pursuant to the Credit Facilities, on the signature pages or schedules hereof, or such other address or telex or facsimile number as such party may hereafter specify for the purpose by notice to the Collateral Agent. All such notices and other communications shall, when delivered by overnight delivery service, telegraphed, telexed, transmitted or cabled, be effective when delivered to the overnight delivery service or the telegraph company, confirmed by telex, answerback, transmitted by telecopier or delivered to the cable company, respectively.

Amendments and Waivers. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed by each of the Lenders (and, if the rights or duties of a Collateral Agent or Escrow Agent are affected thereby, by such Collateral Agent or Escrow Agent).

Payments. All payments hereunder shall be made in Dollars in immediately available funds. All payments to the Collateral Agent shall be made to it at such office or account as it may specify for the purpose by notice to the Lenders. All payments to any Lender shall be made to it, to the extent practicable, in accordance with the provisions of the relevant Credit Facility.

Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts (including those transmitted by facsimile), each of which shall be an original, and all of which taken together shall constitute a single agreement, with the same effect as if the signatures thereto and hereto were upon the same instrument. Delivery of this Agreement may be made by telecopy of a duly executed counterpart hereof. This Agreement shall become effective when the Collateral Agent and Escrow Agent shall have received counterparts hereof executed by each of the parties listed on the signature pages hereof.

Benefits. This Agreement is solely for the benefit of and shall be binding upon the Lenders, the Collateral Agent and the Escrow Agent and their successors or assigns except “Assignees”, and neither the Company nor any other party shall have any right, benefit, priority or interest under or by reason of this Agreement.

Term. This Agreement shall remain in effect until all the Obligations are paid in full and no Lender shall have any commitment to lend or otherwise extend credit under any of the Credit Facilities.

GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF TEXAS, EXCEPT THAT THE RIGHTS, DUTIES AND OBLIGATIONS OF THE COLLATERAL AGENT HEREUNDER AS AN AGENT FOR THE LENDERS SHALL INITIALLY BE GOVERNED BY THE LAW OF THE STATE OF TEXAS AND THEREAFTER, WITH RESPECT TO ANY SUCCESSOR COLLATERAL AGENT, BY THE LAW OF THE STATE IN WHICH SUCH SUCCESSOR COLLATERAL AGENT HAS ITS PRINCIPAL PLACE OF BUSINESS.

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the date first above set forth.

COLLATERAL AGENT:
BANK OF AMERICA, N.A.

By: /s/ John K. Barrett
Name: John K. Barrett
Title: Managing Director

ESCROW AGENT:
BANK OF AMERICA, N.A.

By: /s/ John K. Barrett
Name: John K. Barrett
Title: Managing Director

BANKS:
BANK OF AMERICA, N.A., Individually, and as the Bank Agent and an Issuing Bank

By: /s/ John K. Barrett
Name: John K. Barrett
Title: Managing Director

COMMERCE BANK, N.A.

By: /s/ Martin Nay
Name: Martin Nay
Title: Vice President

U.S. BANK NATIONAL ASSOCIATION, Individually and as an Issuing Bank

By: /s/ Barry P. Sullivan
Name: Barry P. Sullivan
Title: Vice President

NOTEHOLDERS:

MASSACHUSETTS MUTUAL LIFE
    INSURANCE COMPANY
    By: David L. Babson & Company Inc., as
    Investment Adviser

By: /s/ Emeka O. Onukwugha
Name: Emeka O. Onukwugha
Title: Managing Director

BUSINESS MEN’S ASSURANCE COMPANY OF
AMERICA

By: /s/ Robert N. Sawyer
Name: Robert N. Sawyer
Title: Senior Vice President

METROPOLITAN LIFE INSURANCE COMPANY

By: /s/ Timothy L. Powell
Name: Timothy L. Powell
Title: Director

ALLSTATE LIFE INSURANCE COMPANY

By: /s/ Rhonda L. Hopps
Name: Rhonda L. Hopps

By: /s/ Jerry D. Zinkula
Name: Jerry D. Zinkula

Authorized Signatories


PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation

By:		Principal Global Investors, LLC a Delaware limited liability company, its authorized signatory

		By: /s/ L.S. Valentine Its: Counsel

		By: /s/ Stephen G. Skrivanek Its: Counsel

CGU LIFE INSURANCE COMPANY OF AMERICA, a Delaware corporation

By:		Principal Global Investors, LLC, a Delaware limited liability company, its attorney in fact

		By: /s/ L.S. Valentine Its: Counsel

		By: /s/ Stephen G. Skrivanek Its: Counsel

JOHN HANCOCK LIFE INSURANCE COMPANY

By: /s/ Michael L. Short Name: Michael L. Short Title: Managing Director

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

By: /s/ Michael L. Short Name: Michael L. Short Title: Managing Director


NATIONWIDE LIFE INSURANCE COMPANY OF AMERICA

By: /s/ Joseph P. Young Name: Joseph P. Young Title: Credit Officer Fixed Income Securities

NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY OF AMERICA

By: /s/ Joseph P. Young Name: Joseph P. Young Title: Credit Officer Fixed Income Securities

NATIONWIDE INDEMNITY COMPANY

By: /s/ Joseph P. Young Name: Joseph P. Young Title: Credit Officer Fixed Income Securities

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY

By: /s/ Joseph P. Young Name: Joseph P. Young Title: Credit Officer Fixed Income Securities


CONSENTED TO AS OF February 28, 2003:

BUTLER MANUFACTURING COMPANY

By: /s/ Larry C. Miller
	Name: Larry C. Miller Title: Vice President — Finance

ACKNOWLEDGED AND AGREED:

BMC REAL ESTATE, INC

By: /s/ Larry C. Miller
	Name: Larry C. Miller Title: Vice President — Finance

BUCON, INC

By: /s/ Larry C. Miller
	Name: Larry C. Miller Title: Vice President — Finance

BUTLER HOLDINGS, INC

By: /s/ Larry C. Miller
	Name: Larry C. Miller Title: Vice President — Finance

BUTLER REAL ESTATE, INC

By: /s/ Larry C. Miller
	Name: Larry C. Miller Title: Vice President — Finance


LESTER BUILDINGS, INC

By: /s/ Larry C. Miller
	Name: Larry C. Miller Title: Vice President — Finance

BUTLER PACIFIC, INC

By: /s/ Larry C. Miller
	Name: Larry C. Miller Title: Vice President — Finance

MODULINE WINDOWS, INC

By: /s/ Larry C. Miller
	Name: Larry C. Miller Title: Vice President — Finance

LIBERTY BUILDING SYSTEMS, INC

By: /s/ Larry C. Miller
	Name: Larry C. Miller Title: Vice President — Finance

Exhibit A

SUPPLEMENT TO INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT

(SUCCESSOR LENDERS)

[Date]


	Re:		Intercreditor and Collateral Agency Agreement dated as of , 2003, made by and among the Lenders and Bank of America, N.A., as Collateral Agent for itself and the other Lenders (the "Agreement”); capitalized terms used herein and not otherwise defined herein shall have the meaning provided in the Agreement.

Ladies and Gentlemen:

We acknowledge that we have received a copy of the Agreement and we refer to Section 9.2 thereof.

Upon your receipt of this Supplement, we (a) shall have all the rights anti benefits of a “Lender” under the Agreement as if we were an original signatory thereto, and (b) agree to be bound by the terms and conditions set forth in the Agreement and to be obligated thereunder as if we were an original signatory thereto.

[We hereby advise you that we have acquired from [ ], the previous holder, $[ ] principal amount of the [ ] Notes outstanding under the [1994] [1998] [2001] Note Purchase Agreement and have assumed the obligations of such previous Noteholder thereunder.]

[We hereby advise you that we have succeeded to [[ ]% of] the interest of [the Bank or applicable Assignee] under the Credit Agreement and have assumed the obligations of [the Bank or applicable Assignee] thereunder.]

We hereby advise you of the following administrative details:

Address:
Facsimile:
Telephone:

IN WITNESS WHEREOF, the undersigned has caused this Supplement to be duly executed by its proper officer thereunto duly authorized.

[NEW LENDER]


By:

		Name:
		Title:

SCHEDULE A

Security Documents

1. Security Agreement dated as of February 28, 2003 among the Company, the Guarantors and the Collateral Agent.

2. UCC Financing Statements filed in the jurisdiction of incorporation of the Company and the Guarantors.

33 EX-24.1 9 c75442exv24w1.htm POWER OF ATTORNEY Power of Attorney

EXHIBIT 24.1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned hereby constitutes and appoints John W. Huey, his true and lawful attorneys-in-fact and agents, with full power of substitution and revocation in each, for him/her and in his/her name, place and stead, to sign any or all reports (including reports on Form 10-K, Form 3, Form 4, Form 5, Schedule 13-D, Schedule 13-G, and Form 144), and any amendments thereto, required or permitted to be filed by him under the Securities and Exchange Act of 1934, or the Securities Act of 1933, with respect to beneficial ownership of, and transactions in, equity securities of BUTLER MANUFACTURING COMPANY, a Delaware corporation (the “company”), and with respect to other matters relating to the company, and to file the same, with all documents required or permitted to be filed in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.


DATED:	March 4, 2003	/S/ K. DANE BROOKSHER K.DANE BROOKSHER

DATED:	March 4, 2003	/S/ GARY M. CHRISTENSEN GARY M. CHRISTENSEN

DATED:	March 3, 2003	/S/ SUSAN F. DAVIS SUSAN F.DAVIS

DATED:	March 4, 2003	/S. C.L. WILLIAM HAW C.L. WILLIAM HAW

DATED:	March 3, 2003	/S/ JOHN J. HOLLAND JOHN J. HOLLAND

DATED:	March 3, 2003	/S/ MARK A. MCCOLLUM MARK A. MCCOLLUM

DATED:	March 6, 2003	/S/ RONALD E.RUTLEDGE RONALD E.RUTLEDGE

DATED:	March 4, 2003	/S/ GARY L. TAPELLA GARY L. TAPELLA

DATED:	March 6, 2003	/S/ WILLAM D. ZOLLARS WILLAM D. ZOLLARS

EX-13 12 butler2002.htm Butler Manufacturing 2002 Annual Report

Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Results of Operations

Butler Manufacturing Company (the company) supplies products and services for nonresidential construction markets. These markets are cyclical in nature and are subject to changes in the general economy. In 2002, while most of the domestic economy remained subdued, nonresidential construction activity posted its second year of decline. The company’s financial results reflected that trend.

[Graphical chart represented as table]:

Sales by Segment (in millions)	2002	2001	2000

North American Building Systems	$394	$440	$530
International Building Systems	$108	$82	$86
Architectural Products	$220	$232	$224
Construction	$111	$133	$149
Real Estate	$16	$38	$8

For Intersegment Sales eliminations, see footnotes on page 27.

[Graphical chart represented as table]:

Pretax Earnings by Segment (in millions)	2002	2001	2000

North American Building Systems	$(7.6)	$10.4	$31.7
International Building Systems	$8.0	$(6.1)	$4.1
Architectural Products	$8.9	$13.8	$16.8
Construction	$2.0	$3.2	$2.5
Real Estate	$3.3	$6.0	$2.6

For Pretax Earnings (Loss) for Other, see footnotes on page 27.

2002 Compared to 2001

Sales were $828 million in 2002, down $69 million or 7.6% from the prior year. The majority of the decline occurred in the North American Building Systems segment with sales of $394 million, a decline of $46 million or 10.5% from a year ago. Sales were lower in both the U.S. steel buildings and the Lester® buildings businesses compared with the prior year as demand in the manufacturing and commercial construction sectors, important markets of this segment, declined further from the already lower demand levels of 2001.

The International Building Systems segment was the bright spot with sales of $108 million reported in 2002 compared with $82 million a year ago. This segment consists primarily of the China buildings business, as the sale of the company’s European buildings business announced earlier in the year was completed in the third quarter of 2002. The increase in sales was due to growth in the China nonresidential construction markets generally, and superior execution by this business for new and repeat relationship building buyers.

The Architectural Products segment began to experience softness in their markets as sales retreated $12 million or 4.9% to $220 million in 2002. The depressed conditions in the commercial construction sector contributed to their sales decline for the year.

The Construction Services segment reported sales of $111 million in 2002, a decline of $22 million compared with a year ago. Construction opportunities for this segment declined during the year as a consequence of the generally lower demand for nonresidential structures.

The Real Estate segment’s sales were $16 million in 2002, down $22 million or 56.1% compared with a year ago. Depressed commercial construction opportunities and the de-ple-tion of project backlog affected this segment’s sales, which are project-based and generally more erratic than revenues of the company’s manufacturing operations.

Gross profit was $113 million or 13.6% of sales in 2002 compared with $137 million or 15.3% of sales in 2001. Lower sales, competitive pressures on selling prices, coupled with higher costs for raw materials, specifically steel, as well as higher employee benefits costs, contributed to lower gross profit margins in 2002. Gross profit by segment is presented below.


	*2002*		Change			Gross Profit as
	*Gross*		from			a % of sales
Dollars in millions	*Profit*		2001			*2002*		*2001*

North American Building Systems	$	51	$	(18	)	12.9	%	15.7	%
International Building Systems		17		4		15.5		15.9
Architectural Products		33		(7	)	15.2		17.2
Construction Services		11		(2	)	9.5		9.4
Real Estate		1		(1	)	7.7		6.0

Total	$	113	$	(24	)	13.6	%	15.3	%

Gross profit in the North American Building Systems segment was 12.9% in 2002 compared with 15.7% in 2001. Continued decline in sales opportunities, lower selling prices due to intense competitive pricing conditions, and rising steel prices during the year, along with increases in health care, insurance, pension, and employee separation costs were major contributors to the decline in gross profit for this segment. A plant in the U.S. metal buildings business remained offline during 2002 to balance capacity with lower market demand. The Lester® buildings business also incurred employee separation costs as their sales volume declined.

International Building Systems segment’s gross profit was 15.5% in 2002 comparable with gross profit of 15.9% in 2001.

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The company continued expanding market presence in China with additional branch offices and the construction of a second manufacturing plant to be ready in early 2003. Gross profit margins were comparable to the previous year in spite of intense competition and raw material cost increases.

The Architectural Products segment’s gross profit was 15.2% in 2002 compared with 17.2% in 2001. Declining demand, especially in the commercial construction markets served by this segment, increased price competition among industry participants and lowered profit margins.

The Construction Services segment’s gross profit was 9.5% in 2002, comparable with a year ago. Although sales volume declined with construction market conditions, this segment was successful in managing margins by continuing to focus on material erect projects, and improving construction execution.

The Real Estate segment’s gross profit was 7.7% in 2002, up from 6.0% in 2001. This business’s revenues are project-based causing gross margins to be less comparable from period to period.

Selling, general, and administrative expenses were $115 million in 2002, comparable with the prior year, while expenses as a percent of sales were higher. In general, higher costs in 2002 for health care, pension, separation costs, and other costs were offset by lower average employment levels and other cost cutting measures. The North American Building Systems segment’s selling, general, and administrative expenses also increased due to legal costs in the Lester® buildings business related to its lawsuit against the Louisiana Pacific Corporation. The International Building Systems segment incurred lower costs primarily due to the sale of European metal buildings business during the year. All other segments costs were comparable with the prior year.

Restructuring credits associated with the sale of the European metal buildings business were recorded during the year. Asset values received upon conclusion of the European metal buildings sale were greater than originally estimated, and more than offset additional severance and other benefit costs incurred, allowing for a net restructuring recovery of $.6 million.

Other income of $2.4 million increased in 2002 compared with $.9 million a year ago, due partly to the absence of a number of non-recurring costs recorded in 2001 including the move of the company’s Corporate and Buildings Division’s headquarters operations and costs associated with the company’s 100th anniversary celebration. This balance includes the rental income earned on Butler Real Estate projects being marketed for sale to third party investors.

Interest expense of $7.5 million in 2002 was slightly higher than the $6.9 million in 2001 due primarily to a combination of higher effective interest rates on slightly lower borrowing levels, and greater capitalized interest on the company’s headquarters project in 2001.

The company reported a pretax loss of $6.9 million in 2002 compared with pretax earnings of $8.3 million in 2001. The 2001 amount includes asset impairment and restructuring charges of $4.3 million and $3.9 million, respectively. The tax benefit of $5.0 million recognized in 2002 was due to a higher effective domestic tax rate on domestic losses, a lower effective tax rate due to a partial tax holiday on earnings in China, and the utilization of a capital loss carry forward. The company’s effective tax rate was a benefit of 73.2% in 2002 and an expense of 2.4% in 2001. The 2001 tax rate was lower than the statutory rate primarily due to a $4.5 million benefit associated with the impairment and restructuring charges noted above.

The company reported a net loss for 2002 of $1.8 million or $.29 per share compared with net earnings in 2001 of $8.1 million or $1.28 per share.

2001 Compared to 2000

The company’s sales were $897 million in 2001, down $63 million or 6.6%, from the prior year. The majority of the decline occurred in the North American Building Systems segment where sales were $440 million in 2001, a decline of $90 million or 17.0%. Sales in the domestic nonresidential Butler® buildings and Lester® buildings businesses were both lower than the prior year. Lower sales in these businesses were the direct result of fewer opportunities in the important commercial and manufacturing sectors. Construction buying decisions were delayed or shelved, as the global economy entered a more severe decline in the latter half of the year, accelerated by the terrorist attack of September 11. Weather conditions early in the year, especially in the northern half of the U.S., slowed construction activity and contributed to the decline in annual sales.

The International Building Systems segment’s sales were $82 million in 2001 compared with $86 million in 2000, a decline of 5.3% from the prior year. Increases in revenues from the China metal buildings business were not enough to offset the decline experienced in the European metal buildings business.

Sales in the Architectural Products segment’s increased 3.3% in 2001 to $232 million compared with $224 million a year ago. The additional capacity from the opening of a new extruding and finishing facility in Tennessee contributed to the sales growth of this business; however, sales in the Architectural Products segment’s slowed in the latter part of the year as the commercial construction market demand declined.

The Construction Services segment’s sales were $133 million in 2001 compared with $149 million, a decline of 11%. Lower comparative sales during the first half of the year, and a shift in focus to more material-erect projects, which produce less sales volume on a per project basis, and a more selective pursuit of turnkey construction projects, contributed to the decline. Construction

Page 10

services experienced an increase in comparative sales in the latter half of the year due to increased volume from relationship accounts with multiple-location project opportunities, and a large governmental project, which required repetitive standard structures on a fast-track implementation schedule.

The Real Estate segment’s sales in 2001 were $38 million, an increase of $30 million over the prior year. The increase in sales was due to a record backlog of completed projects available for sale at the beginning of 2001 vs. 2000. Butler Real Estate’s revenue stream is more erratic than that of the company’s manufacturing operations due to the project nature of the business.

Gross profit in 2001 was $137 million, or 15.3% of sales compared with $169 million, or 17.6% of sales in 2000. Gross profit by segment is presented below.


	*2001*		Change			Gross Profit as
	*Gross*		from			a % of sales
Dollars in millions	*Profit*		2000			*2001*		*2000*

North American Building Systems	$	69	$	(30	)	15.7	%	18.7	%
International Building Systems		13		(2	)	15.9		17.0
Architectural Products		40		(1	)	17.2		18.3
Construction Services		13		–		9.4		8.2
Real Estate		2		1		6.0		15.6

Total	$	137	$	(32	)	15.3	%	17.6	%

Gross profit as a percent of sales in the North American Building Systems segment was 15.7% in 2001 compared with 18.7% in 2000. Declining sales opportunities in the nonresidential construction market caused by the economic downturn lowered this segment’s manufacturing productivity and gross profit margins during the year. The U.S. metal buildings business took one plant offline during the latter part of the year to better balance its capacity with market demand. Competitive conditions throughout the year reduced product selling prices, lowering gross profit margins as well.

The International Building Systems segment’s gross profit percentage was 15.9% in 2001 compared with 17% in 2000. The gross profit percentage declined modestly in the China business and more severely in the European business, primarily due to the impacts of competitive pricing generally and recession in Europe specifically.

Gross profit as a percent of sales in the Architectural Products segment was 17.2% in 2001 compared with 18.3% in the prior year. Start-up costs associated with the new Tennessee plant, as previously out-sourced production was transitioned in-house during the year, and the slowing commercial construction market in the latter half of the year were the primary contributors to the decline.

The Construction Services segment’s gross profit percentage increased to 9.4% in 2001 from 8.2% in the prior year. A shift in focus to material-erect projects, a more selective pursuit of turnkey projects, good project execution, and better margins on the multi-site program mentioned previously were the primary causes for the improvement.

The Real Estate segment’s gross profit percentage declined to 6% in 2001 from a historically high rate of 15.6% in the prior year. Gross margins on project sales in 2001 reflected a more typical rate for the merchant developer market niche in which Butler Real Estate operates.

The company’s selling, general, and administrative expenses were $115 million in 2001 compared with $124 million in 2000, a 7.4% decrease from the prior year. The decrease was primarily accomplished in the North American Building Systems and Construction Services segments, driven by volume decreases as well as reductions from a number of continuous improvement, organizational change, and cost control initiatives. Selling, general, and administrative expenses increased in the International Building Systems and Architectural Products segments due to expenditures to fund growth initiatives in both segments, including costs associated with new plant capacity and an expanded sales presence in China.

During the fourth quarter, the company recorded pretax charges of $4.3 million for asset impairment and $3.9 million for restructuring, related to the decision to sell certain assets and dispose of other assets of its European metal buildings operation. The after-tax impact of the charges was $3.6 million, or $.58 per share. A letter of intent was signed early in the year and the sale was completed in the third quarter of 2002. Excluding these special charges, the operating loss for the company’s European operations was $3.3 million during 2001. The European business is included in the International Building Systems segment.

Operating income for 2001 was $14.3 million as compared with $45.2 million in 2000.

Other income was $.9 million for the year compared with expense of $1.6 million in the prior year. The primary reason for the favorable increase was due to higher rental income in the company’s Real Estate segment. Butler Real Estate entered 2001 with a record backlog of completed projects. It generates rental income from tenants occupying completed real estate developments while the facilities are being marketed for sale to third party investors.

Interest expense totaled $6.9 million in 2001 compared with $5.2 million the prior year. The increase was primarily due to interest expense related to the new $50 million private placement notes issued by the company to a group of insurance companies in June 2001.

Pretax earnings for 2001 were $16.4 million before, and $8.3 million after asset impairment and restructuring charges associated with the company’s European business. The company realized

Page 11

a $4.5 million tax benefit associated with the pending sale of the European business.

The company’s effective tax rate was 2.4% in 2001. This rate includes a $4.5 million benefit associated with the sale of the European business. Excluding this benefit and the related special charges, the effective rate would have been 28.7% as compared with 34.3% in the prior year. A partial tax holiday for the company’s China subsidiary, favorable settlements of tax audits, and the utilization of a capital loss carry forward contributed to the lower effective rate in 2001.

The after-tax effect of the European special charges decreased net earnings by $3.6 million or $.58 per share. Net earnings were $8.1 million or $1.28 per share in 2001 compared with $25.2 million or $3.86 per share in 2000.

[Graphical chart represented as a table]:

Cash Increased $23 Million During 2002 (in millions)

Sources
	Net earnings adjusted for non-cash items	$16
	Working Capital plus noncurrent activities	$1
	Real Estate Developments – Net	$11
	Proceeds from Assets Sales	$26

Uses
	Capital Expenditures and Other	$24
	Borrowing Activities – Net	$3
	Dividends and Treasury Stock	$4

Liquidity and Capital Resources

Cash flow by activity for the last three years is summarized below.

Dollars in millions		2002			2001			2000

Net earnings adjusted for non-cash items		$	16		$	34		$	40
Working capital plus noncurrent activities			1			11			(16	)
Real estate developments			11			29			(34	)

	Total operating activities		28			74			(10	)

Capital expenditures and other – Net			(24	)		(46	)		(35	)
Proceeds from asset sales			26			-			–
Borrowings activities – Net			(3	)		12			28
Dividends and treasury stock			(4	)		(4	)		(19	)

Cash flow		$	23		$	36		$	(36	)

During 2002, the company increased its cash and cash equivalents by $23 million. The main contributors to this increase were $28 million generated from operations and $26 million from asset sales. The main use of cash during 2002 was $24 million used for capital investments, $3 million for net repayment of debt, and $4 million for dividends and treasury stock transactions.

The $28 million in operating cash flow was comprised of several components. Net losses of $2 million plus $18 million of non-cash items charged to earnings, including depreciation and amortization expense, and restructuring items provided $16 million. Net reductions in various working capital and other noncurrent operating assets provided $1 million. Positive cash flow from receivables reductions were offset by decreases in accounts payable, both due primarily to the declining business activity. Proceeds from the sales of real estate development projects, net of costs incurred for new developments, provided additional operating cash of $11 million in 2002.

Net funds provided for investing purposes totaled $2 million in 2002. Capital expenditures of $24 million included $16 million used for property, plant, and equipment additions, of which approximately $10 million was used for the construction of a second manufacturing plant in China. In addition, $8 million was capitalized for computer systems primarily for the North American Building Systems segment. Funds generated from asset sales of $26 million include the $2 million generated from the European asset sale in the third quarter of 2002, as well as $24 million proceeds from the sale and leaseback of the company’s headquarters facility, which occurred in the fourth quarter.

At year end, the company’s domestic credit agreement provided $35 million of total credit capacity, with sub-limits of $30 million for letters of credit and $10 million for cash borrowings. As of December 31, 2002, the company had used $20.2 million of the line for letters of credit. During the fourth quarter of 2002, the company asked for and received both a waiver and an amendment to the credit agreement to reset covenants under the line. The amendment, along with a subsequent waiver and amendment issued in February 2003, required the company to provide security for the credit line. In February, 2003, amendments and agreements were entered into between the company, the credit agreement banks, and the company’s private placement note holders, which provided these creditors security by granting liens on substantially all domestic assets of the company. In addition, certain covenants within the private placement note agreements were amended, and the coupon rate for the notes was increased by 1.5 percent. Upon the achievement of certain provisions of the note amendments, 1.25 percent of this increase shall expire. The amended credit agreement and note agreements allow the company’s Real Estate Segment to incur up to $35 million in non-recourse debt with other lenders to fund a portion of its development activity, providing another avenue for liquidity. As of December 31, 2002, the company had no debt outstanding under this provision.

At December 31, 2002, the company had additional credit lines available for foreign subsidiary borrowings of approximately $3.5 million at current exchange rates, with no borrowings outstanding.

Based upon the current outlook for the company, management believes the company’s cash balances, anticipated operating cash flow, complemented by the existing bank credit lines, is sufficient to meet foreseen liquidity requirements.

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[Graphical chart represented as a table]:

Capital Employed by Segment, at Year End (in millions)	2002	2001	2000

North American Building Systems	$66	$93	$100
International Building Systems	$34	$27	$29
Architectural Products	$81	$92	$84
Construction	$2	$(7)	$8
Real Estate	$29	$28	$52

Market Risk

The company’s principal exposures to market risk are changes in commodity prices, interest rates, currency exchange rates, and product pricing. To limit exposure to select risks, the company enters into commodity and currency hedging transactions, and forward purchasing arrangements. The company does not use financial instruments for trading purposes.

Commodity Price Exposure: The primary commodities used in the company’s operations are steel, aluminum, and lumber. Steel is the company’s largest purchased commodity. The company enters into forward steel and wood purchase arrangements in its metal buildings businesses for periods of less than one year’s duration to protect against potential price increases. Increases in the company’s steel costs are generally recaptured in the price of the company’s products. Steel prices in 2002 have risen sharply partly due to tariffs imposed by the U.S. Government on certain imported steel products. While recent investments and increased operating efficiencies in the company’s operations have helped to dampen the impact of the increase, the company implemented price increases on most of its products to mitigate the impact of rising steel prices. Due to the intensity of competitive pricing of the company’s products, not all of the price increases were realized in 2002.

Aluminum hedge contracts of less than one year’s duration are purchased to hedge the engineered products backlog of the Vistawall group against potential losses caused by increases in aluminum costs. This product line is more sensitive to material cost movements because of its longer lead times from project quoting to manufacture. Gains or losses on hedge contracts are recorded as cost of sale adjustments when the underlying product sale is recognized.

The company hedges aluminum and Canadian foreign exchange exposures created by its ongoing operations. At December 31, 2002, the fair value of open aluminum contracts recorded in cumulative other comprehensive income was less than $.1 million, pretax. Unrealized losses on the company’s Canadian currency exchange contracts were recorded in earnings and were less than $.1 million pretax at December 31, 2002. At December 31, 2002, a 10% change in either aluminum or Canadian currency contracts would be immaterial to the company.

Interest Rates: Ninety-four percent of the company’s total debt carries a fixed rate of interest, which limits the company’s exposure to increases in market rates. However, interest rate changes impact the fair market value of such debt. At December 31, 2002, holding all other variables constant, including levels of indebtedness, a one percentage point change in interest rates would result in an approximate $5.1 million change in the fair market value of the company’s total debt. Principal payments over the next five years on the fixed-rate debt are $34.2 million, with a weighted-average interest rate of 7.15%. At the end of five years, then outstanding fixed-rate debt of $61.9 million will carry a weighted-average interest rate of 7.49%. The company’s short-term bank borrowings provide for interest at variable rates. The company does not hedge its interest rate exposure.

Foreign Currency Fluctuation: The majority of the company’s business is conducted in U.S. dollars, limiting the company’s exposure to foreign currency fluctuations. The company’s foreign-based operations use the local currency as their functional currency. The company has both transaction and translation foreign exchange exposure in its foreign markets.

At December 31, 2002, the company’s net asset investment in foreign operations was $31 million. Due to its relative cost, limited availability, and the company’s long-term investment perspective, the company does not hedge its foreign net asset exposure.

The company does hedge its short-term foreign currency transaction exposure related to metal building sales activity in Canada. Forward exchange contracts are purchased to cover a portion of the exposure.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets” which was effective January 1, 2002. SFAS 142 eliminates further amortization on goodwill and intangible assets with indefinite useful lives, and requires impairment of goodwill and intangible assets be assessed annually, with valuation write-downs, if any, reflected in the financial statements. Adoption of SFAS 142 did not have a material impact on the company’s results of operations or financial position.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations”, which was effective January 1, 2003. SFAS 143 requires the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. The adoption of SFAS 143 is not expected to have a material impact on the company’s results of operations or financial position.

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In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. In general, SFAS 144 changes and clarifies the accounting for long-lived assets. SFAS 144 was effective January 1, 2002, and did not have a material impact on the Company’s results of operations or financial position.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. This statement is effective on January 1, 2003. SFAS 146 changes the accounting for costs associated with exit or disposal activities. It is not expected that this statement will have a material effect on the company’s results of operations or financial position.

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. The disclosure requirements of FIN 45 were effective for the year ended December 31, 2002. The liability recognition requirements are effective January 1, 2003. Adoption of FIN 45 is not expected to have a material impact on the company’s results of operations or financial position.

Management’s Judgments and Estimates

In preparing the financial statements, a number of assumptions and estimates are determined, that in the judgment of management, are proper in light of existing general economic and company-specific circumstances. Examples of areas in which judgments and estimates are required include the collectibility of receivables, the value of inventory, the future useful life of long-lived assets, such as plant, equipment, and internally generated software, as well as the value of certain contingent liabilities, including product warranties and claims arising in the ordinary course of business. While the company has taken reasonable care in preparing these estimates and making these judgments, actual results could and probably will differ from the estimates. Management believes that any difference in the actual results from the estimates will not have a material adverse effect upon the company’s financial position or results of operations.

Contractual Obligations, Commercial Commitments

The company’s principal contractual obligations and other commercial commitments are summarized below and disclosed in the footnotes to consolidated financial statements:

		Payments due by period (in thousands)

				Less than						After 5
		Total		1 year		1-3 years		4-5 years		years

Contractual Cash Obligations:
	Long-term debt other than capital leases	$	97,950	$	5,460	$	7,629	$	16,701	$	68,160
	Capital lease obligations		4,389		813		1,828		1,748		-
	Operating lease obligations		55,763		6,492		10,901		6,096		32,274
	Hedge contract obligations		3,104		3,104		-		-		-

Total contractual cash obligations		$	161,206	$	15,869	$	20,358	$	24,545	$	100,434


Other Commercial Commitments:
	Standby letters of credit	$	20,158	$	20,158	$	-	$	-	$	-

Total commercial commitments		$	20,158	$	20,158	$	-	$	-	$	-

Critical Accounting Policies

Critical accounting policies are defined as those that are both most important to the portrayal of a company’s financial condition and results of operations, and require management’s most difficult, subjective or complex judgments. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles with no need for the application of management’s judgment. In certain circumstances, however, the preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires judgment to make certain estimates and assumptions. These estimates affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The company’s critical accounting polices include its sales recognition for construction and project contracts, inventory valuation, estimation of product liability for third-party claims, estimation of insurance reserves, and accounting for impairment of long-lived assets. See Note 1 to our consolidated financial statements for a detailed discussion of these and other accounting policies.

Page 14

Sales Recognition: Sales and gross profit recognition for construction and project contracts are based upon the percentage of completion method. This method requires the company to estimate total cost at completion for each in-process construction project. Total contract revenue less total estimated costs generates an estimated gross profit for each contract. Based upon estimated total cost and estimated gross profit, the company recognizes construction sales and gross profit over the life of the project on a percentage of completion basis. The percentage complete at each period end date is determined using costs actually incurred as of that date compared to the estimate of total contract costs at completion. Periodic re-evaluations of total cost at completion estimates are made with the resulting cumulative adjustments recognized in the current period financial statements. Provision is made for estimated probable losses on projects when it is determined that a loss will be incurred. Actual costs for completed projects can and typically will vary from earlier estimates, with the final adjustment from estimate to actual costs recognized during the period when the project is completed.

Inventory Valuation: The company has chosen the last-in, first-out (LIFO) accounting method for valuing inventory in the majority of its manufacturing businesses. In periods of rising prices and steady or increasing levels of inventory, the effect of the LIFO method is to charge the current year cost of sales with inventory purchases that reflect current year costs. This method results in a better matching of current costs with current sales during an accounting period. Generally it presents a more conservative valuation of the company’s inventory, and the gross profit and net earnings reported for the period. The LIFO valuation is a year end measurement process requiring estimates for the determination of quarterly gross profit and quarter-end inventory valuation. At December 31, 2002, the cumulative effect of choosing the LIFO method was a reduction in inventory values of $9.5 million. During 2002, the company reduced inventory levels, which had the effect of charging the current year cost of sales with prior years’ costs. For 2002, the use of LIFO inventory accounting decreased gross margins by $1.0 million.

Third-Party Claims: The company is subject to third-party claims associated with its products and services. The time period from when a claim is asserted to when it is resolved either by dismissal, negotiation, settlement, or litigation can be several years. While the company maintains product liability insurance, its arrangements include significant self-retention of risk in the form of policy deductibles. In addition, certain claims are not insured. Actual claim settlement costs and litigation awards can and probably will vary from the estimates made by the company. Management believes that any difference in the actual results from the estimates will not have a material adverse effect upon the company’s financial position or results of operations.

Insurance Accruals: 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 accruals. At the time a worker’s 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 using analyses provided by third party administrators. 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 and selling, general, and administrative expenses in the period of adjustment. Group medical accruals are estimated using historical claims experience.

The company maintains excess liability insurance with 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 operating results.

Long-Lived Assets: The company accounts for the impairment of long-lived assets in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” When events or circumstances indicate that a long-lived asset may not be recoverable, the company tests for recoverability of the asset by comparing undiscounted future cash flows to the carrying amount. If undiscounted future cash flows are less than the asset carrying amount, an impairment charge is recorded and the asset’s carrying value is reduced to fair value. Management estimates the future cash flows based on current operating conditions. Changes in estimates of such cash flows could impact the results of the impairment test. There were no impairment charges recorded in 2002.

Management Transition and Director Retirements

Robert J. Reintjes, Sr., retired from the Board of Directors in 2002 after 8 years of service. Succeeding Mr. Reintjes is Mark A. McCollum, who was elected to the board in January 2003. Mr. McCollum is Senior Vice President and Chief Financial Officer of Tenneco Automotive, Inc., a global manufacturer of ride control and exhaust systems.

Share Repurchase Agreement and Cash Dividends

In April 2000, the Board of Directors authorized the repurchase of 750,000 shares of Butler common stock to be used for employee benefit plans and other corporate purposes. Stock purchases may be made from time to time in the open market and in private transactions at prevailing market prices. At December 31, 2002, 380,814 shares remained available for repurchase from the April 2000 Board authorization.

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On January 21, 2003, the Board of Directors declared a regular dividend of $.18 per share, payable on April 4, 2003, to shareholders of record on March 21, 2003. Dividends paid during 2002 totaled $4.5 million.

Change In Company’s Certifying Accountants

The Board of Directors of the company, upon the recommendation of its Audit Committee, approved dismissal of Arthur Andersen LLP (“Arthur Andersen”) as the company’s independent auditors and the appointment of KPMG LLP to serve as the company’s independent auditors for the year ending December 31, 2002. The change was effective May 16, 2002.

KPMG LLP issued their audit report on the company’s consolidated financial statements for the year ending December 31, 2002. A copy of their audit report is included with the company’s financial statements. Included also is a copy of Arthur Andersen’s audit report on the company’s consolidated financial statements for each of the years ended December 31, 2001 and 2000.

Outlook

At this point in the economic cycle, it is difficult to predict when nonresidential construction demand will recover from the current low levels. F.W. Dodge forecasts little change in overall construction demand for 2003. The company’s systems approach to building construction solutions continues to capture a significant share of the nonresidential market served. Order backlog at year end was $264 million, 14% lower than a year ago. While the construction project backlog was down 40%, the higher margin product backlog was 2% lower compared with 2001. The Company will continue its focus on reducing costs, and also on developing products and services for a broader segment of the nonresidential construction market.

Forward Looking Information

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which may include statements concerning projection of revenues, income or loss, capital expenditures, capital structure, or other financial items, statements regarding the plans and objectives of management for future operations, statements of future economic performance, statements of future operations, statements of the assumptions underlying or relating to any of the forgoing statements, and other statements which are other than statements of historical fact. These statements appear in a number of places in this report and include statements regarding the intent, belief, or current expectations of the company and its management with respect to (i) the cost and timing of the completion of new or expanded facilities, (ii) the company’s competitive position, (iii) the supply and price of materials used by the company, (iv) the demand and price for the company’s products and services, or (v) other trends affecting the company’s financial condition or results of operations including changes in manufacturing capacity utilization and corporate cash flow in both domestic and international markets. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially as a result of these various factors.

Note: Percentages presented within the MD&A are based upon amounts to the nearest thousand.

Page 16

Reports of Independent Public Accountants

To the Shareholders of Butler Manufacturing Company:

We have audited the accompanying consolidated balance sheet of Butler Manufacturing Company (a Delaware corporation) and subsidiaries as of December 31, 2002 and the related consolidated statements of earnings and retained earnings, comprehensive income, 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 financial statements based on our audit. The accompanying consolidated financial statements of the company as of December 31, 2001 and for the years ended December 31, 2001 and 2000 were audited by other auditors who have ceased operations. Those auditors’ report, dated January 29, 2002, on those financial statements, expressed an unqualified opinion and included an explanatory paragraph that described the change in the company’s method of accounting for the recognition of asset gains and losses considered in the determination of net pension expense for its base retirement pension plan.

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 financial position of Butler Manufacturing Company and subsidiaries at December 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.

/s/ KPMG LLP

Kansas City, Missouri
February 28, 2003

To the Shareholders of Butler Manufacturing Company:

We have audited the accompanying consolidated balance sheets of Butler Manufacturing Company (a Delaware corporation) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of earnings and retained earnings, comprehensive income and cash flows for each of the three years in the period ended December 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Butler Manufacturing Company and subsidiaries at December 31, 2001 and 2000, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

As explained in the notes to the financial statements, effective January 1, 2001, the company changed its method of accounting for the recognition of asset gains and losses considered in the determination of net pension expense for its base retirement pension plan.

/s/ Arthur Andersen LLP

Kansas City, Missouri
January 29, 2002

This audit report of Arthur Andersen LLP, our former independent public accountants, is a copy of the original report dated January 29, 2002 rendered by Arthur Andersen LLP on our consolidated financial statements included in our form 10-K filed on March 28, 2002, and has not been reissued by Arthur Andersen LLP since that date. This report refers to financial statements not physically included in this annual report.

Page 17

Consolidated Balance Sheets


				At December 31,
Dollars in thousands				2002			2001

Assets
Current assets:
	Cash and cash equivalents			$	75,778		$	52,569
	Receivables:
		Trade			100,026			112,459
		Other			2,472			4,201

					102,498			116,660
		Allowance for possible losses			(7,496	)		(7,138	)

			Net receivables		95,002			109,522
	Inventories				57,489			57,435
	Real estate developments in progress				13,203			23,966
	Net current deferred tax assets				25,238			16,636
	Income tax receivable				6,132			4,500
	Other current assets				8,360			10,439

			Total current assets		281,202			275,067

Investments and other assets					50,684			48,741

Assets held for sale					3,684			3,684

Property, plant, and equipment, at cost:
	Land				6,212			7,280
	Buildings				81,088			93,515
	Machinery, tools, and equipment				163,974			160,726
	Office furniture and fixtures				30,042			38,498
	Transportation equipment				2,430			2,341

					283,746			302,360
	Accumulated depreciation				(163,482	)		(159,090	)

			Net property, plant, and equipment		120,264			143,270

				$	455,834		$	470,762

See Accompanying Notes to Consolidated Financial Statements.

Page 18


			At December 31,
Dollars in thousands			2002			2001

Liabilities and Shareholders’ Equity
Current liabilities:
	Notes payable to banks		$	-		$	2,100
	Current maturities of long-term debt			6,273			5,617
	Accounts payable			58,578			70,362
	Dividends payable			1,136			1,131
	Accrued taxes and other expenses			93,677			79,624
	Accrued payroll and benefit expense			13,077			17,049
	Billings in excess of costs and estimated earnings			3,356			1,564
	Taxes on income			10,665			8,659

		Total current liabilities		186,762			186,106

Net noncurrent deferred tax liabilities				4,442			3,683

Other noncurrent liabilities				19,393			18,254

Long-term debt, less current maturities				96,066			98,244

Shareholders’ equity:
	Common stock, no par value, authorized 20,000,000 shares, issued 9,088,200 shares, at stated value, outstanding 6,310,502 shares in 2002 and 6,280,783 in 2001			12,623			12,623
	Foreign currency translation adjustment and hedging activity			329			(165	)
	Minimum pension liability, net of tax			(16,822	)		(6,626	)
	Retained earnings			217,307			223,594
	Cost of common stock in treasury, 2,777,698 shares in 2002 and 2,807,417 shares in 2001			(64,266	)		(64,951	)

		Total shareholders’ equity		149,171			164,475

			$	455,834		$	470,762

Page 19

Consolidated Statements of Earnings and Retained Earnings


		Years Ended December 31,
Dollars in thousands, except per share amounts			2002		2001			2000

Net sales		$	828,209		$	896,572		$	960,377
Cost of sales			715,203			759,331			791,654

	Gross profit		113,006			137,241			168,723
Selling, general, and administrative expenses			115,370			114,846			123,975
Asset impairment charge			–			4,285			–
Restructuring charge (credit), net			(631	)		3,854			(441	)

	Operating income (loss)		(1,733	)		14,256			45,189
Other income (expense), net			2,404			935			(1,637	)

	Operating and other income (expense), net		671			15,191			43,552
Interest expense			7,529			6,929			5,159

	Pretax earnings (loss)		(6,858	)		8,262			38,393
Income tax expense (benefit)			(5,022	)		202			13,178

	Net earnings (loss)		(1,836	)		8,060			25,215
Retained earnings at beginning of year			223,594			220,113			199,229

			221,758			228,173			224,444
Dividends declared – common stock: $.72, $.70, $.66			(4,541	)		(4,400	)		(4,241	)
Net change in retained earnings from treasury stock transactions			90			(179	)		(90	)

Retained earnings at end of year		$	217,307		$	223,594		$	220,113

Basic earnings (loss) per share		$	(0.29	)	$	1.28		$	3.87

Diluted earnings (loss) per share		$	(0.29	)	$	1.28		$	3.86

Consolidated Statements of Comprehensive Income


			Years Ended December 31,
Dollars in thousands				2002		2001			2000

Net earnings (loss) per Statements of Earnings:			$	(1,836	)	$	8,060		$	25,215
	Other comprehensive income (loss):
		Foreign currency translation adjustment and hedging activity		388			(437	)		(375	)
		Minimum pension liability, net of tax		(10,196	)		(6,626	)		–

Comprehensive income (loss)			$	(11,644	)	$	997		$	24,840

See Accompanying Notes to Consolidated Financial Statements.

Page 20

Consolidated Statements of Cash Flows


				Years Ended December 31,
Dollars in thousands					2002		2001			2000

Cash flows from operating activities:
Net earnings (loss)				$	(1,836	)	$	8,060		$	25,215
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities:
	Depreciation and amortization				18,914			18,104			15,594
	Asset impairment				–			4,285			–
	Restructuring charge (credit), net				(631	)		3,854			(441	)
	Equity in loss (earnings) of joint ventures				104			87			(349	)
	Change in assets and liabilities, net of sale of businesses and excluding effect of pension and hedging related other comprehensive income (loss):
		Net receivables			14,779			28,175			(23,122	)
		Inventories			(804	)		2,928			(1,519	)
		Real estate developments in progress, net			10,763			28,657			(33,898	)
		Net current deferred tax assets			(1,594	)		285			(1,581	)
		Other current assets and current liabilities			(14,347	)		(1,908	)		9,707
		Other noncurrent operating assets and liabilities			2,706			(18,836	)		704

			Net cash provided (used) by operating activities		28,054			73,691			(9,690	)


Cash flows from investing activities:
Capital expenditures – property, plant, and equipment					(16,276	)		(44,583	)		(36,938	)
Capital expenditures – software					(7,637	)		(5,355	)		(1,930	)
Proceeds from European assets sale					2,345			–			–
Headquarters building sale					24,000			–			–
Dividend received from joint venture					–			–			2,400
Net decrease in other nonoperating assets					–			4,029			1,049

			Net cash provided (used) by investing activities		2,432			(45,909	)		(35,419	)


Cash flows from financing activities:
Proceeds from issuance of long-term debt					4,131			50,701			1,650
Repayment of long-term debt					(5,653	)		(5,755	)		(5,373	)
Net change in notes payable to banks					(2,100	)		(33,001	)		31,731
Dividends paid					(4,536	)		(4,332	)		(4,277	)
Issuance of treasury stock					710			871			778
Purchase of treasury stock					(25	)		(279	)		(15,121	)

		Net cash provided (used) by financing activities			(7,473	)		8,205			9,388
Effect of exchange rate changes					196			(273	)		(375	)

		Net change in cash and cash equivalents			23,209			35,714			(36,096	)
Cash and cash equivalents at beginning of year					52,569			16,855			52,951

		Cash and cash equivalents at end of year		$	75,778		$	52,569		$	16,855

See Accompanying Notes to Consolidated Financial Statements.

Page 21

Notes to Consolidated Financial Statements

Significant Accounting Policies

Principles of Consolidation
The consolidated financial statements include Butler Manufacturing Company and all subsidiaries more than 50% owned (herein stated as “the company”). Investments in business entities in which the company does not have control (generally 20% to 50% ownership) are accounted for by the equity method. All significant intercompany profits, account balances, and transactions are eliminated in consolidation.

Reclassifications
Certain inconsequential reclassifications have been made to prior years information to conform to the 2002 presentation.

Use of Estimates
Management of the company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with generally accepted accounting principles in the United States. Actual results could differ from those estimates.

Cash and Cash Equivalents
Cash and cash equivalents are defined as all demand deposits and highly liquid investments with original maturities of 90 days or less.

Sales Recognition
Sales from manufacturing operations are recognized when goods are shipped “free on board” (FOB) from their shipping point and when all obligations of the company have been met. For those limited instances where goods are shipped on company trucks, sales are recognized on a FOB destination point basis.

Sales and gross profit recognition for construction and project contracts are based upon the percentage of completion method. This method requires the company to estimate total contract cost at completion for each in-process construction project. Total contract revenue less total estimated costs generates an estimated gross profit for each contract. Based upon estimated total costs and estimated gross profit, the Company recognizes construction sales and gross profit over the life of the project using a percentage of completion method. The percentage complete at each period end date is generally determined using costs actually incurred as of that date compared to the estimate of total contract cost at completion. Periodic re-evaluation of estimated total costs at completion are made with the resulting cumulative adjustments recognized in the current period financial statements. Provision is made for estimated probable losses on projects when it is determined that a loss will be incurred. Actual costs for completed projects can and typically will vary from earlier estimates, with the final adjustment from estimate to actual costs recognized during the period when the project is considered completed.

Sales and gross profit for the Real Estate segment are recognized when real estate development projects are sold to third party investors. Rental income, classified as other income, is recognized on completed projects occupied by leasing tenants while the project is being held for sale.

Inventory Valuation
Inventories are valued at the lower of cost or market and include material, labor, and manufacturing overhead. The last-in, first-out (LIFO) method of determining cost is used for substantially all domestic inventories. If the first-in, first-out (FIFO) method had been used for all locations, inventories would have been $9.5 million and $8.5 million higher than those reported at December 31, 2002 and 2001, respectively.

The use of the LIFO method to calculate cost of sales decreased net earnings by $.6 million ($.10 per share) in 2002, increased net earnings by $.9 million ($.14 per share) in 2001, and decreased net earnings by $.4 million ($.06 per share) in 2000. During 2002, inventory levels decreased in certain of the company’s business units. Under the LIFO method, the decrease in inventory levels had the effect of charging the 2002 cost of sales with prior years’ costs of less than $.1 million, thereby increasing net earnings less than $.1 million or less than $.01 per share. These amounts are included in the net earnings and per share amounts presented above.

Inventories by Component


Dollars in thousands		2002			2001

Raw materials		$	23,108		$	20,132
Work in process			7,608			13,692
Finished goods			36,283			32,100

	FIFO inventory		66,999			65,924
LIFO reserve			(9,510	)		(8,489	)

	Inventory	$	57,489		$	57,435

Third Party Claims
The company is subject to third-party claims associated with its products and services. The time period from when a claim is asserted to when it is resolved either by dismissal, negotiation, settlement, or litigation can be several years. While the company maintains product liability insurance, its arrangements include significant self-retention of risk in the form of policy deductibles. In addition, certain claims are not insured. Actual claim settlement costs and litigation awards can and probably will vary from the estimates made by the company. Management believes that any difference in the actual results from the estimates will not have a material adverse effect upon the company’s financial position or results of operations.

Page 22

Insurance Accruals
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 accruals. At the time a worker’s 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 using analyses provided by third party administrators. 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 and selling, general, and administrative expenses in the period of adjustment. Group medical accruals are estimated using historical claims experience.

Long-Lived Assets
The company accounts for the impairment of long-lived assets in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” When events or circumstances indicate that a long-lived asset may not be recoverable, the company tests for recoverability of the asset by comparing estimates of undiscounted future cash flows to the carrying amount. If undiscounted future cash flows are less than the asset carrying amount, an impairment charge is recorded and the asset’s carrying value is reduced to fair value. Management, based on current operating conditions, estimates the future cash flows; however, changes in estimates of such cash flows could impact the results of the impairment test. There were no impairment charges recorded in 2002.

Property, Plant, and Equipment
Depreciation is calculated using the straight-line method over the estimated useful lives of the assets for financial reporting purposes and accelerated methods for income tax purposes. Expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement of assets, the cost and the accumulated depreciation amounts are removed from the accounts. The estimated useful lives of property are as follows:

Land improvements	15 to 20 years
Buildings and improvements	7 to 33 years
Machinery and equipment	3 to 15 years
Office furniture and fixtures	3 to 15 years

Capital expenditures for property, plant and equipment in 2002 were $16 million compared to $45 million in 2001. In 2002, approximately $10 million was used in construction of a second metal buildings plant in Tianjin, China, which will go into service in 2003. Other expenditures, in 2002, included general factory capital costs. In 2001, $27 million was used to construct and furnish the majority of the company’s new world headquarters building, which subsequently has been sold and leased back. Other 2001 expenditures included costs to complete the installation of process lines in the Vistawall manufacturing plant in Tennessee and the construction of the company’s Shanghai, China office and warehouse facilities. Interest has been capitalized in connection with the development of new facilities and is amortized over the estimated useful live of the related assets. Interest capitalized was $.1 million during 2002, $.6 million in 2001, and $.3 million in 2000.

Research and Development Costs
Costs incurred in the creation and start-up of new products or changes of existing products are charged to expense as incurred. The company expended $1.2 million, $1.3 million, and $1.2 million of research and development costs in 2002, 2001, and 2000, respectively.

Capitalized Software
Capitalized software costs are recorded in “Investments and other assets” in the consolidated balance sheets. At December 31, 2002 and 2001, capitalized software costs, net of amortization, were $18.0 million and $14.6 million, respectively. Costs capitalized in 2002 and 2001 include the implementation of a scalable enterprise system in the North American Building Systems segment. Costs are amortized on a straight-line basis over periods not exceeding seven years once applications are implemented and operational. Amortization of software cost was $4.2 million in 2002 and 2001, respectively, and $3.4 million in 2000. During 2001, $1.3 million, reflecting the disposition of certain software applications in the North American Building Systems segment, reduced unamortized costs of software applications.

Goodwill and Other Intangible Assets
In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 provides guidance on accounting and reporting for goodwill and intangible assets. Goodwill and intangible assets acquired in a purchase business combination which are determined to have an indefinite useful life are no longer amortized over future periods, but are assessed at least annually for impairment using a fair value based test. Intangible assets with estimable useful lives continue to be amortized over their respective useful lives. The company adopted the new standard on January 1, 2002.

Page 23

In September 2002, the company performed the annual impairment test for goodwill related to its Architectural Products business segment using methodology required under SFAS No. 142, which requires the company to evaluate impairment based on the fair value of assets held in the relevant reporting unit. It was determined that the fair value of assets related to the Architectural Products reporting unit exceeded its carrying value and no impairment was recognized.

Prior to the 2001 asset impairment charge, referenced In the Restructuring and Asset Impairment Charges footnote, $5.9 million of goodwill was recorded in the balance sheet, with $5.5 million in the Architectural Products segment and $.4 million in the European operation of its International Building Systems segment. European goodwill was written off in 2001 with the announced disposition of that business. Goodwill was amortized over 40 years prior to adoption of this standard. At the end of 2002 and 2001, the company had $5.5 million of goodwill and other intangible assets recorded in the balance sheets. Goodwill amortization in 2001 and 2000 was $.1 million, respectively, net of tax.

million and $1.4 million at December 31, 2002 and 2001, respectively. These costs are being amortized over the fifteen year life of the agreements. For 2002, 2001, and 2000, amortization was $.1 million, net of tax each year. Estimated amortization expense for each of the next five years is $.2 million.

Derivative Instruments and Hedging Activities
The company enters into aluminum contracts to hedge the cost of a portion of the aluminum used in its Architectural Products segment. These contracts qualify for hedge accounting. Unrealized gains or losses on open contracts are recorded in comprehensive income until the contract settles with a corresponding adjustment to inventory (for losses) or deferred income (for gains). Gains or losses on contracts are recognized in earnings as an adjustment to cost of sales when the underlying inventory is sold. No gain or loss was recorded for open contracts due to the highly effective nature of the hedges in 2002 and 2001. The amounts recorded in cumulative other comprehensive income related to these contracts was a gain of less than $.1 million for 2002 and a $.2 million loss for 2001. The 2001 amount was recognized in 2002 earnings, and the 2002 amount is expected to be recognized in 2003.

The company enters into forward currency exchange contracts to hedge a portion of its exposure associated with Canadian dollar denominated sales and net cash flow for its Canadian operations within the North American Building Systems segment. The company’s costs for this operation are primarily denominated in U.S. dollars. While these hedge contracts would qualify for hedge accounting, the company has chosen not to designate these derivatives as hedge contracts, due to the immateriality of the unrealized gains or losses on such open contracts, at its normal level of activity. Accordingly, the company records the unrealized gain or loss from these derivatives in earnings as opposed to other comprehensive income. For major customer projects or for non-Canadian operations, where customer or vendor payments are denominated in a foreign currency, the company may designate related forward currency exchange contracts as cash flow hedges on a case-by-case basis. No such designation was made during 2002 or 2001.

Financial Instruments
The fair value of long-term debt is determined by comparing interest rates for debt with similar terms and maturities. At December 31, 2002 and 2001, the fair value of the company’s long-term debt was not materially different than its carrying value. Other financial instruments, consisting of cash and cash equivalents, net receivables, notes payable, and accounts payable are carried at cost, which approximates fair value, as a result of the short-term nature of these instruments. The company has no significant concentrations of credit risk.

Accounting for Stock Options
The company records stock compensation costs for employee and directors stock options in accordance with Accounting Principal Board Opinion No. 25 “Accounting for Stock Issued to Employees” versus FASB No. 123 “Accounting for Stock-Based Compensation,” which recommends the recording of compensation costs for options under the fair value method at the date of grant. Under APB 25, no charges are recorded to earnings for stock options granted, since the options exercise price equals their fair value at date of grant. In accordance with APB 25 differences in amounts received when stock options are exercised, and their carrying value in treasury stock, are recorded in retained earnings at their exercise date.

In January 2003, the FASB issued SFAS No. 148 “Accounting for Stock-Base Compensation-Transition and Disclosure.” SFAS No. 148 amends Statement No. 123 and provides for alternative methods of transition for a voluntary change to the fair value method of accounting for stock-base compensation. In addition it requires more frequent and prominent financial statement disclosure of the effect of stock-based compensation on the results of operation. Below is the effect on the company’s net earnings and earnings per share (EPS) if stock options were accounted for under the fair value method.


Dollars in millions		2002			2001			2000

Net earnings (loss) as reported		$	(1.8	)	$	8.1		$	25.2
	After tax effect of SFAS No. 123		(.2	)		(.1	)		–

Net earnings (loss) after SFAS No. 123			(2.0	)		8.0			25.2


EPS effect in dollars

Diluted, EPS as reported		$	(0.29	)	$	1.28		$	3.86
	EPS effect of SFAS No. 123		(0.03	)		(0.02	)		–

Diluted EPS after SFAS No. 123		$	(0.32	)	$	1.26		$	3.86

Page 24

Earnings Per Share
Basic earnings per share are based upon the weighted average common shares outstanding during each year. Dilutive earnings per share are based upon the weighted average common and common equivalent shares outstanding during each year. Employee stock options are the company’s only common stock equivalents; there are no other potentially dilutive securities.

Basic and Diluted Earnings Per Share (EPS) Computations


	2002

Dollars and shares in thousands,	Net				Per Share
except per share amounts	Loss			Shares	Amount

Basic EPS available to common shareholders	$	(1,836	)	6,313	$	(0.29)
Assumed net conversion of stock options				–

Diluted EPS available to common shareholders plus assumed conversions	$	(1,836	)	6,313	$	(0.29)


No dilutive calculations were performed due to a net loss for 2002 resulting in the dilutive and basic weighted shares being equivalent.


	2001

Dollars and shares in thousands,	Net				Per Share
except per share amounts	Earnings			Shares	Amount

Basic EPS available to common shareholders	$	8,060		6,282	$	1.28
Assumed net conversion of stock options				3

Diluted EPS available to common shareholders plus assumed conversions	$	8,060		6,285	$	1.28


				2000

Dollars in thousands,	Net				Per Share
except per share amounts	Earnings			Shares	Amount

Basic EPS available to common shareholders	$	25,215		6,521	$	3.87
Assumed net conversion of stock options				10

Diluted EPS available to common shareholders plus assumed conversions	$	25,215		6,531	$	3.86

The following exercisable options were excluded from the computations of shares outstanding in one or more quarters in the determination of the annual diluted EPS presented above. Exercisable options are not considered to be common equivalent shares during quarters when the options’ exercise price exceeded the average market price of the company’s common shares.

Options Excluded from Diluted EPS

Year
excluded	Number of	Range of exercise	Year(s) the
from EPS	option shares	prices for excluded	excluded options
calculation	excluded	option shares	expire

2002	367,427	$23.00 - $38.50	2002 to 2012
2001	487,719	$26.00 - $38.50	2001 to 2006
2000	513,500	$26.00 - $38.75	2001 to 2006

Foreign Currency Translation
The value of the U.S. dollar fluctuates on foreign currency exchanges, which creates exchange gains or losses on the company’s international investments. These investments, and the related equity earnings and losses, are translated into U.S. dollars. The gains or losses that result from translation are shown in the shareholders’ equity section of the consolidated balance sheets. Cumulative foreign currency exchange translation gains were $.3 million at December 31, 2002 and less than $.1 million at December 31, 2001.

Comprehensive Income
The components of comprehensive income include adjustments for minimum pension liabilities, foreign currency translation items, and hedging activities. The majority of the charges to comprehensive income relate to the company’s minimum pension liabilities. In 2002 and 2001, $10.2 million and $6.6 million, respectively and net of tax, was charged to other comprehensive income to recognize changes in the company’s minimum pension liabilities.

Construction and Project Contracts
Costs and estimated earnings in excess of billings on construction and project contracts, reflected in Inventories on the consolidated balance sheets, were $3.6 million and $4.9 million at December 31, 2002 and 2001, respectively. Billings in excess of costs are specifically identified on the consolidated balance sheets and were $3.4 and $1.6 million at December 31, 2002 and 2001, respectively.

Total receivables due under construction and project contracts, included as trade receivables, were $18.8 million and $21.7 million at December 31, 2002 and 2001, respectively. Included in the contract receivables were $6.1 million and $6.3 million at December 31, 2002 and 2001, respectively, for amounts billed but not collected pursuant to retainage provisions. These amounts are generally due upon completion of the contracts. Construction contract receivables, including retentions, where the collection is not anticipated within twelve months are classified under Investments and other assets and totaled $1.9 million and $1.5 million at December 31, 2002 and 2001, respectively. Included in these amounts is retention older than one year of $.6 million and $1.1 million at December 31, 2002 and 2001, respectively.

Restructuring and Asset Impairment Charges
During the fourth quarter of 2001, the company’s board of directors approved the disposition of the assets of the company’s European building business, which is included in the International Building Systems segment. As a result, the company recorded an $8.1 million pretax charge in December 2001. The company recorded a $4.3 million pretax charge in 2001 for the write-down of certain assets at its European business to estimated net realizable value based on estimated proceeds from the sale. The asset impairment charge was utilized in 2002 upon disposition of these assets. In 2001, the company also recorded a $3.9 million restructuring charge for employee separation costs, costs to close offices, and

Page 25

other expenses related to the disposition of the business.

During 2002 and 2001, the company utilized $1.9 million and $1.7 million of the restructuring reserve, respectively. An additional $1.4 million was accrued in 2002 for severance, termination, and legal costs associated with the disposition of the European building business. The balance of the restructuring reserve totaled $1.5 million at the end of 2002. Recap of activity in the restructuring reserve during 2002 and 2001, is presented below.

Restructuring Charge Accrual Activity


			2001									2002

	12/31/00									12/31/01									12/31/02
Dollars in thousands	Balance		Accrual		Recovery		Utilized			Balance		Accrual		Recovery		Utilized			Balance

Severance and termination costs	$	–	$	1,161	$	–	$	–		$	1,161	$	931	$	–	$	(943	)	$	1,149
Foreign exchange loss		–		1,749		–		(1,749	)		–		106		–		(106	)		–
Legal, claims, and other costs		–		944		–		–			944		330		–		(898	)		376

	$	–	$	3,854	$	–	$	(1,749	)	$	2,105	$	1,367	$	–	$	(1,947	)	$	1,525

In 2002, an additional $2 million was recovered on the sale of certain assets of the business. The detail of restructuring and asset impairment charges (credits) reported on the company’s consolidated statements of earnings for 2002, 2001, and 2000 is presented below.

Restructuring and Asset Impairment Charges (Credits) Activity


Dollars in thousands	2002			2001		2000

Restructuring charges	$	1,367		$	3,854	$	–
Asset impairment and restructuring recoveries		(1,998	)		–		(620	)
Redundant–worthless assets activity		–			–		179

Restructuring charge (credit), net	$	(631	)	$	3,854	$	(441	)

Asset impairment charge	$	–		$	4,285	$	–

Assets Held for Sale
BMC Real Estate, Inc., a wholly owned subsidiary, owns land for development, which is reported as “Assets held for sale” in the consolidated balance sheets. No land parcels were sold in 2002. During 2001, one land parcel was sold, on which the gain on sale was less than $.1 million. Management believes, although the sale may take several years, the ultimate book value of the asset will be realized.

International Joint Venture Operations
The company has a 30% interest in an international joint venture, Saudi Building Systems. The joint venture is involved in the design, manufacture, and marketing of pre-engineered metal buildings for nonresidential use in its respective market. During 2000, the company received a $2.4 million cash payment from Saudi Building Systems, which represented a dividend and partial return of equity earnings. No cash investments were made in Saudi Building Systems during 2002 or 2001. The company’s net investment In Saudi Building Systems was $2 million at December 31, 2002 and 2001, respectively.

During 2001, the company acquired a 40% interest in Vistawall International (UAE) Ltd. The joint venture is involved in the design, manufacture, and sale of architectural aluminum products in the Middle Eastern markets. Cash investments were made in Vistawall International (UAE) Ltd. of $.1 million in 2002 and $.4 million in 2001. The company’s net investment was $.2 million at December 31, 2002 and 2001, respectively.

Business Segments

The company groups its operations into five business segments: North American Building Systems, International Building Systems, Architectural Products, Construction Services, and Real Estate.

The North American Building Systems segment includes the building systems businesses in Canada, the U.S., and Latin America. These business units supply steel and wood frame pre-engineered building systems for a wide variety of commercial, community, industrial, and agricultural applications.

The International Building Systems segment includes the company’s building systems businesses in Europe and China. These businesses supply pre-engineered metal buildings for commercial, community, industrial and agricultural applications primarily for the Chinese and European markets. The European metal buildings business was sold in July 2002.

The Architectural Products segment includes the operations of the Vistawall Group. The group’s businesses design, manufacture, and market architectural aluminum systems for nonresidential construction, including curtain wall, storefront, window, and skylight systems.

The Construction Services segment sells and constructs large, complex metal building systems, working primarily in conjunction with the Butler Builder organization. Typical projects are large distribution centers and industrial buildings.

The Real Estate segment provides real estate build-to-suit-to-lease development services in cooperation with Butler Builders.

The accounting policies for the segments are the same as those described in the summary of significant accounting policies. The company’s reportable segments are strategic business units that offer different products and services. They are managed separately as each business requires different technology and expertise.

The Other classification in the following tables represents unallocated corporate expenses and assets, including corporate offices, deferred taxes, pension accounts, interest expense, and intersegment eliminations.

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Net Sales


Dollars in thousands	2002			2001			2000

North American Building Systems	$	393,969		$	440,049		$	530,235
International Building Systems		107,842			81,644			86,235
Architectural Products		220,098			231,509			224,130
Construction Services		111,428			132,930			149,273
Real Estate		16,475			37,555			7,682
Intersegment eliminations		(21,603	)		(27,115	)		(37,178	)

	$	828,209		$	896,572		$	960,377

Net sales represent revenues from sales to affiliated and unaffiliated customers before elimination of intersegment sales, which are included in intersegment eliminations. Intersegment eliminations are primarily sales from the North American Building Systems segment to the Construction Services segment.

Interest Expense


Dollars in thousands	2002		2001		2000

North American Building Systems	$	3	$	4	$	27
International Building Systems		57		122		206
Architectural Products		92		61		–
Construction Services		–		–		–
Real Estate		–		383		351
Other		7,377		6,359		4,575

	$	7,529	$	6,929	$	5,159

Pretax Earnings (Loss)


Dollars in thousands	2002			2001			2000

North American Building Systems	$	(7,562	)	$	10,417		$	31,673
International Building Systems		7,995			(6,075	)		4,127
Architectural Products		8,891			13,828			16,381
Construction Services		1,952			3,234			2,505
Real Estate		3,341			5,974			2,644
Other		(21,475	)		(19,116	)		(18,937	)

	$	(6,858	)	$	8,262		$	38,393

The 2001 pre-tax loss for the International Building Systems segment includes special charges of $7.7 million associated with the segment’s European operations. The remaining $.4 million of the special charges is contained in the Other segment.

Assets


Dollars in thousands	2002		2001

North American Building Systems	$	132,688	$	138,690
International Building Systems		77,159		67,064
Architectural Products		104,474		112,785
Construction Services		17,807		22,465
Real Estate		30,379		28,406
Other		93,327		101,352

	$	455,834	$	470,762

Assets represent both tangible and intangible assets used by each business segment. Other represents corporate cash and cash equivalents, assets held for sale, corporate fixed assets, including the company’s headquarters facility (in 2001) and various other assets, which are not related to a specific business segment. The company’s headquarters facility was sold in the fourth quarter 2002 and leased back by the company under an operating lease.

Capital Expenditures – Property, Plant, and Equipment


Dollars in thousands	2002		2001		2000

North American Building Systems	$	3,902	$	4,559	$	5,248
International Building Systems		10,209		6,228		5,849
Architectural Products		2,044		6,391		24,229
Construction Services		25		176		212
Real Estate		–		–		–
Other		96		27,229		1,400

	$	16,276	$	44,583	$	36,938

The International Building Systems segment includes capital expenditures for the second Butler pre-engineered metal buildings plant in China. Included in Other, for 2001, are the expenditures for the company’s new headquarters facility. Included in Architectural Products for 2000 are expenditures for the Tennessee extrusion facility.

Depreciation and Amortization


Dollars in thousands	2002		2001		2000

North American Building Systems	$	9,943	$	10,371	$	9,322
International Building Systems		1,753		2,161		1,772
Architectural Products		4,569		4,221		3,098
Construction Services		665		729		786
Real Estate		–		8		8
Other		1,984		614		608

	$	18,914	$	18,104	$	15,594

Geographic Information by Country
The following table presents net sales by country based on the location of delivery of the product or service. The United States of America and the People’s Republic of China are the only countries where sales exceeded 10% of the company’s con-solidated net sales.

Net Sales


Dollars in thousands	2002		2001		2000

United States of America	$	688,803	$	781,646	$	824,552
People’s Republic of China		96,364		61,009		56,734
All other countries		43,042		53,917		79,091

	$	828,209	$	896,572	$	960,377

Page 27

The following table presents all tangible long-lived assets by country based on the location of the asset. The United States of America and the People’s Republic of China are the only countries in which long-lived assets exceeded 10% of the company’s consolidated long-lived assets.

Tangible Long-Lived Assets


Dollars in thousands	2002		2001

United States of America	$	114,060	$	141,034
People’s Republic of China		27,801		19,121
All other countries		119		1,392

	$	141,980	$	161,547

Debt, Leases, Commitments, and Contingencies

Long-Term Debt


Dollars in thousands		2002		2001

2001 private placement notes		$	50,000	$	50,000
1998 private placement notes			35,000		35,000
1994 private placement notes			5,000		10,000
Industrial revenue bonds			6,250		6,250
Capital leases			4,389		286
Other debt			1,700		2,325

Total long-term debt			102,339		103,861
Less current maturities			6,273		5,617

	Long-term debt less current maturities	$	96,066	$	98,244

Long-Term Debt
The 2001 private placement notes carry an all-in fixed interest rate of 7.91% with interest payable semi-annually on June 30 and December 30 and principal payable in equal annual installments of $4.5 million beginning in 2006. The notes mature December 30, 2016.

The 1998 private placement notes carry a fixed interest rate of 6.57% with interest payable semi-annually on March 20 and September 20 and principal payable in equal annual installments of $3.5 million beginning in 2004. The notes mature March 20, 2013.

The 1994 private placement notes carry a fixed interest rate of 8.02% with interest payable semi-annually on June 30 and December 30 and principal payable in equal annual installments of $5 million. The notes mature December 30, 2003.

The industrial revenue bonds mature in 2015, are guaranteed by the company, and are fully secured by a bank letter of credit, which is guaranteed by the company. The weighted-average interest rate on the bond issue was 2.9% for 2002, 3.9% for 2001, and 5% for 2000.

In the fourth quarter of 2002, the company entered into a $3.9 million sale-leaseback lease agreement for the furniture, fixtures, and equipment at its world headquarters facility in Kansas City, Missouri. Under the capital lease arrangement, the lease term is five years with monthly payments carrying a fixed interest rate of 6.00%.

Total principal payments due on all debt in each of the five years subsequent to December 31, 2002 are as follows:

2003	$6.3 million
2004	$4.7 million
2005	$4.7 million
2006	$9.3 million
2007	$9.1 million
2008 and thereafter	$68.2 million

Cash payments for interest on long-term debt were $7.4 million, $6.9 million, and $5.1 million in 2002, 2001, and 2000, respectively.

Short-Term Borrowings
The company and its subsidiaries have a short-term domestic bank credit facility of $35 million with sublimits of $30 million for letters of credit and $10 million in borrowings. The credit facility matures on June 20, 2004. At December 31, 2002, the company had used $20.2 million of the facility for letters of credit and had no borrowings outstanding. At December 31, 2002, the company had $10 million of borrowing capacity under the credit facility.

Debt and Borrowing Covenants
One of the provisions of the company’s bank credit agreement required a fixed charge coverage ratio to be maintained at the end of each quarterly reporting period. The company did not meet this requirement for the quarter ended September 30, 2002. The company received a waiver for the deficiency and was in compliance with all other covenants of this agreement as of September 30, 2002. The company amended the credit agreement in December 2002 to reset various financial covenants, and effective February 2003 amended its private placement notes to conform to the amended credit agreement. The bank credit agreement and the private placement notes are secured by a pledge of the company’s domestic cash, receivables, inventories, and equipment for the benefit of the company’s senior lenders, which consist of the bank lenders under the credit agreement and the note holders under the private placement notes. The February 2003 amendment of the private placement notes increased the coupon rate for each note by 1.5 percent. Upon the company’s achievement of certain financial ratio and other provisions of the note amendments, 1.25 percent of this increase shall expire.

The company’s short-term credit agreement and long-term debt agreements contain, among other restrictions, certain requirements to maintain a minimum level of domestic cash and cash equivalents, limitations on the payment of cash dividends, the purchase of company stock, capital expenditures, and the incurrence of new debt, as well as covenants related to the maintenance of certain defined financial ratios. As of December 31, 2002, the company was in compliance with all covenants, and as of that date, after

Page 28

giving effect to the February, 2003, amendments, $10 million was available for cash dividends and share repurchases.

The amended credit agreement and note agreements allow the company’s Real Estate Segment to incur up to $35 million in non-recourse debt with other lenders to fund a portion of its development activity, providing another avenue for liquidity. As of December 31, 2002, the company had no debt outstanding under this provision.

Sale-Leaseback
In the fourth quarter of 2002, the company entered into a sale-leaseback transaction of its world headquarters building located in Kansas City, Missouri. Under the arrangement, the real estate was sold to an independent third-party for $24 million and leased back under a twenty year operating lease arrangement. The company realized a gain on the sale of approximately $2 million, which is being deferred and amortized as a reduction to rent expense over the term of the lease.

In 2002, the company also entered into a sale-leaseback transaction of furniture and operating equipment used in its world headquarters building. Under the capital lease arrangement, the furniture and operating equipment were sold for $3.9 million and leased back for five years.

Leases
Leases include facility, transportation equipment, and plant operating equipment. Rental expense under operating leases was $8.9 million, $10.9 million, and $11.3 million in 2002, 2001, and 2000, respectively. Minimum rental commitments under noncancelable operating leases subsequent to December 31, 2002 are as follows:

2003	$6.5 million
2004	$6.2 million
2005	$4.7 million
2006	$3.5 million
2007	$2.6 million
2008 and thereafter	$32.3 million

Commitments and Contingencies
The company is subject to various legal proceedings, claims, and environmental actions which arise in the ordinary course of business operations. Although the ultimate outcome of these matters is presently not determinable, management, after consultation with legal counsel, believes the resolution of these matters will not have a material adverse effect upon the company’s financial position or results of operations.

On October 15, 2002, a Minnesota District Court jury awarded the company $29.6 million for its Lester® building business in its suit against Louisiana-Pacific Corporation. The suit pertained to Louisiana-Pacific’s Inner-Seal siding product. The award compensates the company for damages and other losses resulting from product purchased by the company and sold to its dealers.

On January 27, 2003, the Minnesota District Court entered a final judgment in the amount of $20.1 million after ruling on post trial motions. The final judgment added $1.7 million for interest and costs but excluded $11.2 million of the jury’s original award as a result of a permanent injunction entered by the U.S. District Court for the District of Oregon. The injunction enjoined the Minnesota state court from entering judgment in the sum of $11.2 million. Butler has appealed the U.S. District Court’s injunction to the U.S. Ninth Circuit Court of Appeals.

The company is unable to estimate the impact the award may have on its financial position or results of operations at this time. However, if the entire award is paid, the company believes it will recognize approximately $15 million pretax as income for damages and recovery of prior costs in the period in which the award is paid. The trial court’s judgment is subject to appeal, which could delay payment and result in affirmation, modification, or reversal of the award.

Guarantees and Warranties
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 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 or guarantee agreements are also required in the interim and annual financial statements. The disclosure requirements of FIN 45 are effective for the years ending after December 15, 2002. The liability recognition requirements are effective January 1, 2003.

The company accrues for warranty and claim costs as a percentage of sales based on historical trends. Actual warranty and claim costs are deducted from the accrual when incurred. For 2002, warranty and claim accruals at the beginning of the year were $3.6 million, current year payments exceeded current year accruals and adjustments by $.8 million, and the balance at the end of the year was $2.8 million.

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.

Related Party Transaction
During 2001, the company purchased real estate in Kansas City, Missouri upon which the company constructed its world headquarters building. The company purchased the site, constituting approximately 7.8 acres, from N.F. Bldg. Corp., a unit of National Farms, Inc. for $2.7 million. The purchase price was determined by independent appraisals of the site. C.L. William Haw, a director of the company, was President and Chief Executive Officer of National Farms, Inc. at the time of the purchase.

Page 29

Taxes on Earnings

The components of the provision for income taxes are shown below.

Components of Income Taxes


Dollars in thousands		2002			2001			2000

Current:
	Federal	$	(4,622	)	$	(1,646	)	$	12,442
	Foreign		836			720			186
	State and local		358			842			2,131

			(3,428	)		(84	)		14,759

Deferred:
	Federal		(237	)		479			(1,456	)
	Foreign		(1,337	)		(234	)		–
	State and local		(20	)		41			(125	)

			(1,594	)		286			(1,581	)

	Income tax expense (benefit)	$	(5,022	)	$	202		$	13,178

Tax expense in 2001 includes a tax benefit of $4.5 million related to the disposition of the European business. 2000 was the last year of a full tax holiday for the company’s Chinese subsidiary. In 2002 and 2001, the Chinese subsidiary’s earnings were taxed at a reduced percentage of the Chinese statutory rate. Cash payments, net of refunds, for income taxes were a net refund less than $.1 million in 2002, and net payments of $3.6 million, and $5.3 million in 2001 and 2000, respectively. The foreign components of pretax earnings were net profits (loss) of $8.8 million, $(6.1) million, and $4.5 million in 2002, 2001, and 2000, respectively.

A reconciliation of the expected income tax expense at the statutory federal income tax rate and the reported income tax expense is shown below.

Reconciliation of Income Tax Expense


Dollars in thousands		2002			2001			2000

Expected income tax expense (benefit) on pretax earnings (loss) before asset impair- ment and restructuring charge		$	(2,400	)	$	5,615		$	13,438
State and local income tax, net of federal benefits			233			554			1,385
Nondeductible losses (nontaxable profits) of foreign subsidiaries			(262	)		1,199			(1,378	)
Tax benefit from foreign sales corporation			(295	)		(307	)		(229	)
China tax less than U.S. statutory rate			(2,193	)		(1,195	)		–
Settlement of audits			–			(577	)		–
Utilization of capital loss carryforward			(487	)		(651	)		–
Asset impairment and restructuring charge			–			(4,500	)		–
Other			382			64			(38	)

	Income tax expense (benefit) reported	$	(5,022	)	$	202		$	13,178

Deferred income tax expense or benefit arises from differences between financial reporting and tax reporting of assets and liabilities, which most often result from the differences in timing of income and expense recognition. Differences between financial reporting and tax bases also arise due to business acquisition activity as tax laws can result in significant differences in values assigned to assets and liabilities. Previously recorded deferred tax assets and liabilities are adjusted for any changes in enacted tax rates. Detail of deferred tax assets and liabilities is shown below. Management believes that future operations will generate sufficient taxable income to realize its net deferred tax assets.

Net Current Deferred Tax Assets and Liabilities


Dollars in thousands		2002			2001

Current deferred tax assets (liabilities):
	Operating expenses	$	13,727		$	11,318
	Inventory		1,289			1,439
	Restructuring charge		(98	)		(182	)
	Minimum pension liability		10,310			4,061
	Other		10			–

	Net current deferred tax assets	$	25,238		$	16,636

Net Noncurrent Deferred Tax Assets and Liabilities


Dollars in thousands			2002			2001

Noncurrent deferred tax assets (liabilities):
	Depreciation		$	(10,726	)	$	(9,621	)
	Operating expenses			4,367			3,440
	Minority investments			384			293
	Foreign net operating loss and capital loss carryforward			2,045			2,675
	Asset impairment			2,676			2,676
	Other			(1,143	)		(471	)

	Net noncurrent deferred tax assets (liabilities)			(2,397	)		(1,008	)
	Valuation allowance			(2,045	)		(2,675	)

		Net noncurrent deferred tax liabilities	$	(4,442	)	$	(3,683	)

Employee Benefit Plans

Retirement Plans
The company provides retirement benefits for substantially all employees, either through a defined benefit plan, the defined contribution Individual Retirement Asset Account Plan (IRAA), or a combination of both types of plans. The majority of the company’s salaried and nonunion hourly employees are covered by both a defined benefit plan and the IRAA. These plans are integrated in a floor-offset arrangement. The monthly benefit value of the IRAA lump sum distributable to a participant upon their termination or retirement offsets a portion, or all, of their defined benefit. The defined benefit, before the IRAA offset, is based upon compensation and years of service. Bargaining unit employees are

Page 30

covered by defined benefit retirement plans with benefits based on years of service.

The assets of the defined benefit plans are primarily equities, bonds, and government securities. The IRAA assets include the company’s common stock, other equities, bonds, and government securities. The IRAA had assets of $38.4 million and $50 million, including 671,155 shares and 727,101 shares of company stock with a market value of $13 million and $19.9 million at December 31, 2002 and 2001, respectively. The company expensed $.7 million for IRAA contributions in each of the years 2002, 2001, and 2000. A reconciliation of benefit obligations and plan assets, the funded status, and the amounts recognized in the company’s balance sheets for the defined benefit plans are presented below. While the IRAA asset activity and balances are not expressly shown in the tables below, the effect of the IRAA offset against the company’s defined benefit obligation has been recognized by a reduction in the various benefit obligations presented.

Reconciliations of Benefit Obligation and Plan Assets,
Funded Status, and Amounts Recognized in the
Consolidated Balance Sheets


Dollars in thousands		2002			2001

Reconciliation of projected benefit obligation at December 31, (Actuarial present value of future benefits including estimated future increases in compensation levels and estimated future service)
Projected benefit obligation at January 1		$	131,544		$	101,258
Service cost–benefits earned during the year			5,630			4,994
Interest accrued on projected benefit obligation			9,071			8,400
Amendments to plans			–			3,659
Actuarial net loss during the year			10,915			16,859
Benefits paid			(3,809	)		(3,626	)

	Projected benefit obligation	$	153,351		$	131,544


Vested and accumulated benefit obligations (For actual service and compensation through December 31,)
Vested benefits		$	93,777		$	76,149
Accrued but not yet vested benefits		$	8,839		$	6,715

Accumulated benefit obligation		$	102,616		$	82,864


Reconciliation of fair value of plan assets at December 31,
Fair value of plan assets at January 1		$	82,053		$	80,761
Actual return on plan assets			(8,547	)		(5,258	)
Employer contributions			7,033			10,176
Benefits paid			(3,809	)		(3,626	)

	Fair value of plan assets	$	76,730		$	82,053


Funded status and net amount recognized at December 31,
Funded status–projected benefit obligation greater than plan assets		$	(76,621	)	$	(49,491	)
Unrecognized net transition obligation cost			–			2
Unrecognized prior service costs			3,567			4,769
Unrecognized net actuarial loss			77,868			53,428

	Net amount recognized (see detail below)	$	4,814		$	8,708


Amounts recognized in the consolidated balance sheet at December 31
Prepaid pension expense		$	5,898		$	9,391
Accrued pension liability			(31,783	)		(15,032	)
Intangible asset – prior service cost			3,567			4,237
Cumulative other comprehensive income			27,132			10,112

	Net amount recognized	$	4,814		$	8,708

The company recorded a deferred tax asset of $10.3 million and $4.1 million in its balance sheets at December 31, 2002 and 2001, respectively, associated with the cumulative other comprehensive income charge presented in the above table.

Effective January 1, 2001, the company changed its method for the recognition of asset gains and losses considered in the calculation of the annual net pension expense for its base retirement pension plan. The company changed from the market-value method of asset valuation to a market-related value method. Under the previous accounting method, all gains and losses, subject to a 10% corridor, were recognized and amortized in the determination of net periodic pension cost. The new method recognizes and then amortizes annual asset gains or losses over a five-year period in the determination of annual net periodic pension cost. The new method is commonly used and is preferable to the old method because it more accurately matches expense to accounting periods during which benefits are earned. The impact of the change was to increase net income by $.4 million and earnings per share by $.07 for the year ended December 31, 2001. The cumulative effect of this change as of January 1, 2001 was immaterial. However, had this method been applied retroactively, net income would have been reduced by $.3 million or $.05 per share in 2000.

Effective April 1, 2001, the company also changed the period used to amortize prior service costs associated with amendments to its pension plans. Previously, the cost of these amendments was amortized over the average future working-lifetime of those expected to receive the amended benefits. The new amortization period more rapidly recognizes the cost of such plan amendments over the years during which the covered employee earns the amended benefits. The effect of this change in accounting estimate was a decrease in net income of $.5 million and a reduction in earnings per share by $.07 for the year ended December 31, 2001.

The components of net pension expense of the defined benefit plans, as determined under SFAS 87, “Employers’ Accounting for Pensions,” are presented below.

Page 31

Components of Net Pension Expense


Dollars in thousands		2002			2001			2000

Service costs – benefits earned during the year		$	5,630		$	4,994		$	4,657
Interest cost on the projected benefit obligation			9,071			8,400			7,086
Expected return on plan assets			(7,419	)		(7,412	)		(6,768	)
Amortization of transition obligation			2			75			197
Amortization of prior service cost			1,202			1,208			253
Amortization of net actuarial loss			2,441			1,437			704

	Net pension expense	$	10,927		$	8,702		$	6,129

Key assumptions used to determine net pension expense and benefit obligations:
	Discount rate of future benefit obligations		6.75%			7.25%			7.75%
	Long-term expected return on plan assets		8.00%			8.50%			8.50%
	Long-term rate of increase in compensation levels		5.00%			5.50%			5.50%

Other Benefit Plans
The company sponsors the Butler Employees Savings Trust, a savings plan under section 401(k) of the Internal Revenue Code. All U.S. based salaried and nonunion hourly employees are eligible to participate in this plan. If certain defined company profitability levels are attained, the company will match up to 30% of employees’ contributions, up to 6% of the employee’s eligible compensation; with one-third of the company match in the form of restricted company common stock. Restricted company stock and the automatically reinvested dividends thereon held in the 401(k) may only be sold upon the employee’s termination of employment or retirement from the company. A company match was not made for 2002 as the defined pre-tax earnings level was not reached. In 2001 and 2000, the company reached defined pre-tax earnings levels and accordingly expensed $1.8 million and $1.7 million, respectively, as a matching contribution to the plan. The company also sponsors 401(k) savings plans for its bargaining unit employees.

The company sponsors the Supplemental Benefit Plan, an unfunded and nonqualified ERISA-excess retirement plan. The plan restores retirement benefits by applying the defined benefit formula from the qualified retirement plan to that portion of an employee’s total compensation that is in excess of Internal Revenue Service limits, and therefore cannot be used in determining retirement benefits payable by the company’s qualified retirement plan. Split-dollar life insurance arrangements offset certain liabilities of the plan. Cash premium payments under the split-dollar arrangements were $.2 million, $2 million, and $1.8 million in 2002, 2001, and 2000, respectively. In addition, the company expensed $1.1 million, $.4 million, and $.7 million in 2002, 2001, and 2000, respectively, related to this plan. The company also recorded a pre-tax other comprehensive income credit of $.6 million in 2002 and a pre-tax other comprehensive income charge of $.6 million in 2001 for this plan. The 2001 charge recognized the excess of the actuarially determined accumulated benefit obligation over the accrued plan liability in the company’s balance sheet and the reverse of such charge in 2002 when the accrued liability exceeded the plan’s accumulated benefit obligation. The plan liability was $1.6 million and $2.3 million at December 31, 2002, and 2001, respectively.

The company offers a nonqualified, deferred compensation plan to certain key executives. In 2002, 2001, and 2000, the company expensed $.2 million, $.5 million, and $.4 million, respectively, which represented earnings credited to participant accounts. The plan liability at December 31, 2002 and 2001 was $6.7 million and $5.5 million, respectively.

During 2001, the company implemented a value-based Long Term Incentive Plan (LTIP), which is designed to reward the company’s executive officers by means of cash performance awards and stock options as shareholder value increases. The cash performance portion of the LTIP measures and rewards value-added performance over three-year periods. The performance measurement is based on total business return, a measure of the creation of economic value in the company’s business. At December 31, 2002 and 2001, the company’s liability under this plan for cash awards was $.3 million for each year.

Minimum Pension Liability Charges
The assets of the company’s defined benefit pension plans experienced negative investment results during 2002, for the third consecutive year. The three-year shortfall in actual asset returns as compared to the assumed rate, reduced pension plan funding by $39 million. In addition, the decline in long-term interest rates over the last three years reduced the discount rate used to compute the present value of the plans’ benefit obligations. The 0.5 percent decrease each year during 2002 and 2001 combined to increase the plans’ accumulated benefit obligations at December 31, 2002 by $10 million. Also, the asset returns in the IRAA plan fell $20 million short of assumed returns over the last three years, which reduced the value of the IRAA offset, thereby increasing the pension plans benefit obligation by the same amount. The combined result of the shortfall in pension and IRAA plan asset returns and the lower discount rate caused the accumulated benefit obligations of the company’s pension plans to further exceed their respective plan assets at the December 31, 2002 measurement date.

To recognize this additional funding shortfall, the company recorded, in 2002, a net increase in the cumulative after-tax charge to other comprehensive income of $10.2 million and a corresponding decrease in shareholders’ equity. The company’s accrued pension liability for the ERISA and nonqualified plans, including

Page 32

the $30.7 million minimum pension liability, was $33.4 million as of December 31, 2002.

A summary of the $16.8 million cumulative after-tax charge to other comprehensive income as of the December 31, 2002 measurement date is presented below.

Minimum Pension Liability Charge at December 31, 2002

Dollars in thousands	ERISA Plans			Non- qualified Plan

Accumulated Benefit Obligation (ABO)	$	102,616		$	1,613
Fair market value of plan assets		76,730			–

ABO in excess of plan assets		25,886			1,613
Prepaid pension expense – plan contributions not yet recognized in earnings		5,898			–
Accrued liability, previously recognized in earnings		(1,085	)		(1,648	)

Minimum pension liability recognized		30,699			none
Intangible asset recognized – unamortized prior service cost		3,567			N/A

Cumulative charge to other comprehensive income		27,132			N/A
Cumulative income tax benefit		10,310			N/A

Cumulative after-tax charge	$	16,822			N/A

Postretirement Benefits
The company currently offers certain health care and life insurance benefits for eligible retired employees and their dependents. Employees may become eligible for these benefits if they reach retirement age while employed by the company and meet a minimum years of service requirement. Retiree election of health care and life insurance benefit coverage is optional and requires a contribution by the retiree toward the total cost of coverage. The company reserves the right to change or terminate all employee benefits, including postretirement benefits.

During 2002, the company amended its postretirement benefits program. Effective January 1, 2003, retired employees already enrolled in the company’s postretirement health care and life insurance plan, or active employees with either at least ten years of service who have also attained the age of 55, or employees covered by a collectively-bargained agreement, continue to be eligible to elect postretirement health care and life insurance coverage under the defined benefit program. Subject to its rights to amend or terminate the program in the future, the company currently makes a fixed monthly contribution toward the total cost of postretirement benefit coverage, and the retiree pays the remaining cost.

Also effective January 1, 2003, employees ineligible to qualify for the existing postretirement benefits plan who attained age 40 with at least one year of service may elect to contribute to a company sponsored benefits trust to prefund a portion of their postretirement medical expenses. Assets of the trust are invested by the trustee at the employee’s direction. Upon retirement after age 60 with at least 15 years of service, the company will make a matching contribution to the trust to help fund the cost of participants’ postretirement health care expenses, based upon each participant’s annual contributions during active employment. The company has capped its per participant contribution obligation liability at $26,000. Upon a participant’s eligible retirement, postretirement health care expenses can be paid from the retiree’s trust account.

A reconciliation of postretirement benefit obligations, their funded status, and accrued benefit liability is presented below.

Reconciliation of Benefit Obligation, the Funded Status and Accrued Benefit Liability at December 31


Dollars in thousands		2002			2001

Reconciliation of projected benefit obligation (actuarial present value of future benefits)
Projected benefit obligation at January 1		$	17,369		$	16,385
Service costs–benefits earned during the year			282			517
Interest cost on projected benefit obligation			1,594			1,222
Plan amendments			(8,110	)		–
Actuarial loss during the year			15,467			1,186
Benefits paid			(4,325	)		(2,874	)
Participant contributions			1,182			933

	Projected benefit obligation	$	23,459		$	17,369

Funded status and accrued benefit liability at December 31,
Projected benefit obligation, unfunded		$	23,459		$	17,369
Unrecognized net transition obligation cost			(4,778	)		(5,255	)
Unrecognized prior service costs			7,453			–
Unrecognized net actuarial loss			(21,919	)		(7,789	)

	Accrued benefit liability in balance sheet	$	4,215		$	4,325

The components of the annual net benefit cost are pre-sented below.

Components of Net Benefit Costs

Dollars in thousands		2002			2001		2000

Service costs – benefits earned during the year		$	282		$	517	$	438
Interest cost on the projected benefit obligation			1,594			1,222		1,070
Amortization of transition obligation			478			478		478
Amortization of prior service costs			(657	)		–		–
Amortization of net actuarial loss			1,336			344		216

	Net benefit costs	$	3,033		$	2,561	$	2,202

The discount rate assumption was 6.75% at December 31, 2002, 7.25% at December 31, 2001 and 7.75% at December 31, 2000. As the company’s costs are fixed, the rate of future health care cost trends has no impact on the plan. The return on plan assets is not applicable since the plan is unfunded, with benefits paid either as claims are submitted or in a lump sum payment by the company to the participant’s trust account upon their eligible retirement.

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Stock Option Plans

The company records stock compensation in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). Under APB 25, no charges are made to earnings in accounting for stock options granted because all options are granted with an exercise price equal to the fair market value at the date of grant. If the amounts received when options are exercised are different than the carrying value of treasury stock issued, the difference is recorded in retained earnings.

In 2002, the company’s shareholders approved the Stock Incentive Plan for 2002 for key employees and the 2002 Stock Option Plan for Outside Directors. Stock options are presently outstanding under the Stock Incentive Plans of 1996 and 1987, and the 2002 Stock Option Plan for Outside Directors. The 1996 Plan covering 600,000 shares was approved in April 1996. The 1987 plan was terminated upon the approval of the 1996 plan except for outstanding stock options. The 2002 Stock Option Plan for Outside Directors was approved In April 2002.

Stock Options Recap for All Plans at December 31,

Number of shares	2002	2001	2000

Granted and exercisable	405,000	509,500	519,250
Authorized, unissued, and available for future grant	481,710	118,699	94,199

The company granted nonqualified stock options in 2002 and 2000 to key employees under the 1996 plan. There were no options granted in 2001. Options were also granted to outside directors under the 2002 Stock Option Plan for Outside Directors. Options are granted at a fixed exercise price based on fair market value on the date of the grant and expire no more than ten years from the date of grant. Options granted to employees in 2002 and 2000 vest one year after the date of grant and expire five years from the date of grant. Options under the Outside Directors Plan vest on the 184th day after the April 2002 date of grant and are fully exercisable thereafter. Below is a summary of stock option activity for each of the years ended December 31.

Summary of Stock Option Activity


	2002			2001			2000

			Weighted-average			Weighted-average			Weighted-average
	Shares		Exercise Price	Shares		Exercise Price	Shares		Exercise Price

Outstanding at beginning of year	509,500		$29.11	550,750		$28.59	542,249		$28.70
Granted	68,000		$27.12	–		$ 0.00	31,500		$23.00
Exercised	(11,500	)	$25.06	(16,750	)	$ 9.26	(9,999	)	$11.67
Forfeited	(117,000	)	$35.92	(24,500	)	$30.81	(13,000	)	$32.39

Outstanding at end of year	449,000		$27.13	509,500		$29.11	550,750		$28.59

A summary of outstanding and exercisable options is shown below.

Stock Option Outstanding and Exercisable at December 31, 2002


		Options Outstanding		Options Exercisable

Range of	Number	Remaining	Weighted-Average	Number	Weighted-Average
Exercise Prices	Outstanding	Life in Years	Exercise Price	Exercisable	Exercise Price

$10.33 - $23.00	42,000	1.8	$21.57	42,000	$21.57
$26.00 - $26.00	240,000	1.1	$26.00	240,000	$26.00
$26.88 - $32.19	157,000	4.0	$29.99	113,000	$31.20
$32.75	10,000	3.0	$32.75	10,000	$32.75

Total or weighted average	449,000	2.2	$27.13	405,000	$27.16

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Under the Stock Incentive Plan of 2002, 279,000 options were authorized for issuance but none were granted during the year. Under the 2002 Plan for Outside Directors, 40,000 shares were available for grant. The plan provides for a single grant of 4,000 shares to each non-employee director eligible to participate. As of December 31, 2002, 24,000 shares had been granted and were outstanding.

The company uses the Black Scholes option pricing model to calculate the fair value of stock options on their date of grant. The fair value per share of stock options granted was $5 in 2002 and 2000. The company did not grant stock options during 2001. The following assumptions were used:

Assumption	2002	2001	2000

Dividend yield	3.7%	N/A	2.6%
Risk-free interest rate	3.8%	N/A	5.1%
Volatility	25%	N/A	25%
Life of option	5-10 years	N/A	5 years

Treasury Stock Activity

Thousands of dollars	2002			2001			2000

Balance, January 1	$	64,951		$	65,543		$	51,200
Purchases		25			279			15,121
Issues		(710	)		(871	)		(778	)

Balance, December 31	$	64,266		$	64,951		$	65,543

As a result of options exercised and the issuance of treasury stock, the company recognized a tax benefit of less than $.1 million in 2002, and $.1 million in 2001 and 2000, respectively, which was credited directly to retained earnings.

(Number of shares)	2002			2001			2000

Balance, January 1		2,807,417			2,832,338			2,211,646
Purchases		950			12,730			654,300
Issues		(30,669	)		(37,651	)		(33,608	)

Balance, December 31		2,777,698			2,807,417			2,832,388


Average cost at December 31	$	23.14		$	23.14		$	23.14

Quarterly Financial Information (Unaudited)

Dollars in thousands, except share amounts


	Quarter Ended

2002	March 31			June 30		Sept. 30		Dec. 31		Annual

Net Sales	$	182,852		$	213,421	$	238,501	$	193,435	$	828,209
Gross profit		22,119			29,211		32,269		29,407		113,006
Net earnings (loss)		(5,368	)		294		1,692		1,546		(1,836	)
Basic earnings (loss) per share	$	(0.85	)	$	0.05	$	0.27	$	0.24	$	(0.29	)
Diluted earnings (loss) per share	$	(0.85	)	$	0.05	$	0.27	$	0.24	$	(0.29	)
Dividends declared per share	$	.18		$	.18	$	.18	$	.18	$	.72


	Quarter Ended

2001	March 31			June 30		Sept. 30		Dec. 31		Annual

Net Sales	$	194,859		$	213,672	$	249,676	$	238,365	$	896,572
Gross profit		24,765			33,658		40,906		37,912		137,241
Net earnings (loss)		(2,685	)		3,307		5,928		1,510		8,060
Basic earnings (loss) per share	$	(0.43	)	$	0.53	$	0.94	$	0.24	$	1.28
Diluted earnings (loss) per share	$	(0.43	)	$	0.54	$	0.94	$	0.24	$	1.28
Dividends declared per share	$	.17		$	.17	$	.18	$	.18	$	.70

Annual earnings per share for 2001 do not equal the sum of the quarterly earnings per share because of the timing of net earnings and the company’s purchase of common shares during the year.

Special charges in the fourth quarter of 2001 decreased net earnings by $3.6 million or $.58 per share.

Price Range of Common Stock (Unaudited)

The company’s common stock is traded on the New York Stock Exchange. The table below presents the high and low trading prices as reported by the exchange.

	2002		2001

	High	Low	High	Low

First quarter	$27.97	$24.27	$28.00	$22.80
Second quarter	$29.10	$25.29	$28.75	$22.25
Third quarter	$27.63	$20.40	$25.90	$21.30
Fourth quarter	$22.40	$18.34	$27.97	$21.50
Range for the year	$29.10	$18.34	$28.75	$21.30

Year-end closing price:	Year	Close

	2002	$19.35
	2001	$27.70
	2000	$25.31

Page 35

Historical Review (2002–1998)

			Year ended December 31,
Dollars and share, except per share, amounts in thousands			2002			2001		2000		1999		1998

Income Statement Data
Net sales			$	828,209		$	896,572	$	960,377	$	973,153	$	962,163
	Net earnings (loss)			(1,836	)		8,060		25,215		25,834		6,979
	As a percent of sales			(.2%	)		.9%		2.6%		2.7%		.7%
	As a percent of average shareholders’ equity			(1.2%	)		4.9%		15.5%		16.7%		4.6%

Per share of common stock:
	Basic earnings (loss)		$	(0.29	)	$	1.28	$	3.87	$	3.66	$	.92
	Diluted earnings (loss)			(0.29	)		1.28		3.86		3.63		.92
	Cash dividends declared			.72			.70		.66		.62		.58
	Cash dividends paid			.72			.69		.65		.61		.57


Financial Position At Year End
Assets
	Current assets		$	281,202		$	275,067	$	291,770	$	270,988	$	253,500
	Property, plant, and equipment			120,264			143,270		117,396		94,051		97,704
	Total assets			455,834			470,762		447,998		405,857		393,893
Working capital
	Net working capital		$	94,440		$	88,961	$	78,861	$	96,014	$	92,370
	Ratio of current assets to current liabilities			1.5			1.5		1.4		1.5		1.6
Financial structure
	Long-term debt, less current maturities		$	96,066		$	98,244	$	53,298	$	57,021	$	62,901
	Total debt			102,339			103,861		58,861		62,697		68,733
	Shareholders’ equity			149,171			164,475		165,716		159,550		150,188
		Per common share, year end		23.64			26.19		26.49		23.20		20.62
	Total debt as a percent of total capital			41%			39%		26%		28%		31%


General Statistics
Depreciation and amortization			$	18,914		$	18,104	$	15,594	$	19,972	$	14,923
Capital expenditures – property, plant, and equipment			$	16,276		$	44,583	$	36,938	$	13,634	$	14,800
Capital expenditures – software			$	7,637		$	5,355	$	1,930	$	6,660	$	6,073
Basic shares outstanding, average				6,313			6,282		6,521		7,064		7,553
Diluted shares outstanding, average				6,313			6,285		6,531		7,111		7,612
Common shares outstanding, year end				6,311			6,281		6,256		6,877		7,282
Common shareholders, year end				2,022			2,015		2,066		2,599		2,210
Number of employees, year end				4,487			4,719		5,079		4,912		5,171

1. Excluding special charges of $3.6 million, or $.58 per share, net earnings were $11.7 million or $1.86 per share for 2001.
2. Excluding special items, which increased net earnings by $2.3 million, or $.33 per share, net earnings were $23.5 million, or $3.30 per share in 1999.
3. Excluding special charges of $10.7 million or $1.41 per share, net earnings were $17.7 million, or $2.33 per share in 1998.

Page 36

-----END PRIVACY-ENHANCED MESSAGE-----

	•		Annual Report on Form 10-K;

	•		Quarterly Reports on Form 10-Q;

	•		Current reports on Form 8-K; and

	•		Amendments to the foregoing reports.

(1)		Leased space used for the company’s world headquarters offices in Kansas City, Missouri entered into in 2002 as a result of a sale and leaseback of the facility (154,000 sq. ft. lease expires at the end of 2022).

		The sale leaseback transaction was effected through (i) the assignment by the company to the purchaser of the company’s rights (including an option to purchase) under a lease for the headquarters facility (land and building) from the Planned Industrial Expansion Authority of Kansas City (PIEA), under which the company has received sales and property tax abatement (ii) the assignment by the company of its interest as owner of PIEA bonds issued by PIEA to finance the facility and (iii) the lease of the facility by the purchaser to the company. The lease is a triple net lease and has a term of 20 years, with five ten-year renewal options. Rentals during the initial term range from $1.4 to $3.6 million. If the purchaser wishes to sell the facility, the company has a right of first refusal; however, with limited exceptions in the case of major catastrophes which are generally covered by insurance, the company has no option to purchase the property. The company has agreed to indemnify the purchaser/lessor from property taxes assessed on the property and certain other liabilities under the applicable provisions of the triple net lease and also remains liable to PIEA for certain contingent payments in lieu of property tax obligations if specified employee City earnings tax targets are not met, as well as for certain environmental and other matters.

(2)		Leased space used for the Vistawall Division plant in Terrell, Texas (145,000 sq. ft. and 121,000 sq. ft. with leases expiring in 2009 and 2006, respectively, both containing options to renew), and fabrication and distribution facilities in Dallas and Houston, Texas; Jessep, Maryland; St. Louis, Missouri; Brooklyn Park, Minnesota; Detroit, Michigan; Chicago, Illinois; Cincinnati and Cleveland, Ohio; Atlanta and Newnan, Georgia; Tampa, Florida; Auburn, Washington; Modesto, Hayward, Rancho Cucamonga, and Sacramento, California; Warwick, Rhode Island; and Denver, Colorado (510,000 sq. ft. leased with various expiration dates).The company also leases a manufacturing facility (50,000 sq. ft. lease expiring in the year 2005 with three five year renewal options) located in Selmer, Tennessee.

(3)		Leased space used for BUCON, Inc. in Kansas City, Missouri (74,000 sq. ft. lease expiring in the year 2007).

(4)		The company leases various sales and engineering offices throughout the world.

	•		“Reports of Independent Public Accountants” for the three-year period ended December 31, 2002.

	•		Consolidated Balance Sheets as of December 31, 2002 and 2001.

	•		Consolidated Statements of Earnings and Retained Earnings for years Ended December 31, 2002, 2001, and 2000.

	•		Consolidated Statements of Comprehensive Income for years ended December 31, 2002, 2001, and 2000.

	•		Consolidated Statements of Cash Flows for years ended December 31, 2002, 2001, and 2000.

	•		Notes to Consolidated Financial Statements.

			The foregoing have been incorporated by reference to the Annual Report as indicated under Item 8.

			Auditors’ Reports on Financial Statement and Schedule II, Valuation and Qualifying Accounts.

			All other schedules are omitted because they are not applicable or the information is contained in the consolidated financial statements or notes thereto.

	•		Form 8-K dated October 17, 2003 referenced $29.6 million Jury Award.

	•		Form 8-K dated December 23, 2003 referenced Second Amendment to Bank Credit Agreement.

	•		Form 8-K dated January 30, 2003 referenced Jury Award.

	•		Form 8-K dated February 10, 2003 referenced Waiver and Amendment to Credit Agreement.


	“EBITDA — For any period, the sum of Consolidated Net Income for such period, plus, to the extent deducted in determining such Consolidated Net Income, (i) federal, state, local and foreign income, value added and similar taxes, (ii) Consolidated Interest Expense and (iii) depreciation and amortization expense.”

	“Effective Date of the Change of Control — The date on which a Change of Control Event occurs.”


	amount outstanding at any time and in which the Company or its Restricted Subsidiaries do not invest at any time more than 45% of the purchase and development costs of such real estate, improvements and related property. For purposes of this definition, “related property” for a particular real estate project includes: leases, rents, profits and security deposits for the project; books and records for the project; condemnation rights, insurance payments (including deductible amounts) and proceeds related thereto; permits, licenses, certificates of occupancy and other governmental authorizations for the project; franchise, management, service, governmental (including tax incentive) and other agreements related to the project; trademarks and trade names for the project; construction contracts, architect’s and engineer’s agreements, plans, specifications, drawings, surveys, models, sample materials and other items for the construction, fixturing, renovation or improvement of the project; and deposit accounts used exclusively for the project.”

	“Other Note Agreements — The Note Agreement dated as of June 1, 1994 among the Company and the institutions named therein and the Note Purchase Agreement dated as of June 20, 2001 among the Company and the institutions named therein.”

	“Other Notes — The 8.02% Senior Notes due December 30, 2003 issued by the Company pursuant to the Note Agreement dated as of June 1, 1994 and the 7.87% Senior Notes due December 30, 2016 issued by the Company pursuant to the Note Purchase Agreement dated as of June 20, 2001.”

	“Security Documents — The mortgages, deeds of trust, security agreements, financing statements and any other agreements or documents entered into by the Company or any Subsidiary creating Liens securing the Notes and other obligations payable by the Company or any Subsidiary pursuant to this Agreement, as the same may be amended from time to time in accordance with the Intercreditor Agreement.”

	5.3.2. The following definitions are amended to read in their entirety as follows:


	5.4.1. The references in clause (ii)(y) of Section 6.6(c) to “Sections 7.1 through 7.2” and “Sections 7.1 through 7.8” are each amended to read “Sections 7.1 through 7.15.”

	5.4.2. Section 6.6(i) is redesignated as Section 6.6(j) and a new Section 6.6(i) is added to read in its entirety as follows:


	5.17.2. Section 8.1(d) is amended to read in its entirety as follows:

	"(d) Any default in the observance of any covenant or agreement contained in (i) Sections 7.1 through 7.14, (ii) Section 8.7, or (iii) any covenant incorporated by reference pursuant to Section 7.15 or any term contained in any Security Document and such default continues beyond any period of grace provided therein.”

	5.17.3. Section 8.1(f) is amended to read in its entirety as follows:

	"(f) Any representation or warranty made by the Company in this Agreement, any Security Document or in any written statement or certificate furnished by the Company in connection with the issuance and sale of the Notes, or furnished by the Company pursuant to this Agreement or any Security Document, proves incorrect in any material respect as of the date of the issuance or making thereof;”

	5.17.4. The period at the end of Section 8.1(h) is replaced with a semicolon followed by the word “or” and new Section 8.1(i) is added as follows:

	"(i) a default or event of default occurs under any of the Security Documents and such default or event of default continues beyond any period of grace with respect thereto or any of the Security Documents are deemed or are judicially determined not to be valid, binding or enforceable.”


By:		/s/ Larry C. Miller Larry C. Miller Vice President - Finance


	Section 7.13 Debt. The Borrower shall not, and shall not permit any Subsidiary to, create, assume, incur or otherwise become or remain obligated in respect of, or permit to be outstanding, any Debt, except any or all of the following:

	(a) Existing Debt described on Schedule 7.13 hereto and renewals, refinancings and extensions, but not increases thereof, on terms and conditions not otherwise materially different from the terms and conditions thereof immediately preceding such renewal, refinancing or extension;

	(b) In addition to the Existing Debt described on Schedule 7.13 hereto, provided no Default or Event of Default exists both before and after giving effect thereto, Non-recourse Debt, provided that such Debt shall not be payable from the proceeds of Investments of the Borrower or any Domestic Subsidiary in any Foreign Subsidiary;

	(c) In addition to the Existing Debt described on Schedule 7.13 hereto, provided no Default or Event of Default exists both before and after giving effect thereto, purchase money Debt or Capitalized Lease Obligations not to exceed $12,000,000 at any time outstanding;

	(d) In addition to the Existing Debt described on Schedule 7.13 hereto, provided no Default or Event of Default exists both before and after giving effect thereto, Swap Contracts in respect of interest rates, foreign exchange or aluminum contracts, in each case that are (i) not for the purpose of speculation and (ii) on an unsecured basis; and

	(e) in addition to the existing Debt described on Schedule 7.13 hereto, provided no Default or Event of Default exists both before and after giving effect thereto, letters of credit securing manufacturing and factory equipment purchases not to exceed $500,000 at any time outstanding.


	7.21. Incorporation By Reference. On the effective date of the Third Amendment, each financial covenant (together with any defined terms and schedules related thereto) imposed under the Note Agreements (as defined in the Intercreditor Agreement) is incorporated into this Agreement and shall apply as if fully set forth herein.

	If, after the effective date of the Third Amendment, the Noteholders (as defined in the Intercreditor Agreement) or any other holder of Indebtedness of the Borrower impose any additional or more restrictive covenant (including by amendment of an existing covenant, by waiver or consent or otherwise) of the type or similar to the type contained in Article 7 of the this


	First: To the payment of all reasonable out-of-pocket costs and expenses incurred in connection with the sale of, collection of or other realization upon Collateral, including reasonable attorneys’ fees and disbursements;

	Second: To the payment of the Secured Obligations, which payment shall be shared by the Secured Parties as set forth in the Intercreditor Agreement or as may otherwise be agreed to in writing by the Secured Parties (with the Borrower remaining liable for any deficiency); and

	Third: To the extent of the balance (if any) of such proceeds, to the payment to the Borrower or other Person legally entitled thereto.


	(A) if such Letter of Credit is drawn upon, the Collateral Agent shall pay to the Issuing Bank the ratable portion of the amount of cash held as Collateral therefor pursuant to this clause that is allocable to the amount drawn upon such Letter of Credit and

	(B) if and to the extent that such Letter of Credit shall expire or terminate, the amount of cash held as Collateral therefor shall be applied in accordance with this Section 3.2; and


	(C) If and to the extent that any Cash Collateralized Letter of Credit expires or terminates,