Document:

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                                                                   EXHIBIT 4.2

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                          BUTLER MANUFACTURING COMPANY

                                   $50,000,000
                               7.87% Senior Notes
                              due December 30, 2016

                             NOTE PURCHASE AGREEMENT

                            Dated as of June 20, 2001

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                                TABLE OF CONTENTS

Section                                                                   Page
-------                                                                   ----

1.   AUTHORIZATION OF NOTES..................................................1

2.   SALE AND PURCHASE OF NOTES..............................................1

3.   CLOSING.................................................................2

4.   CONDITIONS TO CLOSING...................................................2
     4.1.   Representations and Warranties...................................2
     4.2.   Performance; No Default..........................................2
     4.3.   Compliance Certificates..........................................3
     4.4.   Opinions of Counsel..............................................3
     4.5.   Purchase Permitted By Applicable Law, etc........................3
     4.6.   Sale of Other Notes..............................................3
     4.7.   Payment of Special Counsel Fees..................................3
     4.8.   Private Placement Number.........................................4
     4.9.   Changes in Corporate Structure...................................4
     4.10.  Subsidiary Guaranty..............................................4
     4.11.  Credit Agreement.................................................4
     4.12.  Proceedings and Documents........................................4

5.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................4
     5.1.   Organization; Power and Authority................................4
     5.2.   Authorization, etc...............................................5
     5.3.   Disclosure.......................................................5
     5.4.   Organization and Ownership of Shares of Subsidiaries; Affiliates.6
     5.5.   Financial Statements.............................................6
     5.6.   Compliance with Laws, Other Instruments, etc.....................7
     5.7.   Governmental Authorizations, etc.................................7
     5.8.   Litigation; Observance of Agreements, Statutes and Orders........7
     5.9.   Taxes............................................................8
     5.10.  Title to Property; Leases........................................8
     5.11.  Licenses, Permits, etc...........................................8
     5.12.  Compliance with ERISA............................................9
     5.13.  Private Offering by the Company.................................10
     5.14.  Use of Proceeds; Margin Regulations.............................10
     5.15.  Existing Indebtedness; Future Liens.............................10
     5.16.  Foreign Assets Control Regulations, etc.........................11
     5.17.  Status under Certain Statutes...................................11
     5.18.  Environmental Matters...........................................11
     5.19.  Solvency of Subsidiary Guarantors...............................11

6.   REPRESENTATIONS OF THE PURCHASER.......................................12
     6.1.   Purchase for Investment.........................................12
     6.2.   Source of Funds.................................................12

7.   INFORMATION AS TO COMPANY..............................................13

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     7.1.   Financial and Business Information..............................13
     7.2.   Officer's Certificate...........................................16
     7.3.   Inspection......................................................17

8.   PREPAYMENT OF THE NOTES................................................18
     8.1.   Required Prepayments............................................18
     8.2.   Optional Prepayments with Make-Whole Amount.....................18
     8.3.   Change of Control...............................................18
     8.4.   Allocation of Partial Prepayments...............................19
     8.5.   Maturity; Surrender, etc........................................19
     8.6.   Purchase of Notes...............................................19
     8.7.   Make-Whole Amount...............................................19

9.   AFFIRMATIVE COVENANTS..................................................21
     9.1.   Compliance with Law.............................................21
     9.2.   Insurance.......................................................21
     9.3.   Maintenance of Properties.......................................21
     9.4.   Payment of Taxes and Claims.....................................22
     9.5.   Corporate Existence, etc........................................22

10.  NEGATIVE COVENANTS.....................................................22
     10.1.  Consolidated Net Worth..........................................22
     10.2.  Funded Debt.....................................................22
     10.3.  Short-Term Debt.................................................23
     10.4.  Indebtedness of Subsidiaries....................................23
     10.5.  Fixed Charge Coverage...........................................23
     10.6.  Limitations on Liens............................................23
     10.7.  Merger, Consolidation, etc......................................25
     10.8.  Sale of Assets..................................................26
     10.9.  Disposition of Stock of Restricted Subsidiaries.................27
     10.10. Designation of Unrestricted and Restricted Subsidiaries.........27
     10.11. Nature of Business..............................................28
     10.12. Transactions with Affiliates....................................28
     10.13. Subsidiary Guaranties...........................................28

11.  EVENTS OF DEFAULT......................................................28

12.  REMEDIES ON DEFAULT, ETC...............................................30
     12.1.  Acceleration....................................................30
     12.2.  Other Remedies..................................................31
     12.3.  Rescission......................................................31
     12.4.  No Waivers or Election of Remedies, Expenses, etc...............32

13.  REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES..........................32
     13.1.  Registration of Notes...........................................32
     13.2.  Transfer and Exchange of Notes..................................32
     13.3.  Replacement of Notes............................................33

14.  PAYMENTS ON NOTES......................................................33
     14.1.  Place of Payment................................................33
     14.2.  Home Office Payment.............................................33

15.  EXPENSES, ETC..........................................................34
     15.1.  Transaction Expenses............................................34

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     15.2.  Survival........................................................34

16.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT...........34

17.  AMENDMENT AND WAIVER...................................................35
     17.1.  Requirements....................................................35
     17.2.  Solicitation of Holders of Notes................................35
     17.3.  Binding Effect, etc.............................................36
     17.4.  Notes held by Company, etc......................................36

18.  NOTICES................................................................36

19.  REPRODUCTION OF DOCUMENTS..............................................37

20.  CONFIDENTIAL INFORMATION...............................................37

21.  SUBSTITUTION OF PURCHASER..............................................38

22.  RELEASE OF SUBSIDIARY GUARANTORS.......................................38

23.  MISCELLANEOUS..........................................................39
     23.1.  Successors and Assigns..........................................39
     23.2.  Payments Due on Non-Business Days...............................39
     23.3.  Severability....................................................39
     23.4.  Construction....................................................39
     23.5.  Counterparts....................................................39
     23.6.  Governing Law...................................................40

SCHEDULE A        --     Information Relating to Purchasers

SCHEDULE B        --     Defined Terms

SCHEDULE B-1      --     Existing Investments

SCHEDULE 4.9      --     Changes in Corporate Structure

SCHEDULE 5.3      --     Disclosure Materials

SCHEDULE 5.4      --     Subsidiaries; Affiliates

SCHEDULE 5.5      --     Financial Statements

SCHEDULE 5.8      --     Litigation

SCHEDULE 5.11     --     Permits, etc.

SCHEDULE 5.12     --     Compliance with ERISA

SCHEDULE 5.14     --     Use of Proceeds

SCHEDULE 5.15     --     Existing Indebtedness; Future Liens

SCHEDULE 10.6     --     Liens

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EXHIBIT 1(a)      --     Form of Senior Note

EXHIBIT 1(b)      --     Form of Subsidiary Guaranty

EXHIBIT 4.4(a)    --     Form of Opinion of Counsel for the Company

EXHIBIT 4.4(b)    --     Form of Opinion of Special Counsel for the Purchasers

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                          BUTLER MANUFACTURING COMPANY
                                    BMA Tower
                              One Penn Valley Park
                           Kansas City, Missouri 64108
                                 (816) 968-3000
                               Fax: (816) 968-3279

                                   $50,000,000
                    7.87% Senior Notes due December 30, 2016

                                                     Dated as of June 20, 2001

TO EACH OF THE PURCHASERS LISTED IN
         THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

         BUTLER MANUFACTURING COMPANY, a Delaware corporation (the "Company"),
agrees with you as follows:

1.       AUTHORIZATION OF NOTES.

                  The Company has authorized the issuance and sale of
$50,000,000 aggregate principal amount of its 7.87% Senior Notes due December
30, 2016 (the "Notes", such term to include any such notes issued in
substitution therefor pursuant to Section 13 of this Agreement). The Notes will
be substantially in the form set out in Exhibit 1(a), with such changes
therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement. Subject to Section 22, the Notes will
be guaranteed by certain existing and future Subsidiaries (individually, a
"Subsidiary Guarantor" and collectively, the "Subsidiary Guarantors") pursuant
to the guaranty in substantially the form of Exhibit 1(b) (the "Subsidiary
Guaranty"). The Notes will rank pari passu with the Company's Indebtedness under
the Credit Agreement.

1.       SALE AND PURCHASE OF NOTES.

                  Subject to the terms and conditions of this Agreement, the
Company will issue and sell to you and each of the other purchasers named in
Schedule A (the "Other Purchasers"), and you and the Other Purchasers agree to
purchase from the Company, at the Closing provided for in Section 3, Notes in
the principal amount specified opposite your name in Schedule A at the purchase
price of 100% of the principal amount thereof. Your obligation hereunder and the
obligations of the Other Purchasers are several and not joint obligations and
you shall have no liability to any Person for the performance or non-performance
by any Other Purchaser hereunder.

1.       CLOSING.

                  The sale and purchase of the Notes to be purchased by you and
the Other Purchasers shall occur at the offices of Gardner, Carton & Douglas,
Quaker Tower, Suite 3400, 321 North Clark Street, Chicago, Illinois 60610 at
9:00 a.m., Chicago time, at a closing (the "Closing") on June 27, 2001 or on
such other Business Day thereafter on or prior to June 30, 2001 as may be agreed
upon by the Company and you and the Other Purchasers. At the Closing the Company
will deliver to you the Notes to be purchased by you in the form of a single
Note (or such greater number of Notes in denominations of at least $500,000 as
you may request) dated the date of the Closing and registered in your name (or
in the name of your nominee), against delivery by you to the Company or its
order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Company to account number 375-0953187 at Bank of America, Dallas, Texas, ABA No.
111000012. If at the Closing the Company shall fail to tender such Notes to you
as provided above in this

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Section 3, or any of the conditions specified in Section 4 shall not have been
fulfilled to your satisfaction, you shall, at your election, be relieved of all
further obligations under this Agreement, without thereby waiving any rights you
may have by reason of such failure or such nonfulfillment.

1.       CONDITIONS TO CLOSING.

                  Your obligation to purchase and pay for the Notes to be sold
to you at the Closing is subject to the fulfillment to your satisfaction, prior
to or at the Closing, of the following conditions:

1.1.     REPRESENTATIONS AND WARRANTIES.

                  The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of the Closing.

1.1.     PERFORMANCE; NO DEFAULT.

                  The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it prior to or at the Closing and after giving effect to the
issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Section 5.14) no Default or Event of Default shall have occurred
and be continuing. Neither the Company nor any Subsidiary shall have entered
into any transaction since the date of the Memorandum that would have been
prohibited by Sections 10.1 through 10.13 had such Sections applied since such
date.

1.1.     COMPLIANCE CERTIFICATES.

                  (a) Officer's Certificate. The Company shall have delivered
         to you an Officer's Certificate, dated the date of the Closing,
         certifying that the conditions specified in Sections 4.1, 4.2 and
         4.9 have been fulfilled.

                  (b) Secretary's Certificate. The Company shall have
         delivered to you a certificate certifying as to the resolutions
         attached thereto and other corporate proceedings relating to the
         authorization, execution and delivery of the Notes and the Agreement.

1.2.     OPINIONS OF COUNSEL.

                  You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from Lathrop & Gage L.C.,
counsel for the Company and the Subsidiary Guarantors, and John W. Huey, Esq.,
Vice President, General Counsel and Secretary of the Company and an officer of
each of the Subsidiary Guarantors, covering the matters set forth in Exhibit
4.4(a) and covering such other matters incident to the transactions contemplated
hereby as you or your counsel may reasonably request (and the Company instructs
its counsel to deliver such opinion to you) and (b) from Gardner, Carton &
Douglas, your special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(b) and covering such other
matters incident to such transactions as you may reasonably request.

1.1.     PURCHASE PERMITTED BY APPLICABLE LAW, ETC.

                  On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.

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1.1.     SALE OF OTHER NOTES.

                  Contemporaneously with the Closing the Company shall sell to
the Other Purchasers and the Other Purchasers shall purchase the Notes to be
purchased by them at the Closing as specified in Schedule A.

1.1.     PAYMENT OF SPECIAL COUNSEL FEES.

                  Without limiting the provisions of Section 15.1, the Company
shall have paid on or before the Closing the reasonable fees, charges and
disbursements of your special counsel referred to in Section 4.4 to the extent
reflected in a statement of such counsel rendered to the Company at least one
Business Day prior to the Closing.

1.1.     PRIVATE PLACEMENT NUMBER.

                  A Private Placement Number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Notes by Gardner, Carton & Douglas.

1.1.     CHANGES IN CORPORATE STRUCTURE.

                  Except as specified in Schedule 4.9, the Company shall not
have changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.

1.1.     SUBSIDIARY GUARANTY.

                  Each Subsidiary Guarantor shall have executed and delivered
the Subsidiary Guaranty.

1.1.     CREDIT AGREEMENT.

                  The Company shall have provided to you and your special
counsel a copy of the Credit Agreement, as in existence on the Closing Date.

1.1.     PROCEEDINGS AND DOCUMENTS.

                  All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.

1.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                  The Company represents and warrants to you that:

1.1.     ORGANIZATION; POWER AND AUTHORITY.

                  The Company is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, and is
duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Company has the corporate power and authority to
own or hold under lease the properties it purports to own or hold under lease,
to transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Notes and to perform the provisions hereof and
thereof.

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1.1.     AUTHORIZATION, ETC.

                  This Agreement and the Notes have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each Note will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, 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).

                  The Subsidiary Guaranty has been duly authorized by all
necessary corporate action on the part of each Subsidiary Guarantor and upon
execution and delivery thereof will constitute the legal, valid and binding
obligation of each Subsidiary Guarantor, enforceable against each such
Subsidiary Guarantor in accordance with its terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency, 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).

1.1.     DISCLOSURE.

                  The Company, through its agent, Banc of America Securities
LLC, has delivered to you and each Other Purchaser a copy of a Private Placement
Memorandum, dated May 2001 (the "Memorandum"), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material respects,
the general nature of the business and principal properties of the Company and
its Subsidiaries. Except as disclosed in Schedule 5.3, this Agreement, the
Memorandum, the documents, certificates or other writings delivered to you by or
on behalf of the Company in connection with the transactions contemplated hereby
and the financial statements listed in Schedule 5.5, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Memorandum
or as expressly described in Schedule 5.3, or in one of the documents,
certificates or other writings identified therein, or in the financial
statements (including the notes thereto) listed in Schedule 5.5, since December
31, 2000, there has been no change in the financial condition, operations,
business, properties or prospects of the Company or any Subsidiary except
changes that individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect. There is no fact known to the Company that
could reasonably be expected to have a Material Adverse Effect that has not been
set forth herein or in the Memorandum or in the other documents, certificates
and other writings delivered to you by or on behalf of the Company specifically
for use in connection with the transactions contemplated hereby.

1.1.     ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.

                  (a) Schedule 5.4 contains (except as noted therein) complete
         and correct lists (i) of the Company's Subsidiaries, showing, as to
         each Subsidiary, the correct name thereof, the jurisdiction of its
         organization, whether such Subsidiary is a Restricted Subsidiary, and
         the percentage of shares of each class of its capital stock or similar
         equity interests outstanding owned by the Company and each other
         Subsidiary, (ii) of the Company's Affiliates, other than Subsidiaries,
         and (iii) of the Company's directors and senior officers.

                  (b) All of the outstanding shares of capital stock or similar
         equity interests of each Subsidiary shown in Schedule 5.4 as being
         owned by the Company and its Subsidiaries have been validly issued,
         are fully paid and nonassessable and are owned by the Company or
         another Subsidiary free and clear of any Lien (except as otherwise
         permitted by Section 10.6).

                  (c) Each Subsidiary identified in Schedule 5.4 is a
         corporation or other legal entity duly organized, validly existing and
         in good standing under the laws of its jurisdiction of organization,
         and is duly qualified as a foreign corporation or other legal entity
         and is in good standing in each jurisdiction in which such
         qualification is required by law, other than those jurisdictions as to
         which the failure to be so qualified or in good standing could not,
         individually or in the aggregate, reasonably be expected to have a
         Material Adverse Effect. Each such Subsidiary has the corporate or
         other power and authority to own or hold under lease the properties it
         purports to own or

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         hold under lease and to transact the business it transacts and
         proposes to transact.

                  (d) No Subsidiary is a party to, or otherwise subject to any
         legal restriction or any agreement (other than this Agreement, the
         Credit Agreement, the agreements listed on Schedule 5.4 and customary
         limitations imposed by corporate law statutes) restricting the ability
         of such Subsidiary to pay dividends out of profits or make any other
         similar distributions of profits to the Company or any of its
         Subsidiaries that owns outstanding shares of capital stock or similar
         equity interests of such Subsidiary.

1.2.     FINANCIAL STATEMENTS.

                  The Company has delivered to each Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule 5.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).

1.1.     COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.

                  The execution, delivery and performance by the Company of this
Agreement and the Notes will not (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 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.

                  The execution, delivery and performance by each Subsidiary
Guarantor of the Subsidiary Guaranty will not (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 Guarantor 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.

1.1.     GOVERNMENTAL AUTHORIZATIONS, ETC.

                  No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required in connection
with the execution, delivery or performance by the Company of this Agreement or
the Notes or the execution, delivery or performance by each Subsidiary Guarantor
of the Subsidiary Guaranty.

1.1.     LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.

                  (a) Except as disclosed in Schedule 5.8, there are no
         actions, suits or proceedings pending or, to the knowledge of the
         Company, threatened against or affecting the Company or any Subsidiary
         or any property of the Company or any Subsidiary in any court or
         before any arbitrator of any kind or before or by any Governmental
         Authority that, individually or in the aggregate, could reasonably be
         expected to have a Material Adverse Effect.

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                  (b) Neither the Company nor any Subsidiary is in default
         under any term of any agreement or instrument to which it is a party
         or by which it is bound, or any order, judgment, decree or ruling of
         any court, arbitrator or Governmental Authority or is in violation of
         any applicable law, ordinance, rule or regulation (including without
         limitation Environmental Laws) of any Governmental Authority, which
         default or violation, individually or in the aggregate, could
         reasonably be expected to have a Material Adverse Effect.

1.2.     TAXES.

                  The Company and its Subsidiaries have filed all tax returns
that are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate. The Federal
income tax liabilities of the Company and its Subsidiaries have been determined
by the Internal Revenue Service and paid for all fiscal years up to and
including the fiscal year ended December 31, 1996.

1.1.     TITLE TO PROPERTY; LEASES.

                  The Company and its Subsidiaries have good and sufficient
title to their respective properties that individually or in the aggregate are
Material, including all such properties reflected in the most recent audited
balance sheet referred to in Section 5.5 or purported to have been acquired by
the Company or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear of
Liens prohibited by this Agreement. All leases that individually or in the
aggregate are Material are valid and subsisting and are in full force and effect
in all material respects.

1.1.     LICENSES, PERMITS, ETC.

                  Except as disclosed in Schedule 5.11:

                  (a) the Company and its Subsidiaries own or possess all
         licenses, permits, franchises, authorizations, patents, copyrights,
         service marks, trademarks and trade names, or rights thereto, that
         individually or in the aggregate are Material, without known conflict
         with the rights of others;

                  (b) to the best knowledge of the Company, no product of the
         Company infringes in any material respect any license, permit,
         franchise, authorization, patent, copyright, service mark, trademark,
         trade name or other right owned by any other Person; and

                  (c) to the best knowledge of the Company, there is no
         Material violation by any Person of any right of the Company or any of
         its Subsidiaries with respect to any patent, copyright, service mark,
         trademark, trade name or other right owned or used by the Company or
         any of its Subsidiaries.

1.2.     COMPLIANCE WITH ERISA.

                  Except as disclosed in Schedule 5.12:

                  (a) The Company and each ERISA Affiliate have operated and
         administered each Plan in compliance with all applicable laws except
         for such instances of noncompliance as have not resulted in and could
         not reasonably be expected to result in a Material Adverse Effect.
         Neither the Company nor any

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         ERISA Affiliate has incurred any liability pursuant to Title I or IV
         of ERISA or the penalty or excise tax provisions of the Code relating
         to employee benefit plans (as defined in section 3 of ERISA), and no
         event, transaction or condition has occurred or exists that could
         reasonably be expected to result in the incurrence of any such
         liability by the Company or any ERISA Affiliate, or in the imposition
         of any Lien on any of the rights, properties or assets of the Company
         or any ERISA Affiliate, in either case pursuant to Title I or IV of
         ERISA or to such penalty or excise tax provisions or to section
         401(a)(29) or 412 of the Code, other than in each case such
         liabilities or Liens as would not be individually or in the aggregate
         Material.

                  (b) The present value of the aggregate benefit liabilities
         under each of the Plans (other than Multiemployer Plans), determined
         as of the end of such Plan's most recently ended plan year on the
         basis of the actuarial assumptions specified for funding purposes in
         such Plan's most recent actuarial valuation report, did not exceed the
         aggregate current value of the assets of such Plan allocable to such
         benefit liabilities in the case of any single Plan or in the aggregate
         for all Plans. The term "benefit liabilities" has the meaning
         specified in section 4001 of ERISA and the terms "current value" and
         "present value" have the meaning specified in section 3 of ERISA.

                  (c) The Company and its ERISA Affiliates have not incurred
         withdrawal liabilities (and are not subject to contingent withdrawal
         liabilities) under section 4201 or 4204 of ERISA in respect of
         Multiemployer Plans that individually or in the aggregate are
         Material.

                  (d) The expected post-retirement benefit obligation
         (determined as of the last day of the Company's most recently ended
         fiscal year in accordance with Financial Accounting Standards Board
         Statement No. 106, without regard to liabilities attributable to
         continuation coverage mandated by section 4980B of the Code) of the
         Company and its Subsidiaries is not Material.

                  (e) The execution and delivery of this Agreement and the
         issuance and sale of the Notes hereunder will not involve any
         transaction that is subject to the prohibitions of section 406 of
         ERISA or in connection with which a tax could be imposed pursuant to
         section 4975(c)(1)(A)-(D) of the Code. The representation by the
         Company in the first sentence of this Section 5.12(e) is made in
         reliance upon and subject to the accuracy of your representation in
         Section 6.2 as to the sources of the funds used to pay the purchase
         price of the Notes to be purchased by you.

1.2.     PRIVATE OFFERING BY THE COMPANY.

                  Neither the Company nor anyone acting on its behalf has
offered the Notes or any similar securities for sale to, or solicited any offer
to buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any person other than you, the Other Purchasers and not more than
26 other Institutional Investors, each of which has been offered the Notes at a
private sale for investment. Neither the Company nor anyone acting on its behalf
has taken, or will take, any action that would subject the issuance or sale of
the Notes to the registration requirements of Section 5 of the Securities Act.

1.1.     USE OF PROCEEDS; MARGIN REGULATIONS.

                  The Company will apply the proceeds of the sale of the Notes
as set forth in Schedule 5.14. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than 1.0% of the value of the
consolidated assets of the Company and the Company does not have any present
intention that margin stock will constitute more than 1.0% of the value of such
assets. As used in this Section, the terms "margin stock" and "purpose of buying
or carrying" shall have the meanings assigned to them in said Regulation U.

                                       7

<PAGE>   13

1.1.     EXISTING INDEBTEDNESS; FUTURE LIENS.

                  (a) Except as described therein, Schedule 5.15 sets forth a
         complete and correct list of all outstanding Indebtedness of the
         Company and its Subsidiaries as of March 31, 2001, since which date
         there has been no Material change in the amounts, interest rates,
         sinking funds, installment payments or maturities of the Indebtedness
         of the Company or its Subsidiaries. Neither the Company nor any
         Subsidiary is in default and no waiver of default is currently in
         effect, in the payment of any principal or interest on any
         Indebtedness of the Company or such Subsidiary and no event or
         condition exists with respect to any Indebtedness of the Company or
         any Subsidiary that would permit (or that with notice or the lapse of
         time, or both, would permit) one or more Persons to cause such
         Indebtedness to become due and payable before its stated maturity or
         before its regularly scheduled dates of payment.

                  (b) Except as disclosed in Schedule 5.15, neither the
         Company nor any Subsidiary has agreed or consented to cause or permit
         in the future (upon the happening of a contingency or otherwise) any
         of its property, whether now owned or hereafter acquired, to be
         subject to a Lien not permitted by Section 10.6.

1.2.     FOREIGN ASSETS CONTROL REGULATIONS, ETC.

                  Neither the sale of the Notes by the Company hereunder nor its
use of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.

1.1.     STATUS UNDER CERTAIN STATUTES.

                  Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the ICC Termination Act of
1995, as amended, or the Federal Power Act, as amended.

1.1.     ENVIRONMENTAL MATTERS.

                  Neither the Company nor any Subsidiary has knowledge of any
claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company or any of its Subsidiaries or
any of their respective real properties now or formerly owned, leased or
operated by any of them or other assets, alleging any damage to the environment
or violation of any Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect. Except as
otherwise disclosed to you in writing,

                  (a) neither the Company nor any Subsidiary has knowledge of
         any facts which would give rise to any claim, public or private, of
         violation of Environmental Laws or damage to the environment emanating
         from, occurring on or in any way related to real properties now or
         formerly owned, leased or operated by any of them or to other assets
         or their use, except, in each case, such as could not reasonably be
         expected to result in a Material Adverse Effect;

                  (b) neither the Company nor any of its Subsidiaries has stored
         any Hazardous Materials on real properties now or formerly owned,
         leased or operated by any of them and has not disposed of any Hazardous
         Materials in a manner contrary to any Environmental Laws in each case
         in any manner that could reasonably be expected to result in a Material
         Adverse Effect; and

                  (c) all buildings on all real properties now owned, leased or
         operated by the Company or any of its Subsidiaries are in compliance
         with applicable Environmental Laws, except where failure to comply
         could not reasonably be expected to result in a Material Adverse
         Effect.

                                       8

<PAGE>   14

1.2.     SOLVENCY OF SUBSIDIARY GUARANTORS.

                  After giving effect to the transactions contemplated herein
and after giving due consideration to any rights of contribution (i) each
Subsidiary Guarantor has received fair consideration and reasonably equivalent
value for the incurrence of its obligations under the Subsidiary Guaranty, (ii)
the fair value of the assets of each Subsidiary Guarantor exceeds its
liabilities, (iii) each Subsidiary Guarantor is able to and expects to be able
to pay its debts as they mature, and (iv) each Subsidiary Guarantor has capital
sufficient to carry on its business as conducted and as proposed to be
conducted.

1.       REPRESENTATIONS OF THE PURCHASER.

1.1.     PURCHASE FOR INVESTMENT.

                  You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of your or their property
shall at all times be within your or their control. You understand that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.

1.1.     SOURCE OF FUNDS.

                  You represent that at least one of the following statements is
an accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:

                  (a) the Source is an "insurance company general account" as
         such term is defined in the Department of Labor Prohibited Transaction
         Exemption ("PTE") 95-60 (issued July 12, 1995) ("PTE 95-60") and as of
         the date of this Agreement there is no "employee benefit plan" with
         respect to which the aggregate amount of such general account's
         reserves and liabilities for the contracts held by or on behalf of such
         employee benefit plan and all other employee benefit plans maintained
         by the same employer (and affiliates thereof as defined in Section
         V(a)(1) of PTE 95-60) or by the same employee organization (in each
         case determined in accordance with the provisions of PTE 95-60) exceeds
         10% of the total reserves and liabilities of such general account (as
         determined under PTE 95-60) (exclusive of separate account liabilities)
         plus surplus as set forth in the National Association of Insurance
         Commissioners Annual Statement filed with your state of domicile; or

                  (b) the Source is either (i) an insurance company pooled
         separate account, within the meaning of PTE 90-1 (issued January 29,
         1990), or (ii) a bank collective investment fund, within the meaning of
         PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to
         the Company in writing pursuant to this paragraph (b), no employee
         benefit plan or group of plans maintained by the same employer or
         employee organization beneficially owns more than 10% of all assets
         allocated to such pooled separate account or collective investment
         fund; or

                  (c) the Source constitutes assets of an "investment fund"
         (within the meaning of Part V of the QPAM Exemption) managed by a
         "qualified professional asset manager" or "QPAM" (within the meaning of
         Part V of the QPAM Exemption), no employee benefit plan's assets that
         are included in such investment fund, when combined with the assets of
         all other employee benefit plans established or maintained by the same
         employer or by an affiliate (within the meaning of Section V(c)(1) of
         the QPAM Exemption) of such employer or by the same employee
         organization and managed by such QPAM, exceed 20% of the total client
         assets managed by such QPAM, the conditions of Part I(c) and (g) of the
         QPAM Exemption are satisfied, neither the QPAM nor a person controlling
         or controlled by the QPAM (applying the definition of "control" in
         Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
         Company and (i) the

                                       9

<PAGE>   15

         identity of such QPAM and (ii) the names of all employee benefit plans
         whose assets are included in such investment fund have been disclosed
         to the Company in writing pursuant to this paragraph (c); or

                  (d) the Source is a governmental plan; or

                  (e) the Source is one or more employee benefit plans, or a
         separate account or trust fund comprised of one or more employee
         benefit plans, each of which has been identified to the Company in
         writing pursuant to this paragraph (e); or

                  (f) the Source is the assets of one or more employee benefit
         plans that are managed by an "in-house asset manager," as that term is
         defined in PTE 96-23 and such purchase and holding of the Notes is
         exempt under PTE 96-23; or

                  (g) the Source does not include assets of any employee benefit
         plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan" and "separate account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.

1.       INFORMATION AS TO COMPANY.

1.1.     FINANCIAL AND BUSINESS INFORMATION

                  The Company shall deliver to each holder of Notes that is an
Institutional Investor:

                  (a) Quarterly Statements -- within 45 days after the end of
         each quarterly fiscal period in each fiscal year of the Company (other
         than the last quarterly fiscal period of each such fiscal year),
         duplicate copies of,

                      (i)   a consolidated balance sheet of the Company and
                  its Subsidiaries as at the end of such quarter,

                      (ii)  consolidated statements of earnings of the
                  Company and its Subsidiaries for such quarter and (in the case
                  of the second and third quarters) for the portion of the
                  fiscal year ending with such quarter, and

                      (iii) consolidated statements of cash flows for the
                  portion of the fiscal year ending with such quarter,

         setting forth in each case in comparative form the figures for the
         corresponding periods in the previous fiscal year, all in reasonable
         detail, prepared in accordance with GAAP applicable to quarterly
         financial statements generally, and certified by a Senior Financial
         Officer as fairly presenting, in all material respects, the financial
         position of the companies being reported on and their results of
         operations and cash flows, subject to changes resulting from year-end
         adjustments, provided that delivery within the time period specified
         above of copies of the Company's Quarterly Report on Form 10-Q prepared
         in compliance with the requirements therefor and filed with the
         Securities and Exchange Commission shall be deemed to satisfy the
         requirements of this Section 7.1(a);

                  (a) Annual Statements -- within 90 days after the end of each
         fiscal year of the Company, duplicate copies of,

                      (i)   a consolidated balance sheet of the Company and
                  its Subsidiaries, as at the end of such year, and

                                       10

<PAGE>   16

                      (ii)  consolidated statements of earnings, retained
                  earnings and cash flows of the Company and its Subsidiaries,
                  for such year,

         setting forth in each case in comparative form the figures for the
         previous fiscal year, all in reasonable detail, prepared in accordance
         with GAAP, and accompanied

                      (A)   by an opinion thereon of independent certified
                  public accountants of recognized national standing, which
                  opinion shall state that such financial statements present
                  fairly, in all material respects, the financial position of
                  the companies being reported upon and their results of
                  operations and cash flows and have been prepared in conformity
                  with GAAP, and that the examination of such accountants in
                  connection with such financial statements has been made in
                  accordance with generally accepted auditing standards, and
                  that such audit provides a reasonable basis for such opinion
                  in the circumstances, and

                      (B)   a certificate of such accountants stating that
                  they have reviewed this Agreement and stating further whether,
                  in making their audit, they have become aware of any condition
                  or event that then constitutes a Default or an Event of
                  Default, and, if they are aware that any such condition or
                  event then exists, specifying the nature and period of the
                  existence thereof (it being understood that such accountants
                  shall not be liable, directly or indirectly, for any failure
                  to obtain knowledge of any Default or Event of Default unless
                  such accountants should have obtained knowledge thereof in
                  making an audit in accordance with generally accepted auditing
                  standards or did not make such an audit),

         provided that the delivery within the time period specified above of
         the Company's Annual Report on Form 10-K for such fiscal year (together
         with the Company's annual report to shareholders, if any, prepared
         pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance
         with the requirements therefor and filed with the Securities and
         Exchange Commission, together with the accountant's certificate
         described in clause (B) above, shall be deemed to satisfy the
         requirements of this Section 7.1(b);

                  (a) Unrestricted Subsidiaries -- if, at the time of delivery
         of any financial statements pursuant to Section 7.1(a) or (b),
         Unrestricted Subsidiaries account for more than 10% of (i) the
         consolidated total assets of the Company and its Subsidiaries reflected
         in the balance sheet included in such financial statements or (ii) the
         consolidated revenues of the Company and its Subsidiaries reflected in
         the consolidated statement of income included in such financial
         statements, an unaudited balance sheet for all Unrestricted
         Subsidiaries taken as whole as at the end of the fiscal period included
         in such financial statements and the related unaudited statements of
         earnings, retained earnings and cash flows for such Unrestricted
         Subsidiaries for such period, together with consolidating statements
         reflecting all eliminations or adjustments necessary to reconcile such
         group financial statements to the consolidated financial statements of
         the Company and its Subsidiaries shall be delivered together with the
         financial statements required pursuant to Sections 7.1(a) and (b);

                  (b) SEC and Other Reports -- promptly upon their becoming
         available, one copy of (i) each financial statement, report, notice or
         proxy statement sent by the Company or any Restricted Subsidiary to
         public securities holders generally, and (ii) each regular or periodic
         report, each registration statement (without exhibits except as
         expressly requested by such holder), and each prospectus and all
         amendments thereto filed by the Company or any Restricted Subsidiary
         with the Securities and Exchange Commission and of all press releases
         and other statements made available generally by the Company or any
         Restricted Subsidiary to the public concerning developments that are
         Material;

                  (c) Notice of Default or Event of Default -- promptly, and in
         any event within five Business Days after a Responsible Officer
         becoming aware of the existence of any Default or Event of Default or
         that any Person has given any notice or taken any action with respect
         to a claimed default hereunder or that any Person has given any notice
         or taken any action with respect to a claimed default of the type
         referred to in Section 11(f), a written notice specifying the nature
         and period of existence thereof and what action the Company is taking
         or proposes to take with respect thereto;

                                       11

<PAGE>   17

                  (d) ERISA Matters -- promptly, and in any event within five
         Business Days after a Responsible Officer becoming aware of any of the
         following, a written notice setting forth the nature thereof and the
         action, if any, that the Company or an ERISA Affiliate proposes to take
         with respect thereto:

                      (i)   with respect to any Plan, any reportable event,
                  as defined in section 4043(b) of ERISA and the regulations
                  thereunder, for which notice thereof has not been waived
                  pursuant to such regulations as in effect on the date hereof;
                  or

                      (ii)  the taking by the PBGC of steps to institute, or
                  the threatening by the PBGC of the institution of, proceedings
                  under section 4042 of ERISA for the termination of, or the
                  appointment of a trustee to administer, any Plan, or the
                  receipt by the Company or any ERISA Affiliate of a notice from
                  a Multiemployer Plan that such action has been taken by the
                  PBGC with respect to such Multiemployer Plan; or

                      (iii) any event, transaction or condition that could
                  result in the incurrence of any liability by the Company or
                  any ERISA Affiliate pursuant to Title I or IV of ERISA or the
                  penalty or excise tax provisions of the Code relating to
                  employee benefit plans, or in the imposition of any Lien on
                  any of the rights, properties or assets of the Company or any
                  ERISA Affiliate pursuant to Title I or IV of ERISA or such
                  penalty or excise tax provisions, if such liability or Lien,
                  taken together with any other such liabilities or Liens then
                  existing, could reasonably be expected to have a Material
                  Adverse Effect;

                  (e) Notices from Governmental Authority -- promptly, and in
         any event within 30 days of receipt thereof, copies of any notice to
         the Company or any Subsidiary from any Federal or state Governmental
         Authority relating to any order, ruling, statute or other law or
         regulation that could reasonably be expected to have a Material Adverse
         Effect;

                  (f) Requested Information -- with reasonable promptness, such
         other data and information relating to the business, operations,
         affairs, financial condition, assets or properties of the Company or
         any of its Subsidiaries or relating to the ability of the Company to
         perform its obligations hereunder and under the Notes as from time to
         time may be reasonably requested by any such holder of Notes.

1.2.     OFFICER'S CERTIFICATE.

                  Each set of financial statements delivered to a holder of
Notes pursuant to Sections 7.1(a) or (b) hereof shall be accompanied by a
certificate of a Senior Financial Officer setting forth:

                  (a) Covenant Compliance -- the information (including detailed
         calculations) required in order to establish whether the Company was in
         compliance with the requirements of Section 10.1 through Section 10.13,
         inclusive, during the quarterly or annual period covered by the
         statements then being furnished (including with respect to each such
         Section, where applicable, the calculations of the maximum or minimum
         amount, ratio or percentage, as the case may be, permissible under the
         terms of such Sections, and the calculation of the amount, ratio or
         percentage then in existence); and

                  (b) Event of Default -- a statement that such officer has
         reviewed the relevant terms hereof and has made, or caused to be made,
         under his or her supervision, a review of the transactions and
         conditions of the Company and its Restricted Subsidiaries from the
         beginning of the quarterly or annual period covered by the statements
         then being furnished to the date of the certificate and that such
         review shall not have disclosed the existence during such period of any
         condition or event that constitutes a Default or an Event of Default
         or, if any such condition or event existed or exists (including,
         without limitation, any such event or condition resulting from the
         failure of the Company or any Restricted Subsidiary to comply with any
         Environmental Law), specifying the nature and period of existence
         thereof and what action the Company or such Restricted Subsidiary shall
         have taken or proposes to take with respect thereto.

                                       12

<PAGE>   18

1.2.     INSPECTION.

                  The Company shall permit the representatives of each holder of
Notes that is an Institutional Investor:

                  (a) No Default -- if no Default or Event of Default then
         exists, at the expense of such holder and upon reasonable prior notice
         to the Company, to visit the principal executive office of the Company,
         to discuss the affairs, finances and accounts of the Company and its
         Subsidiaries with the Company's officers, and (with the consent of the
         Company, which consent will not be unreasonably withheld) its
         independent public accountants, and (with the consent of the Company,
         which consent will not be unreasonably withheld) to visit the other
         offices and properties of the Company and each Subsidiary, all at such
         reasonable times and as often as may be reasonably requested in
         writing; and

                  (b) Default -- if a Default or Event of Default then exists,
         at the expense of the Company to visit and inspect any of the offices
         or properties of the Company or any Subsidiary, to examine all their
         respective books of account, records, reports and other papers, to make
         copies and extracts therefrom, and to discuss their respective affairs,
         finances and accounts with their respective officers and independent
         public accountants (and by this provision the Company authorizes said
         accountants to discuss the affairs, finances and accounts of the
         Company and its Subsidiaries), all at such times and as often as may be
         requested.

Prior to or concurrently with any inspection pursuant to this Section 7.3, the
holder, if requested by the Company, shall have entered into a confidentiality
agreement with the Company, reasonably satisfactory to it and the Company, so as
to avoid any disclosure obligation on the Company under Regulation FD under the
Exchange Act.

1.       PREPAYMENT OF THE NOTES

1.1.     REQUIRED PREPAYMENTS.

                  On December 30, 2006, and on each December 30 thereafter to
and including December 30, 2015, the Company will prepay $4,545,455 principal
amount (or such lesser principal amount as shall then be outstanding) of the
Notes at 100% of the principal amount thereof and without payment of the
Make-Whole Amount or any premium, provided that upon any partial prepayment of
the Notes pursuant to Sections 8.2, 8.3 or 10.8 or purchase of the Notes
permitted by Section 8.6 the principal amount of each required prepayment of the
Notes becoming due under this Section 8.1 on and after the date of such
prepayment or purchase shall be reduced in the same proportion as the aggregate
unpaid principal amount of the Notes is reduced as a result of such prepayment
or purchase.

1.1.     OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.

                  The Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part of, the Notes, in an
amount not less than $1,000,000 in the case of a partial prepayment, at 100% of
the principal amount so prepaid, plus the Make-Whole Amount determined for the
prepayment date with respect to such principal amount. The Company will give
each holder of Notes written notice of each optional prepayment under this
Section 8.2 not less than 30 days and not more than 60 days prior to the date
fixed for such prepayment. Each such notice shall specify such date, the
aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in
accordance with Section 8.4), and the interest to be paid on the prepayment date
with respect to such principal amount being prepaid, and shall be accompanied by
a certificate of a Senior Financial Officer as to the estimated Make-Whole
Amount due in connection with such prepayment (calculated as if the date of such
notice were the date of the prepayment), setting forth the details of such
computation. Two Business Days prior to such prepayment, the Company shall
deliver to each holder of Notes a certificate of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.

                                       13

<PAGE>   19

1.1.     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 and without
payment of the Make-Whole Amount or any premium. 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 and (v) 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.

1.1.     ALLOCATION OF PARTIAL PREPAYMENTS.

                  In the case of each partial prepayment of the Notes pursuant
to Sections 8.1 or 8.2, the principal amount of the Notes to be prepaid shall be
allocated among all of the Notes at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.

1.1.     MATURITY; SURRENDER, ETC.

                  In the case of each prepayment of Notes pursuant to this
Section 8, the principal amount of each Note to be prepaid shall mature and
become due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable
Make-Whole Amount, if any. From and after such date, unless the Company shall
fail to pay such principal amount when so due and payable, together with the
interest and Make-Whole Amount, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and cancelled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any Note.

1.1.     PURCHASE OF NOTES.

                  The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.

1.1.     MAKE-WHOLE AMOUNT.

                  The term "MAKE-WHOLE AMOUNT" means, with respect to any Note,
an amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:

                                       14

<PAGE>   20

                  "CALLED PRINCIPAL" means, with respect to any Note, the
         principal of such Note that is to be prepaid pursuant to Section 8.2 or
         has become or is declared to be immediately due and payable pursuant to
         Section 12.1, as the context requires.

                  "DISCOUNTED VALUE" means, with respect to the Called Principal
         of any Note, the amount obtained by discounting all Remaining Scheduled
         Payments with respect to such Called Principal from their respective
         scheduled due dates to the Settlement Date with respect to such Called
         Principal, in accordance with accepted financial practice and at a
         discount factor (applied on the same periodic basis as that on which
         interest on the Notes is payable) equal to the Reinvestment Yield with
         respect to such Called Principal.

                  "REINVESTMENT YIELD" means, with respect to the Called
         Principal of any Note, 0.50% plus the yield to maturity implied by (i)
         the yields reported, as of 10:00 A.M. (New York City time) on the
         second Business Day preceding the Settlement Date with respect to such
         Called Principal, on the display designated as the "PX Screen" on the
         Bloomberg Financial Market Service (or such other display as may
         replace the PX Screen on Bloomberg Financial Market Service) for
         actively traded U.S. Treasury securities having a maturity equal to the
         Remaining Average Life of such Called Principal as of such Settlement
         Date, or (ii) if such yields are not reported as of such time or the
         yields reported as of such time are not ascertainable, the Treasury
         Constant Maturity Series Yields reported, for the latest day for which
         such yields have been so reported as of the second Business Day
         preceding the Settlement Date with respect to such Called Principal, in
         Federal Reserve Statistical Release H.15 (519) (or any comparable
         successor publication) for actively traded U.S. Treasury securities
         having a constant maturity equal to the Remaining Average Life of such
         Called Principal as of such Settlement Date. Such implied yield will be
         determined, if necessary, by (a) converting U.S. Treasury bill
         quotations to bond-equivalent yields in accordance with accepted
         financial practice and (b) interpolating linearly between (1) the
         actively traded U.S. Treasury security with the maturity closest to and
         greater than the Remaining Average Life and (2) the actively traded
         U.S. Treasury security with the maturity closest to and less than the
         Remaining Average Life.

                  "REMAINING AVERAGE LIFE" means, with respect to any Called
         Principal, the number of years (calculated to the nearest one-twelfth
         year) obtained by dividing (i) such Called Principal into (ii) the sum
         of the products obtained by multiplying (a) the principal component of
         each Remaining Scheduled Payment with respect to such Called Principal
         by (b) the number of years (calculated to the nearest one-twelfth year)
         that will elapse between the Settlement Date with respect to such
         Called Principal and the scheduled due date of such Remaining Scheduled
         Payment.

                  "REMAINING SCHEDULED PAYMENTS" means, with respect to the
         Called Principal of any Note, all payments of such Called Principal and
         interest thereon that would be due after the Settlement Date with
         respect to such Called Principal if no payment of such Called Principal
         were made prior to its scheduled due date, provided that if such
         Settlement Date is not a date on which interest payments are due to be
         made under the terms of the Notes, then the amount of the next
         succeeding scheduled interest payment will be reduced by the amount of
         interest accrued to such Settlement Date and required to be paid on
         such Settlement Date pursuant to Section 8.2 or 12.1.

                  "SETTLEMENT DATE" means, with respect to the Called Principal
         of any Note, the date on which such Called Principal is to be prepaid
         pursuant to Section 8.2 or has become or is declared to be immediately
         due and payable pursuant to Section 12.1, as the context requires.

1.       AFFIRMATIVE COVENANTS.

                  The Company covenants that so long as any of the Notes are
outstanding:

1.1.     COMPLIANCE WITH LAW.

                  The Company will and will cause each Subsidiary to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental

                                       15

<PAGE>   21

Laws, and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-compliance
with such laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates, permits, franchises
and other governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

1.1.     INSURANCE.

                  The Company will and will cause each Restricted Subsidiary to
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.

1.1.     MAINTENANCE OF PROPERTIES.

                  The Company will and will cause each Restricted Subsidiary to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent
the Company or any Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

1.1.     PAYMENT OF TAXES AND CLAIMS.

                  The Company will and will cause each Subsidiary to file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.

1.1.     CORPORATE EXISTENCE, ETC.

                  The Company will at all times preserve and keep in full force
and effect its corporate existence. Subject to Sections 10.8 and 10.9, the
Company will at all times preserve and keep in full force and effect the
corporate existence of each Restricted Subsidiary (unless merged into the
Company or a Restricted Subsidiary) and all rights and franchises of the Company
and its Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.

1.       NEGATIVE COVENANTS.

                  The Company covenants that so long as any of the Notes are
outstanding:

                                       16

<PAGE>   22

1.1.     CONSOLIDATED NET WORTH.

                  The Company will not permit at any time its Adjusted
Consolidated Net Worth to be less than $125,000,000 plus the cumulative sum of
50% of Consolidated Net Income (but only if a positive number) for each fiscal
quarter ending after March 31, 2001.

1.1.     FUNDED DEBT.

                  The Company will not, and will not permit any Restricted
Subsidiary to, create, assume, incur or otherwise become liable for, directly or
indirectly, any Funded Debt, other than:

                  (a) the Notes;

                  (b) Funded Debt of the Company and its Restricted Subsidiaries
         outstanding on the Closing Date and described in Schedule 5.15.

                  (c) Funded Debt of the Company to a Restricted Subsidiary or
         Funded Debt of a Restricted Subsidiary to the Company or another
         Restricted Subsidiary; and

                  (d) additional Funded Debt, provided that at the time of
         incurring such additional Funded Debt and after giving effect thereto
         and to the application of the proceeds therefrom, the Funded Debt of
         the Company and its Restricted Subsidiaries then to be outstanding does
         not exceed 60% of Consolidated Total Capitalization.

1.2.     SHORT-TERM DEBT.

                  The Company will not, and will not permit any Restricted
Subsidiary to, create, assume, incur or otherwise become liable for, directly or
indirectly, any Short-Term Debt unless during the 12 calendar months immediately
preceding such incurrence there shall have been a period of 30 consecutive days
during which either (i) there was no Short-Term Debt of the Company and its
Restricted Subsidiaries outstanding or (ii) the average daily amount of
Short-Term Debt of the Company and its Restricted Subsidiaries during such
30-day period could have been incurred as Funded Debt pursuant to Section
10.2(d).

1.1.     INDEBTEDNESS OF SUBSIDIARIES.

                  The Company will not permit any Restricted Subsidiary to
create, assume, incur, or otherwise become liable for, directly or indirectly,
or permit to exist any Indebtedness, other than Indebtedness to the Company or
another Restricted Subsidiary, unless, at the time of incurrence thereof and
after giving effect thereto and to the application of the proceeds therefrom:

                  (a) such Indebtedness, if it constitutes Funded Debt, may be
         incurred pursuant to Section 10.2(d); and

                  (b) the aggregate outstanding Indebtedness of Restricted
         Subsidiaries does not exceed 15% of Consolidated Total Capitalization.

1.2.     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 quarters ending as of the last day of
each fiscal quarter to be less than 1.5 to 1.0.

                                       17

<PAGE>   23

1.1.     LIMITATIONS ON LIENS.

                  The Company will not, and will not permit any Restricted
Subsidiary to, permit to exist, create, assume or incur, directly or indirectly,
any Lien on its properties or assets, whether now owned or hereafter acquired,
except:

                  (a) Liens existing on property or assets of the Company or any
         Restricted Subsidiary as of the Closing Date that are described in
         Schedule 10.6 and Liens resulting from extensions, renewals,
         refinancings and refundings of Indebtedness secured by such Liens,
         provided that there is no increase in the principal amount of the
         Indebtedness secured thereby at the time of extension, renewal,
         refinancing or refunding, and any new Lien attaches only to the
         property which was subject to such Lien at the time of such extension,
         renewal, refinancing or refunding; provided that this 10.6(a) shall not
         permit any Liens securing Indebtedness owed to banks;

                  (b) Liens for taxes, assessments or governmental charges not
         then due and delinquent or the nonpayment of which is permitted by
         Section 9.4;

                  (c) any attachment or judgment Lien, unless the judgment it
         secures shall not, within 60 days after the entry thereof, have been
         discharged or execution thereof stayed pending appeal, or shall not
         have been discharged within 60 days after the expiration of any such
         stay;

                  (d) Liens arising in the ordinary course of business and not
         incurred in connection with the borrowing of money, including
         encumbrances in the nature of survey exceptions, zoning restrictions,
         easements, rights and restrictions of record on the use of real
         property, statutory landlord's and lessor's liens, warehousemen's liens
         and mechanics' and materialmen liens in the ordinary course of
         business, which in the aggregate do not materially interfere with the
         conduct of the business of the Company and its Subsidiaries taken as a
         whole or materially impair the value of the property subject thereto
         for the purpose of such business;

                  (e) Liens securing Indebtedness of a Restricted Subsidiary to
         the Company;

                  (f) Liens (i) existing on tangible property at the time of its
         acquisition by the Company or a Restricted Subsidiary and not created
         in contemplation thereof, whether or not the Indebtedness secured by
         such Lien is assumed by the Company or such Restricted Subsidiary, or
         (ii) on tangible property created substantially contemporaneously with
         the date of acquisition or within 180 days of the acquisition or
         completion of construction thereof to secure or provide for all or a
         portion of the purchase price or cost of construction of such tangible
         property, or (iii) existing on tangible property of a Person at the
         time such Person is merged into or consolidated with or is acquired by,
         or substantially all of its tangible assets are acquired by, the
         Company or a Restricted Subsidiary and not created in contemplation
         thereof, or (iv) securing reimbursement obligations under letters of
         credit, or (v) renewals, extensions or replacements of such Liens;
         provided, in each case, that (x) the incurrence of the Indebtedness
         secured by such Liens does not violate or conflict with any other
         provision of this Agreement, (y) such Liens do not extend to other
         property of the Company or any Restricted Subsidiary and (z) the
         aggregate principal amount of Indebtedness secured by each such Lien
         does not exceed 100% of the cost or fair market value of the tangible
         property subject thereto;

                  (g) Liens on real estate projects held for sale created within
         one year of the acquisition or completion of construction thereof to
         secure or provide for all or a portion of the purchase price or cost of
         construction of such real estate projects;

                  (h) Liens not otherwise permitted by paragraphs (a) through
         (g) above 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 10% of Adjusted Consolidated Net Worth;
         and

                                       18

<PAGE>   24

                  (i) the Lien on cash advanced, together with the earnings and
         proceeds thereof, to fund potential general liability and workers'
         compensation reimbursement obligations under a bank letter of credit
         upon a default in agreements providing for the letter of credit so long
         as the amounts advanced have been adequately reserved against on the
         consolidated financial statements of the Company.

1.2.     MERGER, CONSOLIDATION, ETC.

                  The Company will not, and will not permit any Restricted
Subsidiary to, consolidate with or merge with any other Person or convey,
transfer, sell or lease all or substantially all of its assets in a single
transaction or series of transactions to any Person except that:

                  (a) the Company may consolidate or merge with any other Person
         or convey, transfer, sell or lease all or substantially all of its
         assets in a single transaction or series of transactions to any Person,
         provided that:

                      (i)   the successor formed by such consolidation or the
                  survivor of such merger or the Person that acquires by
                  conveyance, transfer, sale or lease all or substantially all
                  of the assets of the Company as an entirety, as the case may
                  be, is a solvent corporation organized and existing under the
                  laws of the United States or any State thereof (including the
                  District of Columbia), and, if the Company is not such
                  corporation, such corporation (y) shall have executed and
                  delivered to each holder of any Notes its assumption of the
                  due and punctual performance and observance of each covenant
                  and condition of this Agreement and the Notes and (z) shall
                  have caused to be delivered to each holder of any Notes an
                  opinion of independent counsel reasonably satisfactory to the
                  Required Holders, to the effect that all agreements or
                  instruments effecting such assumption are enforceable in
                  accordance with their terms, except as enforcement of such
                  terms may be limited by bankruptcy, insolvency,
                  reorganization, moratorium, fraudulent conveyance and similar
                  laws affecting the enforcement of creditors' rights generally
                  and by general equitable principles, and comply with the terms
                  hereof;

                      (ii)  immediately after giving effect to such
                  transaction, the successor formed by such consolidation or the
                  survivor of such merger or the Person that acquires by
                  conveyance, transfer, sale or lease all or substantially all
                  of the assets of the Company as an entirety, as the case may
                  be, could incur $1.00 of additional Funded Debt pursuant to
                  Section 10.2; and

                      (iii) immediately after giving effect to such
                  transaction, no Default or Event of Default shall exist; and

                  (b) Any Restricted Subsidiary may (x) merge into the Company
         (provided that the Company is the surviving corporation) or another
         Wholly Owned Restricted Subsidiary or (y) sell, transfer or lease all
         or any part of its assets to the Company or another Wholly Owned
         Restricted Subsidiary, or (z) merge or consolidate with, or sell,
         transfer or lease all or substantially all of its assets to, any Person
         in a transaction that is permitted by Section 10.8 or, as a result of
         which, such Person becomes a Restricted Subsidiary; provided in each
         instance set forth in clauses (x) through (z) that, immediately before
         and after giving effect thereto, there shall exist no Default or Event
         of Default;

No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed in
this Section 10.7 from its liability under this Agreement or the Notes.

1.1.     SALE OF ASSETS.

                  The Company will not, and will not permit any Restricted
Subsidiary to, sell, lease, transfer or otherwise dispose of, including by way
of merger (collectively a "Disposition"), any assets, including capital stock of
Restricted Subsidiaries, in one or a series of transactions, to any Person,
other than:

                                       19

<PAGE>   25

                  (a) Dispositions in the ordinary course of business;

                  (b) Dispositions by a Restricted Subsidiary to the Company or
         another Wholly Owned Restricted Subsidiary; or

                  (c) Dispositions not otherwise permitted by Section 10.8(a) or
         (b), provided that:

                      (i)   each such Disposition is for a consideration at
                  least equal to the fair market value of the property subject
                  thereto;

                      (ii)  the aggregate net book value of all assets so
                  disposed of in any fiscal year pursuant to this Section
                  10.8(c) does not exceed 10% of Consolidated Total Assets as of
                  the end of the immediately preceding fiscal year; and

                      (iii) after giving effect to such Disposition no
                  Default or Event of Default would exist.

Notwithstanding the foregoing, the Company may, and may permit any Restricted
Subsidiary to, make a Disposition and the assets subject to such Disposition
shall not be subject to or included in the foregoing limitation and computation
contained in Section 10.8(c) to the extent that (A) it is a sale and leaseback
(including the purchase and resale by the Company of bonds secured by such
facility) by the Company of its Kansas City, Missouri headquarters facility, or
(B) the net proceeds from such Disposition are within 180 days of such
Disposition (y) reinvested in productive assets of the Company or its Restricted
Subsidiaries consistent with Section 10.11 or (z) offered by the Company to be
applied to the prepayment of the Notes on a pro rata basis with other
outstanding Indebtedness at a price of 100% of the principal amount to be
prepaid together with interest accrued to the date of prepayment; provided, that
if any holder of the Notes declines such repayment, the pro rata proceeds which
would have been paid to such holder shall not be distributed to any other
holders of the Notes or any other holders of Indebtedness as part of such
repayment.

1.1.     DISPOSITION OF STOCK OF RESTRICTED SUBSIDIARIES.

                  The Company (i) will not permit any Restricted Subsidiary to
issue its capital stock, or any warrants, rights or options to purchase, or
securities convertible into or exchangeable for, such capital stock, to any
Person other than the Company or another Wholly Owned Restricted Subsidiary
(other than directors' qualifying shares or similar issuances), and (ii) will
not, and will not permit any other Restricted Subsidiary to, sell, transfer or
otherwise dispose of any shares of capital stock of a Restricted Subsidiary if
such sale would be prohibited by Section 10.8. If a Restricted Subsidiary at any
time ceases to be such as a result of a sale or issuance of its capital stock,
any Liens on property of the Company or any other Restricted Subsidiary securing
Indebtedness owed to such Restricted Subsidiary, which is not contemporaneously
repaid, together with such Indebtedness, shall be deemed to have been incurred
by the Company or such other Restricted Subsidiary, as the case may be, at the
time such Restricted Subsidiary ceases to be a Restricted Subsidiary.

1.1.     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 (iii) and Section 10.9, (iii) the Company can incur at
         least $1.00 of additional Funded Debt, and (iv) 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.

                                       20

<PAGE>   26

1.2.     NATURE OF BUSINESS.

                  The Company will not, and will not permit any Restricted
Subsidiary to, engage in any business if, as a result thereof, the general
nature of the business in which the Company and its Restricted Subsidiaries,
taken as a whole, would then be engaged, would be substantially changed from the
general nature of the business in which the Company is engaged on the date of
this Agreement as described in the Memorandum.

1.1.     TRANSACTIONS WITH AFFILIATES.

                  The Company will not, and will not permit any Restricted
Subsidiary to, enter into directly or indirectly any transaction or Material
group of related transactions (including the purchase, lease, sale or exchange
of properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Restricted Subsidiary), except in the
ordinary course and pursuant to the reasonable requirements of the Company's or
such Subsidiary's business and upon fair and reasonable terms no less favorable
to the Company or such Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.

1.1.     SUBSIDIARY GUARANTIES.

                  The Company will not permit any Subsidiary to become a
guarantor of Indebtedness owed to banks under the Credit Agreement or to
directly or indirectly guarantee any of the Company's Indebtedness or other
obligations unless such Subsidiary is, or concurrently therewith becomes, a
party to the Subsidiary Guaranty.

1.       EVENTS OF DEFAULT.

                  An "Event of Default" shall exist if any of the following
conditions or events shall occur and be continuing:

                  (a) the Company defaults in the payment of any principal or
         Make-Whole Amount, if any, on any Note when the same becomes due and
         payable, whether at maturity or at a date fixed for prepayment or by
         declaration or otherwise; or

                  (b) the Company defaults in the payment of any interest on any
         Note for more than five Business Days after the same becomes due and
         payable; or

                  (c) the Company defaults in the performance of or compliance
         with any term contained in Section 7.1(e) or Sections 10.1 through
         10.13; or

                  (d) the Company defaults in the performance of or compliance
         with any term contained herein (other than those referred to in
         paragraphs (a), (b) and (c) of this Section 11) and such default is not
         remedied within 30 days after the earlier of (i) a Responsible Officer
         obtaining actual knowledge of such default and (ii) the Company
         receiving written notice of such default; or

                  (e) any representation or warranty made in writing by or on
         behalf of the Company or by any officer of the Company in this
         Agreement 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

                  (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

                                       21

<PAGE>   27

         Indebtedness has become, or has been declared, 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), 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

                  (g) the Company or any Restricted Subsidiary (i) is generally
         not paying, or admits in writing its inability to pay, its debts as
         they become due, (ii) files, or consents by answer or otherwise to the
         filing against it of, a petition for relief or reorganization or
         arrangement or any other petition in bankruptcy, for liquidation or to
         take advantage of any bankruptcy, insolvency, reorganization,
         moratorium or other similar law of any jurisdiction, (iii) makes an
         assignment for the benefit of its creditors, (iv) consents to the
         appointment of a custodian, receiver, trustee or other officer with
         similar powers with respect to it or with respect to any substantial
         part of its property, (v) is adjudicated as insolvent or to be
         liquidated, or (vi) takes corporate action for the purpose of any of
         the foregoing; or

                  (h) a court or governmental authority of competent
         jurisdiction enters an order appointing, without consent by the Company
         or any Restricted Subsidiary, a custodian, receiver, trustee or other
         officer with similar powers with respect to it or with respect to any
         substantial part of its property, or constituting an order for relief
         or approving a petition for relief or reorganization or any other
         petition in bankruptcy or for liquidation or to take advantage of any
         bankruptcy or insolvency law of any jurisdiction, or ordering the
         dissolution, winding-up or liquidation of the Company or any Restricted
         Subsidiary, or any such petition shall be filed against the Company or
         any Restricted Subsidiary and such petition shall not be dismissed
         within 60 days; or

                  (i) a final judgment or judgments for the payment of money
         aggregating in excess of $5,000,000 are rendered against one or more of
         the Company and its Restricted Subsidiaries and which judgments are
         not, within 60 days after entry thereof, bonded, discharged or stayed
         pending appeal, or are not discharged within 60 days after the
         expiration of such stay; or

                  (j) if (i) any Plan shall fail to satisfy the minimum funding
         standards of ERISA or the Code for any plan year or part thereof or a
         waiver of such standards or extension of any amortization period is
         sought or granted under section 412 of the Code, (ii) a notice of
         intent to terminate any Plan shall have been or is reasonably expected
         to be filed with the PBGC or the PBGC shall have instituted proceedings
         under ERISA section 4042 to terminate or appoint a trustee to
         administer any Plan or the PBGC shall have notified the Company or any
         ERISA Affiliate that a Plan may become a subject of any such
         proceedings, (iii) the aggregate "amount of unfunded benefit
         liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
         all Plans, determined in accordance with Title IV of ERISA, shall
         exceed $5,000,000, (iv) the Company or any ERISA Affiliate shall have
         incurred or is reasonably expected to incur any liability pursuant to
         Title I or IV of ERISA or the penalty or excise tax provisions of the
         Code relating to employee benefit plans, (v) the Company or any ERISA
         Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or
         any Subsidiary establishes or amends any employee welfare benefit plan
         that provides post-employment welfare benefits in a manner that would
         increase the liability of the Company or any Subsidiary thereunder; and
         any such event or events described in clauses (i) through (vi) above,
         either individually or together with any other such event or events,
         could reasonably be expected to have a Material Adverse Effect; or

                  (k) any Subsidiary Guarantor defaults in the performance of or
         compliance with any term contained in the Subsidiary Guaranty or the
         Subsidiary Guaranty ceases to be in full force and effect as a result
         of acts taken by the Company or any Subsidiary Guarantor, except as
         provided in Section 22, or is declared to be null and void in whole or
         in part by a court or other governmental or regulatory authority having
         jurisdiction or the validity or enforceability thereof shall be
         contested by any of the Company or any Subsidiary Guarantor or any of
         them renounces any of the same or denies that it has any or further
         liability thereunder.

                                       22

<PAGE>   28

As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

1.       REMEDIES ON DEFAULT, ETC.

1.1.     ACCELERATION.

                  (a) If an Event of Default with respect to the Company
         described in paragraph (g) or (h) of Section 11 (other than an Event of
         Default described in clause (i) of paragraph (g) or described in clause
         (vi) of paragraph (g) by virtue of the fact that such clause
         encompasses clause (i) of paragraph (g)) has occurred, all the Notes
         then outstanding shall automatically become immediately due and
         payable.

                  (b) If any other Event of Default has occurred and is
         continuing, any holder or holders of more than 51% in principal amount
         of the Notes at the time outstanding may at any time at its or their
         option, by notice or notices to the Company, declare all the Notes then
         outstanding to be immediately due and payable.

                  (c) If any Event of Default described in paragraph (a) or (b)
         of Section 11 has occurred and is continuing, any holder or holders of
         Notes at the time outstanding affected by such Event of Default may at
         any time, at its or their option, by notice or notices to the Company,
         declare all the Notes held by it or them to be immediately due and
         payable.

                  Upon any Notes becoming due and payable under this Section
12.1, whether automatically or by declaration, such Notes will forthwith mature
and the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

1.1.     OTHER REMEDIES.

                  If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 12.1, the holder of any Note
at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.

1.1.     RESCISSION.

                  At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of 66-2/3% or more in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.

                                       23

<PAGE>   29

1.1.     NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.

                  No course of dealing and no delay on the part of any holder of
any Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Note upon any
holder thereof shall be exclusive of any other right, power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.

1.       REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

1.1.     REGISTRATION OF NOTES.

                  The Company shall keep at its principal executive office a
register for the registration and registration of transfers of Notes. The name
and address of each holder of one or more Notes, each transfer thereof and the
name and address of each transferee of one or more Notes shall be registered in
such register. Prior to due presentment for registration of transfer, the Person
in whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

1.1.     TRANSFER AND EXCHANGE OF NOTES.

                  Upon surrender of any Note at the principal executive office
of the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $500,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $500,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representations set forth in Section 6.2 and
the second sentence of Section 6.1.

1.1.     REPLACEMENT OF NOTES.

                  Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation), and

                  (a) in the case of loss, theft or destruction, of indemnity
         reasonably satisfactory to it (provided that if the holder of such Note
         is, or is a nominee for, an original Purchaser or another holder of a
         Note that is an Institutional Investor, such Person's own unsecured
         agreement of indemnity shall be deemed to be satisfactory), or

                  (b) in the case of mutilation, upon surrender and cancellation
         thereof,

                                       24

<PAGE>   30

the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.

1.       PAYMENTS ON NOTES.

1.1.     PLACE OF PAYMENT.

                  Subject to Section 14.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes shall be made
in Chicago, Illinois, at the principal office of Bank of America in such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

1.1.     HOME OFFICE PAYMENT.

                  So long as you or your nominee shall be the holder of any
Note, and notwithstanding anything contained in Section 14.1 or in such Note to
the contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, or by such
other method or at such other address as you shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, you shall surrender
such Note for cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of payment most
recently designated by the Company pursuant to Section 14.1. Prior to any sale
or other disposition of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes pursuant to Section 13.2. The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by you
under this Agreement and that has made the same agreement relating to such Note
as you have made in this Section 14.2.

1.       EXPENSES, ETC.

1.1.     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 or
the Notes (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 or the Notes or in responding to
any subpoena or other legal process or informal investigative demand issued in
connection with this Agreement, the Subsidiary Guaranty or the Notes, 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).

1.1.     SURVIVAL.

                  The obligations of the Company under this Section 15 will
survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes, and the termination of
this Agreement.

                                       25

<PAGE>   31

1.       SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

                  All representations and warranties contained herein shall
survive the execution and delivery of this Agreement and the Notes, the purchase
or transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof.

1.       AMENDMENT AND WAIVER.

1.1.     REQUIREMENTS.

                  This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing, and (b) no such amendment or waiver may, without the written consent
of the holder of each Note at the time outstanding affected thereby, (i) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or of
the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.

1.1.     SOLICITATION OF HOLDERS OF NOTES.

                  (a) Solicitation. The Company will provide each holder of the
         Notes (irrespective of the amount of Notes then owned by it) with
         sufficient information, sufficiently far in advance of the date a
         decision is required, to enable such holder to make an informed and
         considered decision with respect to any proposed amendment, waiver or
         consent in respect of any of the provisions hereof or of the Notes. The
         Company will deliver executed or true and correct copies of each
         amendment, waiver or consent effected pursuant to the provisions of
         this Section 17 to each holder of outstanding Notes promptly following
         the date on which it is executed and delivered by, or receives the
         consent or approval of, the requisite holders of Notes.

                  (b) Payment. The Company will not directly or indirectly pay
         or cause to be paid any remuneration, whether by way of supplemental or
         additional interest, fee or otherwise, or grant any security, to any
         holder of Notes as consideration for or as an inducement to the
         entering into by any holder of Notes of any waiver or amendment of any
         of the terms and provisions hereof unless such remuneration is
         concurrently paid, or security is concurrently granted, on the same
         terms, ratably to each holder of Notes then outstanding even if such
         holder did not consent to such waiver or amendment.

1.2.     BINDING EFFECT, ETC.

                  Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of Notes and is binding upon them and
upon each future holder of any Note and upon the Company without regard to
whether such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Company and the
holder of any Note nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any holder of such Note. As used
herein, the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.

                                       26

<PAGE>   32

1.1.     NOTES HELD BY COMPANY, ETC.

                  Solely for the purpose of determining whether the holders of
the requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company or any of
its Affiliates shall be deemed not to be outstanding.

1.       NOTICES.

                  All notices and communications provided for hereunder shall be
in writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:

                      (i)   if to you or your nominee, to you or it at the
         address specified for such communications in Schedule A, or at such
         other address as you or it shall have specified to the Company in
         writing,

                      (ii)  if to any other holder of any Note, to such holder
         at such address as such other holder shall have specified to the
         Company in writing, or

                      (iii) if to the Company, to the Company at its address
         set forth at the beginning hereof to the attention of Chief Financial
         Officer (with a copy to the Vice President, General Counsel and
         Secretary), or at such other address as the Company shall have
         specified to the holder of each Note in writing.

Notices under this Section 18 will be deemed given the next Business Day when
sent as described in clauses 18(a) and (c) and when actually received when sent
as described in clause 18(b).

1.       REPRODUCTION OF DOCUMENTS.

                  This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.

1.       CONFIDENTIAL INFORMATION.

                  For the purposes of this Section 20, "Confidential
Information" means information delivered to you by or on behalf of the Company
or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified in writing when
received by you as being confidential information of the Company or such
Subsidiary, provided that such term does not include information that (a) was
publicly known or otherwise known to you prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by you or any
person acting on your behalf, (c) otherwise becomes known to you, other than
through disclosure by the Company or any Subsidiary, from a source not known by
you to be subject to an obligation to keep such information

                                       27

<PAGE>   33

confidential or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors, trustees, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you, but
only under the circumstances described in clauses (viii)(w), (x) and (y) below,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.

1.       SUBSTITUTION OF PURCHASER.

                  You shall have the right to substitute any one of your
Affiliates as the purchaser of the Notes that you have agreed to purchase
hereunder, by written notice to the Company, which notice shall be signed by
both you and such Affiliate, shall contain such Affiliate's agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section 6.
Upon receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted as
a purchaser hereunder and such Affiliate thereafter transfers to you all of the
Notes then held by such Affiliate, upon receipt by the Company of notice of such
transfer, wherever the word "you" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to you, and you shall have all the rights of an original holder of
the Notes under this Agreement.

1.       RELEASE OF SUBSIDIARY GUARANTORS.

                  You and each subsequent holder of a Note agree to release each
Subsidiary Guarantor from the Subsidiary Guaranty (i) if such Subsidiary
Guarantor ceases to be such as a result of a Disposition permitted by Sections
10.7 or 10.8 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 Subsidiary 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 Subsidiary Guarantor is to become a borrower under the
Credit Agreement, (C) such release is part of a plan of financing that
contemplates such Subsidiary 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 Subsidiary Guarantor. The release of any
Subsidiary 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.

                                       28

<PAGE>   34

1.       MISCELLANEOUS.

1.1.     SUCCESSORS AND ASSIGNS.

                  All covenants and other agreements contained in this Agreement
by or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.

1.1.     PAYMENTS DUE ON NON-BUSINESS DAYS.

                  Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.

1.1.     SEVERABILITY.

                  Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

1.1.     CONSTRUCTION.

                  Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse compliance with any
other covenant. Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.

1.1.     COUNTERPARTS.

                  This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.

1.1.     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 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.

                                    * * * * *

                                       29

<PAGE>   35

                  If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterpart of this Agreement and return
it to the Company, whereupon the foregoing shall become a binding agreement
between you and the Company.

                                         Very truly yours,

                                         BUTLER MANUFACTURING COMPANY

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

                                      S-1

<PAGE>   36

The foregoing is agreed to as of the date thereof.

ALLSTATE LIFE INSURANCE COMPANY

By:               /s/ Ronald A. Mendel
     ---------------------------------------------
Name:    Ronald A. Mendel
       -------------------------------------------

By:               /s/ Patricia W. Wilson
     ----------------------------------------------
Name:    Patricia W. Wilson
       -------------------------------------------

     Authorized Signatories

                                      S-2

<PAGE>   37

METROPOLITAN LIFE INSURANCE COMPANY

By:               /s/ Claudia Cromie
     ---------------------------------------------
Name:    Claudia Cromie
       -------------------------------------------
Title:            Director
        ------------------------------------------

                                      S-3

<PAGE>   38

PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation

By:      Principal Capital Management, LLC
         a Delaware limited liability company,
         its authorized signatory

By:               /s/ Clint Woods
     ---------------------------------------------
Its:              Clint Woods, Counsel
      --------------------------------------------

By:               /s/ Douglas A. Drees
     ---------------------------------------------
Its:              Douglas A. Drees, Counsel
      --------------------------------------------

                                      S-4

<PAGE>   39

COMMERCIAL UNION LIFE INSURANCE COMPANY OF AMERICA, a
     Delaware corporation

By:      Principal Capital Management, LLC, a
     Delaware limited liability company, its
     attorney in fact

By:               /s/ Clint Woods
     ---------------------------------------------
Its:              Clint Woods, Counsel
      --------------------------------------------

By:               /s/ Douglas A. Drees
     ---------------------------------------------
Its:              Douglas A. Drees, Counsel
      --------------------------------------------

                                      S-5

<PAGE>   40

JOHN HANCOCK LIFE INSURANCE COMPANY

By:      /s/ Marlene J. DeLeon
     ---------------------------------------------
         Marlene J. DeLeon
         Director

                                      S-6

<PAGE>   41

JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

By:      /s/ Marlene J. DeLeon
     ---------------------------------------------
         Marlene J. DeLeon
         Authorized Signatory

                                      S-7

<PAGE>   42

NATIONWIDE INDEMNITY COMPANY

By:               /s/ Mark W. Poeppelman
     --------------------------------------------
Name:    Mark W. Poeppelman
       -------------------------------------------
Title:            Associate Vice President
        ------------------------------------------

                                      S-8

<PAGE>   43

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY

By:               /s/ Mark W. Poeppelman
     ---------------------------------------------
Name:    Mark W. Poeppelman
       -------------------------------------------
Title:            Associate Vice President
        ------------------------------------------

                                      S-9

<PAGE>   44

PROVIDENT MUTUAL LIFE INSURANCE COMPANY

By:               /s/ James D. Kestner
     ---------------------------------------------
Name:    James D. Kestner
       -------------------------------------------
Title:            Vice President
        ------------------------------------------

                                      S-10

<PAGE>   45

                                                                    SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                    PRINCIPAL AMOUNT OF
Name of Purchaser                                  NOTES TO BE PURCHASED
-----------------                           --------------------------------
ALLSTATE LIFE INSURANCE COMPANY                          $8,000,000
                                                         $8,000,000

Register Notes in the name of:  Allstate Life Insurance Company

(1)      All payments by Fedwire transfer or ACH of immediately available (on
         receipt) funds, identifying the name of the Issuer, the Private
         Placement Number preceded by "DPP" and the payment as principal,
         interest or premium in the format as follows:

         BBK      =        Harris Trust and Savings Bank
                           ABA #071000288
         BNF      =        Allstate Life Insurance Company
                           Collection Account #168-117-0
         ORG      =        Butler Manufacturing Company
         OBI      =        DPP      - 123655 B@ 0
                           Payment Due Date (MM/DD/YY) - P________ (Enter "P"
                           and amount of principal being remitted, for example,
                           P5000000.00) - I (Enter "I" __________ and amount
                           of interest being remitted, for example, I225000.00)

(2)      All notices of scheduled payments and written confirmations of such
         wire transfer to be sent to:

                  Allstate Insurance Company
                  Investment Operations--Private Placements
                  3075 Sanders Road, STE G4A
                  Northbrook, Illinois 60062-7127
                  Telephone:        (847) 402-2769
                  Telecopy:         (847) 326-5040

(3)      Securities to be delivered to:

                  Citibank, Federal Savings Bank
                  U.S. Custody & Employee Benefit Trust
                  500 W. Madison Street, Floor 6, Zone 4
                  Chicago, Illinois 60661-2591
                  Attention:        Pam Jost
                  For Allstate Life Insurance Company/Safekeeping
                  Account No. 846627

(4)      All financial reports, compliance certificates and all other written
         communications, including notice of prepayments, to be sent to:

                  Allstate Life Insurance Company
                  Private Placements Department
                  3075 Sanders Road, STE G5D
                  Northbrook, Illinois 60062-7127
                  Telephone:        (847) 402-8922
                  Telecopy:         (847) 402-3092

                                   Schedule A

<PAGE>   46

Tax I.D.#:        36-2554642

                                   Schedule A
<PAGE>   47

                                                                    SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                  PRINCIPAL AMOUNT OF
Name of Purchaser                                NOTES TO BE PURCHASED
-----------------                        -------------------------------------
METROPOLITAN LIFE INSURANCE COMPANY                   $10,000,000

Register Notes in the name of:  Metropolitan Life Insurance Company

(1)      All payments by wire transfer or ACH of immediately available
         (on receipt) funds to:

                  The Chase Manhattan Bank
                  ABA #021-000-021
                  New York, New York
                  Metropolitan Life Insurance Company, Account No. 002-2-410591
                  With reference to PPN # 123655 B@ 0

         with sufficient information to identify the source and application
         of such funds

(2)      All notices and other communications:

                  Metropolitan Life Insurance Company
                  Private Placement Unit
                  334 Madison Avenue
                  Convent Station, New Jersey 07961-0633
                  Attention:  Director
                  Facsimile:  (973) 254-3032

         With a copy to:

                  Metropolitan Life Insurance Company
                  One Madison Avenue
                  New York, New York 10010-3690
                  Attention:  Lisa Korsten, Esq. (Area 6-H)
                  Facsimile:  (212) 251-1640

Tax I.D.#:  13-5581829

                                   Schedule A
<PAGE>   48

                                                                    SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                  PRINCIPAL AMOUNT OF
Name of Purchaser                                NOTES TO BE PURCHASED
-----------------                        -------------------------------------
PRINCIPAL LIFE INSURANCE COMPANY                       $4,250,000
                                                       $1,000,000
                                                       $1,000,000
                                                        $750,000

Register Notes in the name of:  Principal Life Insurance Company

(1) All payments on account of the Notes to be made by 12:00 noon (New York City
time) by wire transfer or ACH of immediately available (on receipt) funds to:

         With respect to the four (4) Notes in the following denominations:
         $4.25 million, $1 million, $1 million, $750,000

                  ABA No.:  073000228
                  Wells Fargo Bank Iowa, N.A.
                  7th and Walnut Streets
                  Des Moines, Iowa  50309
                  For credit to Principal Life Insurance Company
                  Account No.:  0000014752
                  OBI PFGSE (S) B0063963()

                  For payments by ACH include Bond Name (Butler Manufacturing
                  Company 7.87% Senior Notes) and Bond Number (1-B-63963).

         With sufficient information (including interest rate, maturity date,
interest amount, principal amount and premium amount, if applicable) to identify
the source and application of such funds.

(2)      All notices with respect to payments to:

                  Principal Capital Management, LLC
                  801 Grand Avenue
                  Des Moines, Iowa  50392-0960
                  Attn:  Investment Accounting - Securities
                  Fax (515) 248-2643
                  Confirmation (515) 247-0689

(3)      All other communications to:

                  Principal Capital Management, LLC
                  801 Grand Avenue
                  Des Moines, Iowa  50392-0800
                  Attn:  Investment - Securities
                  Fax (515) 248-2490
                  Confirmation (515) 248-3495

(4)      Upon closing, deliver Notes to:

                  Principal Capital Management, LLC
                  801 Grand Avenue

                                   Schedule A

<PAGE>   49

                  Des Moines, Iowa  50392-0301
                  Attn.:  Clint Woods

Tax I.D.#:  42-0127290

                                   Schedule A

<PAGE>   50

                                                                    SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                  PRINCIPAL AMOUNT OF
Name of Purchaser                                NOTES TO BE PURCHASED
-----------------                        -------------------------------------
COMMERCIAL UNION LIFE INSURANCE COMPANY                $1,000,000
OF AMERICA

Register Notes in the name of:  Commercial Union Life Insurance Company of
America

(1) All payments on account of the Notes to be made by 12:00 noon (New York City
time) by wire transfer or ACH of immediately available (on receipt) funds to:

                  With respect to the $1,000,000 Note:

                  Mellon Bank (Boston Safe Deposit)
                  ABA No.:  011001234
                  DDA#:  048771
                  Account Name: None Given
                  FFC:  CU Life Insurance Co/Principal Financial
                  FFC AC#:  GAIF1309002

                  OBI PFGSE (S) B0063963()

                  For payments by ACH include Bond Name (Butler Manufacturing
                  Company 7.87% Senior Notes) and Bond Number (400-B-63963).

         With sufficient information (including interest rate, maturity date,
         interest amount, principal amount and premium amount, if applicable) to
         identify the source and application of such funds.

(2)      All notices with respect to payments to:

                  Commercial Union Life Insurance Company of America
                  c/o Principal Capital Management, LLC
                  801 Grand Avenue
                  Des Moines, Iowa  50392-0960
                  Attn:  Investment Accounting - Securities
                  Fax (515) 248-2643
                  Confirmation (515) 247-0689

(3)      All other communications to:

                  Commercial Union Life Insurance Company of America
                  c/o Principal Capital Management, LLC
                  801 Grand Avenue
                  Des Moines, Iowa  50392-0800
                  Attn:  Investment - Securities - Jon Davidson
                  Fax (515) 248-2490
                  Confirmation (515) 248-3495

(4)      Upon closing, deliver Notes to:

                  Commercial Union Life Insurance Company of America
                  c/o Principal Capital Management, LLC

                                   Schedule A

<PAGE>   51

                  801 Grand Avenue
                  Des Moines, Iowa  50392-0301
                  Attn:  Clint Woods

Tax I.D.#:  04-2235236

                                   Schedule A

<PAGE>   52

                                                                    SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                 PRINCIPAL AMOUNT OF
Name of Purchaser                               NOTES TO BE PURCHASED
-----------------                       -------------------------------------
JOHN HANCOCK LIFE INSURANCE COMPANY                   $7,750,000

Register Notes in the name of:  John Hancock Life Insurance Company

PAYMENT INFORMATION

(1)      Wire Information

                  Fleet Boston
                  ABA No. 011000390
                  Boston, Massachusetts 02110
                  Account of :      John Hancock Life Insurance Co. Private
         Placement Collection Acct.
                  Account Number:   541-55417
                  On Order of:      Name of Issuer and CUSIP/PPN
                  Full name, interest rate and maturity date of Notes or other
         obligations

         Wire Deadline              12 NOON, BOSTON TIME

                  All payments on account of the Notes or other obligations in
                  accordance with the provisions thereof shall be made by bank
                  wire transfer or ACH of immediately available (on receipt)
                  funds for credit by 12 noon, Boston time.

NOTICE INFORMATION

All notices shall be sent via fax AND mail according to the instructions below:

(3)      Scheduled Payments         John Hancock Life Insurance Company
         Unscheduled                200 Clarendon St.
         Prepayments                Boston, MA 02117
         Notice of Maturity         Attn:  Investment Accounting Division, B-3
                                    Fax:  (617) 572-0628

                                    Include:
                                    (a) full name, interest rate and
                                    maturity date of the Notes or other
                                    obligations (b) allocation of
                                    payment between principal and
                                    interest and any special payment (c)
                                    name and address of Bank (or
                                    Trustee) from which the wire
                                    transfer was sent

(4)      Financial Statements       John Hancock Life Insurance Company
         Certificates of Compliance 200 Clarendon St.
         with financial covenants   Boston, MA 02117
                                    Attn:  Bond and Corporate Finance
                                    Group, T-57
                                    Fax:  (617) 572-1605

(5)      Change in Issuer's name,   John Hancock Life Insurance Company

                                   Schedule A

<PAGE>   53

         address or principal place 200 Clarendon St.
         of business                Boston, MA 02117
         Change in location of      Attn:  Investment Law Division, T-30
         collateral                 Fax:  (617) 572-9269
         Copy of legal opinions

Tax I.D.#:        04-1414660

                                   Schedule A

<PAGE>   54

                                                                    SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                      PRINCIPAL AMOUNT OF
Name of Purchaser                                    NOTES TO BE PURCHASED
-----------------                                ----------------------------
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY                $250,000

Register Notes in the name of:  John Hancock Variable Life Insurance Company

PAYMENT INFORMATION

(1)      Wire Information

                  Fleet Boston
                  ABA No. 011000390
                  Boston, Massachusetts 02110
                  Account of :     John Hancock Life Insurance Co. Private
         Placement Collection Acct.
                  Account Number:  541-55417
                  On Order of:     Name of Issuer and CUSIP/PPN
                  Full name, interest rate and maturity date of Notes or other
         obligations

         Wire Deadline             12 Noon, Boston time

                  All payments on account of the Notes or other obligations in
                  accordance with the provisions thereof shall be made by bank
                  wire or transfer or ACH of immediately available (on receipt)
                  funds for credit by 12 noon, Boston time.

NOTICE INFORMATION

         All notices shall be sent via fax AND mail according to the
instructions below:

(3)      Scheduled Payments        John Hancock Variable Life Insurance Company
         Unscheduled               200 Clarendon St.
         Prepayments               Boston, MA 02117
         Notice of Maturity        Attn:  Investment Accounting Division, B-3
                                   Fax:  (617) 572-0628

                                   Include:
                                   (a) full name, interest rate and
                                   maturity date of the Notes or other
                                   obligations (b) allocation of
                                   payment between principal and
                                   interest and any special payment (c)
                                   name and address of Bank (or
                                   Trustee) from which the wire
                                   transfer was sent

(4)      Financial Statements      John Hancock Life Insurance Company
         Certificates of Compliance 200 Clarendon St.
         with financial covenants  Boston, MA 02117
                                   Attn:  Bond and Corporate Finance Group, T-57
                                   Fax:  (617) 572-1605

                                   Schedule A

<PAGE>   55

(5)      Change in Issuer's name,  John Hancock Life Insurance Company
         address or principal place 200 Clarendon St.
         of business Boston, MA 02117
         Change in location of     Attn: Investment Law Division, T-30
         collateral                Fax: (617) 572-9269
         Copy of legal opinions

Tax I.D.#:        04-2664016

                                   Schedule A

<PAGE>   56

                                                                    SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                      PRINCIPAL AMOUNT OF
Name of Purchaser                                    NOTES TO BE PURCHASED
-----------------                                 ----------------------------
NATIONWIDE INDEMNITY COMPANY                               $3,000,000

Register Notes in the name of:  Nationwide Indemnity Company

(1)      Send notices and communications to:

                  Nationwide Indemnity Company
                  One Nationwide Plaza (1-33-07)
                  Columbus, Ohio 43215-2220
                  Attention:  Corporate Fixed-Income Securities

(2)      Wiring instructions or payments by ACH of immediately available
(on receipt) funds to:

                  The Bank of New York
                  ABA #021-000-018
                  BNF: IOC566
                  F/A/O Nationwide Indemnity Company
                  Attn:  P&I Department
                  PPN# 123655 B@ 0
                  Security Description
                                       --------------------------------

         All notices of payment on or in respect to the security should be sent
to:

                  Nationwide Indemnity Company
                  c/o The Bank of New York
                  P.O. Box 19266
                  Attn:  P&I Department
                  Newark, NJ 07195

         With a copy to:

                  Nationwide Indemnity Company
                  Attn:  Investment Accounting
                  One Nationwide Plaza (1-32-05)
                  Columbus, Ohio 43215-2220

(3)      The original note should be registered in the name of Nationwide
Indemnity Company and delivered to:

                  The Bank of New York
                  One Wall Street
                  3rd Floor- Window A
                  New York, NY 10286
                  F/A/O Nationwide Indemnity Company Acct # 264234

Tax I.D.#:  31-1399201

                                   Schedule A

<PAGE>   57

                                                                   SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                      PRINCIPAL AMOUNT OF
Name of Purchaser                                    NOTES TO BE PURCHASED
-----------------                                 ----------------------------
NATIONWIDE MUTUAL FIRE INSURANCE COMPANY                   $3,000,000

Register Notes in the name of:  Nationwide Mutual Fire Insurance Company

(1)      Send notices and communications to:

                  Nationwide Mutual Fire Insurance Company
                  One Nationwide Plaza (1-33-07)
                  Columbus, Ohio 43215-2220
                  Attention:  Corporate Fixed-Income Securities

(2)      Wiring instructions or payments by ACH of immediately available
(on receipt) funds to:

                  The Bank of New York
                  ABA #021-000-018
                  BNF:  IOC566
                  F/A/O Nationwide Mutual Fire Insurance Company
                  Attn:  P&I Department
                  PPN# 123655 B@ 0
                  Security Description
                                       --------------------------------

         All notices of payment on or in respect to the security should be sent
to:

                  Nationwide Mutual Fire Insurance Company
                  c/o The Bank of New York
                  P.O. Box 19266
                  Attn:  P& I Department
                  Newark, NJ 07195

         With a copy to:

                  Nationwide Mutual Fire Insurance Company
                  Attn:  Investment Accounting
                  One Nationwide Plaza (1-32-05)
                  Columbus, Ohio 43215-2220

(3) The original note should be registered in the name of Nationwide Mutual Fire
Insurance Company and delivered to:

                  The Bank of New York
                  One Wall Street
                  3rd Floor- Window A
                  New York, NY 10286
                  F/A/O Nationwide Mutual Fire Insurance Co. Acct #267966

Tax ID:  31-4177110

                                   Schedule A

<PAGE>   58

                                                                    SCHEDULE A

                       INFORMATION RELATING TO PURCHASERS

                                                      PRINCIPAL AMOUNT OF
Name of Purchaser                                    NOTES TO BE PURCHASED
-----------------                                 ----------------------------
PROVIDENT MUTUAL LIFE INSURANCE COMPANY                     $2,000,000

Register Notes in the name of:  Provident Mutual Life Insurance Company

(1)      All payments by wire transfer or ACH of immediately available (on
receipt) funds to:

         PNC Bank
         Broad and Chestnut Streets
         Philadelphia, PA  19101
         ABA # 031-000-053
         For credit to the account of Provident Mutual Life Insurance Company
         Re:  Butler Manufacturing
         Account # 85-4084-2176

         with sufficient information to identify the source and application
         of such funds.

(2)      All notices of payments and written confirmations of such wire
transfers:

         Provident Mutual Life Insurance Company
         1000 Cheterbrook Blvd.
         Wayne, PA 19312
         Attention:  Treasurer

(3)      All other communications:

         Provident Mutual Life Insurance Company
         1000 Cheterbrook Blvd.
         Wayne, PA 19312
         Attention:  Treasurer

Tax I.D. #23-0990450

                                   Schedule A

<PAGE>   59

                                                                    SCHEDULE B

                                  DEFINED TERMS

                  As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:

                  "ADJUSTED CONSOLIDATED 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 amount by which
outstanding Restricted Investments on such date exceed 10% of consolidated
stockholders' equity of the Company and its Restricted Subsidiaries.

                  "AFFILIATE" means, at any time, and with respect to any
Person, (a) any other Person that at such time directly or indirectly through
one or more intermediaries Controls, or is Controlled by, or is under common
Control with, such first Person, and (b) any Person beneficially owning or
holding, directly or indirectly, 10% or more of any class of voting or equity
interests of the Company or any Subsidiary or (c) any Person of which the
Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity interests.
As used in this definition, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the Company.

                  "BUSINESS DAY" means (a) for the purposes of Section 8.6 only,
any day other than a Saturday, a Sunday or a day on which commercial banks in
New York City are required or authorized to be closed, and (b) for the purposes
of any other provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in New York City or Chicago, Illinois
are required or authorized to be closed.

                  "CAPITAL LEASE" means, at any time, a lease with respect to
which the lessee is required concurrently to recognize the acquisition of an
asset and the incurrence of a liability in accordance with GAAP.

                  "CHANGE OF CONTROL EVENT" means:

                  (a) the 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

                  (b) the 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.

                  "CLOSING" is defined in Section 3.

                  "CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time.

                                   Schedule B

<PAGE>   60

                  "COMPANY" means Butler Manufacturing Company, a Delaware
corporation.

                  "CONFIDENTIAL INFORMATION" is defined in Section 20.

                  "CONSOLIDATED INCOME AVAILABLE FOR FIXED CHARGES" means, for
any period, the sum of (i) EBITDA for such period and (ii) Consolidated Rent
Expense for such period under all leases other than Capital Leases.

                  "CONSOLIDATED INDEBTEDNESS" means, as of any date,
Indebtedness of the Company and its Restricted Subsidiaries as of such date
determined on a consolidated basis in accordance with GAAP.

                  "CONSOLIDATED INTEREST EXPENSE" means, for any period, the
consolidated interest expense of the Company and its Restricted Subsidiaries for
such period determined in accordance with GAAP (including imputed interest under
Capital Leases and all debt discount and expense amortized in such period).

                  "CONSOLIDATED NET INCOME" means, for any period, the net
income (or deficit) of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP and after
eliminating income or losses attributable to outstanding minority interests, but
excluding in any event (i) net income and losses of any Restricted Subsidiary
accrued prior to the date it became a Restricted Subsidiary; (ii) net income and
losses of any Person (other than a Restricted Subsidiary), substantially all the
assets of which have been acquired in any manner, realized by such Person prior
to the date of such acquisition; (iii) net income and losses of any Person
(other than a Restricted Subsidiary) with which the Company or a Restricted
Subsidiary shall have consolidated or which shall have merged into or with the
Company or a Restricted Subsidiary prior to the date of such consolidation or
merger; (iv) net income of any Person (other than a Restricted Subsidiary) in
which the Company or any Restricted Subsidiary has an ownership interest except
to the extent actually received in the form of cash distributions to the Company
or such Restricted Subsidiary; (v) any portion of the net income of any
Restricted Subsidiary which for any reason is legally or contractually
unavailable for payment of cash dividends to the Company or any other Restricted
Subsidiary; (vi) gains or losses resulting from any reappraisal, revaluation,
write-up or write-off of assets; (vii) any gains or losses, or other earnings,
properly classified as extraordinary in accordance with generally accepted
accounting principles; (viii) restructuring reserves for future expenditures
until the expenditures covered thereby are actually paid; and (ix) any gains or
losses on the sale or other disposition of fixed or capital assets other than in
the ordinary course of business, and any taxes on such excluded gains and any
tax deductions or credits on account of any such excluded losses.

                  "CONSOLIDATED NET WORTH" means, as of any date, the
consolidated shareholders' equity of the Company and its Restricted Subsidiaries
as of such date determined in accordance with GAAP.

                  "CONSOLIDATED RENT EXPENSE" means, for any period, the rent
expense of the Company and its Restricted Subsidiaries for such period under all
operating leases, determined on a consolidated basis in accordance with GAAP.

                  "CONSOLIDATED TOTAL ASSETS" means, as of any date, the assets
and properties of the Company and its Restricted Subsidiaries as of such date
determined on a consolidated basis in accordance with GAAP.

                  "CONSOLIDATED TOTAL CAPITALIZATION" means, as of any date, the
sum of Consolidated Indebtedness and Consolidated Net Worth as of such date.

                  "CREDIT AGREEMENT" means 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.

                  "DEFAULT" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of notice or
both, become an Event of Default.

                                       2

                                   Schedule B

<PAGE>   61

                  "DEFAULT RATE" means that rate of interest that is the greater
of (i) 2.0% per annum above the rate of interest stated in clause (a) of the
first paragraph of the Notes or (ii) 2.0% over the rate of interest publicly
announced by Bank of America in Chicago, Illinois as its "base" or "prime" rate.

                  "DISPOSITION" is defined in Section 10.8.

                  "EBITDA" means, 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.

                  "ENVIRONMENTAL LAWS" means any and all Federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.

                  "ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.

                  "EVENT OF DEFAULT" is defined in Section 11.

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

                  "FIXED CHARGES" means, for any period, the sum of (i)
Consolidated Rent Expense for such period under all leases other than Capital
Leases and (ii) Consolidated Interest Expense for such period.

                  "FUNDED DEBT" means, with respect to any Person, (i) all
Indebtedness (other than obligations under Capital Leases and Guaranties) having
a final maturity of one year or more from the date of origin thereof (or which
is renewable or extendible at the option of the obligor for a period or periods
more than one year from the date of origin), including current maturities,
whether or not included as current liabilities on the balance sheet of such
Person prepared in accordance with GAAP, (ii) all liabilities appearing on its
balance sheet as indebtedness in accordance with GAAP in respect of Capital
Leases, and (iii) all Guaranties of Indebtedness of others (except Guaranties by
the Company or any Restricted Subsidiary of Funded Debt of a Restricted
Subsidiary and Guaranties by a Restricted Subsidiary of Funded Debt of the
Company or another Restricted Subsidiary) having a final maturity of one year or
more from the date of origin thereof (or which is renewable or extendible at the
option of the obligor for a period or periods more than one year from the date
of origin).

                  "GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.

                  "GOVERNMENTAL AUTHORITY"  means

                  (a) the government of

                      (i)   the United States of America or any State or
                  other political subdivision thereof, or

                      (ii)  any jurisdiction in which the Company or any
                  Subsidiary conducts all or any part of its business, or which
                  asserts jurisdiction over any properties of the Company or any
                  Subsidiary, or

                                       3

                                   Schedule B

<PAGE>   62

                  (b) any entity exercising executive, legislative, judicial,
         regulatory or administrative functions of, or pertaining to, any such
         government.

                  "GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any indebtedness, dividend or other obligation of any other Person
in any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:

                  (a) to purchase such indebtedness or obligation or any
         property constituting security therefor;

                  (b) to advance or supply funds (i) for the purchase or payment
         of such indebtedness or obligation, or (ii) to maintain any working
         capital or other balance sheet condition or any income statement
         condition of any other Person or otherwise to advance or make available
         funds for the purchase or payment of such indebtedness or obligation;

                  (c) to lease properties or to purchase properties or services
         primarily for the purpose of assuring the owner of such indebtedness or
         obligation of the ability of any other Person to make payment of the
         indebtedness or obligation; or

                  (d) otherwise to assure the owner of such indebtedness or
         obligation against loss in respect thereof.

In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

                  "HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).

                  "HOLDER" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the Company pursuant
to Section 13.1.

                  "INDEBTEDNESS" with respect to any Person means, at any time,
without duplication,

                  (a) its liabilities for borrowed money and its redemption
         obligations in respect of preferred stock that is mandatorily
         redeemable at the option of the holder thereof prior to payment in full
         of the Notes;

                  (b) its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including all liabilities created
         or arising under any conditional sale or other title retention
         agreement with respect to any such property);

                  (c) all liabilities appearing on its balance sheet as
         indebtedness in accordance with GAAP in respect of Capital Leases;

                  (d) all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities);

                  (e) any Guaranty of such Person with respect to liabilities of
         a type described in any of clauses (a) through (d).

                                       4

                                   Schedule B

<PAGE>   63

Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.

                  "INSTITUTIONAL INVESTOR" means (a) any original purchaser of a
Note and any Affiliates thereof, and (b) any bank, trust company, savings and
loan association or other financial institution, any pension plan, any
investment company, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.

                  "INVESTMENTS" means all investments made, in cash or by
delivery of property, directly or indirectly, in any Person, whether by
acquisition of shares of capital stock, indebtedness or other obligations or
securities or by loan, Guaranty, advance, capital contribution or otherwise.

                  "LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including, in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).

                  "MAKE-WHOLE AMOUNT" is defined in Section 8.7.

                  "MATERIAL" means material in relation to the business,
operations, affairs, financial condition, assets or properties of the Company
and its Restricted Subsidiaries taken as a whole.

                  "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 and the
Notes, or (c) the ability of any Subsidiary Guarantor to perform its obligations
under the Subsidiary Guaranty, or (d) the validity or enforceability of this
Agreement, the Notes or the Subsidiary Guaranty.

                  "MEMORANDUM" is defined in Section 5.3.

                  "MOODY'S" means Moody's Investors Service, Inc.

                  "MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).

                  "NOTES" is defined in Section 1.

                  "OFFICER'S CERTIFICATE" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.

                  "OTHER PURCHASERS" is defined in Section 2.

                  "PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.

                  "PERSON" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

                  "PLAN" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may have
any liability.

                                       5

                                   Schedule B

<PAGE>   64

                  "PROPERTY" or "Properties" means, unless otherwise
specifically limited, real or personal property of any kind, tangible or
intangible, choate or inchoate.

                  "QPAM EXEMPTION" means Prohibited Transaction Class Exemption
84-14 issued by the United States Department of Labor.

                  "REQUIRED HOLDERS" means, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).

                  "RESPONSIBLE OFFICER" means any Senior Financial Officer and
any other officer of the Company with responsibility for the administration of
the relevant portion of this Agreement.

                  "RESTRICTED INVESTMENTS" means all Investments of the Company
and its Restricted Subsidiaries, other than:

                  (a) property or assets to be used or consumed in the ordinary
         course of business;

                  (b) current assets arising from the sale of goods or services
         in the ordinary course of business;

                  (c) Investments in Restricted Subsidiaries or in any Person
         that, as a result thereof, becomes a Restricted Subsidiary;

                  (d) Investments existing as of the date of this Agreement that
         are listed in the attached Schedule B-1;

                  (e) Investments in treasury stock;

                  (f) relocation, travel and similar advances to employees made
         in the ordinary course of business consistent with past practice;

                  (g) bonds, the proceeds of which are used to fund the sale and
         leaseback of real estate and equipment by the Company or a Restricted
         Subsidiary in a transaction designed to result in an abatement of
         certain taxes; and

                  (h)      Investments in:

                            (i)    obligations, maturing within one year from
                  the date of acquisition, of or fully guaranteed by the United
                  States of America or an agency thereof or by Canada or a
                  province thereof;

                            (ii)   state or municipal securities, maturing
                  within one year from the date of acquisition, that are rated
                  in one of the top two rating classifications by at least one
                  nationally recognized rating agency;

                            (iii)  certificates of deposit or banker's
                  acceptances maturing within one year from the date of
                  acquisition or issued by a commercial bank whose long-term
                  unsecured debt obligations (or the long-term unsecured debt
                  obligations of the bank holding company owning all of the
                  capital stock of such bank) are rated in one of the top two
                  rating classifications by at least one nationally recognized
                  rating agency;

                            (iv)   commercial paper maturing within 270 days
                  from the date of issuance that, at the time of acquisition, is
                  rated in one of the top two rating classifications by at least
                  one credit rating agency of recognized national standing;

                                       6

                                   Schedule B

<PAGE>   65

                            (v)    repurchase agreements, having a term of not
                  more than 90 days and fully collateralized with obligations of
                  the type described in clause (i), with a bank satisfying the
                  requirements of clause (iii);

                            (v)    municipal or Canadian provincial securities
                  maturing within three years of the date of acquisition and
                  rated AA- or better by S&P or Aa3 or better by Moody's, or
                  their short-term equivalent ratings, or, in the case of
                  Canadian provincial securities, rated within the two highest
                  classifications of the leading provincial rating agency; and

                            (vi)   money market instrument programs or
                  registered investment companies that invest in securities of
                  the type described in this clause (h) that are properly
                  classified as current assets in accordance with GAAP.

As of any date of determination, each Restricted Investment shall be valued at
the greater of:

                  (x) the amount at which such Restricted Investment is shown on
         the books of the Company or any of its Restricted Subsidiaries (or zero
         if such Restricted Investment is not shown on any such books); and

                  (y)      either

                            (i)    in the case of any Guaranty of the
                  obligation of any Person, the amount which the Company or any
                  of its Restricted Subsidiaries has paid on account of such
                  obligation less any recoupment by the Company or such
                  Restricted Subsidiary of any such payments, or

                            (ii)   in the case of any other Restricted
                  Investment, the excess of (x) the greater of (A) the amount
                  originally entered on the books of the Company or any of its
                  Restricted Subsidiaries with respect thereto and (B) the cost
                  thereof to the Company or its Restricted Subsidiary over (y)
                  any return of capital (after income taxes applicable thereto)
                  upon such Restricted Investment through the sale or other
                  liquidation thereof or part thereof or otherwise.

                  "RESTRICTED SUBSIDIARY" means any Subsidiary (a) at least a
majority of the voting securities of which are owned by the Company and/or one
or more Wholly Owned Restricted Subsidiaries and (b) that the Company has not
designated an Unrestricted Subsidiary by notice in writing given to the holders
of the Notes.

                  "S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.

                  "SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or controller of the Company.

                  "SHORT-TERM DEBT" means all Indebtedness other than Funded
Debt.

                  "SUBSIDIARY" means, as to any Person, any corporation,
association or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership, limited
liability company or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries, or
by such Person and one or more of its Subsidiaries (unless such partnership,
limited liability company or joint venture can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.

                  "SUBSIDIARY GUARANTOR" is defined in Section 1.

                                       7

                                   Schedule B

<PAGE>   66

                  "SUBSIDIARY GUARANTY" is defined in Section 1.

                  "THIS AGREEMENT" OR "THE AGREEMENT" is defined in
Section 17.3.

                  "UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company
that has been so designated by notice in writing given to the holders of the
Notes.

                   "VOTING STOCK" shall mean the capital stock of any class or
classes of a corporation having power under ordinary circumstances to vote for
the election of members of the board of directors of such corporation, or person
performing similar functions (irrespective of whether or not at the time stock
of any of the class or classes shall have or might have special voting power or
rights by reason of the happening of any contingency).

                  "WHOLLY OWNED SUBSIDIARY" or "WHOLLY OWNED RESTRICTED
SUBSIDIARY" mean, at any time, any Subsidiary, or Restricted Subsidiary, as the
case may be, 100% of all of the equity interests (except directors' qualifying
shares) and voting interests of which are owned by any one or more of the
Company and the Company's other Wholly Owned Subsidiaries or Wholly Owned
Restricted Subsidiaries, as the case may be, at such time.

                                       8

                                   Schedule B

<PAGE>   67

                                                                  EXHIBIT 1(a)

                                 [FORM OF NOTE]

                          BUTLER MANUFACTURING COMPANY

                                7.87% 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 7.87% 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 (except that no
interest payment shall be made on June 30, 2001), 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) 9.87% 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 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.

                                  Exhibit 1(a)

<PAGE>   68

                  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.

                                       2

                                  Exhibit 1(a)

<PAGE>   69

6

                                                                  EXHIBIT 1(b)

                               SUBSIDIARY GUARANTY
                               -------------------

                  THIS SUBSIDIARY GUARANTY (this "Guaranty") dated as of
June 20, 2001 is made by BMC Real Estate, Inc., BUCON, Inc., Butler Holdings,
Inc., Butler Real Estate, Inc., Lester Buildings, Inc., Butler Pacific, Inc.,
Moduline Windows, Inc. and Liberty Building Systems, Inc. (each individually a
"Guarantor" and collectively the "Guarantors"), in favor of the holders from
time to time of the Notes hereinafter referred to, including each Purchaser
listed on Schedule A to the Note Agreement hereinafter referred to and its
respective successors and assigns (the "Purchaser").

                              W I T N E S S E T H:
                               - - - - - - - - - -

                  WHEREAS, Butler Manufacturing Company, a Delaware corporation
(the "Company"), and the Purchasers listed on Schedule A thereto entered into a
Note Purchase Agreement dated as of June 20, 2001 (as amended, supplemented,
restated or otherwise modified from time to time in accordance with its terms
and in effect, the "Note Agreement");

                  WHEREAS, the Company owns, directly or indirectly, all of the
issued and outstanding capital stock of the Guarantors and, by virtue of such
ownership and otherwise, the Guarantors will derive substantial benefits as a
result of the purchase of the Company's Notes (as defined in the Note Agreement)
by the Purchasers;

                  WHEREAS, it is a condition precedent to the obligation of the
Purchasers to purchase the Company's Notes that the Guarantors shall have
executed and delivered this Guaranty to the Purchasers; and

                  WHEREAS, the Board of Directors of each Guarantor has
determined that the execution, delivery, and performance of this Guaranty is
necessary and convenient to the conduct, promotion and attainment of such
Guarantor's business and each of the Guarantors desires to execute this Guaranty
to satisfy the condition described in the preceding paragraph;

                  NOW, THEREFORE, in consideration of the premises and other
benefits to the Guarantors, and of the purchase of the Company's Notes by the
Purchasers, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantors hereby makes this
Guaranty as follows:

                  SECTION 1. Definitions. Any capitalized terms not otherwise
herein defined, when used herein in capitalized form, shall have the respective
meanings attributed to them in the Note Agreement.

                  SECTION 2. Guaranty. (a) The Guarantors, jointly and
severally, hereby unconditionally and irrevocably guarantee to the Purchasers
the due, prompt and complete payment by the Company of the principal of,
Make-Whole Amount, if any, and interest on, and each other amount due under, the
Notes, when and as the same shall become due and payable (whether at stated
maturity or by required or optional prepayment or by declaration or otherwise)
in accordance with the terms of the Notes and the Note Agreement (the Notes and
the Note Agreement being collectively hereinafter referred to as the "Note
Documents", and the amounts payable by the Company under any of the Note
Documents, and all other obligations of the Company thereunder, being sometimes
collectively hereinafter referred to as the "Obligations"). This guaranty is a
guaranty of payment, performance and compliance and not just of collectibility
and is in no way conditioned or contingent upon any attempt to collect from or
enforce performance or compliance by the Company or upon any other event,
contingency or circumstance whatsoever. If for any reason whatsoever the Company
shall fail or be unable duly, punctually and fully to pay such amounts as and
when the same shall become due and payable or to perform or comply with any such
obligation, covenant, term, condition or undertaking, whether or not such
failure or inability shall constitute a "Default" or an "Event of Default" under
any Note Document, the Guarantors, without demand, presentment, protest or
notice of any kind, will forthwith pay or cause to be paid such amounts to the
Purchasers under the terms of such Note Document, in lawful money of the United
States, at the place specified in the Note Agreement, or perform or comply with
the same or cause the same to be performed or complied with, together with
interest (to the extent provided for under such Note Document) on any amount due
and owing from the Company. The Guarantors, promptly after demand, will pay to

<PAGE>   70

the Purchasers the reasonable costs and expenses of collecting such amounts or
otherwise enforcing this Guaranty, including, without limitation, the reasonable
fees and expenses of counsel. Notwithstanding the foregoing, the right of
recovery against each of the Guarantors under this Guaranty is limited to the
extent it is judicially determined with respect to such Guarantor that entering
into this Guaranty would violate section 548 of the United States Bankruptcy
Code or any comparable provisions of any state law, in which case such Guarantor
shall be liable under this Guaranty only for amounts aggregating up to the
largest amount that would not render such Guarantor's obligations hereunder
subject to avoidance under section 548 of the United States Bankruptcy Code or
any comparable provisions of any state law.

                  (b) Each Guarantor hereby agrees that to the extent a
Guarantor shall have paid more than its proportionate share of any payment made
hereunder, such Guarantor shall be entitled to seek and receive contribution
from and against any other Guarantor hereunder who has not paid its
proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 6 hereof. The provisions
of this paragraph (b) shall in no respect limit the obligations and liabilities
of any Guarantor to the Purchasers, and each Guarantor shall remain liable to
the Purchasers for the full amount guaranteed by such Guarantor hereunder.

                  SECTION 3. Guarantor's Obligations Absolute and Unconditional.
The obligations of each Guarantor under this Guaranty shall be primary, absolute
and unconditional obligations of such Guarantor, shall not be subject to any
counterclaim, set-off, deduction, diminution, abatement, recoupment, suspension,
deferment, reduction or defense based upon any claim such Guarantor or any other
Person may have against the Company or any other Person, and to the full extent
permitted by applicable law shall remain in full force and effect without regard
to, and shall not be released, discharged or in any way affected by, any
circumstance or condition whatsoever (whether or not any Guarantor or the
Company shall have any knowledge or notice thereof), including, without
limitation:

                  (a) any termination, amendment or modification of or deletion
         from or addition or supplement to or other change in any of the Note
         Documents or any other instrument or agreement applicable to any of the
         parties to any of the Note Documents;

                  (b) any furnishing or acceptance of any security, or any
         release of any security, for the Obligations, or the failure of any
         security or the failure of any Person to perfect any interest in any
         collateral;

                  (c) any failure, omission or delay on the part of the Company
         to conform or comply with any term of any of the Note Documents or any
         other instrument or agreement referred to in paragraph (a) above,
         including, without limitation, failure to give notice to any Guarantor
         of the occurrence of a "Default" or an "Event of Default" under any
         Note Document;

                  (d) any waiver of the payment, performance or observance of
         any of the obligations, conditions, covenants or agreements contained
         in any Note Document, or any other waiver, consent, extension,
         indulgence, compromise, settlement, release or other action or inaction
         under or in respect of any of the Note Documents or any other
         instrument or agreement referred to in paragraph (a) above or any
         obligation or liability of the Company, or any exercise or non-exercise
         of any right, remedy, power or privilege under or in respect of any
         such instrument or agreement or any such obligation or liability;

                  (e) any failure, omission or delay on the part of any
         Purchaser to enforce, assert or exercise any right, power or remedy
         conferred on such Purchaser in this Guaranty, or any such failure,
         omission or delay on the part of such Purchaser in connection with any
         Note Document, or any other action on the part of such Purchaser;

                  (f) any voluntary or involuntary bankruptcy, insolvency,
         reorganization, arrangement, readjustment, assignment for the benefit
         of creditors, composition, receivership, conservatorship,
         custodianship, liquidation, marshalling of assets and liabilities or
         similar proceedings with respect to the

                                       2

<PAGE>   71

         Company, any Guarantor or to any other Person or any of their
         respective properties or creditors, or any action taken by any trustee
         or receiver or by any court in any such proceeding;

                  (g) any limitation on the liability or obligations of the
         Company or any other Person under any of the Note Documents, or any
         discharge, termination, cancellation, frustration, irregularity,
         invalidity or unenforceability, in whole or in part, of any of the Note
         Documents or any other agreement or instrument referred to in paragraph
         (a) above or any term hereof;

                  (h) any merger or consolidation of the Company or any
         Guarantor into or with any other corporation, or any sale, lease or
         transfer of any of the assets of the Company or any Guarantor to any
         other Person;

                  (i) any change in the ownership of any shares of capital stock
         of the Company or any change in the corporate relationship between the
         Company and any Guarantor, or any termination of such relationship;

                  (j) any release or discharge, by operation of law, of any
         Guarantor from the performance or observance of any obligation,
         covenant or agreement contained in this Guaranty;

                  (k) any lack of corporate power of the Company or any other
         Person at any time liable for part or all of the Obligations;

                  (l) the existence of any claim, defense, set-off, or other
         rights which the Company or any Guarantor may have at any time against
         any Purchaser, the Company or any Guarantor, or any other Person,
         whether in connection with this Guaranty, the Note Documents, the
         transactions contemplated thereby, or any other transaction;

                  (m) any failure of a Purchaser to notify any Guarantor of any
         renewal, extension, or assignment of the Obligations or any part
         thereof, or the release of any security, or if any action taken or
         refrained from being taken by a Purchaser, it being understood that a
         Purchaser shall not be required to give any Guarantor any notice of any
         kind under any circumstance whatsoever with respect to or in connection
         with the Obligations; or

                  (n) any other occurrence, circumstance, happening or event
         whatsoever, whether similar or dissimilar to the foregoing, whether
         foreseen or unforeseen, and any other circumstance which might
         otherwise constitute a legal or equitable defense or discharge of the
         liabilities of a guarantor or surety or which might otherwise limit
         recourse against any Guarantor.

                  SECTION 4. Full Recourse Obligations. The obligations of each
of the Guarantors set forth herein constitute the full recourse obligations of
such Guarantor enforceable against it to the full extent of all its assets and
properties.

                  SECTION 5. Waiver. Each of the Guarantors unconditionally
waives, to the extent permitted by applicable law, (a) notice of any of the
matters referred to in Section 3, (b) notice to the Guarantor of the incurrence
of any of the Obligations, notice to the Guarantor or the Company of any breach
or default by the Company with respect to any of the Obligations or any other
notice that may be required, by statute, rule of law or otherwise, to preserve
any rights of the Purchasers against the Guarantor, (c) presentment to or demand
of payment from the Company or the Guarantor with respect to any amount due
under any Note Document or protest for nonpayment or dishonor, (d) any right to
the enforcement, assertion or exercise by any Purchaser of any right, power,
privilege or remedy conferred in the Note Agreement or any other Note Document
or otherwise, (e) any requirement of diligence on the part of any Purchaser, (f)
any requirement to exhaust any remedies or to mitigate the damages resulting
from any default under any Note Document, (g) any notice of any sale, transfer
or other disposition by a Purchaser of any right, title to or interest in the
Note Agreement or in any other Note Document, (h) any right to assert against
any Purchaser as a counterclaim, set-off or cross-claim, any counterclaim,
set-off or claim which it may now or hereafter have against the Company or other
Person liable on the Obligations, and (i) any other circumstance whatsoever

                                       3

<PAGE>   72

which might otherwise constitute a legal or equitable discharge, release or
defense of a guarantor or surety or which might otherwise limit recourse against
the Guarantor.

                  SECTION 6. No Subrogation, Contribution, Reimbursement or
Indemnity. Notwithstanding anything to the contrary in this Guaranty and the
other Note Documents, each of the Guarantors hereby irrevocably waives any and
all claims or other rights which may have arisen in connection with this
Guaranty to be subrogated to any of the rights (whether contractual, under the
United States Bankruptcy Code, as amended, including Section 509 thereof, under
common law or otherwise) of any Purchaser against the Company or against any
collateral security or guaranty or right of offset held by the Purchasers for
the payment of the Obligations until indefeasible payment in full of the
Obligations. Each of the Guarantors hereby further irrevocably waives all
contractual, common law, statutory or other rights of reimbursement,
contribution, exoneration or indemnity (or any similar right) from or against
the Company which may have arisen in connection with this Guaranty, whether or
not such remedy or right arises in equity, or under contract, statute or common
law until indefeasible payment in full of the Obligations. So long as the
Obligations remain, if any amount shall be paid by or on behalf of the Company
to any of the Guarantors on account of any of the rights waived in this
paragraph, such amount shall be held by the Guarantor in trust for the benefit
of the Purchasers, segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to the Purchasers (duly
indorsed by such Guarantor to the Purchasers, if required), to be applied
against the Obligations, whether matured or unmatured, in such order as the
Purchasers may determine. The provisions of this paragraph shall survive the
term of this Guaranty and the payment in full of the Obligations. Each Guarantor
acknowledges that it will receive direct and indirect benefits from the sale of
the Notes by the Company and that the waiver set forth in this Section 6 is
knowingly made in contemplation of such benefits.

                  SECTION 7. Effect of Bankruptcy Proceedings, etc. This
Guaranty shall continue to be effective or be automatically reinstated, as the
case may be, if at any time payment, in whole or in part, of any of the sums due
to any Purchaser pursuant to the terms of the Note Agreement or any other Note
Document is rescinded or must otherwise be restored or returned by such
Purchaser upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or any other Person, or upon or as a result of the
appointment of a custodian, receiver, trustee or other officer with similar
powers with respect to the Company or other Person or any substantial part of
its property, or otherwise, all as though such payment had not been made. If an
event permitting the acceleration of the maturity of the principal amount of the
Notes shall at any time have occurred and be continuing, and such acceleration
shall at such time be prevented by reason of the pendency against the Company or
any other Person of a case or proceeding under a bankruptcy or insolvency law,
each of the Guarantors agrees that, for purposes of this Guaranty and its
obligations hereunder, the maturity of the principal amount of the Notes and all
other Obligations shall be deemed to have been accelerated with the same effect
as if a Purchaser had accelerated the same in accordance with the terms of the
Note Agreement or other applicable Note Document, and the Guarantors shall
forthwith pay such principal amount, Make-Whole Amount, if any, and interest
thereon and any other amounts guaranteed hereunder without further notice or
demand.

                  SECTION 8. Term of Agreement. This Guaranty and all
guaranties, covenants and agreements of the Guarantors contained herein shall
continue in full force and effect and shall not be discharged until such time as
all of the Obligations shall be paid and performed in full and all of the
agreements of the Guarantors hereunder shall be duly paid and performed in full.

                  SECTION 9. Representations and Warranties. Each Guarantor
represents and warrants to each Purchaser that:

                  (a) such Guarantor is a corporation duly organized, validly
         existing and in good standing under the laws of its jurisdiction of
         organization and has the corporate power and authority to own and
         operate its property, to lease the property it operates as lessee and
         to conduct the business in which it is currently engaged;

                  (b) such Guarantor has the corporate power and authority and
         the legal right to execute and deliver, and to perform its obligations
         under, this Guaranty, and has taken all necessary corporate action to
         authorize its execution, delivery and performance of this Guaranty;

                                       4

<PAGE>   73

                  (c) this Guaranty constitutes a legal, valid and binding
         obligation of such Guarantor enforceable in accordance with its terms,
         except as enforceability may be limited by bankruptcy, insolvency,
         reorganization, moratorium, fraudulent conveyance or similar laws
         affecting the enforcement of creditors' rights generally and by general
         equitable principles (regardless of whether such enforceability is
         considered in a proceeding in equity or at law);

                  (d) the execution, delivery and performance of this Guaranty
         will not violate any provision of any material requirement of law or
         material contractual obligation of such Guarantor and will not result
         in or require the creation or imposition of any Lien on any of the
         properties, revenues or assets of such Guarantor pursuant to the
         provisions of any material contractual obligation of such Guarantor or
         any requirement of law;

                  (e) no consent or authorization of, filing with, or other act
         by or in respect of, any arbitrator or governmental authority is
         required in connection with the execution, delivery, performance,
         validity or enforceability of this Guaranty;

                  (f) no litigation, investigation or proceeding of or before
         any arbitrator or governmental authority is pending or, to the
         knowledge of such Guarantor, threatened by or against such Guarantor or
         any of its properties or revenues (i) with respect to this Guaranty or
         any of the transactions contemplated hereby or (ii) which could
         reasonably be expected to have a material adverse effect upon the
         business, operations or financial condition of such Guarantor and its
         Subsidiaries taken as a whole;

                  (g) the execution, delivery and performance of this Guaranty
         will not violate any provision of any order, judgment, writ, award or
         decree of any court, arbitrator or Governmental Authority, domestic or
         foreign, or of the charter or by-laws of such Guarantor or of any
         securities issued by such Guarantor; and

                  (h) such Guarantor (after giving due consideration to any
         rights of contribution) has received fair consideration and reasonably
         equivalent value for the incurrence of its obligations hereunder or as
         contemplated hereby and after giving effect to the transactions
         contemplated herein, (i) the fair value of the assets of such Guarantor
         exceeds its liabilities, (ii) such Guarantor is able to and expects to
         be able to pay its debts as they mature, and (iii) such Guarantor has
         capital sufficient to carry on its business as conducted and as
         proposed to be conducted.

                  SECTION 10. Notices. All notices under the terms and
provisions hereof shall be in writing, and shall be delivered or sent by
overnight delivery or telecopy or mailed by first-class mail, postage prepaid,
addressed (a) if to the Company or a Purchaser at the addresses set forth in the
Note Agreement or (b) if to any of the Guarantors, at:

                           BMA Tower
                           31st Street and Southwest Trafficway
                           Kansas City, Missouri  64108

or at such other address as the Guarantors shall from time to time designate in
writing to the Purchasers. Any notice so addressed shall be deemed to be given
when so delivered or sent or, if mailed, on the third Business Day after being
so mailed.

                  SECTION 11. Survival. All warranties, representations and
covenants made by the Guarantors herein or in any certificate or other
instrument delivered by it or on its behalf hereunder shall be considered to
have been relied upon by the Purchasers and shall survive the execution and
delivery of this Guaranty, regardless of any investigation made by any
Purchaser. All statements in any such certificate or other instrument shall
constitute warranties and representations by the Guarantors hereunder.

                  SECTION 12. Miscellaneous. Any provision of this Guaranty
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability

                                       5

<PAGE>   74

in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. To the extent permitted by applicable law, each of
the Guarantors hereby waives any provision of law that renders any provisions
hereof prohibited or unenforceable in any respect. The terms of this Guaranty
shall be binding upon, and inure to the benefit of, the Guarantors and the
Purchasers and their respective successors and assigns. No term or provision of
this Guaranty may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Guarantors and the Purchasers. The
Section and paragraph headings in this Guaranty are for convenience of reference
only and shall not modify, define, expand or limit any of the terms or
provisions hereof, and all references herein to numbered Sections, unless
otherwise indicated, are to Sections in this Guaranty.

                  SECTION 13. Information. Each Guarantor acknowledges and
agrees that it shall have the sole responsibility for obtaining from the Company
such information concerning the Company's financial condition or business
operations as such Guarantor may require, and that the Purchasers do not have
any duty at any time to disclose to any Guarantor any information relating to
the business operations or financial conditions of the Company.

                  SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS AND THE
UNITED STATES OF AMERICA. WITHOUT EXCLUDING ANY OTHER JURISDICTION, EACH
GUARANTOR AGREES THAT THE STATE AND FEDERAL COURTS OF ILLINOIS LOCATED IN
CHICAGO, ILLINOIS SHALL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION
HEREWITH.

                  SECTION 15. WAIVER OF JURY TRIAL. EACH GUARANTOR AND EACH
PURCHASER HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND INTENTIONALLY WAIVES,
TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY
OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS PROVISION
IS A MATERIAL INDUCEMENT TO EACH PURCHASER ENTERING INTO THE NOTE AGREEMENT.

                                       6

<PAGE>   75

                  IN WITNESS WHEREOF, each of the Guarantors has caused this
Guaranty to be duly executed as of the day and year first above written.

                                   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

                                      S-1

<PAGE>   76

                     FORM OF JOINDER TO SUBSIDIARY GUARANTY
                     --------------------------------------

         The undersigned (the "Guarantor"), joins in the Subsidiary Guaranty
dated as of June 20, 2001 from the Guarantors named therein in favor of the
Purchasers, as defined therein, and agrees to be bound by all of the terms
thereof and represents and warrants to the Purchasers that:

                  (a) the Guarantor is a corporation duly organized, validly
         existing and in good standing under the laws of its jurisdiction of
         organization and has the corporate power and authority to own and
         operate its property, to lease the property it operates as lessee and
         to conduct the business in which it is currently engaged;

                  (b) the Guarantor has the corporate power and authority and
         the legal right to execute and deliver, and to perform its obligations
         under, this Guaranty, and has taken all necessary corporate action to
         authorize its execution, delivery and performance of this Guaranty;

                  (c) this Guaranty constitutes a legal, valid and binding
         obligation of the Guarantor enforceable in accordance with its terms,
         except as enforceability may be limited by bankruptcy, insolvency,
         reorganization, moratorium, fraudulent conveyance or similar laws
         affecting the enforcement of creditors' rights generally and by general
         equitable principles (regardless of whether such enforceability is
         considered in a proceeding in equity or at law);

                  (d) the execution, delivery and performance of this Guaranty
         will not violate any provision of any material requirement of law or
         material contractual obligation of the Guarantor and will not result in
         or require the creation or imposition of any Lien on any of the
         properties, revenues or assets of the Guarantor pursuant to the
         provisions of any material contractual obligation of the Guarantor or
         any requirement of law;

                  (e) no consent or authorization of, filing with, or other act
         by or in respect of, any arbitrator or governmental authority is
         required in connection with the execution, delivery, performance,
         validity or enforceability of this Guaranty;

                  (f) no litigation, investigation or proceeding of or before
         any arbitrator or governmental authority is pending or, to the
         knowledge of the Guarantor, threatened by or against the Guarantor or
         any of its properties or revenues (i) with respect to this Guaranty or
         any of the transactions contemplated hereby or (ii) which could
         reasonably be expected to have a material adverse effect upon the
         business, operations or financial condition of the Guarantor and its
         Subsidiaries taken as a whole;

                  (g) the execution, delivery and performance of this Guaranty
         will not violate any provision of any order, judgment, writ, award or
         decree of any court, arbitrator or Governmental Authority, domestic or
         foreign, or of the charter or by-laws of the Guarantor or of any
         securities issued by the Guarantor; and

                  (h) the Guarantor (after giving due consideration to any
         rights of contribution) has received fair consideration and reasonably
         equivalent value for the incurrence of its obligations hereunder or as
         contemplated hereby and after giving effect to the transactions
         contemplated herein, (i) the fair value of the assets of the Guarantor
         exceeds its liabilities, (ii) the Guarantor is able to and expects to
         be able to pay its debts as they mature, and (iii) the Guarantor has
         capital sufficient to carry on its business as conducted and as
         proposed to be conducted.

Capitalized terms used but not defined herein have the meanings ascribed thereto
in the Subsidiary Guaranty.

                                  Exhibit 1(b)

<PAGE>   77

IN WITNESS WHEREOF, the undersigned has caused this Joinder to Subsidiary
Guaranty to be duly executed as of           ,     .
                                   ----------  ----

                                   [Name of Guarantor]

                                       2

                                  Exhibit 1(b)

<PAGE>   78

                                                                EXHIBIT 4.4(a)

                           FORM OF OPINION OF COUNSEL
                  FOR THE COMPANY AND THE SUBSIDIARY GUARANTORS

         (a) The opinion of Lathrop & Gage L.C., counsel to the Company and the
Guarantors, shall be to the effect that:

         1.  Each of the Company and each Subsidiary Guarantor is a corporation
duly organized and validly existing in good standing under the laws of its
jurisdiction of incorporation, and each has the corporate power and authority to
carry on the business now being conducted by it, to own its property and, in the
case of the Company, to enter into and perform the Agreement and to issue and
sell the Notes and, in the case of the Subsidiary Guarantors, to enter into and
perform the Subsidiary Guaranty.

         2.  The Agreement and the Notes have been duly authorized by proper
corporate action on the part of the Company, have been duly executed and
delivered by an authorized officer thereof, and constitute the legal, valid and
binding agreements of the Company, enforceable in accordance with its terms,
except to the extent that enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws of general application relating to or affecting the enforcement of
the rights of creditors or by equitable principles, regardless of whether
enforcement is sought in a proceeding in equity or at law.

         3.  The Subsidiary Guaranty has been duly authorized by proper
corporate action on the part of each Subsidiary Guarantor, has been duly
executed and delivered by an authorized officer thereof, and constitutes the
legal, valid and binding agreement of each Subsidiary Guarantor, enforceable in
accordance with their terms, except to the extent that enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws of general application relating to or
affecting the enforcement of the rights of creditors or by equitable principles,
regardless of whether enforcement is sought in a proceeding in equity or at law.

         4.  The offering, sale and delivery of the Notes and the delivery of
the Subsidiary Guaranty do not require the registration of the Notes or the
Subsidiary Guaranty under the Securities Act of 1933, as amended, or the
qualification of an indenture under the Trust Indenture Act of 1939, as amended.

         5.  No authorization, approval or consent of any governmental or
regulatory body is necessary or required in connection with the lawful execution
and delivery by the Company of the Agreement, by the Subsidiary Guarantors of
the Subsidiary Guaranty, or the lawful offering, issuance and sale by the
Company of the Notes, and no designation, filing, declaration, registration
and/or qualification with any governmental authority is required in connection
with the offer, issuance and sale of the Notes by the Company.

         6.  The issuance and sale of the Notes by the Company, compliance with
the terms and provisions of the Notes and the Agreement by the Company and
compliance with the terms and provisions of the Subsidiary Guaranty by each of
the Subsidiary Guarantors will not conflict with, or result in any breach or
violation of any of the provisions of, or constitute a default under, or result
in the creation or imposition of any Lien upon the property of the Company or
any Subsidiary Guarantor pursuant to the provisions of (i) the Certificate of
Incorporation (or other charter document) or By-Laws of the Company or any
Subsidiary Guarantor, (ii) any loan agreement or evidence of Indebtedness or
other instrument under which the Company or any Subsidiary is a party or by
which any of their property is bound or may be affected that is set forth on
Exhibit I, or (iii) any law (including usury laws) or regulation, or to such
counsel's knowledge, order, writ, injunction or decree of any court or
governmental authority applicable to the Company or any Subsidiary. Such counsel
shall state that it has been informed by the Company that there are no other
loan agreements or evidences of Indebtedness to which the Company or any
Subsidiary is a party other than as set forth on Exhibit I.

                                 Exhibit 4.4(a)

<PAGE>   79

         7.  There are no actions, suits or proceedings with respect to which
counsel has been engaged to provide substantive attention pending, or, to such
counsel's knowledge, threatened in writing against, or affecting the Company or
any Subsidiary, at law or in equity or before or by any Governmental Authority,
which are likely to result, individually or in the aggregate, in a Material
Adverse Effect.

         8.  Neither the Company nor any Subsidiary Guarantor is: (i) a "public
utility company" or a "holding company," or an "affiliate" or a "subsidiary
company" of a "holding company," or an "affiliate" of such a "subsidiary
company," as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, or (ii) a "public utility" as defined in the Federal Power
Act, as amended, or (iii) an "investment company" or an "affiliated person"
thereof, as such terms are defined in the Investment Company Act of 1940, as
amended.

         9.  The issuance of the Notes and the use of the proceeds of the sale
of the Notes do not violate or conflict with Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System (12 C.F.R., Part 201 et seq.).

         The opinion of Lathrop & Gage L.C. shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably request. With
respect to matters of fact on which such opinion is based, such counsel shall be
entitled to rely on appropriate certificates of public officials and officers of
the Company and the Subsidiary Guarantors. With respect to matters governed by
the laws of any jurisdiction other than the United States of America and the
States of Delaware and Missouri, such counsel may rely upon the opinions of
counsel deemed (and stated in their opinion to be deemed) by them to be
competent and reliable; provided that, with respect to the opinions in numbered
paragraphs 2 and 3, such counsel may assume that the laws of the State of
Illinois are the same as the laws of the State of Missouri.

         (b) The opinion of John W. Huey, Esq., General Counsel to the Company
and the Subsidiary Guarantors, shall be to the effect that:

         There are no actions, suits or proceedings pending, or, to such
counsel's knowledge threatened in writing against, or affecting the Company or
any Subsidiary, at law or in equity or before or by any Governmental Authority,
which are likely to result, individually or in the aggregate, in a Material
Adverse Effect.

<PAGE>   80

                                    Exhibit I
                                    ---------
<TABLE>
<CAPTION>

              LOAN ARRANGEMENT                             AMOUNT                             MATURITY
              ----------------                             ------                             --------
<S>                                                <C>                                 <C>
Private Placement Note dated  June 1, 1994              $15,000,000                         December 2003

$35 million Senior notes dated March 1, 1998            $35,000,000                          March 2013

Vistawall TVA Loan                                       $2,000,000                             2008
Tennessee Valley Authority

Industrial Development Revenue Bond issue,               $6,250,000                          April 2015
City of San Marcos Industrial Development
Corporation

Note on Vistawall Factory Equipment to                    $400,000                              2004
Valspar Corporation

Note to former shareholders of Rebco West,                $140,000                          December 2001
Inc.

Credit Agreement                                        $65,000,000                             2004

Europe Line of Credit                              $2,467,000 outstanding              Renewable Revolver 2002
CIB Central-European International Bank

$3M, 24M (RMB) CHINA LINE OF CREDIT, BANK             $0 outstanding                  Renewable Revolver 2002
OF COMMUNICATIONS

Capitalized Lease obligations relating to                $2,306,000                         January 2013
office, manufacturing and warehouse
facility in Newman, Georgia

Capitalized Lease obligations relating to               $24,000,000                         December 2006
land, business and factory facility in
Midway City, Tennessee

CAPITALIZED LEASE OBLIGATIONS REGARDING THE             $30,000,000                             2022
COMPANY'S NEW HEADQUARTER FACILITY

</TABLE>

<PAGE>   81

                                                                EXHIBIT 4.4(b)

                       FORM OF OPINION OF SPECIAL COUNSEL
                                TO THE PURCHASERS

         The opinion of Gardner, Carton & Douglas, special counsel for the
Purchasers, shall be to the effect that:

         1. The Company is a corporation validly existing in good standing under
the laws of the State of Delaware, with the corporate power and authority to
enter into the Agreement and to issue and sell the Notes. Each of the Subsidiary
Guarantors is a corporation validly existing under the laws of its jurisdiction
of incorporation, with all requisite corporate power and authority to enter into
the Subsidiary Guaranty.

         2. The Agreement and the Notes have been duly authorized by proper
corporate action on the part of the Company, have been duly executed and
delivered by an authorized officer thereof, and constitute the legal, valid and
binding agreements of the Company, enforceable in accordance with their terms,
except to the extent that enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws of general application relating to or affecting the enforcement of
the rights of creditors or by equitable principles, regardless of whether
enforcement is sought in a proceeding in equity or at law.

         3. The Subsidiary Guaranty has been duly authorized by proper corporate
action on the part of each Subsidiary Guarantor, has been duly executed and
delivered by an authorized officer thereof, and constitutes the legal, valid and
binding agreement of each Subsidiary Guarantor, enforceable in accordance with
its terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws of general application relating to or affecting the
enforcement of the rights of creditors or by equitable principles, regardless of
whether enforcement is sought in a proceeding in equity or at law.

         4. Based upon the representations set forth in the Agreement, the
offering, sale and delivery of the Notes do not require the registration of the
Notes under the Securities Act of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.

         5. The issuance and sale of the Notes and compliance with the terms and
provisions of the Notes, the Agreement and the Subsidiary Guaranty will not
conflict with or result in any breach of any of the provisions of the
Certificate of Incorporation or By-Laws of the Company or the Subsidiary
Guarantors.

The opinion of Gardner, Carton & Douglas also shall state that the legal opinion
of Lathrop & Gage, counsel for the Company, delivered to you pursuant to the
Agreement, is satisfactory in form and scope to it, and, in its opinion, the
Purchasers and it are justified in relying thereon and shall cover such other
matters relating to the sale of the Notes as the Purchasers may reasonably
request.<PAGE>   1

                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

eLoyalty Corporation, a Delaware corporation ("eLoyalty"), and Steven C. Pollema
("Employee") enter into this Employment Agreement (this "Agreement") effective
as of June 1, 2001 (the "Effective Date").

     In consideration of the agreements and covenants contained in this
Agreement, eLoyalty and Employee agree as follows:

     1.   EMPLOYMENT DUTIES: eLoyalty shall employ Employee as a Senior Vice
President of Operations. Employee shall report to eLoyalty's chief executive
officer and shall have the normal responsibilities, duties and authorities
inherent in his position. Employee's principal place of employment shall be at
eLoyalty's corporate headquarters. Employee shall perform faithfully the duties
assigned to Employee to the best of Employee's ability and shall devote
Employee's full and undivided business time and attention to the transaction of
eLoyalty's business.

     2.   TERM OF EMPLOYMENT: The term of employment ("Term of Employment")
covered by this Agreement shall commence as of June 11, 2001 (the "Employment
Date") and continue until terminated in accordance with the terms hereof.
Employee agrees that after the Effective Date and prior to the Employment Date,
he shall provide eLoyalty with such consulting services as eLoyalty may
reasonably request at no additional compensation; provided, however, that such
services shall not interfere with Employee's other employment obligations.

     3.   TERMINATION: This Agreement may be terminated as follows:

          (a)  Involuntary Termination. eLoyalty may terminate Employee's
     employment for any reason by giving Employee written notice of termination,
     which termination shall be effective as of such date specified in the
     notice (the "Termination Date"), provided that, except in cases of Serious
     Misconduct (which shall be subject to the notice and cure provisions set
     forth in paragraph 3(b)), such Termination Date shall be at least 90 days
     after the notice date and, in any event, no earlier than the six-month
     anniversary of the Effective Date. Until such Termination Date, Employee
     shall make a good faith effort to satisfy those professional obligations
     requested to be performed by eLoyalty, which may include transferring
     duties and assisting in the orderly transition of client responsibilities,
     including meeting with clients and returning all eLoyalty and client
     confidential material. If Employee's employment with eLoyalty is terminated
     by eLoyalty for any reason other than Serious Misconduct, Employee shall
     receive:
<PAGE>   2

               (i) a lump sum payment within seven days of the Termination Date
          equal to the sum of Employee's annual base salary as in effect on the
          Termination Date, plus an amount equal to the average annual bonus
          earned during the two years immediately preceding the Termination Date
          (for any year prior to 2001, the bonus earned shall be deemed to be
          equal to Employee's base salary on the Effective Date); and

               (ii) with respect to any stock options outstanding on the
          Termination Date, accelerated vesting of the portion of such stock
          options that would otherwise vest and become exercisable as of the day
          prior to the first anniversary of the Termination Date, as provided in
          the respective applicable stock option agreements.

          (b)  Serious Misconduct. eLoyalty may terminate Employee's employment
     immediately upon written notice and with no continuation of salary,
     benefits or option vesting if Employee engages in "Serious Misconduct." For
     purposes of this Agreement, "Serious Misconduct" means embezzlement or
     misappropriation of corporate funds, conviction of a felony, material
     breach of this Agreement or willful and continued failure to substantially
     perform his duties or responsibilities. Prior to any termination for
     Serious Misconduct, eLoyalty shall provide the Employee with fifteen days'
     notice and an opportunity to be heard at a meeting of the Board of
     Directors, and an opportunity to cure a willful failure to perform his
     duties and responsibilities or, to the extent curable, a material breach of
     this Agreement.

          (c)  Constructive Discharge. A Constructive Discharge by eLoyalty
     shall be treated for all purposes of this Agreement as a termination by
     eLoyalty for a reason other than Serious Misconduct and shall entitle
     Employee to the benefits set forth in paragraph 3(a) above. If (x) Employee
     provides written notice to eLoyalty of the occurrence of Good Reason (as
     defined below) within a reasonable time after Employee has knowledge of the
     circumstances constituting Good Reason, which notice shall specifically
     identify the circumstances which Employee believes constitute Good Reason;
     (y) eLoyalty fails to correct the circumstances within 15 days after such
     notice; and (z) the Employee resigns within ninety days after the date of
     delivery of the notice referred to in clause (x) above, then Employee shall
     be considered to have been subject to a Constructive Discharge by eLoyalty.
     For purposes of this Agreement, "Good Reason" shall mean the occurrence of
     any of the following events without Employee's consent:

          (i) a reduction by eLoyalty in Employee's base salary, a reduction in
     his target bonus to less than 100% of base salary; or a material and
     substantial reduction in Employee's benefits other than a reduction which
     is applied generally to employees or other senior executives.

          (ii) diminutions in the Employee's duties or responsibilities which
     ARE material in the aggregate;

                                       2

<PAGE>   3

          (iii) a change in Employee's reporting relationship such that
     Employee no longer reports directly to the chief executive officer of
     eLoyalty or, if eLoyalty is acquired by any other entity, the chief
     executive officer of the ultimate parent of eLoyalty;

          (iv) a relocation of eLoyalty's corporate offices or Employee's
     principal place of employment to a location outside of Lake, Cook and
     DuPage counties;

          (v) the failure of eLoyalty to obtain a satisfactory agreement from
     any successor to all or substantially all of the assets or business of
     eLoyalty to assume and agree to perform this Agreement within 15 days after
     a merger, consolidation, sale or similar transaction; or

          (vi) a material breach of this Agreement by eLoyalty.

          (d) Resignation. Employee may terminate his employment upon giving
     eLoyalty 90 days written notice. eLoyalty may make the termination
     effective at any time within the 90 day notice period. During this period
     Employee shall make a good faith effort to satisfy those professional
     obligations requested to be performed by eLoyalty, which may include
     transferring duties and assisting in the transition of client
     responsibilities, including meeting with clients.

          (e)  Disability. eLoyalty or Employee may terminate Employee's
     employment at any time by reason of Employee's Disability. A termination of
     Employee's employment by reason of Disability shall be treated for all
     purposes of this Agreement as a termination by eLoyalty for a reason other
     than Serious Misconduct and shall entitle Employee to the benefits set
     forth in paragraph 3(a)(i) above. For purposes of this Agreement,
     "Disability" means Employee's inability, due to physical or mental
     incapacity, to substantially perform his duties and responsibilities
     contemplated by this Agreement for a period of not less than 180 days. In
     the event of a dispute as to whether Employee is disabled, the
     determination shall be made by a licensed medical doctor selected by the
     eLoyalty and agreed to by Employee. If the parties cannot agree on a
     medical doctor, each party shall select a medical doctor and the two
     doctors shall select a third who shall be the approved medical doctor for
     this purpose. Employee agrees to submit to such tests and examinations as
     such medical doctor shall deem appropriate.

          (f) Death. A termination of Employee's employment by reason of death
     shall be treated for all purposes of this Agreement as a termination by
     eLoyalty for a reason other than Serious Misconduct and shall entitle
     Employee's estate to the benefits set forth in paragraph 3(a)(i) above.

          4. SALARY: As compensation for Employee's services, eLoyalty shall pay
     Employee a base salary at the annual rate listed on Exhibit A to this
     Agreement. Employee's base salary shall be subject to annual review and
     may, by mutual agreement of eLoyalty and Employee, be adjusted from that
     listed in Exhibit A according to Employee's responsibilities, capabilities
     and performance during the preceding year.

                                       3
<PAGE>   4

       5. BONUSES:

          (a)  In order to facilitate Employee's acquisition of shares of
     eLoyalty common stock in accordance with paragraph 6(a) below, Employee
     shall receive a sign-on bonus in the amount set forth on Exhibit A to this
     Agreement in the form of a loan evidenced by, and subject to the terms and
     conditions of, a promissory note (the "Promissory Note"). The loan proceeds
     will be distributed as soon as practicable after eLoyalty has received
     Employee's signed Promissory Note. Provided that Employee remains in the
     employ of eLoyalty, the loan will be fully forgiven in substantially equal
     monthly installments over the 24-month period following the date the loan
     is made. The outstanding balance of the loan will be fully forgiven upon
     the earliest to occur of (i) any termination of employment by eLoyalty for
     reasons other than Serious Misconduct; (ii) any termination of employment
     by Employee pursuant to a Constructive Discharge; (iii) any termination of
     employment by eLoyalty or Employee for Employee's Disability; (iv)
     Employee's death; or (v) a Change in Control of eLoyalty as defined in the
     eLoyalty Corporation 1999 Stock Incentive Plan, as amended and restated
     (the "Incentive Plan"). Employee will be obligated to repay the remaining
     balance of his loan with accrued interest thereon in accordance with the
     terms of the Promissory Note if his employment terminates on account of his
     resignation other than pursuant to a Constructive Discharge or eLoyalty's
     termination of his employment for Serious Misconduct before the expiration
     of such 24-month period.

          (b)  In addition, Employee shall be eligible to receive a performance
     bonus under this paragraph (b) based upon the attainment of objectives
     determined in accordance with and subject to the terms and conditions of
     eLoyalty's then applicable discretionary bonus program. Employee's target
     bonus for the 2001 calendar year shall equal 100% of his annual base
     salary, prorated based upon the portion of calendar year 2001 remaining
     from the Effective Date through December 31, 2001. In no event will the
     Employee's actual bonus for each of the calendar quarters ending on
     September 30, 2001, December 31, 2001 and March 31, 2002 be less than
     $63,750, payable no later than forty-five days after the end of each
     quarter. As soon as practicable after the Effective Date, eLoyalty shall
     make a lump sum payment to Employee in the amount of $100,000 as an advance
     against such guaranteed bonus payments. Such advance shall be offset
     against the final payments of such guaranteed bonus. In the event that
     Employee's employment is terminated by Employee pursuant to a Constructive
     Discharge or because of death or Disability, or by eLoyalty for any reason
     other than Serious Misconduct, this advance shall not have to be repaid,
     but shall be offset against the amounts otherwise payable under paragraph
     3(a), 3(c), 3(e) or 3(f), as the case may be. For calendar years after
     2001, Employee's target bonus for any year shall not be less than 100% of
     his base salary for such year and, subject to approval of the Compensation
     Committee of eLoyalty's Board of Directors, shall be based upon objectives
     mutually agreed upon by Employee and eLoyalty's Chief Executive Officer.
     The timing of any bonus payments for calendar years after 2001 (other than
     the guaranteed bonus payment for the first quarter of 2002) shall be in
     accordance with the schedule set by eLoyalty for its Senior
     Vice-Presidents.

                                       4

<PAGE>   5

     6.   ELOYALTY STOCK:

          (a)  Purchase of Stock. Employee shall acquire shares of eLoyalty
common stock for an aggregate purchase price in the amount set forth on Exhibit
A in open market transactions on or before the 90th day following the Employment
Date.

          (b)  Restricted Stock. As of the Employment Date, Employee shall be
awarded the number of shares of common stock of eLoyalty set forth on Exhibit A
to this Agreement. The shares shall be awarded as Restricted Stock under and in
accordance with the provisions of the Incentive Plan, and will be subject, in
all respects, to the terms and conditions of the Incentive Plan. In addition,
the award of such Restricted Stock will be evidenced by, and subject to the
terms and conditions of, a Restricted Stock Award Agreement in the form attached
hereto (the "Restricted Stock Agreement") reflecting the vesting schedule set
forth on Exhibit A hereto, as well as the other customary terms and conditions
applicable to awards under the Incentive Plan.

          (c)  Stock Options. As of the Effective Date, Employee shall be
granted a nonqualified stock option (the "Option") to purchase the number of
shares of common stock of eLoyalty set forth on Exhibit A to this Agreement. The
Option shall be granted under and in accordance with the provisions of the
Incentive Plan, and will be subject, in all respects, to the terms and
conditions of the Incentive Plan. In addition, the Option will be evidenced by,
and subject to the terms and conditions of, a Stock Option Agreement in the form
attached hereto (the "Option Agreement") reflecting the vesting schedule set
forth on Exhibit A hereto, as well as the other customary terms and conditions
applicable to options granted under the Incentive Plan.

     7. EMPLOYEE BENEFITS: During the Term of Employment, Employee shall be
entitled to participate in such employee benefit plans, including eLoyalty's
401(k) plan and deferred compensation plan and its group life and health
insurance and other medical benefits, and shall receive all other fringe
benefits, including 22 paid vacation days, as eLoyalty may make available
generally to its Senior Vice Presidents. In the event of a termination of
employment by eLoyalty for reasons other than Serious Misconduct or Employee's
Constructive Discharge, Employee shall continue to receive group life and health
insurance and other medical benefits and continued deferral of income deferred
prior to his termination of employment through the first anniversary of such
termination on the same basis as an active employee.

     8. BUSINESS EXPENSES: eLoyalty shall reimburse Employee for all reasonable
and necessary business expenses (including mobile phone expenses) incurred by
Employee in performing Employee's duties in accordance with eLoyalty's expense
reimbursement policies. Employee shall provide eLoyalty with supporting
documentation sufficient to satisfy reporting requirements of the Internal
Revenue Service and eLoyalty. eLoyalty's determination as to reasonableness and
necessity shall be final.

                                       5

<PAGE>   6

     9. NONCOMPETITION AND NONDISCLOSURE: Employee acknowledges that the
successful development and marketing of eLoyalty's professional services and
products require substantial time and expense. Such efforts generate for
eLoyalty valuable and proprietary information ("Confidential Information") which
gives eLoyalty a business advantage over others who do not have such
information. Confidential Information of eLoyalty and its clients and prospects
includes, but is not limited to, the following: business strategies and plans;
proposals; deliverables; prospects and customer lists; methodologies; training
materials; computer software; and other Trade Secrets (as defined in paragraph
11) of eLoyalty, its customers and its vendors. Employee acknowledges that
during the Term of Employment, Employee will obtain knowledge of such
Confidential Information. Accordingly, Employee agrees to undertake the
following obligations which Employee acknowledges to be reasonably designed to
protect eLoyalty's legitimate business interests without unnecessarily or
unreasonably restricting Employee's post-employment opportunities:

          (a)  Upon termination of the Term of Employment for any reason,
     Employee shall return all eLoyalty property, including but not limited to
     computer programs, files, notes, records, charts, or other documents or
     things containing in whole or in part any of eLoyalty's Confidential
     Information.

          (b) During the Term of Employment and subsequent to termination,
     Employee agrees to treat all such Confidential Information as confidential
     and to take all necessary precautions against disclosure of such
     information to third parties during and after Employee's employment with
     eLoyalty. Employee shall refrain from using or disclosing to any person,
     without the prior written approval of eLoyalty's Chief Executive Officer,
     any Confidential Information unless at that time the information has become
     generally and lawfully known to eLoyalty's competitors.

          (c)  Without limiting the obligations of paragraph 9(b) during the
     Noncompetition Period (as defined below), Employee shall not, for
     Employee's self or as an agent, partner or employee of any person, firm or
     corporation, engage in or be employed by any entity which engages in the
     practice of consulting or related services with respect to the customer
     relationship management ("CRM") area which is competitive with the services
     provided by eLoyalty or which, on the date of Employee's termination of
     employment, senior management of eLoyalty is actively planning for eLoyalty
     to provide to its customers; provided, however, that the foregoing shall
     not preclude the Employee from employment with any entity which provides
     consulting or related services in the CRM area if (i) services in the CRM
     area do not constitute such entity's principal business, and (ii) the
     Employee does not have duties, responsibilities or authorities with respect
     to the portion of such entity's business which relates to the CRM area. For
     purposes of this paragraph, the "Noncompetition Period" means (i) the
     six-month period following Employee's termination of employment either by
     eLoyalty for reasons other than Serious Misconduct or by Employee pursuant
     to a Constructive Discharge or (ii) the one-year period following
     Employee's termination of employment by eLoyalty for Serious Misconduct or
     by Employee for any reason other than pursuant to a Constructive Discharge.

                                       6
<PAGE>   7

          (d) During a one year period immediately following Employee's
     termination of employment for any reason, Employee shall not induce or
     assist in the inducement of any eLoyalty employee away from eLoyalty's
     employ or from the faithful discharge of such employee's contractual and
     fiduciary obligations to serve eLoyalty's interests with undivided loyalty.

         Notwithstanding anything contained in this paragraph 9 to the contrary,
Employee shall not be prevented from: (a) owning up to 5% of the outstanding
stock of any corporation regularly traded on a national securities exchange or
in any over-the-counter market; or (b) retaining any shares of stock in any
corporation which Employee owned prior to the date of this Agreement.

     10. REMEDIES: Employee recognizes and agrees that a breach of any or all
of the provisions of paragraph 9 will constitute immediate and irreparable harm
to eLoyalty's business advantage, including but not limited to eLoyalty's
valuable business relations, for which damages cannot be readily calculated and
for which damages are an inadequate remedy. Accordingly, Employee acknowledges
that eLoyalty shall therefore be entitled to an order enjoining any further
breaches by the Employee.

     11. AGREEMENTS REGARDING PRIOR EMPLOYMENT.

          (a) As used in this Agreement "Trade Secret" means the whole or any
portion of the property of a person (the "Owner") consisting of any information,
pattern, compilation, data, list, document, memorandum, process, program,
device, method, technique, formula or improvement, whether patentable or not,
relating to the business of the Owner (i) of which Employee became aware as a
consequence of or through his relationship with the Owner; (ii) which derives
independent economic value, actual or potential, form not being generally known
to the public or to other persons who can obtain economic value from its
disclosure or use; and (iii) which is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy. Assuming these three criteria
are met, Trade Secrets shall include information relating to the financial
affairs, customers, employees, employees' compensation, research, development,
inventions, existing and future products and services, plans and designs, and
marketing of the Owner. Trade Secrets shall not include any data or information
that has been voluntarily disclosed to the public by the Owner or become
generally known to the public.

          (b) To induce eLoyalty to enter into this Agreement, Employee
     represents to eLoyalty that Employee has not disclosed to eLoyalty,
     directly or indirectly, any Trade Secret of any former employer and that
     Employee does not believe that the performance of his duties and
     responsibilities arising from this Agreement will require his reliance on,
     use of or disclosure of any Trade Secret of any former employer.

                                       7
<PAGE>   8

          (c) Employee and eLoyalty hereby covenant to each other that neither
     eLoyalty nor Employee intends to obtain, learn, disclose or use any Trade
     Secret of any former employer of Employee. Employee will not disclose to
     eLoyalty any Trade Secret of a former employer, and eLoyalty will not
     request Employee to make any such disclosure.

     12. INTELLECTUAL PROPERTY: During the Term of Employment, Employee shall
disclose to eLoyalty all ideas, inventions and business plans which Employee
develops during the course of Employee's employment with eLoyalty which relate
directly or indirectly to eLoyalty's business, including but not limited to any
computer programs, processes, products or procedures which may, upon
application, be protected by patent or copyright. Employee agrees that any such
ideas, inventions or business plans shall be the property of eLoyalty (and in
furtherance thereof hereby assigns to eLoyalty any and all rights and interests
of Employee therein and thereto) and that Employee shall, at eLoyalty's request
and cost (including reimbursement of Employee's expenses and, if Employee is no
longer in the employ of eLoyalty, reasonable per diem compensation to Employee),
provide eLoyalty with such assurances as is necessary to secure a patent or
copyright.

     13. ASSIGNMENT: Employee acknowledges that the services to be rendered
pursuant to this Agreement are unique and personal. Accordingly, Employee may
not assign any of Employee's rights or delegate any of Employee's duties or
obligations under this Agreement. eLoyalty may assign its rights, duties or
obligations under this Agreement to a subsidiary or affiliate of eLoyalty with
the consent of Employee. This Agreement shall be binding upon and inure to the
benefit of any purchaser or transferee of a majority of eLoyalty's outstanding
capital stock or a purchaser or transferee of all, or substantially all, of the
assets of eLoyalty.

     14. NOTICES: All notices hereunder shall be in writing, except for notice
of termination of employment, which may be oral if confirmed in writing within
14 days. Notices intended for eLoyalty shall be sent by registered or certified
mail addressed to it at 150 Field Drive, Suite 250, Lake Forest, Illinois 60045
or its current principal office, and notices intended for Employee shall be
either delivered personally to Employee or sent by registered or certified mail
addressed to Employee's last known address.

     15.ENTIRE AGREEMENT: This Agreement and Exhibit A attached hereto, together
with the other plans, programs and agreements referred to herein, constitute the
entire agreement between eLoyalty and Employee with respect to the subject
matter hereof. Neither Employee nor eLoyalty may modify this Agreement by oral
agreements, promises or representations. The parties may modify this Agreement
only by a written instrument signed by the parties.

     16. WAIVER OF BREACH: No waiver by any party hereto of a breach of any
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party of any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take any action by
reason of such breach will not deprive such party of the right to take action at
any time while such breach continues.

                                        8
<PAGE>   9

     17. APPLICABLE LAW:  This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.

     18. BINDING ARBITRATION: Employee and eLoyalty agree that all claims or
disputes relating to Employee's employment with eLoyalty or the termination of
such employment, and any and all other claims that Employee might have against
eLoyalty, any eLoyalty director, officer, employee, agent, or representative,
and any and all claims or disputes that eLoyalty might have against Employee
(except for any claims under Paragraph 9 of this Agreement) shall be resolved
under the Expedited Commercial Rules of the American Arbitration Association. If
either party pursues a claim and such claim results in an Arbitrator's decision,
both parties agree to accept such decision as final and binding. eLoyalty and
Employee agree that any litigation under Paragraph 9 or 10 of this Agreement
shall be brought in the Circuit Court for Cook County, Illinois.

     19. SEVERABILITY: Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

    20. ACKNOWLEDGEMENT:  Employee acknowledges that Employee has read,
understood and accepts the provisions of this Agreement.

eLoyalty Corporation                        Steven C. Pollema

By: /s/ KELLY D. CONWAY                  /s/ STEVEN C. POLLEMA
   ---------------------------           ------------------------
         Kelly D. Conway
President and Chief Executive Officer

                                       9
<PAGE>   10

                                    EXHIBIT A

EMPLOYEE:                  Steven C. Pollema

POSITION:                  Senior Vice President

BASE SALARY:               $300,000 per annum

SIGN-ON BONUS/LOAN:        $250,000

EFFECTIVE DATE:            June 1, 2001

EMPLOYMENT DATE:           June 11, 2001

STOCK PURCHASE:            $150,000

RESTRICTED STOCK:

                           Award as of the Employment Date, under the Incentive
                           Plan, of 50,000 restricted shares of eLoyalty
                           Corporation common stock, having the following
                           vesting schedule, subject to the terms and conditions
                           of the Incentive Plan and the applicable Restricted
                           Stock Award Agreement:

                           Vesting Schedule: The Award shall vest in monthly
                           increments on the first day of each month over the
                           sixty (60) consecutive month period beginning on the
                           first day of the month following the month in which
                           the Employment Date occurs (subject to Employee's
                           continued employment with eLoyalty). The first 20
                           such monthly increments shall be for 834 shares each.
                           The final 40 such monthly increments shall be for
                           833 shares each. The Award shall be subject to
                           accelerated vesting (i) as to a portion of the
                           shares, in accordance with the terms set forth in the
                           attached Restricted Stock Award Agreement, upon a
                           termination of Employee's employment within the first
                           year of the Agreement by eLoyalty for reasons other
                           than Serious Misconduct or by Employee by reason of
                           Constructive Discharge, or (ii) as to all shares,
                           upon a change in control of eLoyalty or in the event
                           of death or termination of employment by reason of
                           Disability or retirement with eLoyalty's consent in
                           accordance with the terms set forth in the attached
                           Restricted Stock Award Agreement.

                                  Exhibit A-1

<PAGE>   11

STOCK OPTION:              Initial grant as of the Effective Date, under the
                           Incentive Plan, of a nonqualified option to purchase
                           200,000 shares of eLoyalty Corporation common stock,
                           having the following exercise price and vesting
                           schedule, subject to the terms and conditions of the
                           Incentive Plan and the applicable Option Agreement:

                           Exercise Price:  Closing price per share of eLoyalty
                           common stock on the Effective Date.

                           Vesting Schedule: The Option shall become vested and
                           exercisable with respect to 50,000 shares (25% of the
                           shares covered by the Option) on the last day of the
                           month in which the first anniversary of the Effective
                           Date occurs (subject to Employee's continued
                           employment with eLoyalty). The remaining 150,000
                           shares covered by the Option shall vest and become
                           exercisable in equal monthly increments (each equal
                           to 1/36 of such remaining shares) on the last day of
                           each month over the thirty-six (36) consecutive
                           month period beginning in the month following the
                           month in which the first anniversary of the Effective
                           Date occurs (subject to Employee's continued
                           employment with eLoyalty). The option shall be
                           subject to accelerated vesting (i) as to a portion of
                           the option, in accordance with the terms set forth in
                           the attached option agreement, upon a termination of
                           Employee's employment by eLoyalty for reasons other
                           than Serious Misconduct or by Employee by reason of
                           Constructive Discharge (with accelerated vesting as
                           to the entire option if any such employment
                           termination occurs during the first year of
                           Employee's employment) or upon a change in control of
                           eLoyalty or (ii) as to the entire option, in the
                           event of Employee's death or termination of his
                           employment by reason of Disability, in accordance
                           with the terms set forth in the attached option
                           agreement.

     /s/ STEVEN C. POLLEMA                 eLoyalty Corporation
--------------------------------
       Steven C. Pollema

                                           By: /s/ KELLY D. CONWAY
                                              ---------------------------
                                                    Kelly D. Conway
                                                  President and Chief
                                                   Executive Officer

                                  Exhibit A-2

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