BUTLER NATIONAL CORPORATION
1546 East Spruce Road19920 W. 161st Street
Olathe, Kansas 6606166062
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 1, 1996November 15, 2001
To the Shareholders of Butler National Corporation:
Notice is hereby given that the Annual Meeting of Shareholders of
Butler National Corporation (the "Company") will be held at the
Holiday Inn-Olathe, 1010 West 151st Street, Olathe, Kansas, on
Tuesday, October 1, 1996,January 8, 2002, at 11:00 a.m., for the following purposes:
1. To elect five (5) directors to hold office until the next Annual
Meeting of Shareholders or until their successors are elected.
2.To2. To ratify the selection of Arthur Andersen LLPWeaver & Martin, L.L.C. as auditors
for the fiscal year ending April 30, 1997.2002.
3. To consider and vote upon a proposal to approve changing the Company'sour
state incorporation from MinnesotaDelaware to DelawareKansas by merging the Company into a
wholly owned subsidiary of the
CompanyButler National Corporation which
is a DelawareKansas corporation.
4. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on August
16, 1996,November
15, 2001, as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
WILLIAM A. GRIFFITH, Secretary
Olathe, Kansas
August 16, 1996November 15, 2001
TO ASSURE YOUR REPRESENTATION AT THE MEETING,
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT
TO ATTEND IN PERSON. SHAREHOLDERS WHO ATTEND
THE MEETING MAY REVOKE THEIR PROXIES AND VOTE
IN PERSON IF THEY DESIRE.
BUTLER NATIONAL CORPORATION
1546 East Spruce Road19920 W. 161st Street
Olathe, Kansas 6606166062
PROXY STATEMENT
General
This Proxy Statement is furnished to theour shareholders of Butler
National Corporation (the "Company") in
connection with the solicitation of proxies by theour Board of Directors of the Company to
be voted at the Annual Meeting of Shareholders to be held on October 1, 1996,January
8, 2002, or any adjournment or adjournments thereof. The cost of this
solicitation will be borne by the Company.us, Butler National Corporation (the
"Company"). In addition to solicitation by mail, our officers, directors
and employees
of the Company may solicit proxies by telephone, telegraph, or in
person. The CompanyWe may also request banks and brokers to solicit their
customers who have a beneficial interest in the Company'sour Common Stock
registered in the names of nominees and will reimburse such banks and
brokers for their reasonable out-of-pocket expenses.
Any proxy may be revoked at any time before it is voted by written
notice to the Secretary, by receipt of a proxy properly signed and dated
subsequent to an earlier proxy, or by revocation of a written proxy by
request in person at the Annual Meeting; but if not so revoked, the
shares represented by such proxy will be voted. The mailing of this
proxy statement to our shareholders of
the Company commenced on or about August 26, 1996. The
Company'sNovember
20, 2001. Our corporate offices are located at 1546 East Spruce
Road,19920 W. 161st Street,
Olathe, Kansas 6606166062 and itsour telephone number is (913) 780-9595.
The Company hasWe have outstanding only one class of Common Stock, par value
$.01$0.01 per share ("Common Stock"), of which 9,280,89037,283,031 shares were
issued, outstanding and entitled to vote at the Annual Meeting. Each
share is entitled to one vote. Shareholders may not cumulate votes in
the election of directors. Only shareholders of record at the close of
business on August
16, 1996,November 15, 2001, will be entitled to vote at the meeting.
The presence in person or by proxy of the holders of 35% of the shares
of Common Stock entitled to vote at the Annual Meeting of
Shareholders constitutes a quorum for the transaction of business. The
shares represented by the enclosed proxy will be voted if the proxy is
properly signed and received prior to the meeting.
Voting
TheOur Charter Documents of the Company require that a 35% of the votes of the shares
of Common Stock issued, outstanding and entitled to vote at the Annual
Meeting be present in person or represented by Proxy at the Annual
Meeting in order to constitute a quorum for the transaction of business.
Provided a quorum is present, the affirmative vote of (a) a plurality of
the votes cast by the holders of theour Common Stock present in person or
represented by Proxy at the Annual Meeting and entitled to vote on the
subject matter is required for the election of directors and (b) the
holders of a majority of the voting power of all shares is required for
the approval of the Reincorporation described herein. Votes that are
cast against the proposals are counted both for purposes of determining
the presence or absence of a quorum for the transaction of business and
for purposes of determining the total number of votes cast on a given
proposal. Abstentions will be counted for purposes of determining both
the presence or absence of a quorum for the transaction of business and
the total number of votes cast on a given proposal, and therefore will
have the same effect as a vote against a given proposal. Broker non-votesnon-
votes (i.e., a proxy card returned by a holder on behalf of its beneficial
owner that is not voted on a particular matter because voting
instructions have not been received and the broker has no discretionary
authority to vote) will be counted as present or represented for purposes
of determining the presence or absence of a quorum for the transaction
of business but will not be counted for purposes of determining the
number of votes cast with respect to a particular proposal for which
authorization to vote was withheld. Accordingly, broker non-votes will
not be considered as votes cast and thus will not affect the outcome of
voting on a proposal.
Stockholder Proposals
The proxy rules of the Securities and Exchange Commission permit
shareholders of a company, after timely notice to the company, to
present proposals for shareholder action in the company's proxy
statements where such proposals are consistent with applicable law,
pertain to matters appropriate for shareholder action and are not
properly omitted by company action in accordance with the proxy rules.
The Butler National Corporation 19972002 Annual Meeting of Shareholders
is expected to be held on or about September 30, 1997,October 8, 2002, and proxy materials
in connection with that meeting are expected to be mailed on or about
August 29, 1997.September 1, 2002. Shareholder proposals prepared in accordance
with the proxy rules must be received by the Company on or before
June 3, 1997.
5, 2002.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, with respect to the Company's
common stockour
Common Stock (the only class of voting securities), the only persons
known to be beneficial owners of more than five percent (5%) of any
class of the Company'sour voting securities as of June
27, 1996.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
Clark D. Stewart
1546 East Spruce Road
Olathe, Kansas 66061 2,205,920 18.73%
Marvin J. Eisenbath
1546 East Spruce Road
Olathe, Kansas 66061 650,000 5.52%
Unless otherwise indicated by footnote, nature of beneficial ownership
of securities is direct, and beneficial ownership as shown in the table
arises from sole voting power and sole investment power.
Includes 1,120,000July 30, 2001.
Name and Address of Beneficial Owner
Clark D. Stewart
19920 West 161st Street
Olathe, Kansas 66062
Amount and Nature of Beneficial Ownership (1)
5,096,390(2)
Percent of Class
13.7%
Name and Address of Beneficial Owner
William E. Logan
19920 West 161st Street
Olathe, Kansas 66062
Amount and Nature of Beneficial Ownership (1)
2,073,683(3)
Percent of Class
5.6%
Name and Address of Beneficial Owner
R. Warren Wagoner
19920 West 161st Street
Olathe, Kansas 66062
Amount and Nature of Beneficial Ownership (1)
3,988,983(4)
Percent of Class
10.7%
(1) Unless otherwise indicated by footnote, nature
of beneficial ownership of securities is direct, and
beneficial ownership as shown in the table arises from
sole voting power and sole investment power.
(2) Includes 2,225,000 shares which may be acquired by
Mr. Stewart pursuant to the exercise of stock
options which are exercisable.
(3) Includes 785,000 shares which may be acquired by
Mr. Logan pursuant to the exercise of stock
options which are exercisable.
(4) Includes 1,325,000 shares which may be acquired by
Mr. Wagoner pursuant to the exercise of stock
options which are exercisable.
The following table sets forth, with respect to the Company's
common stockour
Common Stock (the only class of voting securities), (i) shares
beneficially owned by all directors and named executive officers of
the Company,Butler National Corporation, and (ii) total shares beneficially
owned by directors and officers as a group, as of June 27, 1996.
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
Clark D. Stewart 2,205,920 18.73%
Marvin J. Eisenbath 650,000 5.52%
William E. Logan 260,000 2.21%
R. Warren Wagoner 335,000 2.84%
William A. Griffith 172,000 1.46%
David B. Hayden 60,000 .51%
All Directors and 4,162,900 35.34%
Officers as a
Group (12 persons)
Unless otherwise indicated by footnote, nature of beneficial
ownership of securities is direct, and beneficial ownership as shown in
the table arises from sole voting power and sole investment power.
Includes 1,120,000 shares which may be acquired by Mr. Stewart pursuant
to the exercise of stock options which are exercisable.
Includes 210,000 shares which may be acquired by Mr. Logan pursuant to
the exercise of stock options which are exercisable.
Includes 235,000 shares which may be acquired by Mr. Wagoner pursuant
to the exercise of stock options which are exercisable.
Includes 92,000 shares which may be acquired by Mr. Griffith pursuant
to the exercise of stock options which are exercisable.
Includes 50,000 shares which may be acquired by Mr. Hayden pursuant
to the exercise of stock options which are exercisable.
Includes 2,154,700April 30, 2001.
Name of Beneficial Owner Amount and Nature of Percent of
Beneficial Ownership Class
(1)
Larry B. Franke 420,600(6) 1.1%
William A. Griffith 1,381,983(5) 3.7%
David B. Hayden 1,363,683(7) 3.7%
William E. Logan 2,073,683(3) 5.6%
Clark D. Stewart 5,096,390(2) 13.7%
R. Warren Wagoner 3,988,983(4) 10.7%
All Directors and Executive Officers as a Group (12 persons)
14,325,320(8) 38.4%
(1) Unless otherwise indicated by footnote, nature of beneficial
ownership of securities is direct and beneficial
ownership as shown in the table arises from sole voting
power and sole investment power.
(2) Includes 2,225,000 shares, which may be acquired by Mr.
Stewart pursuant to the exercise of stock options,
which are exercisable.
(3) Includes 785,000 shares, which may be acquired by Mr.
Logan pursuant to the exercise of stock options which
are exercisable.
(4) Includes 1,325,000 shares, which may be acquired by Mr.
Wagoner pursuant to the exercise of stock options,
which are exercisable.
(5) Includes 575,000 shares, which may be acquired by Mr.
Griffith pursuant to the exercise of stock options,
which are exercisable.
(6) Includes 420,600 shares, which may be acquired by Mr.
Franke pursuant to the exercise of stock options, which
are exercisable.
(7) Includes 625,000 shares, which may be acquired by Mr.
Hayden pursuant to the exercise of stock options,
which are exercisable.
(8) Includes 5,955,600 shares for all directors and executive
officers as a group, which may be acquired pursuant
to the exercise of stock options, which are exercisable.
ELECTION OF DIRECTORS
(Proposal No. 1)
The number of directors constituting theour Board of Directors
has been fixed byat five (5). A director holds office until the Company at five. The termnext
election of office for a
director is one year or until his successor is elected an qualified.Board members. The Board of Directors has nominated for
election the five (5) persons named below. All of the nominees are
currently members of the Board of Directors. All of the nominees
except
Mr. Hayden were elected by the shareholders. Mr. Hayden was
appointed as a director by the Board of Directors on December
1, 1995 to fill a vacancy. It is intended that proxies
solicited will be voted for such nominees. The Board of Directors
believes that each nominee named below will be able to serve, but
should any nominee be unable to serve as a director, the persons
named in the proxies have advised that they will vote for the
election of such substitute nominee as the Board of Directors may
propose.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of the directors, their principal
occupations for at least the past five years are set forth below, based on
information furnished to the Company by the directors.
Name of Nominee and Director and Age
Clark D. Stewart
(56)(2)(61)
(n2)
Served Since
1989
Principal Occupation for Last Five Years and Other Directorships
President of theour Company from September 1, 1989 to present. President of
Tradewind Systems, Inc. (consulting and computer sales) 1980 to present;
Executive Vice President of RO Corporation (manufacturing) 1986 to 1989;
President of Tradewind Industries, Inc. (manufacturing) 1979 to 1985.
Mr. Stewart is also a member of the Board of Directors of TransFinancial
Holdings, Inc.
Name of Nominee and Director and Age
R. Warren Wagoner
(44)(1)(2)(49)
(n2)
Served Since
1986
Principal Occupation for Last Five Years and Other Directorships
Chairman of the Board of Directors of theour Company since August 30, 1989
and President of theour Company from July 26, 1989 to September 1, 1989.
Sales Manager of Yamazen Machine Tool, Inc. from March, 1992 to
March, 1994; President of Stelco, Inc. (manufacturing) 1987 to 1989;
General Manager, AmTech Metal Fabrications, Inc., Grandview, MO
1982 to 1987.
Name of Nominee and Director and Age
William E. Logan (58)(1)(2)A. Griffith
(54)
(n1)(n2)
Served Since
1990
Vice PresidentPrincipal Occupation for Last Five Years and Treasurer of Wendy's Hamburgers of Kansas City, Inc. June,
1984 to present. Vice President and Treasurer of Valley Foods
Services, Inc. (wholesale food distributor) June, 1988 to April,
1993. Professional practice as a Certified Public Accountant 1965
to 1984.
William A. Griffith (49)(1)(2) Served Since 1990Other Directorships.
Secretary of theour Company, President of Griffith and Associates
(management consulting) since 1984. Management consultant for
Diversified Health Companies (management consulting) from 1986 to 1989
and for Health Pro (health care) from 1984 to 1986. Chief Executive
Officer of Southwest Medical Center (hospital) from 1981 to 1984.
Name of Nominee and Director and Age
David B. Hayden(50)(2)Hayden
(55)
(n1)(n2)
Served Since
1996
Principal Occupation for Last Five Years and Other Directorships.
Co-owner and President of Kings Avionics, Inc. since 1974 (avionics sales
and service). Co-owner of Kings Aviation LLP (aircraft fixed base
operation and maintenance) since 1994.1994 to 2000. Field Engineer for King Radio
Corporation (avionics manufacturing) 1966 to 1974.
Mr.
Hayden was appointedName of Nominee and Director and Age
William E. Logan
(63)
(n1)(n2)
Served Since
1990
Principal Occupation for Last Five Years and Other Directorships.
Vice President and Treasurer of WH of KC, Inc. (Wendy's franchisee) June,
1984 to present. Vice President and Treasurer of Valley Foods Services,
Inc. (wholesale food distributor) June, 1988 to April, 1993. Professional
practice as a Certified Public Accountant 1965 to 1984.
Name of Nominee and Director by the Board of Directors
on December 1, 1995.
(1)and Age
(n1) Audit Committee
(2)(n2) Compensation Committee
During the fiscal year ended April 30, 1996,2001, the Board of
Directors met two times. Each director attended 100% of the meetings
of the Board of Directors. Members of the Board who are not
otherwise our paid employees of the Company (all except Mr. Stewart) are paid $100
for each meeting attended. The Board of Directors has an Audit
Committee and Compensation Committee, but no Nominating
Committee. During fiscal 1996,2001, the Audit Committee consisted of
R. Warren Wagoner,David Hayden, William E. Logan and William A. Griffith. Its
function is to assist the President in the review of theour financial
performance and operations of the Company.operations. The Audit Committee met oncefour times during
the fiscal year ended April 30, 19962001 and all members of the Audit
Committee attended the meeting.
During fiscal 1996,2001, the Compensation Committee consisted of
the Board of Directors. Its function is to assist the President in
periodic reviews of the performance of management which in turn
leads to salary review and recommendations for salary adjustment.
The Compensation Committee met one time during the fiscal year
ended April 30, 19962001 and all members of the Audit
Committee attended the meeting.
The Board of Directors recommends a vote "FOR" each of Messrs.
Wagoner, Stewart, Logan, Griffith and Hayden for election as
directors of the Company.
TheButler National Corporation.
Our executive officers of the Company are elected each year at the annual meeting
of the Board of Directors held in conjunction with the annual meeting
of shareholders and at special meetings held during the year. The
executive officers are as follows:
Name Age Position
R. Warren Wagoner 44,49 Chairman of the Board of Directors
Clark D. Stewart 56,61 President and Chief Executive Officer
Jack L. Graham, 72, ViceLarry W. Franke 57 President Aircraft Modifications
Thomas E. Woodson, 58, Vice President, Avionicsof Avcon Industries, Inc.,
a wholly-owned subsidiary of
Butler National Corporation
Jon C. Fischrupp 56,61 President of Butler National Services,
Inc., a wholly-owned subsidiary of
the Company
Marvin J. Eisenbath, 44, President of R. F. Inc., a wholly-owned
subsidiary of the Company ("RFI")
Stephanie S. Ruskey, 31, Vice President,Butler National Corporation
Angela Seba 37 Chief Financial Officer
and Assistant Secretary
Edward J. Matukewicz, 48, Treasurer
William A. Griffith 49,54 Secretary
R. Warren Wagoner was General Manager, Am-Tech Metal
Fabrications, Inc. from 1982 to 1987. From 1987 to 1989, Mr.
Wagoner was President of Stelco, Inc. Mr. Wagoner was Sales
Manager for Yamazen Machine Tool, Inc. from March 1992 to March
1994. Mr. Wagoner was President of the Company from July 26, 1989,
to September 1, 1989. He became our Chairman of the Board of the Company on
August 30, 1989.
Clark D. Stewart was President of Tradewind Industries, Inc., a
manufacturing company, from 1979 to 1985. From 1986 to 1989, Mr.
Stewart was Executive Vice President of RO Corporation. In 1980, Mr.
Stewart became President of Tradewind Systems, Inc. He became our
President in September of 1989.
Larry W. Franke was Vice President and General Manager of Kansas
City Aviation Center from 1984 to 1992. From 1993 to 1994 he was
Vice President of theOperations and Sales for Marketlink, an aircraft
marketing company. Mr. Franke joined our Company in September 1989.
Jack L. GrahamJuly 1994 as
Director of Marketing and was promoted in August 1995 to Vice
President of Operations and Sales. Mr. Franke is currently President
of Avcon Industries, for 19 years
and joined the Company in December 1983, at the time of the
acquisition of Avcon Industries by the Company. Mr. Graham is
Vice President, Aircraft Modifications.
Thomas E. Woodson has been President of Plectron
Corporation since 1980. Mr. Woodson became General Manager
of Woodson Avionics, Inc. in February 1990, and Vice President of Avionics in November 1990.our Aircraft
Modifications segment.
Jon C. Fischrupp was President of Lauderdale Services, Inc. ("LSI")
from June 14, 1978, until May 1, 1986, at which time the
Companywe
acquired LSI and he became President of LSI (now known as Butler
National Services, Inc.).
Marvin J. Eisenbath was President of RFI from January 1988 to
April 1994, at which time the Company acquired RFI and he
continued as its President. Mr. EisenbathAngela Seba was the Vice Presidentcontroller of PurchasingA&M products, a subsidiary of SyscoFirst
Brands Corporation from 19811995 to 1987.
Stephanie S. Ruskey, CPA,1998. From 1998 to 2000 Ms. Seba was a
senior accountant with Arthur
Andersen LLPSenior Business Systems Analyst for Black & Veatch of Kansas City; the
largest privately held engineering firm in the United States. Ms. Seba
was the CFO of Peerless Prducts, Inc. a manufacturer of customized
windows from May 1987 until December 1990.2000 to 2001. Ms. RuskeySeba joined the Companyus in December, 1990,October of 2001 as controller and was
promoted to Vice President -
Chief Financial Officer in 1991.
Edward J. Matukewicz was Vice President of Master Fund
Company from 1987 to 1990 and Vice President of First Trust of
Mid America from 1990 to 1991. Mr. Matukewicz joined the
Company in May, 1991, as Treasurer.Officer.
William A. Griffith was Chief Executive Officer of Southwest Medical
Center (hospital) from 1981 to 1984. Mr. Griffith was a management
consultant for Health Pro from 1984 to 1986 and for Diversified Health
Companies from 1986 to 1989. Mr. Griffith has been President of
Griffith and Associates, management consulting, since 1984. Mr.
Griffith became our Secretary of the
Company in 1992.
Except for the following, based solely upon a review of Forms 3
and 4 and amendment thereto filed with the Company during the
most recent fiscal year and Form 5 and amendments thereto filed
with the Company with respect to its most recent fiscal year, all
reports required to be filed for the fiscal years ending April 30,
1995 and 1996 with the Securities and Exchange Commission
under Section 16 of the Securities Exchange Act of 1934, as
amended, by the Company's executive officers, directors and 10%
stockholders have been filed on a timely basis in accordance with
applicable rules. Ms. Brenda Brainard Shadwick has not filed a
Form 3 reflecting her employment with the Company (beginning
July 1994), a Form 4 reflecting her holdings of 8,333 shares of the
Company's common stock (restricted shares issued per her
employment agreement on June 24, 1994) or a Form 5 reflecting
her status as of April 30, 1995. On April 17, 1995, Ms.
Shadwick's employment was terminated.
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides certain summary information
concerning compensation paid or accrued by us to or on behalf of our
Chief Executive Officer and each of our other most highly compensated
executive officers whose salary and bonus exceeded $100,000
(determined as of the end of the last fiscal year) for the fiscal years
ended April 30, 2001, 2000, and 1999:
Summary Compensation Table
The following table provides certain summary information concerning
compensation paid or accrued by our Company to or on behalf of the Company'sour
Chief Executive Officer and each of the other most highly
compensated executive officers of theour Company whose salary and
bonus exceeded $100,000 (determined as of the end of the last fiscal
year) for the fiscal years ended April 30, 1996, 19952001, 2000 and 1994:
Summary Compensation Table
Name and Other Annual
Principal Compensation
Position Year Salary($) Bonus($) ($)
Clark D. Stewart,
President and
CEO, Director 96 212,075 0 0
95 195,590 0 0
94 166,185 0 0
Marvin J. Eisenbath,
President, R. F., Inc.
96 331,791 0 0
95 307,469 0 0
94 6,923 0 0
Brenda Brainard
Shadwick, Indian
Affairs counsel
96 N/A N/A N/A
95 133,709 N/A N/A
94 N/A N/A N/A
Long Term Compensation
Awards Payouts
Restricted Securities LTIP
Stock Underlying All Other
Awards(s) Options Payouts Compensation
($) (#) ($) ($)
0 50,000 0 0
0 100,000 0 0
0 970,000 0 0
0 0 0 0
0 0 0 0
N/A N/A N/A N/A
N/A N/A N/A N/A
24,999 N/A N/A N/A
N/A N/A N/A N/A
Represents options granted pursuant to the Company's 1989 Nonqualified
Stock Option Plan (100,000) in 1995 and 1993 Nonqualified Stock Option Plan
(20,000) and 1993 Nonqualified Stock Option Plan II (950,000) in 1994.
Mr. Eisenbath, President of RFI, became an executive officer of the
Company on April 22, 1994.
Ms. Shadwick, Indian Affairs counsel, employed July 5, 1994 to April 17,
1995. Ms. Shadwick was issued 8,333 shares of common stock with a value of
$24,999 on June 24, 1994. Ms. Shadwick received these shares on her
termination date.
1999:
SUMMARY COMPENSATION TABLE
Name and Principal Position
Clark D. Stewart, President and CEO, Director
Annual Compensation
Year Salary Bonus($) Other Annual Compensation ($)
01 237,986 --- ---
00 237,986 --- ---
99 218,743 --- ---
Long Term Compensation
Awards Payouts
Year Restricted Securities LTIP All Other
Stock Underlying Payouts Compensation
Award(s) Options ($) ($)
($) (no.) (1)
01 --- 250,000 --- ---
00 --- 575,000 --- ---
99 --- (820,000) --- ---
(1) Represents options granted or (cancelled) pursuant to our
Nonqualified Stock Option Plans 250,000 in 2001;
575,000 in 2000; and (820,000) in 1999.
OPTION GRANTS, IN LAST FISCAL YEAREXERCISES AND HOLDINGS
The following table provides further information concerning grants of
stock options pursuant to the 19951989 Nonqualified Stock Option Plan
during the fiscal 19962001 year (the only Plan under
which options were granted in such fiscal year ) to the named executive officers:
Individual Grants
Name Number of Percent of Total Exercise or
Securities Options Base Price
Underlying Granted to ($/Sh)
Options Employees in
Granted (#) Fiscal Year
Clark D. Stewart, 50,000 7.1% 2.00
Chief Executive
Officer
Marvin J. Eisenbath -0- N/A N/A
Brenda Brainard
Shadwick N/A N/A N/A
Expiration Date Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
for Option Term*
5% ($) 10% ($)
12/01/05 81,445 126,687
N/A N/A N/A
N/A N/A N/A
Except in the event of death or retirement for disability,
if Mr. Stewart ceases to be employed by the Company, his option
shall terminate immediately.OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Name and Position
Clark D. Stewart, Chief Executive Officer (1)
Number of Securities Underlying Options Granted
250,000
Percent of Total Options Granted to Employees in Fiscal Year
8.8%
Exercise or Base Price ($/Sh)
.09
Expiration Date
12/31/2010
Potential Realizable Value at Assumed Annual Rates of
Stock Price Appreciation for Option Term
5% ($) 10% ($)
0 10,000
(1) Except in the event of death or retirement for disability,
if Mr. Stewart ceases to be employed by us, his option shall
terminate. Upon death or retirement for disability, Mr. Stewart (or
his representative) shall have three months or one year, respectively,
following the date of death or retirement, as the case may be, in which to
exercise such options.
The option granted for 50,000 shares of Common Stock was
granted on December 1, 1995 from the 1995 Stock Option Plan. All such options are immediately exercisable.
* The dollar amounts set forth under these columns are the
result of the 5% and 10% rates set by the Securities and
Exchange
Commission and are not intended to forecast possible future
appreciation.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES
AT APRIL 30, 1996
The following table provides information with respect to the named
executive officers concerning options exercised and value
of unexercised
options held as of the end of the Company'sour last fiscal year (Aprilyear:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Name
Clark D. Stewart, Chief Executive Officer
Shares Acquired on Exercise (no.)
0
Value Realized ($)
0
Number of Securities Underlying Unexercised
Options at FY-End (no.)
Exercisable/Unexercisable
2,225,000 / 0
Value of Unexercised In-the-Money
Options at FY-End ($)
0/0
COMPENSATION OF DIRECTORS
Each non-officer director is entitled to a director's fee of $100 for
meetings of the Board of Directors which he attends. Officer-directors
are not entitled to receive fees for attendance at meetings.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS.
On April 30, 1996):
Name Shares Acquired on
Exercise (#) Value Realized ($)
Clark D. Stewart,
Chief Executive
Officer 400,000 340,000
Marvin J.
Eisenbath 0 0
Brenda Brainard
Shadwick N/A N/A
Number of Securities Underlying Value of Unexercised
Unexercised Options at FY-End (#) In-the-Money Options
at FY-End ($)
Exercisable/Unexercisable Exercisable/Unexercisable
1,120,000/0 43,750/0
0 0
N/A N/A
Based on the price of the Company's common stock at
the close of business on Tuesday, April 30, 1996 and the exercise
price of the options.
2001, we extended the employment agreement
through August 31, 2006 with Clark D. Stewart under the terms of
which Mr. Stewart was employed as our President and Chief Executive
Officer. The contract provides a minimum annual
salary of $265,700, $278,900, $292,900, $307,600, $322,980,
$339,129 respectively in the next six years. In the event Mr. Stewart is
terminated from employment with us other than "for cause",
Mr. Stewart shall receive as severance pay an amount equal to the
unpaid salary for the remainder of the term of the employment
agreement. Mr. Stewart is also granted an automobile allowance of
$600 per month.
AUDIT COMMITTEE REPORT - Item 7(d)(3)
Our Board of Directors has adopted a written charter for a
standing Audit Committee. A copy of the Audit Committee charter
is included as Appendix C to this Proxy. The Audit Committee
is comprised of Mr. David Hayden, Mr. William A. Griffith,
and Mr. William Logan. The Audit Committee has reviewed and
discussed the audited financial statements with our management.
The Audit Committee has also discussed with the independent auditors
the matters required to be discussed by SAS No. 61, and received
from the auditors disclosures regarding the auditors independence as
required by Independence Standards Board Standard No. 1.
Based upon the Audit Committees review of the audited financials,
the Audit Committee recommended to the Board of Directors that the
audited financials be included in our Annual Report on Form 10-K.
We have assessed the independence of the members of the Audit
Committee according to the definition of independence in Sections
303.01(B)(2)(a) and (3) of the New York Stock Exchange (NYSE)
listing standards. Mr. Logan and Mr. Hayden are independent within
the NYSE listing standard definition. Mr. Griffith is not
independent under the NYSE definition. Mr. Griffith is
our Secretary. Officers are not independent under the NYSE
definition.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is
comprised of Mr. Wagoner, Mr. Stewart, Mr. Griffith and Mr. Logan.
Mr. Wagoner is the Chairman, Mr. Stewart is the President and Chief
Executive Officer of theour Company, and Mr. Griffith is the Secretary of
theour Company.
During fiscal 1996,2001, the consulting firm of Griffith &
Associates was paid for business consulting services rendered to the
Company in the approximate amount of $47,000.$92,993. William A. Griffith,
who is a director for the Company,one of our directors, is a principal at Griffith &
Associates. It is anticipated that Griffith & Associates will continue to
provide services for theour Company.
During fiscal 1996, the Company paid2001, we did not pay consulting fees of
approximately $110,000 to Mr. Logan
for business consulting services. It is anticipated that Mr. Logan
will continue tomay provide services for the Company. During the 1995 fiscal year, salesus. Mr. Logan was granted an option to
Wendy's Hamburgerspurchase 500,000 shares of Kansas City, Inc. ("WHcommon stock at an exercise price of
KC, Inc.")
accounted$0.50 per share on November 2, 1998. Mr. Logan exercised this
option by agreeing to provide consulting services to us
for approximately 6%an additional three years without receiving any further cash
payments other than for out of pocket expenses. The cost of the
net sales ofconsulting services are charged to various projects including
advances under the Company
($790,000). William E. Logan, who is a director for the
Company, is Vice President and Treasurer of WH of KC, Inc.
Mr. Logan sold the WH of KC, Inc. restaurants as of June 3,
1994. The Company no longer provided temporary services
subsequent to June 3, 1994.Indian consulting agreements.
During fiscal 1996,2001, the consulting firm of Butler Financial
Corporation was paid for business consulting services rendered to the Companyus
in the approximate amount of $20,000.$56,000. R. Warren Wagoner,
who is a director for the Company,one of our directors, is a principal at Butler Financial
Corporation. It is anticipated that Butler Financial Corporation will
continue to provide services for the
Company.
During fiscal 1996, the Company paid rent payments totalling
approximately $30,000 to Eisenbath Properties, Inc. for office
space leased by RFI. Marvin J. Eisenbath, who is an officer of
the Company, owns Eisenbath Properties, Inc. It is anticipated
the Company will continue to lease office space from Eisenbath
Properties, Inc.us.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS, LITIGATION.
On March 17, 1994,April 30, 2001, we extended the Company entered into a five-year
employment
agreement through August 31, 2006 with Clark D. Stewart under the
terms of which Mr. Stewart was employed as theour President and Chief
Executive Officer of the Company at an initialOfficer. The contract provides a minimum
annual salary of $198,000 and a minimum salary of $208,000, $218,500,
$229,500 and $241,000,$265,700, $278,900, $292,900, $307,600, $322,980,
$339,129 respectively in years two through five.the next six years. In the event Mr. Stewart is
terminated from employment with theour Company other than "for cause,"cause",
Mr. Stewart shall receive as severance pay an amount equal to the
unpaid salary for the remainder of the term of the employment
agreement. Mr. Stewart wasis also granted an automobile allowance of
$600 per month.
On April 22, 1994, the Company entered into a five-year
employment agreement with Marvin J. Eisenbath under the terms
of which Mr. Eisenbath was employed at an annual salary of
$300,000 plus an annual incentive bonus based on the net profits
of the food distribution division. This incentive arrangement is
consistent with the incentive arrangements made with the
Company's other division managers. In the event Mr. Eisenbath
is terminated from employment with the Company other than
"for cause," Mr. Eisenbath shall receive as severance pay an
amount equal to the unpaid salary for the remainder of the term
of the employment agreement.
On June 6, 1994, the Company entered into a five-year
employment agreement with Brenda Brainard Shadwick under
the terms of which Ms. Shadwick was employed at an annual
salary of $150,000 plus additional compensation to be issued in
stock options or warrants having fair market value of $25,000.
The contract provided that in the event Ms. Shadwick was
terminated from employment with the Company other than "for
cause," Ms. Shadwick would receive as severance pay an amount
equal to the unpaid salary for the remainder of the term of the
employment agreement.
The Company terminated Ms. Shadwick's employment in April
1995. This individual filed a lawsuit against the Company, the
President of the Company and various corporate subsidiaries
alleging the Company wrongfully terminated the individual's
employment in breach of the contract. The suit was filed in
October, 1995, in State Court in Johnson County, Kansas. The
individual has asserted a claim for damages in excess of
$1,400,000. The individual had proposed a settlement offer for
$500,000, but has recently withdrawn the settlement offer. The
individual has withdrawn the suit in State Court in July 1996, and
has filed a substantially similar suit in Federal Court in the
District of Kansas. It is management's position that the Company
will defend the claim vigorously and in that pursuit the Company
has asserted a counterclaim against the individual for negligence
in the performance of the individual's professional duties.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
On an annual basis, the Compensation Committee reviews the
salaries and performance adjustments of the executive officers and
oversees the administration of the Company'sour compensation program.
In accordance with Securities and Exchange Commission rules
designed to enhance disclosure of companies' policies toward executive
compensation, the following report is submitted by the below listed
committee members in their capacity as the Board's Compensation
Committee. The report addresses theour Company's compensation policy
as it related to the executive officers for fiscal 1996.2001.
General Compensation Policy. The Compensation Committee
of the Board of Directors was, and continues to be, guided by a belief
that executive compensation should reflect the Company'sour performance (as
evidenced by revenue, operating ratio (operating expenses divided by
operating revenue), operating income and earnings per share), while at
the same time considering surrounding competitive pressures, retention
of key executive officers and individual performance as evidenced by
informal evaluations. The Compensation Committee has not yet
adopted a policy with respect to the $1,000,000 limitation on
deductibility of executive compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended.
19962001 Compensation. To accomplish the Company'sour compensation policy,
the executive compensation package integrates (i) annual base salary,
(ii) current year performance adjustments to such salary, and (iii) stock
option grants under the
Company'sour 1989, 1993 and 1995 and 1993 Plans. The
overall compensation policy, as implemented, endeavors to enhance theour
profitability of
the Company (and, thus, shareholder value) by tying the financial
interests of the management with those of the Company.our financial interests.
Base Salary. The Compensation Committee, upon the
recommendation of the CEO, initially determines the amount of
executive officer base salary based on factors such as prior level of pay,
quality of experience, responsibilities of position and salary levels of
similarly positioned executives in other companies.
For all officers, raises are determined subjectively by
recommendation of the CEO and which are approved by the
Compensation Committee. Such raises are based upon informal
evaluation by the CEO and, to a lesser extent, other executive officers.
Performance Adjustments. Once base salary has been
determined, the Compensation Committee divides the executive officers
into two groups: Operating Officers and Administrative Officers. The
Operating Officers consist of Mr. Stewart (CEO), Mr. GrahamFranke (Vice
President-Aircraft Modifications), Mr. WoodsonWagoner (Vice President-Avionics), Mr. Fischrupp (President-
BNSI)President-
Avionics), and Mr. Eisenbath (President-RFI). The Administrative
Officers consists of the remaining executive officers, Mrs. Ruskey
(Vice President-Chief Financial Officer) and Mr. Matukewicz
(Treasurer)Fischrupp, (President-BNSI). For Mr.
Fischrupp and Mr. Eisenbath, the Company
haswe have in place a Performance Plan which couples the
executive's cash compensation with specific improvements in the Company'sour
operating income. Each Performance Plan is specific to the Operating
Officer's segment. Generally, the incentive bonus is five percent (5%)
of the business segment net income before income taxes from the
business segment currently under the control of the officer. Business
segment net income is defined to include all ordinary and necessary
business expenses associated with the operations and financing of the
business segment but does not include an allocation of corporate
overhead.
In 1996,2001, Mr. Fischrupp and Mr. EisenbathFranke received performance
adjustments.
Administrative Officers do not participate in the Performance
Plan and, thus, do not receive a performance incentive bonus.
Stock Option Awards. The Compensation Committee may
also award stock options to executive officers under the 19951989, 1993 and
19931995 Plans. In general, the Committee believes that stock options are
an effective incentive for executive to create value for shareholders
since the value of an option bears a direct relationship to appreciation in
the Company'sour stock price. Obviously, when shareholder value decreases, the
stock options granted to executives either decrease in value or have no
value.
In 1996,2001, the Compensation Committee granted 410,0002,835,000 options to
executive officers.
President and CEO Compensation. Clark D. Stewart, our
President and CEO, of the Company, entered into a five yearhas an employment agreement with the Company.our Company
through August 31, 2006. The Compensation Committee granted to Mr.
Stewart 50,000250,000 options subjectively based upon his performance.
Summary. The Compensation Committee believes that theour
executive officers of the Company are dedicated to achieving significant improvements
in long-term financial performance and that the compensation policies
and programs contribute to achieving this senior management focus.
The Compensation Committee believes that the compensation levels
during 19962001 adequately reflect the Company'sour compensation goals and
policies.
The Compensation Committee report is submitted by:
Randal W. Wagoner
Clark D. Stewart
William A. Griffith
William E. Logan
STOCK PERFORMANCE GRAPH
In April 1994, the Company acquired R F, Inc., and thereby
entered into the Food Distribution Industry. Until April 1994,
the Company'sOur largest business segment was Temporary Services.
The Company entered into the Temporary Services segment in
December 1990. This segment became inactive on June 3, 1994,
due to the loss of its only customer.is Aircraft Modifications. Therefore,
in order to provide a representative companion of the Company'sour stock
performance, the following chart compares the cumulative stockholder
return on the Company's common stockour Common Stock for the last five years with the cumulative
return on the NASDAQOTCBB Stock Market Index and an industry peer group index (based upon
companies which are traded on a listed exchange) for each the
Temporary Services industry and the Food Distribution industry. The following chart assumes $100
invested May 1, 1990,2000, in each
of the above groups.group. The total return assumes the
reinvestment of dividends.
AGGREGATE AUDIT FEES DISCLOSURE
We retained Weaver & Martin, L.L.C. to perform the review of our
annual financial statements for the past fiscal year, and for review
of quarterly reports for that fiscal year. The aggregate fees billed
for professional services rendered by Weaver & Martin, L.L.C. for the
fiscal year ended April 30, 2001 were approximately $57,035.
INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal No. 2)
The CompanyWe have engaged Arthur Andersen LLPWeaver & Martin, L.L.C. to audit theour financial
statements for the year ended April 30, 1996,1999, 2000, 2001, and 1995.
Arthur Andersen LLP2002.
Weaver & Martin, L.L.C. was able to express an opinion on the
financial statements for the year ended April 30, 1996,1999, 2000, and 1995.2001.
Representatives of Arthur Andersen LLPWeaver & Martin, L.L.C. are expected to be present
at the Annual Meeting of Shareholders, and they will have an
opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
The Company hasWe selected Arthur Andersen LLPWeaver & Martin, L.L.C. to be the independent public
accountants for fiscal year 19972002 which ends April 31, 2002, and
recommendsrecommend that the appointment of the auditors be ratified by the
Shareholders. Although Shareholder approval is not required, it is the
policy of theour Board of Directors to request, whenever possible,
Shareholder ratification of the appointment or reappointment of
independent public accountants.
The Board of Directors recommends a vote "FOR" the shareholder
ratification of Arthur Andersen LLPWeaver & Martin, L.L.C. as the
Company'sour independent public
accountant.
CHANGE OF DOMICILE
(Proposal No. 3)
TheOur Board of Directors has recommended, subject to the approval
of theour stockholders of the Company and subject to the right of the Board of Directors to
determine not to proceed in certain circumstances, that the Company changes itswe change our
corporate domicile (i.e. state of incorporation) from the State of
MinnesotaDelaware to the State of DelawareKansas (the "Reincorporation") pursuant to the
Agreement and Plan of Merger (the "Merger Agreement") between theour
Company and Butler National Corporation Kansas, a DelawareKansas corporation
("Butler-Delaware"Butler-Kansas"). The sole purpose of the merger transaction is to
change our domicile from Delaware to Kansas. The following discussion
summarizes certain aspects of the Reincorporation and the Merger
Agreement. This summary is not intended to be complete and is subject
to, and qualified in its entirety by, reference to the "COMPARISON OF
MINNESOTADELAWARE AND DELAWAREKANSAS CORPORATE LAW" attached as Appendix A to this
Proxy Statement, the Merger Agreement, a copy of which is attached to
this Proxy Statement as Exhibit A, the CertificateAmended and Restated Articles
of Incorporation of Butler-DelawareButler-Kansas (the "Delaware Certificate""Kansas Articles"), a copy of
which is attached to this Proxy Statement as Exhibit B, and the Bylaws
of Butler-DelawareButler-Kansas (the "Delaware"Kansas Bylaws"), a copy of which is attached to
this Proxy Statement as Exhibit C. Copies of the Articlesour Certificate of
Incorporation and the Bylaws of the
Company (the "Minnesota Articles""Delaware Certificate" and the
"Minnesota"Delaware Bylaws," respectively) are available for inspection at theour
principal executive office of the Company and copies will be sent to shareholders,
without charge, upon oral or written request directed to: Stephanie S. Ruskey, Vice-President,William A.
Griffith, Secretary, Butler National Corporation, 1546 East Spruce Road,19920 W. 161st
Street, Olathe, Kansas 66061,66062, Telephone Number: (913) 780-9595.
In this discussion of the Reincorporation, the terms "Company" or
"Butler-Minnesota""Butler-Delaware" refer to theour existing MinnesotaDelaware corporation and the
term "Butler-
Delaware""Butler-Kansas" refers to the new DelawareKansas corporation which is
the proposed successor to Butler-Minnesota.Butler-Delaware.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND, FOR THE REASONS
DESCRIBED BELOW UNDER "PRINCIPAL REASONS FOR THE REINCORPORATION,"
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS APPROVE AND ADOPT THE
MERGER AGREEMENT AND THE REINCORPORATION PROPOSAL.
Principal Reasons for the Reincorporation
For many years the State of Delaware has followed a policy of
encouraging incorporation in that state and, in furtherance of that
policy, has adopted comprehensive, modern and flexible corporate laws
which are periodically updated and revised to meet changing business
needs. As a result, many corporations have been initially incorporated in Delaware or have subsequently
reincorporated in Delaware in a manner similar to that proposed
by the Company. Because of Delaware's prominence as a state
of incorporation for many corporations, the Delaware courts have
developed considerable expertise in dealing with
corporate issues and a substantial body of case law has developed
construing the Delaware General
Corporation Law ("Delaware Law") and establishing public
policies with respect to corporations incorporated in
Delaware. Consequently,We are one of such companies that elected to change domicile
to Delaware. While having favorable corporate policies, there are
considerable fees and expenses associated with maintaining a corporate
domicile in Delaware.
The corporation laws of the State of Kansas generally track the
Delaware Lawlaws. The source of most of the Kansas corporation statutes is
comparatively well knownDelaware law. The fees and understood. It is anticipatedexpenses associated with domicile of a
corporation in Kansas are generally less than the fees required for a
corporation in Delaware. The fees charged to Butler National Corporation
for the year ended December 31, 2000 by the State of Delaware for
franchise and filing fees was $150,020.00. The franchise fee that
as in the past, Delaware Law
will continuewe expect to be interpreted and explained in a numbercharged by the State of significant court decisions.Kansas upon reincorporation
is $2,500.00. The BoardState of Director believes that
reincorporation in Delaware should provide greater predictability
with respect toKansas does not have an annual filing fee
separate from the Company's corporate affairs.franchise fee. As one of the effectsanticipated results of the
proposed Reincorporation, the Companywe may be able to expand the scope of its indemnification of directors,
officers and key employees andsave money by having our
corporate domicile relocated to limit the liability of its
directors in a broader range of circumstances than permitted
under Minnesota Law.Kansas. See "COMPARISON OF MINNESOTADELAWARE
AND DELAWAREKANSAS CORPORATE LAW" attached as Appendix A to this Proxy
Statement.
The Board of Directors has
not viewed the increased protections permitted under Delaware
Law as a reason for recommending the Reincorporation. The
Board, however, believes that the Company will benefit from
having the ability to provide its directors, officers and employees
protections equivalent to those provided by other Delaware
corporations. Shareholders should note however that since
members of the Board of Directors will receive the benefit of
expanded indemnification provisions and limitations on liability,
the Board members may be viewed as having a personal interest
in the approval of the Reincorporation at the potential expense
of shareholders.
In addition, the CompanyAdditionally, we have no longer has any business operations in Minnesota,Delaware, and
consequently, no longer generally retainsdo not retain counsel licensed to practice law in
Minnesota.Delaware. Thus, the
Company haswe have been and will be (absent the Reincorporation)
required to incur additional expenses to retain MinnesotaDelaware counsel in
most transactions involving the Company Delaware,and to advise the
Companyus when issues of
MinnesotaDelaware Law arise.
Possible Disadvantages of Reincorporation
Shareholders should be aware, that the courts applying the Kansas
Corporation Statutes have not developed a history of rulings and
guidance that may be found with Delaware Law has been
publicly criticized on the grounds that it does not afford minority
shareholders all the same substantive rights and protections that
are available under the laws of a number of other states
(including Minnesota) and that,law. Additionally, as a result
of the proposed Reincorporation, the rights of shareholders and the
authorized stock will change in a
number of importantsome respects. For example if the
Reincorporation is consummated, the Company will not be
required in the future under Delaware Law to obtain shareholder
approval, or to grant class voting and appraisal rights, in
connection with certain kinds of mergers and corporate
reorganizations which under Minnesota Law would be subject to
those requirements. For information
regarding those and other material differences between MinnesotaDelaware Law
and DelawareKansas Law, see Appendix A attached to this Proxy Statement.
TheOur Board of Directors believes that the advantage of the
Reincorporation to the CompanyButler National Corporation and itsour shareholders
outweigh its possible disadvantages.
SHAREHOLDERS ARE URGED TO READ THE SUMMARY OF CERTAIN SIGNIFICANT
DIFFERENCES IN THE PROVISIONS OF MINNESOTADELAWARE AND DELAWAREKANSAS LAWS AFFECTING
THE RIGHTS AND INTERESTS OF SHAREHOLDERS SET FORTH IN APPENDIX A ATTACHED
TO THIS PROXY STATEMENT
Principal Features of the Reincorporation
The Reincorporation will be affected by the merger (the "Merger")
of Butler-MinnesotaButler-Delaware with and into Butler-Delaware,Butler-Kansas, which will beis
incorporated under DelawareKansas Law as a wholly-
ownedwholly-owned subsidiary of
Butler-MinnesotaButler-Delaware for purposes of the Merger. Butler-DelawareButler-Kansas will be the
surviving corporation in the Merger and will continue under the name
"Butler National Corporation". Butler-MinnesotaButler-Delaware will cease to exist as
result of the Merger.
The Merger will not become effective until approval of the
Reincorporation Proposal by the holders of a majority of theour
outstanding shares of Common Stock is obtained, and the Merger
Agreement or an appropriate certificateCertificate of mergerMerger is filed with the
Secretary of State of the State of DelawareKansas and articlesCertificate of mergerMerger with
the Secretary of State of the State of Minnesota.Delaware.
At the effective time of the Merger, the Companywe will be governed by the
Kansas Articles, the Kansas Bylaws, and Kansas Law. A summary of
the differences between the Kansas Articles and Bylaws and the
Delaware Certificate the
Delawareand Bylaws and Delaware Law.is described below.
Upon completion of the Merger, each outstanding share of
Common Stock, par value $.01$0.01 per share, of Butler-MinnesotaButler-Delaware will be
converted into one share of Common Stock, $.01$0.01 par value, of
Butler-Delaware.Butler-Kansas. As a result, the existing shareholders of Butler-MinnesotaButler-
Delaware will automatically become shareholders of Butler-Kansas,
Butler-Delaware Butler-Minnesota will cease to exist and Butler-
DelawareButler-Kansas will continue to
operate theour business of the Company under the name "Butler National Corporation."
Butler-MinnesotaButler-Delaware stock certificates will be deemed to represent the same
number of Butler-DelawareButler-Kansas shares as were represented by such Butler-
MinnesotaDelaware stock certificates prior to the Reincorporation. IT WILL
NOT BE NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR BUTLER-MINNESOTABUTLER-Delaware
STOCK CERTIFICATES FOR BUTLER-DELAWAREBUTLER-Kansas STOCK CERTIFICATES. Following the
Reincorporation, previously outstanding Butler-MinnesotaButler-Delaware stock will
constitute "good delivery" in connection with sales through a broker, or
otherwise, of shares of Butler-Delaware.Butler-Kansas. The Butler-DelawareButler-Kansas Common
Stock willis expected to be listed on the NASDAQ Small CapOTCBB Market as the Common
Stock of Butler-MinnesotaButler-Delaware is presently listed. Upon completion of the
Reincorporation, the authorized capital stock of Butler-DelawareButler-Kansas will
consist of 40,000,000100,000,000 shares of Common Stock, $.01$0.01 par value
and 200,00050,000,000 shares of Preferred Stock $5$5.00 par value, which is
identical toan increase in the authorized capital stock of Butler-Minnesota.compared to Butler-
Delaware.
The Reincorporation will not result in any change to theour daily
business operations of the Company or the present location of theour principal executive
offices of the Company in Olathe, Kansas. The consolidated financial condition and
results of operations of Butler-DelawareButler-Kansas immediately after the
consummation of the Reincorporation will be identical to that of Butler-MinnesotaButler-
Delaware immediately prior to the consummation of the Reincorporation.
In addition,Additionally, at the effective time of the Merger, the Board of Directors
of Butler-DelawareButler-Kansas will consist of those persons who currently are our
directors, of the Company, all of whom are nominees for re-election at theour Annual Meeting.
In addition, the individuals serving as executive officers of Butler-MinnesotaButler-
Delaware immediately prior to the Merger will serve as executive
officers of Butler-DelawareButler-Kansas upon the effectiveness of the Merger.
Pursuant to the Merger Agreement, each option or right to
purchase a share of Butler-MinnesotaButler-Delaware Common Stock outstanding
immediately prior to the effective time of the Merger will become an
option or right to purchase a share of Butler-DelawareButler-Kansas Common Stock
upon the same terms and conditions as existed immediately prior to the
effective time of the Merger. Future options and rights, if any, granted
under the 1989 Nonqualified Option Plan, the 1993 Nonqualified
Option Plan I, the 1993 Nonqualified Option Plan II and the 1995
Nonqualified Option Plan (collectively the "Plans") or otherwise
will be for shares of Butler-DelawareButler-Kansas Common Stock. Butler-Kansas
has adopted and will assume the obligations and benefits of Butler-
Delaware under the Rights Agreement ("Rights Agreement"),
dated as of October 26, 1998 between Butler National Corporation
and Wells Fargo Shareowner Services, as Rights Agent.
A vote for approval and adoption of the Merger Agreement and
Reincorporation Proposal will also constitute specific approval of the
Delaware CertificateKansas Articles and the DelawareKansas Bylaws. In addition, a vote for
approval and adoption of the Merger Agreement and Reincorporation
Proposal will constitute approval of the assumption by Butler-DelawareButler-Kansas of
the Plans and agreements of Butler-Minnesota,Butler-Delaware, and the substitution of
shares of Butler-
DelawareButler-Kansas Common Stock for shares of Butler-MinnesotaButler-Delaware
Common Stock as the security to be received upon exercise of options,
if any, granted in the future under the Plans.
Confirmation and adoption of the Merger Agreement and the
Reincorporation Proposal will affect certain rights of shareholders.
Accordingly, shareholders are urged to read carefully this entire
Proxy Statement, the Appendices and the Exhibits to the Proxy
Statement before voting.
Dissenters' Rights of Appraisal
The holders of the Company'sour Common Stock have the right to dissent from the
Reincorporation and receive from the Companyus payment in cash the value of the
shares. In general, to exercise dissenters' rights under MinnesotaDelaware Law, a
dissenting shareholder must file with the Companyour Secretary before the vote on
the proposed action a written notice of intent to demand the fair value
of the shares owned by the shareholder and must not vote the shares in
favor of the proposed action. The failure by a holder to vote against the
Reincorporation will not constitute a waiver of the holder's appraisal
rights. A vote against the Reincorporation by a holder of Common
Stock will not satisfy the required notice requirement under MinnesotaDelaware
Law. After the proposed action has been approved by the shareholders
the
Companywe must send a notice to all shareholders who have properly filed
notices of objection and not voted in favor of the Reincorporation that
the action has been approved and providing them a copy of the
MinnesotaDelaware Law regarding exercise of dissenter's rights. A dissenting
shareholder desiring to exercise appraisal rights must then demand
payment and deposit certificated shares or comply with any restrictions
on transfer of uncertificated shares within 30 days after receipt from the
Companyus
of the notice that the proposed action has been approved by the required
vote of the shareholders. After the corporate action takes effect, the Companywe
must remit to each dissenting shareholder who has complied with the
requirements of law, the amount the Company estimatesthat we estimate to be the fair value of
the shares. If a dissenter believes that the amount remitted is less than
the fair value of the shares plus interest, the dissenter shall give written
notice to the corporationour Secretary of the dissenters' own estimate of the fair value
of the shares plus interest within 30 days after the Company mailswe mail the remittance.
The foregoing is merely a summary of the procedures for a
shareholder to exercise dissenters' rights, which summary is qualified in
its entirety by reference to the provisions of MinnesotaDelaware Law setting forth
the procedures for a holder of Companyour Common Stock to exercise appraisal
rights which is attached to this Proxy Statement as Appendix B. If the
Reincorporation is not consummated then no shareholder will be
entitled to dissenters' rights.
Amendment, Deferral or Termination of the Merger Agreement
If approved by the shareholders at the Annual Meeting, it is
anticipated that the Reincorporation will become effective at the earliest
practicable date. However, the Merger Agreement provides that the
Merger Agreement may be amended, modified or supplemented before
or after approval by the shareholders of
the Company;our shareholders; but no such amendment,
modification or supplement may be made if it would have a material
adverse effect upon the rights of the Company'sour shareholders unless it has been
approved by the shareholders. The Merger Agreement also provides
that the Companywe may terminate and abandon the Merger or defer its
consummation for a reasonable period, notwithstanding shareholder
approval, if in the opinion of the Board of Directors or, in the case of
deferral, of an authorized officer, such action would be in theour best
interests of the Company
and its shareholders.our shareholders best interests. The Merger Agreement
provides that the consummation of the Merger is subject to certain
conditions, including the absence of pending or threatened litigation
regarding the Reincorporation. In addition, theour Board of Directors of the Company has
indicated that it will likely terminate the Reincorporation if the Company haswe have
received notices of exercise of appraisal rights, with respect to, in
excess of 1% of the shares of the Common Stock of the Companyour outstanding.
Federal Income Tax Consequences of the Reincorporation
The Company has been advised by counsel that, forFor federal income tax purposes, no gain or loss will be recognized
by the holders of Common Stock or options to purchase Common Stock as a
result of the consummation of the Reincorporation and no gain or loss
will be recognized by Butler-MinnesotaButler-Delaware or Butler-
Delaware.Butler-Kansas. Each holder of
Common Stock will have the same basis in the Butler-DelawareButler-Kansas Common
Stock received pursuant to the Reincorporation as he had in the
Common Stock held immediately prior to the Reincorporation, and his
holding period with respect to the Butler-DelawareButler-Kansas Common Stock will
include the period during which he held the corresponding Common
Stock, so long as the Common Stock was held as a capital asset at the
time of consummation of the Reincorporation.
ALTHOUGH IT IS NOT ANTICIPATED THAT STATE OR LOCAL INCOME TAX
CONSEQUENCES TO SHAREHOLDERS WILL VARY FROM THE FEDERAL INCOME TAX
CONSEQUENCES DESCRIBED ABOVE, SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS AS TO THE EFFECT OF THE REINCORPORATION UNDER STATE, LOCAL
OR FOREIGN INCOME TAX LAWS.
Butler-Minnesota has also been advised by legal tax counsel that
Butler-MinnesotaButler-Delaware will not recognize gain or loss for Federal income tax
purposes as a result of the Merger, and that Butler-DelawareButler-Kansas will succeed
without adjustment to the tax attributes of Butler-Minnesota.Butler-Delaware. Butler-
MinnesotaDelaware is currently subject to state income taxation in Minnesota.Delaware. If
the Reincorporation is approved, Butler-DelawareButler-Kansas will be obligated to pay
an annual franchise tax in Kansas and no longer be taxed in Delaware,
which the Company believeswe believe to be immaterial.beneficial.
Articles of Incorporation
The Kansas Articles provide for an increase in the number of
authorized shares to 100,000,000 shares of Common Stock and
50,000,000 shares of Preferred Stock. The par value of the Butler-
Kansas common stock is $0.01 and preferred stock is $5.00.
Vote Required and Board of Directors' Recommendation
The Merger Agreement and the Reincorporation Proposal have
been approved by the Board of Directors of Butler-Minnesota.Butler-Delaware. In order
to approve and adopt the Merger Agreement and the Reincorporation
Proposal, the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is required.
The Board of Directors unanimously recommends that the
shareholders vote "FOR" the approval and adoption of the Merger
Agreement and the Reincorporation Proposal.
OTHER MATTERS
Management knows of no other matters that will be presented at
the meeting. If any other matter arises at the meeting, it is intended that
the shares represented by the proxies in the accompanying form will be
voted in accordance with the judgment of the persons named in the
proxy.
TheOur Annual Report of the Company for the fiscal year 19962001 is enclosed. The 19962001
Annual Report includes the Annual Report on Form 10-K containing the Company'sour
financial statements for the fiscal year ended April 30, 1996.2001.
A copy of Form 10-K and the Annual Report as we have filed by the
Company
with the Securities and Exchange Commission, will be
furnished without charge to any shareholder who requests it in
writing to the Companyus at the address noted on the first page of
this Statement.
By Order of the Board of Directors
WILLIAM A. GRIFFITH, Secretary
APPENDIX A
COMPARISON OF MINNESOTADELAWARE AND DELAWAREKANSAS CORPORATE LAW
Minnesota LawPURPOSES AND EFFECTS OF CERTAIN PROVISIONS OF BUTLER NATIONAL-KANSAS
ARTICLES OF INCORPORATION, BY-LAWS AND KANSAS STATUTORY LAW
General
In a change of our domicile from Delaware to Kansas, the resulting
Kansas corporation will have different provisions for the Kansas
Articles and Bylaws compared to the Delaware Certificate and Bylaws.
A description of certain material differences between the Kansas
Articles and Kansas Bylaws is provided in the following sections.
Articles of Incorporation
Authorized Shares
Kansas Articles generally track the provisions of the Delaware
Certificate of Incorporation. In addition to the changes in referencing
the Kansas Code instead of the Delaware Code, there is an increase in
the number of authorized shares of common and preferred stock.
The number of authorized shares is increased in the Kansas Articles
to 100,000,000 shares of Common Stock and 50,000,000 of Preferred
Stock.
The foregoing description of changes in the provisions of the Amended
and Restated Articles of Incorporation does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
Amended and Restated Articles of Incorporation, including definitions of
certain terms in the document. A copy of the Kansas Articles are attached
as Exhibit B.
Kansas Bylaws
The Kansas Bylaws generally track the Delaware Bylaws. The
substantive differences between the bylaws is the reference to
Kansas statutes in the Kansas Bylaws and Delaware Law differstatutes in the
Delaware Bylaws.
Forms of the Kansas Articles and Bylaws are attached as Exhibits
B and C.
The foregoing description of certain provisions of the Kansas
Articles and the Bylaws does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the
Kansas Articles and the Bylaws, including definitions of certain
terms in each respective document.
Statutory Differences between the Kansas and Delaware Corporation Codes
Delaware Corporate Code and Kansas Corporate Code are similar
in many respects, and
consequently,however, the exact wording of each states
corresponding code is not identical. Therefore, it is not practical to
summarize all of the differences.differences between Kansas and Delaware Law.
The following, however, is a summary of certain significant differences
in such laws which may affect the rights and interests of the Company'sour
shareholders as a result of the Reincorporation.
Vote Required for Certain Mergers and ConsolidationsCorporate Powers
Kansas Statutes Annotated "K.S.A." Section 17-6102 generally
tracks the language of Section 122 of the Delaware Law relatingCode. However,
Section 122(17) expressly gives a corporation the power to mergers and other corporate
reorganizationsrenounce
any interest or expectancy of the corporation in, or being offered an
opportunity to participate in, specified business opportunities or
specified classes or categories of business opportunities that are
presented to the corporation or one or more of its officers, directors or
stockholders. There is no analogous provision in K.S.A. 17-6102, but
the Kansas Code does not prohibit such action.
Committees of the Board of Directors
Delaware Code Section 141 differs from Minnesota LawK.S.A. 17-6301 in that
the Delaware Code limits the powers of committees of the Board of
Directors if the company was incorporated after July 1, 1996, or the
Board of Directors by resolution adopts the limiting provision.
Presently, the Kansas Code Section, 17-6301, tracks the Delaware
provision for incorporations prior to July 1, 1996 that have not adopted
the limitations on committees. The Kansas Code expressly allows
committees, to the extent authorized by resolution of the Board of
Directors, to provide for the issuance of shares of stock, fix the
designations and preferences or rights of shares related to dividends,
redemption, dissolution, any distribution of assets or the conversion
into, or the exchange of such shares for, shares of any other class or
classes or any other series of the same or any other class or classes of
stock of the corporation, or fix the numbers of shares of any series of
stock or authorized the increase or decrease of the shares of any series
of stock.
Indemnification of officers, directors, employees and agents
Delaware Code Section 145(k) expressly gives the state court
exclusive jurisdiction to resolve disputes for the advancement of
expenses or indemnification brought under the indemnification
provision of the code, any bylaw, agreement, vote of stockholders or
otherwise. The Kansas Code has no such express provision for exclusive
jurisdiction, but the Kansas state courts implicitly have the power to
resolve the disputes.
Taxation of Shares of Stock
Delaware Code Section 159 expressly prohibits the State of
Delaware from taxing stock held by non-residents. The Kansas
equivalent code section does not address taxation of stock held by non-
residents.
Liability of Stockholder for Stock Not Paid In Full
Under the Kansas Code, Section 17-7101 and Section 60-511, the
Statue of Limitations for a claim for the unpaid balance of consideration
for the issuance of stock shares is five years. The equivalent Delaware
Code provision, Section 162, has a six-year statute of limitation.
Dividends; Payment
The Kansas Code, Section 17-6420, generally tracks the language
of Section 170 of the Delaware Code related to the payment of
dividends. Unlike the Kansas Code, the Delaware Code expressly
provides that nothing in the code section shall invalidate or otherwise
affect a note, debenture or other obligation of the corporation paid by it
as a dividend on shares of its stock, or any payment made thereon, if at
the time of such note, debenture or obligation was delivered by the
corporation, and the corporation had either surplus or net profits from
which the dividend could be lawfully paid. The Kansas Code does not
contain an equivalent express statement.
Declaration and Payment of Dividends
Both the Kansas Code and Delaware Code require that if dividends
are paid in unissued capital stock, then the Board of Directors shall
designate as capital, an amount which is not less than the aggregate par
value being declared as a dividend. Delaware Code also expressly
states that no such designation as capital is necessary if shares are being
distributed pursuant to a split-up or division of its stock rather than a
payment of a dividend payable in stock. The equivalent Kansas Code
provision is silent about designations in a numbersplit-up or a non-dividend
division of respects. Generally, Minnesota Law requiresstock.
Liability of Directors for Unlawful Dividend, Stock Purchase or
Redemption
Section 17-6424 of the Kansas Code generally tracks the language
of Section 174 of the Delaware Code except for the statute of
limitations for the unlawful payment of a shareholder vote
in more situations thandividend or unlawful stock
purchase or unlawful redemption. The Delaware Code provides for a
six-year statute of limitations. The similar Kansas Code statute of
limitations is three years.
Restrictions on the Transfer and Ownership of Securities
Delaware Code section 202 expressly states that restrictions may
be placed on the amount of the corporation's securities that may be
owned by any person or group of persons. The analogous Kansas Code
Section, K.S.A. 17-6426, does Delaware Law. Both Minnesotanot expressly provide for that restriction.
However, the restriction may be implied.
Additionally, these sections of both the Kansas and Delaware
LawCodes describe when restrictions on securities are permitted. Section
202 of the Delaware Code permits a securities restriction that obligates
the holder of restricted securities to sell or transfer an amount of
restricted securities to the corporation or to any other person.
Delaware Code also authorizes a restriction allowing the automatic sale
or transfer, or that causes the automatic sale or transfer of an amount of
the restricted securities to the corporation or any other person. The
Kansas Code provision, K.S.A. 17-6426, governing restrictions, does
not have a provision that recognizes a restriction that would obligate a
sale or transfer, or cause an automatic sale or transfer of a restricted
security from a security holder.
The Kansas Code is also more vague about reasonable purposes for
restrictions on the transfer securities, registration of transfer of
securities, and the amount of securities that may be owned by a group
or person. The Delaware Code lists specific reasons for restrictions
that are presumptively reasonable. Under the Kansas Code, any
restriction on the transfer of securities to maintain sub-chapter S status
of the United States Internal Revenue Code or for maintaining any other
tax advantage to the corporation is conclusively presumed to be a
reasonable purpose.
Meeting of Stockholders
Section K.S.A. 17-6501 provides that if the bylaws do not provide
for a shareholder vote (exceptlocation for an annual meeting, the location will be at the
registered office. The analogous Delaware Code provision provides for
an annual meeting location as indicated
below anddesignated by the Board of Directors if
not otherwise specified. The Kansas Bylaws specifically provide for
certain "short-form mergers" between a parent
corporation and its 90 percent owned subsidiaries) of both the acquiring and acquired corporation to approve mergers andlocation of the selling corporationannual meeting to be determined by the Board of
Directors.
The Delaware Code also allows for attendance at meetings by
remote communication and electronic submission of ballots. The
Kansas Code does not specify such an option. The Kansas Code only
requires an annual meeting in any year in which the election of directors
is required to be acted upon under the Investment Company Act of
1940.
Voting Rights of Stockholders; Proxies
Section 212 of the Delaware Code contains a provision for the
sale bydetermination of validity of electronic submission of documents from
stockholders. Because Kansas does not have a corporationprovision for the
electronic submission of all or
substantially all of its assets. Both Minnesota Lawdocuments and Delaware
Law provide for a shareholder vote to approve the dissolution of
a corporation. In addition, Minnesota Law requires the
affirmative vote of a majorityballots, there is no equivalent
Kansas Code provision.
Voting Trusts and Other Voting Agreements
Section K.S.A. 17-6508 of the outstanding shares inKansas Code limits the length of
time to ten (10) years for the term of an agreement that a varietystockholder
may transfer capital stock to another for the purpose of transactionsvoting. Under
the Kansas provision, the voting trust agreement as originally fixed or
extended, maybe extended by one or more fully set forth below.beneficiaries by written
agreement with consent of the trustees within the two years prior to
expiration of any voting trust agreement. Delaware LawCode, section 218
does not requirespecify a shareholder votetime limit or renewal limitation.
List of Stockholders Entitled To Vote
Section 219 of the surviving corporation in a merger if (i) the merger agreement
does not amend the existing certificateDelaware Code provides that lists of
incorporation; (ii) each
outstanding or treasury share of the surviving corporation in the
merger is unchanged after the merger; and (iii) the number of
shares to be issued by the surviving corporation in the merger
does not exceed 20 percent of the shares outstanding immediately
prior to such issuance. Minnesota Law contains a similar
exception to its voting requirements for reorganizations if (i) the
articles of the corporation will not be amended; (ii) each holder
of shares that were outstanding immediately before the effective
time of the transaction will hold the same number of shares with
identical rights immediately thereafter; (iii) the voting power of
the outstanding sharesstockholders entitled to vote immediately aftermay be provided on a reasonably
accessible electronic network (with instructions given related to
accessing the merger, pluslist at the voting powertime of notice of the shares entitled to vote
issuable on conversionmeeting) or during
ordinary business hours at the principal place of or on the exercise of rights to
purchase, securities issued in the transaction, will not exceed by
more than 20 percent, the voting powerbusiness of the
outstanding shares
entitledCorporation. The Kansas code does not have an equivalent provision.
Consent of Stockholders in Lieu of Meeting
Section K.S.A. 17-6518 states that unless the Articles of
Incorporation provide otherwise, any action that is required by
Kansas law to be accomplished at an annual or special meeting of
stockholders may only be taken without a meeting, without prior notice
and without a vote, immediately beforeif consent in writing, setting forth the transaction; and (iv) the
number of participating shares immediately after the merger, plus
the number of participating shares issuable on conversion of, or
on the exercise of rights to purchase, securities issued in the
transaction, will not exceedaction so
taken is signed by more than 20 percent, the number
of participating shares immediately before the transaction.
Under Delaware Law, a corporation may sell all or substantially all of its assets with the approvalholders of a majority of the outstanding stock entitled to vote
thereon. Minnesota Lawon the action. Delaware Code, section 228 only requires the approval of a majoritywritten
consent of the votingminimum number of shares (votes) that would be
necessary to authorize or take such action at a meeting at which all
shares entitled to vote on the action would be present.
Reduction of Capital
Section 244 of the Delaware Code expressly allows the Board of
Directors to reduce capital by the conversion or exchange of
outstanding capital or capital represented by the shares being converted
to the extent that such capital exceeds the total aggregate par value or
the stated capital of any previously unissued shares issuable upon such
conversion or exchange. The analogous Kansas Code provision, K.S.A.
17-6604, does not expressly address this situation.
Merger or Consolidation
Section K.S.A. 17-6709 of the Kansas Code expressly provides
that a company cannot merge or consolidate until all corporate fees and
taxes due to the state have been paid. The analogous Delaware Code
provision, Section 259, does expressly not include this requirement.
Business Combinations
The language of section 203 of the Delaware Code provides that
an amendment to the certificate of incorporation or bylaws pursuant to
Section 203 shall be immediately effective if the corporation has never
had stock on a national securities exchange (including quotation by
NASDAQ) or more that 2,000 stockholders, and has not elected by a
provision in its original certificate of incorporation to be governed by
section 203. The similar Kansas Code section, K.S.A. 12,100, does not
expressly provide for such a rule. The Delaware Code business
combination section also provides that the business combination
restrictions do not apply when a business combination is with an
interested stockholder who became an interested stockholder prior to
the effective date of the amendment of the certificate of incorporation
or bylaws adopting the restriction against business combinations.
Dissolution by Court Order
Section 285 of the Delaware Code provides for the filing of a court
ordered dissolution decree or judgment with the Register in the
Chancery of the county in which the decree or judgment was entered.
The Kansas Code provisions do not have a similar requirement.
APPENDIX B
Sec. 262. Appraisal rights.
(a) Any stockholder of a corporation of this State who holds
shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares,
who continuously holds such shares through the effective date
of the merger or consolidation, who has other compiled with
subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in
writing pursuant to Sec. 228 of this title shall be entitled to an
appraisal by the Court of Chancery of the fair value of the
stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record
of stock in a stock corporation and also a member of record of
a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt
or other instrument issued by a depository representing an
interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or
consolidation to be effected pursuant to Sec. 251 (other than a
merger effected pursuant to Sec. 251(g) of this title), Sec. 252,
Sec. 254, Sec. 257, Sec. 258, Sec. 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or
series of stock, which stock, or depository receipts in
respect thereof, at the record date fixed to determine the
stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of
merger or consolidation, were either (i) listed on a
national securities exchange or designated as a national
market system security on an interdealer quotation
system by the National Association of Securities Dealers,
Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be
available for any shares of stock of the constituent
corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of
the surviving corporation as provided in subsection (f) of
Sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for
the shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation
pursuant to Sec. 251, 252, 254, 257, 258, 263 and 264 of
this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or
depository receipts in respect thereof;
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares of
stock (or depository receipts in respect thereof) or
depository receipts at the effective date of the merger
or consolidation will be either listed on a national
securities exchange or designated as a national market
system security on an interdealer quotation system by
the National Association of Securities Dealers, Inc. or
held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing
subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or
fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under Sec. 253
of this title is not owned by the parent corporation
immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware
corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the
shares of any class or series of its stock as a result of an
amendment to its certificate of incorporation, any merger or
consolidation in which the corporation is a constituent
corporation or the sale of all or substantially all of the corporate assets including
goodwill, not in the usual and regular course of business.
Class Vote for Certain Reorganizations
With certain exceptions, Minnesota Law requires that a merger
or reorganization and certain sales of assets or similar
transactions be approved by a majority vote of each class or series
of shares outstanding and entitled to vote if any provision of
the plan would, if contained in a proposed amendment to the articles,
entitle the class or series of shares to vote as a class or series,
and, in an exchange, if the class or series is included in the
exchange. Delaware Law generally does not require class voting,
except in circumstances where the transaction involves an
amendment tocorporation. If the certificate of incorporation contains
such a provision, the procedures of this section, including
those set forth in subsections (d) and (e) of this section, shall
apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
would
increaseappraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for
which appraisal rights are available pursuant to
subsection (b) or decrease the aggregate number of authorized shares
of the class, increase(c) hereof that appraisal rights are
available for any or decrease the par valueall of the shares of the constituent
corporations, and shall include in such notice a copy of
this section. Each stockholder electing to demand the
appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger
or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to
demand the appraisal of such stockholder's shares. A
proxy or vote against the merger or consolidation shall
not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective
date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of
each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to
228 or 253 of this title, each constituent corporation,
either before the effective date of the merger or
consolidation or within ten days thereafter, shall notify
each of the holders of any class or alter or change the powers, preferences or specialseries of stock of such
constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and
that appraisal rights are available for any or all shares of
such class or series of stock of such constituent
corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or
after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting
corporation to all such holders of any class or series of
stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or
after the effective date of the merger or consolidation,
shall, also notify such stockholders of the effective date
of the merger or consolidation. Any stockholder entitled
to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the
surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to
demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before
the effective date of the merger or consolidation
notifying each of the holders of any class or series of
stock of such constituent corporation that are entitled to
appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such
holders on or within 10 days after such effective date;
provided, however, that if such second notice is sent
more than 20 days following the sending of the first
notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who
has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the
secretary or assistant secretary or of the transfer agent of
the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to
receive either notice, each constituent corporation may
fix, in advance, a record date that shall be not more than
10 days prior to the date the notice is given, provided,
that if the notice is given on or after the effective date of
the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be
the close of business on the day next preceding the day
on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any
stockholder who has complied with subsections (a) and (d)
hereof and who is otherwise entitled to appraisal rights, may
file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time
within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw
such stockholder's demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within 120
days after the effective date of the merger or consolidation,
any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger
or resulting from the consolidation a statement setting forth the
aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of
such shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholder's written
request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection
(d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service
of a copy thereof shall be made upon the surviving or resulting
corporation, which shall within 20 days after such service file
in the office of the Register in Chancery in which the petition
was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for
their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting
corporation. If the petition shall be filed by the surviving or
resulting corporation, the petition shall be accompanied by
such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place
fixed for the hearing of such petition by registered or certified
mail to the surviving or resulting corporation and to the
stockholders shown on the list at the addresses therein stated.
Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington,
Delaware or such publication as the Court deems advisable.
The forms of the notices by mail and by publication shall be
approved by the Court, and the costs thereof shall be borne by
the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who
have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value
exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation,
together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value. In determining such
fair value, the Court shall take into account all relevant factors.
In determining the fair rate of interest, the Court may consider
all relevant factors, including the rate of interest which the
surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon
application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, permit discovery or other
pretrial proceedings and may proceed to trial upon the
appraisal prior to the final determination of the stockholder
entitled to an appraisal. Any stockholder whose name appears
on the list filed by the surviving or resulting corporation
pursuant to subsection (f) of this section and who has
submitted such stockholder's certificates of stock to the
Register of Chancery, if such is required, may participate fully
in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case
of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender
to the corporation of the certificates representing such stock.
The Court's decree may be enforced as other decrees in the
Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court
and taxed upon the parties as the Court deems equitable in the
circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against
the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal
rights as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock
(except dividends or other distributions payable to
stockholders of record at a date which is prior to the effective
date of the merger or consolidation); provided, however, that if
no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such
stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of
the merger or consolidation as provided in subsection (e) of
this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to
any stockholder without the approval of the Court, and such
approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the class so assurviving or resulting corporation to affect them adversely.
Anti-Takeover Laws
Delaware Law provides somewhat less protectionwhich
the shares of such objecting stockholders would have been
converted had they assented to the
Company against potentially undesirable takeovers than
Minnesota Law. In general, Section 203 of Delaware Law
("Section 203") prevents an "Interested Stockholder" (which is
defined in Section 203 generally as any person that, individually
or with others, owns 15 percent or more of the outstanding voting
securities of a corporation), from engaging in a "Business
Combination" (which is defined to include, among other
transactions, any merger or consolidation
shall have the status of authorized and unissued shares of the
surviving or resulting corporation.
(8 Del. C. 1953, Sec. 262; 56 Del. Laws, c. 50; 56 Del. Laws,
c. 186, Sec. 24; 57 Del. Laws, c. 148, Sec. 27-29; 59 Del.
Laws, c. 106, Sec. 12; 60 Del. Laws, c. 371, Sec. 3-12; 63 Del.
Laws c. 25, Sec. 14; 63 Del. Laws, c. 152, Sec. 1, 2; 64 Del.
Laws, c. 112, Sec. 46-54; 66 Del. Laws, c. 136, Sec. 30-32; 66
Del. Laws, c. 352, Sec. 9; 67 Del. Laws, c. 376, Sec. 19, 20;
68 Del. Laws, c. 337, Sec. 3, 4; 69 Del. Laws, c. 61, Sec.10;
69 Del. Laws, c. 262, Sec. 1-9; 70 Del. Laws, c. 79, Sec. 16;
70 Del. Laws, c. 186, Sec. 1; 70 Del. Laws, c. 299, Sec. 2, 3;
70 Del. Laws, c. 349, Sec. 22; 71 Del. Laws, c. 120, Sec. 15;
71 Del. Laws, c. 339, Sec. 49-52.)
APPENDIX C
AUDIT COMMITTEE CHARTER BUTLER NATIONAL CORPORATION
The Board of Directors Butler National Corporation (the "Company")
hereby adopts this charter to govern the composition of its Audit
Committee (the "Committee") and the scope of the Committee's duties
and responsibilities, and to set forth specific actions the Board
of Directors expects the Committee to undertake to fulfill those
duties and responsibilities.
I. STATEMENT OF PURPOSE
The Committee will assist the Board of Directors in overseeing and
monitoring the Company's financial reporting process. The duties
of the Committee are ones of oversight and supervision. It is not
the duty of the Committee to plan or conduct audits or to determine
that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles-
that is the responsibility of management and the Company's independent
auditors. Similarly, it is not the duty of the Committee to conduct
investigations or sale or
dispositionto assure compliance with laws and regulations. The
Board of a substantial amountDirectors recognizes that the Committee will rely on the
advice and information it receives from the Company's management
and its internal and outside auditors. The Board does, however,
expect the Committee to exercise independent judgment in assessing
the quality of assetsthe Company's financial reporting process and its
internal controls. In doing so, the Board expects that the Committee
will maintain free and open communication with the other directors,
the Company's independent and internal auditors and the financial
management of the Company.
II. COMPOSITION OF THE AUDIT COMMITTEE
The Committee shall be comprised of at least three members of the
Board of Directors, with the number of members to an Interested
Stockholder) with a Delaware corporation for three years
followingbe determined
from time to time by the date such person became an Interested Stockholder
unless certain conditions (such as approvalBoard. The members shall be designated
by the Board of Directors) are met. Minnesota Law defines an interested
shareholder as anyDirectors.
Each member of the Committee shall have experience or education in
business or financial matters sufficient to provide him or her with
a working familiarity with basic finance and accounting matters. In
addition, the Audit Committee shall include at least one person that owns 10%with
financial management or accounting expertise.
Unless the Board has previously designated the Chair, the members of
the Committee may designate a Chair by majority vote.
III. MEETINGS
The Committee shall meet at least 4 times annually, or more frequently
if circumstances dictate. One or more of these meetings shall include
separate executive sessions with the outstanding voting securities ofCompany's Chief Financial Officer,
and the independent auditors. Unless circumstances dictate otherwise,
the meetings should occur quarterly in conjunction with a corporation. Moreover,
Minnesota Law provides for limitation on Business Combinations
a period of four years following the interested shareholder's share
acquisition date unless the business combination or share
acquisition is approved by a committeereview of the
board pursuantCompany's quarterly financial results.
IV. DUTIES AND RESPONSIBILITIES OF THE AUDIT COMMITTEE
The duties and responsibilities of the Committee shall include the
following:
1. Receive the written disclosures and letter from the Company's
independent auditors required by Independence Standards Board Standard
No. 1.
2. Review the Company's Annual Report on Form l0-K and the financial
statements contained therein with the Company's financial management
and independent auditors. Discuss any significant financial judgments
made in connection with the preparation of the Company's financial
statements. Receive assurances from financial management that the
financial statements proposed to specific qualifications.
In addition, Minnesotabe included in the Company's Annual
Report contain no material misstatements, and receive assurances from
the independent auditors that, in the course of their audit, they
learned of no material misstatement. If deemed appropriate, after
consideration of the reviews and assurances, recommend to the Board
of Directors that they be included in the Annual Report on Form 10-K.
3. Review the Company's Quarterly Reports on Form 10-Q and the
financial statements contained therein with the Company's financial
management. Receive assurances from the Company's financial management
that the financial statements included in the Company's reports do not
contain any material misstatements, and receive assurances that the
auditors learned of no material misstatements in the course of their
review of such financial statements.
4. Discuss at least annually with the Company's independent auditors
the adequacy and effectiveness of the Company's internal controls.
Review the management letter issued by the independent auditor and
management's response thereto. Periodically assess action management
has taken or progress it has made in addressing issues raised by the
independent auditors.
5. Appoint or reappoint the senior internal auditing executive, and
approve the responsibilities.
6. Discuss at least annually with the internal auditor the
effectiveness of the Company's internal accounting controls, as well
as any significant letters or reports to management issued by the
internal auditors, and management's responses thereto.
7. Discuss at least annually with the Company's attorneys the
effectiveness of the Company's legal compliance programs, any legal
matters that may have a material impact on the Company's financial
statements and any material reports or inquiries received from
regulators or government agencies.
8. Authorize and oversee investigations deemed appropriate into
any matters within the Committee's scope of responsibility, with
the power to retain independent counsel, accountants and other
advisors and experts to assist the Committee if deemed appropriate.
9. Prepare the disclosure required by the Rules of the Securities
and Exchange Commission to be included in the Company's annual proxy
statement.
10. Review this charter on an annual basis and make recommendations
to the Board of Directors concerning any changes deemed appropriate.
11. Report actions of the Committee to the Board of Directors with
such recommendations as the Committee deems appropriate.
End of Charter.
Exhibit A
AGREEMENT AND PLAN OF MERGER
Parties:
THIS AGREEMENT AND PLAN OF MERGER ("Merger
Agreement") is entered into by and between Butler National
Corporation, a Delaware corporation ("Butler-Delaware"), and Butler
National Corporation Kansas, a Kansas corporation ("Butler-Kansas").
Recitals:
1. Butler-Delaware is a corporation duly organized and
existing under the laws of the State of Delaware.
2. Butler-Kansas is a corporation duly organized and
existing under the laws of the State of Kansas.
3. On the date of this Merger Agreement, Butler-Delaware's
authorized capital consists of 40,200,000 shares of stock, consisting of
40,000,000 shares of Common Stock, par value $0.01 per share (the
"Butler-Delaware Common Stock"), of which 37,283,278 common
shares are issued and outstanding, and no shares of preferred stock, par
value $5.00 per share, are issued and outstanding.
4. On the date of this Merger Agreement, Butler-Kansas'
authorized capital consists of 100,000,000 shares of Common Stock,
par value $0.01 per share (the "Butler-Kansas Common Stock"), of which
one share is issued and outstanding and owned by Butler-Delaware, and
50,000,000 shares of preferred stock, par value $5.00, none of which
are issued and outstanding.
5. The respective Boards of Directors of Butler-Delaware
and Butler-Kansas have determined that it is advisable and in the best
interests of each such corporation that Butler-Delaware merge with and
into Butler-Kansas upon the terms and subject to the conditions of this
Merger Agreement for the purpose of effecting the reincorporation of
Butler-Delaware in the State of Kansas.
6. The respective Boards of Directors of Butler-Delaware
and Butler-Kansas have, by resolutions duly adopted, approved and
adopted this Merger Agreement. Butler-Delaware has adopted this
Merger Agreement as the sole stockholder of Butler-Kansas and the
Board of Directors of Butler-Delaware has directed that this Merger
Agreement be submitted to a Control Share Acquisition
Act ("CSAA") which has no comparable provision under
Delaware Law.vote of its shareholders. The CSAA generally limits the voting rights of a
shareholder acquiring a substantial percentage of the voting
shares of a corporation in an attempt to takeover or otherwise
becoming a substantial shareholder, unless holders of the majority
of the voting power of the disinterested shares approve full voting
rights for such substantial shareholder. The CSAA provides that,
generally, a person who becomes a beneficial owner of 20% or
more of the voting power of the shares of an issuing public
corporation in the election of directors may exercise only an
aggregate of 20% of the voting power of the corporation's shares
in the absence of special shareholder approval. That approval
can be obtained only by resolution adopted by (i) the affirmative
vote of the holders of a majority of the shares of the Butler-Delaware
Common Stock outstanding must approve this Merger Agreement for it is
to become effective.
7. The parties intend by this Merger Agreement to effect a
"reorganization" under Section 368 of the Internal Revenue Code of
1986, as amended.
Terms and Provisions:
In consideration of the foregoing recitals and of the following
terms and provisions, and subject to the following conditions, it is
agreed:
1. Merger. At the Effective Time (as defined in this
Section 1), Butler-Delaware shall be merged with and into Butler-
Kansas (the "Merger"). Butler-Kansas shall be the surviving
corporation of the Merger (hereinafter sometimes referred to as the
"Surviving Corporation"), and the separate corporate existence of
Butler-Delaware shall cease. The Merger shall become effective upon
the filing of a Certificate of Merger with the Secretary of State of the
State of Kansas. The date and time when the Merger shall become
effective is herein referred to as the "Effective Time."
2. Governing Documents.
1. The Amended and Restated Articles of Incorporation of
Butler-Kansas as it may be amended or restated subject to applicable
law, and as in effect immediately prior to the Effective Time, shall
constitute the Articles of Incorporation of the Surviving Corporation
without further change or amendment until thereafter amended in
accordance with the provisions thereof and applicable law except
that Article First is amended to read in its entirety: "The name of
the corporation is Butler National Corporation".
2. The Bylaws of Butler-Kansas as in effect immediately
prior to the Effective Time shall constitute the Bylaws of the Surviving
Corporation without change or amendment until thereafter amended in
accordance with the provisions thereof and applicable law.
3. Officers and Directors. The persons who are officers and
directors of Butler-Delaware immediately prior to the Effective Time
shall, after the Effective Time, be the officers and directors of the
Surviving Corporation, without change until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Articles of Incorporation and Bylaws and applicable law.
4. Name. The name of the Surviving Corporation shall be
Butler National Corporation.
5. Succession. At the Effective Time, the separate
corporate existence of Butler-Delaware shall cease, and the Surviving
Corporation shall possess all the rights, privileges, powers and
franchises of a public or private nature and be subject to all the
restrictions, disabilities and duties of Butler-Delaware; and all the
rights, privileges, powers and franchises of Butler-Delaware, and all
property, real, personal and mixed, and all debts due to Butler-
Delaware on whatever account, as well for share subscriptions and all
other things in action, shall be vested in the Surviving Corporation; and
all property, rights, privileges, powers and franchises, and all and every
other interest shall be thereafter as effectively the property of the
Surviving Corporation as the same were of Butler-Delaware, and the
title to any real estate vested by deed or otherwise shall not revert or be
in any way impaired by reason of the Merger, but all rights of creditor
and liens upon any property of Butler-Delaware shall be preserved
unimpaired, and all debts, liabilities and duties of Butler-Delaware shall
thenceforth attach to the Surviving Corporation and may be enforced
against it to the same extent as if such debts, liabilities and duties had
been incurred or contracted by it; provided, however, that such liens
upon property of Butler-Delaware will be limited to the property
affected thereby immediately prior to the Merger. All corporate acts,
plans, policies, agreements, arrangements, approvals and authorizations
of Butler-Delaware, its shareholders, Board of Directors and
committees thereof, officers and agents, which were valid and effective
immediately prior to the Effective Time, shall be taken for all purposes
as the acts, plans, policies, agreements, arrangements, approvals and
authorizations of the Surviving Corporation, its shareholders, Board of
Directors and committees thereof, respectively, and shall be as effective
and binding thereon as the same were with respect to Butler-Delaware.
6. Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder thereof:
1. Each share of Butler-Delaware Common Stock
outstanding immediately prior to the Effective Time shall be converted
into, and shall become, one fully paid and nonassessable share of
Butler-Kansas Common Stock.
2. The one share of Butler-Kansas Common Stock
issued and outstanding in the name of Butler-Delaware shall be
cancelled and retired, and no payment shall be made with respect
thereto, and such shares shall resume the status of unauthorized and
unissued shares of Butler-Kansas Common Stock.
7. Stock Certificates. At and after the Effective Time, all of
the outstanding certificates which immediately prior to the Effective
Time represented shares of Butler-Delaware Common Stock shall be
deemed for all purposes to evidence ownership of, and to represent
shares of, Butler-Kansas Common Stock into which the shares of
Butler-Delaware Common Stock formerly represented by such
certificates have been converted as herein provided. The registered
owner on the books and records of Butler-Delaware or its transfer agent
of any such outstanding stock certificate shall, until such certificate
shall have been surrendered for transfer or otherwise accounted for to
the Surviving Corporation or its transfer agent, have and be entitled to
exercise any voting or other rights with respect to and to receive any
dividends and other distributions upon the shares of Butler-Kansas
Common Stock evidenced by such outstanding certificate as above
provided. Nothing contained herein shall be deemed to require the
holder of any shares of Butler-Delaware Common Stock to surrender
the certificate or certificates representing such shares in exchange for a
certificate or certificates representing shares of Butler-Kansas Common
Stock.
8. Options. Each right in or to, or option to purchase,
shares of Butler-Delaware Common Stock, granted under Butler-
Delaware's 1989 Nonqualified Option Plan, the 1993 Nonqualified
Option Plan I, the 1993 Nonqualified Option Plan II and the 1995
Nonqualified Option Plan (collectively the "Plans") and otherwise,
which is outstanding immediately prior to the Effective Time, shall, by
virtue of the Merger and without any action of the part of the holder
thereof, be converted into and become a right in or to, or an option to
purchase at the same option price per share, the same number of shares
of Butler-Kansas Common Stock, upon the same terms and subject to
the same conditions as set forth in the Plans or otherwise as in effect at
the Effective Time. The same number of shares of Butler-Kansas
Common Stock shall be reserved for purposes of the outstanding
options as is equal to the number of shares of Butler-Delaware
Common Stock so reserved as of the Effective Time. As of the
Effective Time, the Surviving Corporation hereby assumes the Plans
and all obligations of Butler-Delaware under the Plans including the
outstanding rights or options or portions thereof granted pursuant to the
Plans and otherwise.
9. Other Employee Benefit Plans. As of the Effective
Time, the Surviving Corporation hereby assumes all obligations of
Butler-Delaware under any and all employee benefit plans in effect as
of the Effective Time or with respect to which employee rights or
accrued benefits are outstanding as of the Effective Time.
10. Conditions. The consummation of the Merger is subject
to satisfaction of the following conditions prior to the Effective Time:
1. The Merger shall have received the requisite approval
of the holders of Butler-Delaware Common Stock and all necessary
action shall have been taken to authorize the execution, delivery and
performance of the Merger Agreement by Butler-Delaware and Butler-
Kansas.
2. All approvals and consents necessary or desirable, if
any, in connection with the consummation of the Merger shall have
been obtained.
3. No suit, action, proceeding or other litigation shall
have been commenced or threatened to be commenced which, in the
opinion of Butler-Delaware or Butler-Kansas, would pose a material
restriction on or impair consummation of the Merger, performance of
this Merger Agreement or the conduct of the business of Butler-Kansas
after the Effective Time, or create a risk of subjecting Butler-Delaware
or Butler-Kansas, or their respective shareholders, officers or directors,
to material damages, costs, liability or other relief in connection with
the Merger or this Merger Agreement.
4. The Board of Directors of Butler-Delaware has not
received sufficient numbers of notices of exercise of appraisal rights to,
in the sole discretion of the Board of Directors, impact the
Reincorporation.
11. Governing Law. This Merger Agreement shall be
governed by and construed in accordance with the State of Kansas
applicable to contracts entered into and to be performed wholly within
the State of Kansas, except to the extent that the laws of the State of
Kansas are mandatorily applicable to the Merger.
12. Amendment. Subject to applicable law and subject to
the rights of Butler-Delaware's shareholders further to approve any
amendment which would have a material adverse effect on such
shareholders, this Merger Agreement may be amended, modified or
supplemented by written agreement of the parties hereto at any time
prior to the Effective Time with respect to the terms contained herein.
13. Deferral or Abandonment. At any time prior to the
Effective Time, this Merger Agreement may be terminated and the
Merger may be abandoned or the time of consummation of the Merger
may be deferred for a reasonable time by the Board of Directors of
either Butler-Delaware or Butler-Kansas or both, notwithstanding
approval of this Merger Agreement by the shareholders of Butler-
Delaware or the stockholders of Butler-Kansas, or both, if
circumstances arise which, in the opinion of the Board of Directors of
Butler-Delaware or Butler-Kansas, make the Merger inadvisable or
such deferral of the time of consummation thereof advisable.
14. Counterparts. This Merger Agreement may be executed
in any number of counterparts each of which when taken alone shall
constitute an original instrument and when taken together shall
constitute one and the same Agreement.
15. Further Assurances. From time to time, as and when
required or requested by either Butler-Delaware or Butler-Kansas, as
applicable, or by its respective successors and assigns, there shall be
executed and delivered on behalf of the other corporation, or by its
respective successors and assigns, such deeds, assignments and other
instruments, and there shall be taken or caused to be taken by it all such
further and other action, as shall be appropriate or necessary in order to
vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation the title to and possession of all property, interests, assets,
rights, privileges, immunities, powers, franchise and authority of Butler-
Delaware and otherwise to carry out the purposes of this Merger
Agreement, and the officers and directors of each corporation are fully
authorized in the name and on behalf of such corporation or otherwise,
to take any and all such action and to execute and deliver any and all
such deeds, assignments and other instruments.
IN WITNESS WHEREOF, Butler-Delaware and Butler-Kansas
have caused this Merger Agreement to be signed by their respective
duly authorized officers and delivered this 29th day of October,
2001.
BUTLER NATIONAL CORPORATION
a Delaware corporation
By: /S/ Clark D. Stewart
Title: President and CEO
ATTEST: /S/ William A. Griffith
By: /S/ William A. Griffith
Secretary
BUTLER NATIONAL CORPORATION KANSAS
a Kansas corporation
By: /S/ Clark D. Stewart
Title: President and CEO
ATTEST: /S/ William A. Griffith
By: /S/ William A. Griffith
Secretary
Exhibit B
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
Butler National Corporation Kansas
THE UNDERSIGNED, does hereby certify these Amended and
Restated Articles of Incorporation that amend and restate the
original Articles of Incorporation that was filed on February 23,
2001 are as follows:
FIRST: The name of the corporation is changed to
Butler National Corporation Kansas
SECOND: The registered office of the Corporation is to be
located at 19920 West 161st Street, Olathe, Kansas 66062. The name
of its registered agent at that address is Christopher J. Reedy, Esq.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under
the Kansas Corporation Code.
FOURTH: Section 1. The authorized capital of this Corporation
shall be $251,000,000 consisting of 100,000,000 shares of common stock,
$0.01 par value (the "Common Stock") and 50,000,000 shares of
preferred stock, the par value of $5.00 per share (the "Preferred
Stock"). The relative voting rights, preferences and other privileges of
such capital stock shall be as follows:
(a) Common Stock. Each share of Common Stock shall entitle the
holder thereof to one (1) vote; all such shares of Common Stock
shall be equal in all respects and shall confer equal rights upon the
holders thereof.
(b) Preferred Stock. Each share of Preferred Stock shall entitle the
holder thereof to such rights, voting power, preferences and
restrictions as may be fixed by the board of directors by resolution
thereof.
Section 2. A shareholder shall have no pre-emptive rights
to subscribe for or purchase any shares of capital stock or other
securities of whatsoever kind of nature which may be issued by this
Corporation; voting for directors shall not be cumulative.
FIFTH: The name and address of the incorporator was as follows:
Name - Address
William A. Griffith - Butler National Corporation
19920 West 161st Street
Olathe, KS 66062
SIXTH: Except as otherwise specifically provided by applicable
statute, all powers of management, direction and control of the
Corporation shall be vested in its Board of Directors.
The total number of directors of the Corporation which shall
constitute the whole Board of Directors of the Corporation shall be
fixed from time to time in the manner provided in the bylaws, such
number in no event shall be less than three (3) nor more than eleven
(11) persons.
The names and mailing addresses of the persons who are to serve
as the initial directors of the Corporation until the first annual meeting
of Stockholders or until their successors are elected and qualified are as
follows:
Name-Address-City
Clark D. Stewart - 19920 West 161st Street Olathe, KS 66062
William E. Logan - 19920 West 161st Street Olathe, KS 66062
R. Warren Wagoner - 19920 West 161st Street Olathe, KS 66062
William A. Griffith - 19920 West 161st Street Olathe, KS 66062
SEVENTH: In furtherance, and not in limitation of the powers
conferred by statute, the Board of Directors of the Corporation is
expressly authorized:
(a) To make, adopt, alter, amend or repeal the Bylaws of the
Corporation;
(b) To, in its sole discretion, call special meetings of the
Stockholders of the Corporation;
(c) To set apart out of any of the money or funds of the
Corporation available for dividends a reserve or reserves for any
proper purpose or to abolish any such reserve in the manner in
which it was created;
(d) When and as authorized by the Stockholders' vote, to sell,
lease or exchange all or substantially all of the property or assets of
the Corporation, including its goodwill and its corporate
franchises, upon such terms and conditions and for such
consideration, which may be in whole or in part shares of stock in,
or other securities of (or both), any other corporation or
corporations as the Board of Directors may deem expedient and for
the best interests of the Corporation; and
(e) To sell, issue or otherwise dispose of common stock or any
other securities of the Corporation, including preferred stock,
debentures, bonds, mortgages, notes, certificates, and any and all
other securities whatsoever, for such consideration as the Board of
Directors in its discretion shall determine; provided, however, that
no shares of stock shall be sold for any consideration not in
accordance with the laws of the State of Kansas.
The Corporation may in its bylaws confer powers additional to the
foregoing upon the directors, in addition to the powers, authorities and
duties expressly conferred upon them by law.
EIGHTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or
between this Corporation and its Stockholders or any class of them, any
court of competent jurisdiction within the State of Kansas may, on the
application in a summary way of this Corporation or of any creditor or
Stockholders thereof or on the application of any receiver or receivers
appointed for this Corporation under the provisions of K.S.A. Sec. 17-
6901 of the Kansas Corporation Code or on the application of trustees
in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of K.S.A. Sec. 17-6808 of the Kansas
Corporation Code order a meeting of the creditors or class of creditors,
and/or of the Stockholders or class of Stockholders of this Corporation,
as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths in value of
the creditors or class of creditors, and/or of the Stockholders or class of
Stockholders of this Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the
said compromise or arrangement and the said reorganization shall, if
sanctioned by the court to which the said application has been made, be
binding on all the creditors or class of creditors, and/or on all the
Stockholders or class of Stockholders, of this Corporation, as the case
may be, and also on this Corporation.
NINTH: No director shall be personally liable to the Corporation
or its Stockholders for monetary damages for any breach of fiduciary
duty by such director as a director, except to the extent such exemption
from liability or limitation thereof is not permitted by Kansas
Corporation Code as it now exists or may hereafter be amended.
Notwithstanding the foregoing, a director shall be liable to the extent
provided by the existing Kansas Corporation Code (i) for breaches of
the directors' duty of loyalty to the Corporation or its Stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law, (iii) under the provisions
of K.S.A. Sec. 17-6424 of the Kansas Corporation Code (relating to
unlawful stock purchase or redemption) and any amendments thereto,
or (iv) for any transaction from which the director derived an improper
personal benefit. Any repeal or modification of these provisions shall
not adversely affect any right of any director of the Corporation existing
at the time of such repeal or modification.
The provisions of this Article shall not be deemed to limit or
preclude indemnification of a director by the Corporation for any
liability of a director which has not been eliminated by the provisions of
this Article.
If Kansas Corporation Code hereafter is amended to authorize the
further elimination or limitation of liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited
to the fullest extent permitted by the Kansas Corporation Code, as so
amended.
TENTH: The Corporation shall have the power to indemnify
officers, directors, employees and agents to the extent permitted by the
bylaws, as amended from time to time.
I certify that these Amended and Restated Articles of Incorporation
have been amended and restated in accordance with K.S.A. 17-6605.
IN WITNESS WHEREOF, I declare under the penalty of perjury
according to the laws of the State of Kansas that the foregoing is true
and correct, and I have hereunto set my hand, the 29th day of
October, 2001.
By: /S/ Clark D. Stewart
Clark D. Stewart, President and CEO
ATTEST: /S/William A. Griffith
William A. Griffith, Secretary
Exhibit C
BYLAWS
OF
BUTLER NATIONAL CORPORATION-KANSAS
ARTICLE I
Stockholders
Section 1.1. Annual Meetings. An annual meeting of
stockholders shall be held on the 1st Tuesday of October of each year, or
at such other date and time as shall be designated from time to time by the
board of directors and stated in the notice of the meeting, at which the
stockholders shall elect directors by a plurality vote to serve until the
next meeting of stockholders and shall transact such other business as may
properly be brought before the meeting. The meeting may be held either
within or without the State of Kansas as may be designated by the Board
of Directors from time to time.
Section 1.2. Special Meetings. Special meetings of stockholders
may be called at any time by the Chairman of the Board, the Vice
Chairman of the Board, if any, the Chief Executive Officer, the President
or the Board of Directors, to be held at such date, time and place either
within or without the State of Kansas as may be stated in the notice of the
meeting.
Section 1.3. Notice of Meetings. Whenever stockholders are required
or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date and hour of
the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Unless otherwise provided
by law, the written notice of any meeting shall be given not less
than ten nor more than sixty days before the date of the meeting to
each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United
States mail, postage prepaid, directed to the stockholder at his address as
it appears on the records of the Corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual
or special, may adjourn from time to time to reconvene at the same or
some other place, and notice need not be given of any such adjourned
meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken. At the adjourned meeting, the
Corporation may transact any business which might have been transacted
at the original meeting. If the adjournment is for more than thirty days, or
if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 1.5. Quorum. At each meeting of stockholders, except
where otherwise provided by law or the Articles of Incorporation or these
bylaws, the holders of a 35% of the outstanding shares of each class of
stock entitled to vote at the meeting, present in person or represented by
proxy, shall constitute a quorum. For purposes of the foregoing, two or
more classes or series of stock shall be considered a single class if the
holders thereof are entitled to vote together as a single class at the
meeting. In the absence of a quorum, the stockholders so present may, by
majority vote, adjourn the meeting from time to time in the manner
provided by Section 1.4 of these Bylaws until a quorum shall attend.
Shares of its own capital stock belonging on the record date for the
meeting to the Corporation or to another corporation, if a majority of the
shares entitled to vote in the election of directors of such other corporation
is held, directly or indirectly, by the Corporation, shall neither be entitled
to vote nor be counted for quorum purposes; provided, however, that the
foregoing shall not limit the right of the Corporation to vote stock,
including all sharesbut not limited to its own stock, held by it in a fiduciary
capacity.
Section 1.6. Organization. Meetings of stockholders shall be
presided over by the acquiringChairman of the Board, if any, or in his absence by
the Vice Chairman of the Board, if any, or in his absence by the Chief
Executive Officer, President, or in their absence by a Vice President, or in
the absence of the foregoing persons by a chairman designated by the
Board of Directors, or in the absence of such designation by a chairman
chosen at the meeting. The Secretary shall act as secretary of the meeting,
but in his absence the chairman of the meeting may appoint any person to
act as secretary of the meeting.
Section 1.7. Voting; Proxies. Unless otherwise provided in the
Articles of Incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held
by him which has voting power upon the matter in question. Reference to
the Articles of Incorporation in these Bylaws shall mean the Company's
Articles of Incorporation as may be amended and/or restated. Each
stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and (ii)if, and only as long as,
it is coupled with an interest sufficient in law to support an irrevocable
power. A stockholder may revoke any proxy which is not irrevocable by
attending the affirmativemeeting and voting in person or by filing an instrument in
writing revoking the proxy or another duly executed proxy bearing a later
date with the Secretary of the Corporation. Voting at meetings of
stockholders need not be by written ballot and need not be conducted by
inspectors unless the holders of a majority of the outstanding shares of
all classes of stock entitled to vote thereon present in person or by proxy
at such meeting shall so determine. At all meetings of stockholders for the
election of directors, a plurality of the votes cast shall be sufficient to
elect. All other elections and questions shall, unless otherwise provided
by law or by the Articles of Incorporation or these Bylaws, be decided by
the vote of the holders of a majority of the voting poweroutstanding shares of all sharesclasses
of stock entitled to vote excluding all
"Interested Shares" (i.e. shares heldthereon present in person or by proxy at the
meeting, provided that (except as otherwise required by law or by the
acquiring person,Articles of Incorporation) the Board of Directors may require a larger vote
upon any officerelection or question.
Section 1.8. Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose
of any other lawful action, the Board of Directors may fix, in advance, a
record date, which shall not be more than sixty nor less than ten days
before the date of such meeting, nor more than sixty days prior to any
other action. If no record date is fixed: (1) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held;
(2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior
action by the Board is necessary, shall be the day on which the first written
consent is expressed; and (3) the record date for determining stockholders
for any other purpose shall be at the close of business on the day on which
the Board adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the issuing public corporationmeeting; provided,
however, that the Board may fix a new record date for the adjourned
meeting.
Section 1.9. List of Stockholders Entitled to Vote. The Secretary
shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall
be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof
and may be inspected by any directorstockholder who is also an employeepresent.
Section 1.10. Consent of the corporation).
Cumulative Voting
Under Delaware Law, cumulative voting (which permits holdersStockholders in Lieu of less than a majority of the voting securities of a corporation to
cumulate their votes and elect a director in certain situations) is
not available unless soMeeting. Unless
otherwise provided in the corporation'sArticles of Incorporation, any action required
by law to be taken at any annual or special meeting of stockholders of
the Corporation, or any action which may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by all the holders
of outstanding stock entitled to vote thereon. In the event that the
action which is consented is such as would have required the filing
of a certificate under any section of incorporation. Under Minnesota Law,the Kansas Statutes, if such
action had been voted upon by stockholders at a corporation will have
cumulative voting unlessmeeting thereof, the
certificate filed under such right is deniedother section shall state, in lieu of
any statement required by such section concerning a vote of stockholders,
that written consent has been given in accordance with the provision of
this section.
ARTICLE II
Board of Directors
Section 2.1. Powers; Number; Tenure. Except as
otherwise specifically provided by applicable statute, all powers of
management, direction and control of the Corporation shall be vested in
its Board of Directors.
The total number of directors of the Corporation which shall
initially constitute the whole Board of Directors of the Corporation shall
be five (5). Thereafter, the minimum and maximum number of directors
shall be as set forth in the Articles of Incorporation. Cumulative voting has been specifically denied inThe Board of
Directors shall have the charter documentspower to change the number of both Butler-Minnesota and Butler-
Delaware. Furthermore, in Minnesota, no amendmentdirectors by
resolution adopted by a majority of the whole Board.
Section 2.2. Resignation; Removal; Vacancies. Any director
may resign at any time upon written notice to the articlesBoard of incorporationDirectors or bylaws which hasto
the Chief Executive Officer, President or the Secretary of the Corporation.
Such resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of denying
or modifying cumulative voting rights for directorssuch resignation shall be
adopted if the votes of a proportionnecessary to make it effective.
Section 2.3. Regular Meetings. Regular meetings of the voting power sufficientBoard
of Directors may be held at such places within or without the State of
Kansas and at such times as the Board may from time to elect a director at an electiontime determine,
and if so determined, notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the entire board under
cumulative voting are cast againstBoard of
Directors may be held at any time or place within or without the amendment.
Dividends
Minnesota Law provides that a corporation board may authorizeState of
Kansas whenever called by the Chairman of the Board, or by the Vice
Chairman of the Board, if any, distribution, including dividends, ifby the board determines thatChief Executive Officer, President
or by any two directors. Reasonable notice thereof shall be given by the
corporation will be able to pay its debts inperson or persons calling the ordinary
course of business after making the distribution and the board
does not know prior to the distribution that the determination
was or has become erroneous.
Delaware Law provides that a corporation may, unlessmeeting.
Section 2.5. Telephonic Meetings Permitted. Unless otherwise
restricted by its certificatethe Articles of incorporation, declareIncorporation or these Bylaws, members of
the Board of Directors, or any committee designated by the Board, may
participate in a meeting of the Board or of such committee, as the case
may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other, and pay
dividends outparticipation in a meeting pursuant to this by-law
shall constitute presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings
of surplus or, if no surplus exists, outthe Board of net profitsDirectors a majority of the total number of directors shall
constitute a quorum for the fiscal year in which the dividend is declared or the
preceding fiscal year (provided that the amounttransaction of capitalbusiness. The vote of a majority
of the corporation followingdirectors present at a meeting at which a quorum is present shall be
the declaration and paymentact of the dividend is not less thanBoard unless the aggregate amountArticles of Incorporation or these Bylaws
shall require a vote of a greater number. In case at any meeting of the
capital
representedBoard a quorum shall not be present, the members of the Board present
may adjourn the meeting from time to time until a quorum shall attend.
Section 2.7. Organization. Meetings of the Board of Directors
shall be presided over by the issuedChairmen of the Board or in his absence by
the Vice Chairman of the Board, if any, or in his absence by the Chief
Executive Officer or President, or in their absence by a chairman chosen
at the meeting. The Secretary shall act as secretary of the meeting, but in
his absence the chairman of the meeting may appoint any person to act as
secretary of the meeting.
Section 2.8. Informal Action by Directors. Unless otherwise
restricted by the Articles of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors,
or of any committee thereof, may be taken without a meeting if all
members of the Board or of such committee, as the case may be, consent
thereto in writing, and outstanding sharesthe writing or writings are filed with the minutes of
all classes
havingproceedings of the Board or committee.
ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors may, by
resolution passed by a preference uponmajority of the distributionwhole Board, designate one or more
committees, each committee to consist of assets).one or more of the directors of
the Corporation. The Delaware Certificate contains no restriction onBoard may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the
payment of dividends. Additionally, Delaware Law provides, that,
in general, a corporation may redeemcommittee. In the absence or
repurchase its shares
only out of surplus.
Appraisal Rights in Mergers
Under both Minnesota Law and Delaware Law, a dissenting
shareholderdisqualification of a corporation participatingmember of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another
member of the Board to act at the meeting in certain transactions
may, in certain circumstances, receive cashplace of any such absent or
disqualified member. Any such committee, to the extent provided in the
amountresolution of the fair value of his or her shares (as determined by a court) in lieuBoard, shall have and may exercise all the powers and
authority of the consideration otherwise receivableBoard in anythe management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; but no such transaction.
Unless a Delaware corporation's certificatecommittee shall have power
or authority in reference to amending the Articles of incorporation
provides otherwise (which the Delaware Certificate does not),
Delaware Law does not require these dissenters' rights with
respect to (i) a saleIncorporation,
adopting an agreement of assets; (ii) a merger or consolidation, by a
corporation, the shares of which are either listed on a national
securities exchange or widely held (by more than 2,000
stockholders), if such stockholders receive shares of the surviving
corporation or of such a listed or widely held corporation; or (iii)
stockholders of a corporation surviving a merger if no vote ofrecommending to the
stockholders is required to approve the merger. Under Delaware
Law, no vote of the stockholders of the surviving corporation is
required if the number of shares to be issued in the merger does
not exceed 20 percent of the shares of the surviving corporation
outstanding immediately prior to the merger and certain other
conditions are met. Minnesota Law does, in general, afford
dissenters' rights in a sale, lease transfer or other dispositionexchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of dissolution, removing or
indemnifying directors or amending these Bylaws; and, unless the
resolution expressly so provided, no such committee shall have the power
or authority to declare a dividend or to authorize the issuance of stock.
Section 3.2. Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board may make,
alter and repeal rules for the conduct of its business. In the absence of a
provision by the Board or a provision in the rules of such committee to the
contrary, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of business, the
vote of a majority of the members present at a meeting at the time of such
vote if a quorum is then present shall be the act of such committee, and in
other respects each committee shall conduct its business in the same
manner as the Board conducts its business pursuant to Article II of these
by-laws.
ARTICLE IV
Officers
Section 4.1. Officers; Election; Qualification; Term of Office;
Resignation; Removal; Vacancies. As soon as practicable after the annual
meeting of stockholders in each year, the Board of Directors shall elect a
President and a Secretary, and it may, if it so determines, elect from
among its members Co-Chairmen of the Board and a Vice Chairman of the
Board. The Board may also elect a Chief Executive Officer, one or more
Vice Presidents, one or more Assistant Vice Presidents, one or more
Assistant Secretaries, a Treasurer and one or more Assistant Treasurers
and may give any of them such further designations or alternate titles as
it considers desirable. Each such officer shall hold office until the first
meeting of the Board after the annual meeting of stockholders next
succeeding his election, and until his successor is elected and qualified or
until his earlier resignation or removal. Any officer may resign at any time
upon written notice to the Board or to the Chairman, the President or the
Secretary of the Corporation. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of
such resignation shall be necessary to make it effective. The Board may
remove any officer with or without cause at any time. Any such removal
shall be without prejudice to the contractual rights of such officer, if any,
with the Corporation, but the election or appointment of an officer shall
not of itself create contractual rights. Any number of offices may be held
by the same person. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise may be filled for
the unexpired portion of the term by the Board at any regular or special
meeting.
Section 4.2. Powers and Duties of Executive Officers. The
officers of the Corporation shall have such powers and duties in the
management of the Corporation as may be prescribed by the Board of
Directors and, to the extent not so provided, as generally pertain to their
respective offices, subject to the control of the Board. The Board may
require any officer, agent or employee to give security for the faithful
performance of his duties.
ARTICLE V
Stock
Section 5.1. Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by or in the name
of the Corporation by the Chairman or Vice Chairman of the Board of
Directors, if any, or the Chief Executive Officer, President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary, of the Corporation, certifying the number of
shares owned by him in the Corporation. If such certificate is manually
signed by one officer or manually countersigned by a transfer agent or by
a registrar, any other signature on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent or registrar before such certificate is issued,
it may be issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates. The Corporation may issue a new certificate
of stock in the place of any certificate theretofore issued by it, alleged to
have been lost, stolen or destroyed, and the Corporation may require the
owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the Corporation a bond sufficient to indemnify it
against any claim that may be made against it on account of the alleged
loss, theft or destruction of any such certificate or the issuance of such new
certificate.
ARTICLE VI
Miscellaneous
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall
be determined by the Board of Directors.
Section 6.2. Seal. The Corporation may have a corporate assets (subjectseal
which shall have the name of the Corporation inscribed thereon and shall
be in such form as may be approved from time to certain
limited exceptions);time by the Board of
Directors. The corporate seal may be used by causing it or a planfacsimile
thereof to be impressed or affixed or in any other manner reproduced.
Section 6.3. Waiver of merger;Notice of Meetings of Stockholders,
Directors and Committees. Whenever notice is required to be given by
law or under any provision of the Articles of Incorporation or these
Bylaws, a planwritten waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent
to notice. Attendance of exchangea person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in whichany written waiver of notice
unless so required by the corporation's sharesArticles of Incorporation or these Bylaws.
Section 6.4. Indemnification of Directors, Officers, Employees
and Agents.
(a) Directors. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened
pending or completed action, suit, or proceeding, whether civil, criminal,
administrative or investigative, including an action by or in the right of the
Corporation, by reason of the fact that he is or was a director of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, judgment, fines
and amounts paid in settlement actually and reasonably incurred by him
in connection with the defense or settlement of such action, suit or
proceeding, including attorneys' fees, to the full extent permitted by
Kansas Corporation Code, as amended, K.S.A. 17-6305.
(b) Officers, Employees and Agents. The Corporation may, at
the discretion of the Board of Directors, indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or contemplated action, suit, or proceeding, whether civil, criminal,
administrative or investigative, including an action by or in the right of the
Corporation, by reason of the fact that he is or was an officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the defense or settlement
of such action, suit or proceeding, including attorneys' fees, to the full
extent permitted by Kansas Corporation Code, as amended, K.S.A. 17-
6305.
(c) Expenses.
(i) The Corporation shall pay the director, or such person
or entity as the director may designate, on a continuing and current basis
and in any event not later than 10 business days following receipt by the
Corporation of the director's request for reimbursement of all expenses,
including attorneys fees, costs, settlement, fines and judgment incurred by
or levied upon the director in connection with any action, suit or
proceeding referred to in Section 6.4, subsection (a).
(ii) To the extent that an officer, employee or agent
of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to Section 6.4,
subsection (b) or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses actually and reasonably incurred by such
person in connection therewith, including attorneys' fees.
(iii) Expenses incurred by a director or officer in
defending a civil or criminal action, suit, or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the director
or officer to repay such amount if it is ultimately determined that the
director or officer is not entitled to be indemnified by the Corporation as
authorized in these Bylaws. Such expenses incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the
Board of Directors deems appropriate.
(d) Board Authorization. Any indemnification of directors,
officers, employees or agents pursuant to this Section 6.4, unless ordered
by a court, shall be made by the Corporation only as authorized in the
specific case upon a determination that such indemnification is proper in
the circumstances because such director, officer, employee or agent has
met the applicable standard of conduct set forth in Kansas Corporation
Code, as amended, K.S.A. 17-6305. Such determination shall be made by
the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to the action, suit, or proceeding, or if such
a quorum is not obtainable, or even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
by the stockholders.
(e) Notification and Defense of Claim. Promptly after receipt
by a director, officer, employee or agent of notice of the commencement
of any action, suit or proceeding, the director, officer, employee or agent
will, if a claim in respect thereof is to be acquired,made, against the Corporation,
notify the Corporation of the commencement thereof. The failure to
promptly notify the Corporation will not relieve the Corporation from any
liability that it may have to the director, officer, employee or agent
hereunder, except to the extent the Corporation is prejudiced in its defense
of such claim as a result of such failure. Unless otherwise requested by the
Board of Directors, written notification shall not be necessary if the
shares are
entitleddirector, officer, employee or agent informs a majority of the Board of
Directors of the commencement of any such action, or, independent of
such notification by the director, officer, employee or agent, a majority of
the Board of Directors has reason to vote;believe such action has been initiated
or threatened. With respect to any other corporatesuch action, taken pursuant to
shareholder vote with respectsuit or proceeding as to
which the articles, bylaws,director, officer, employee or a
resolution directs that dissenting shareholders may obtain
payment for their shares; and, when amendmentagent notified, or is deemed to
have notified, the Corporation of the articles
would materiallycommencement thereof; the
following shall apply:
(i) The Corporation will be entitled to participate therein
at its own expense;
(ii) Except as otherwise provided below, to the
extent that it may wish, the Corporation, jointly with any other
indemnifying party similarly notified, will be entitled to assume the
defense thereof with counsel reasonably satisfactory to the director,
officer, employee or agent. After notice from the Corporation to the
director, officer, employee or agent of its election so to assume the defense
thereof, the Corporation will not be liable to the director, officer,
employee or agent for any legal or other expenses subsequently incurred
by the director, officer, employee or agent in connection with the defense
thereof other than reasonable costs of investigation or unless: (A) the
employment of separate counsel by the director, officer, employee or
entity has been authorized by the Corporation; (B) the director, officer,
employee or agent reasonably concludes that there may be a conflict of
interest between the Corporation and adversely affect the rightsdirector, officer, employee or
preferencesagent in the conduct of the sharesdefense of such action and that such conflict
may lead to exposure for the director, officer, employee or agent and the
director, officer, employee or agent notifies the Corporation of such
conclusion and decision to employ separate counsel; or (C) the
Corporation fails to employ counsel to assume the defense of such action.
The Corporation shall not be entitled to assume the defense of any action,
suit or proceeding brought by or on behalf of the dissenterCorporation or as to
which the director, officer, employee or agent reasonably makes the
conclusion provided for in that the amendment alters or
abolishes preferential rights; creates, alters or abolishes a right to
share redemption; alters or abolishes a preemptive right; or,
excludes or limits a voting right.
Indemnification of Officers(B) above; and
Directors and Liability of
Directors
Both Delaware Law and Minnesota Law allow a corporation to
include in its certificate of incorporation or articles of
incorporation, respectively, a provision which eliminates, in
certain circumstances, a director's personal liability for breach of
fiduciary duties and a provision which authorizes the corporation(iii) The Corporation shall not be liable to
indemnify the director, officer, employee or agent for any amount paid in
settlement of any action or claim effected without its agents.written consent. The
Minnesota Articles andCorporation shall not settle any action or claim in any manner which
would impose any penalty or limitation on the Delaware Certificate contain substantially identical liability
limitation provisions.
However, duedirector, officer, employee
or agent without the written consent of the director, officer, employee or
agent. Neither the Corporation nor the director, officer, employee or agent
will unreasonably withhold their consent to certain differences between Minnesota Law and
Delaware Law, Butler-Delaware will be able to provide
indemnification of its officers and directors under a somewhat
broader range of circumstances than currently permitted under
Minnesota Law as Delaware Law provides thatany proposed settlement.
(f) Not Exclusive. The indemnification and advancement of
expenses specifically provided under
Delaware Law isby this Section 6.4 shall not be deemed exclusive of
any other right to
indemnificationrights to which a covered personthose seeking indemnification or advancement
of expenses may be entitled under the Articles of Incorporation, as
amended from time to time, or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be a director or officer
and shall inure to the benefit of the heirs, executors and administrators of
such person.
(g) Further Indemnity. The Delaware Bylaws provide that the
CompanyCorporation shall have the power
to give any further indemnity, in addition to the indemnity authorized or
contemplated under this Section 6.4, to any person who is or was a
director, officer, employee or agent or to any person who is or was serving
at the request of the CompanyCorporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise;
provided, no such indemnity shall indemnify any person from or on
account of such personsperson's conduct which iswas finally adjudged to have been
knowingly fraudulent, deliberately dishonest or wilfulwillful misconduct, or if
it is determined by a final judgment or other final adjudication by a court
of confidentcompetent jurisdiction considering the question of indemnification that any
such payment of indemnification is or would be in violation of applicable
law. As a result, under Delaware Law, the Company
will be able to provideThe Corporation may enter into indemnification agreements with
each director and advancement of
expenses in a broader range of circumstances than under
Minnesota Law.
The Company has not experienced any difficulty in recruiting
qualified directors and noneofficer of the existing members ofCorporation whom the Board of Directors
has indicated an intention to resign if the
Reincorporation is not approved. Except for the claim against
Clark Stewart in the Shadwick matter (See page 9), no claim has
been threatened or asserted against any director, officer or
employeeauthorizes by vote of the Company's in his capacity as such (which is
already covered by indemnity by the Company).a majority of a quorum of disinterested directors.
(h) Insurance. The Company
believes, however, that it
is important to continue to provide the Company's directorsCorporation may purchase and officers with protection from the risk of litigation and personal
liability, and thereby ensure that the Company can continue to
attract and retain experienced individuals to serve as directors
and officers and that the directors and officers will continue to
consider all possible alternatives when making business decisions.
Accordingly, the Board of Directors has determined that it is in
the best interests of the stockholders of Butler-Delaware that
Butler-Delaware include a Delaware Director Liability Provision
(as defined below) and Delaware Indemnification Provisions (as
defined below) in its charter documents in order to take full
advantage of the protections permitted under Delaware Law.
Butler-Delaware will therefore continue to indemnify its officers,
directors and key employees and to provide limited liability for its
directors.
Director Liability
The Delaware Certificate includes a provision which eliminates
the directors' personal liability for monetary damages to the full
extent permitted by Delaware Law (the "Delaware Director
Liability Provision"). The Delaware Director Liability Provision
would eliminate the liability of Directors to Butler-Delaware and
its stockholders for monetary damages arising outmaintain
insurance on behalf of any violation
by a director of his fiduciary duty of due care. Under Delaware
Law, however, the Delaware Director Liability Provision would
not eliminate the personal liability of a director for (i) breach of
the director's duty of loyalty, (ii) actsperson who is or omissions not in good
faith or involving intentional misconduct or knowing violation of
law, (iii) payment of dividends or repurchases or redemptions of
stock other than from lawfully available funds, or (iv) any
transaction from which the Director derived an improper benefit.
The Delaware Director Liability Provision also would not affect a
Director's liability under the federal securities laws or the
recovery of damages by third parties. Furthermore, while
pursuant to Delaware Law the limitation on liability afforded by
the Delaware Director Liability Provision would eliminate a
Director's personal monetary liability for breach of the Director's
duty of due care, it will not eliminate the duty of due care. The
Directors would remain subject to equitable remedies, such as
actions for injunction or rescission, although such remedies,
whether as a result of timeliness or otherwise, may not be
effective in all situations. Furthermore, the Delaware Certificate
would have no effect on any liability arising by virtue of any act
or omission by a director which occurred prior to the effective
date of the Reincorporation. With regard to directors who are
also officers of Butler-Delaware, these persons would be insulated
from liability only with respect to their conduct as directors and
would not be insulated from liability for acts or omissions in their
capacity as officers. The Minnesota provisions are substantially
identical.
Indemnification
Delaware Law provides a detailed statutory framework covering
indemnification of directors, officers, employees or agents of the
corporation against liabilities and expenses arising out of legal
proceedings brought against them by reason of their status or
service as directors, officers, employees or agents. Section 145 of
Delaware Law ("Section 145") provides thatwas a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, (i)partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would
have the power to indemnify him against such liability under the
provisions of this Section 6.4. When, and if, the Corporation obtains such
insurance coverage, the Corporation shall not be indemnifiedrequired to maintain such
insurance coverage in effect; provided, however, that the Corporation
notifies the covered person in writing within five business days of the
making of the decision to not renew or replace such insurance policy. The
maintenance of such insurance shall not diminish, relieve or replace the
Corporation's liability for indemnification under the provisions hereof. A
claim for reimbursement hereunder, shall not be denied on the basis that
such amount may or will be covered by the corporation for expenses in defense of any action or
proceedingsuch insurance policy, if such
person is sued by reason of his servicepayments from the insurance company will not be made to the covered
person within 10 business days of the claim for reimbursement.
(i) Definitions. For the purpose of this Section 6.4, references
to "the Corporation" include all constituent corporations absorbed in a
consolidation or merger as well as the resulting or surviving corporation,
so that any person who is or was a director or officer of such a constituent
corporation or is or was serving at the request of such constituent
corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise shall stand in the same position
under the provisions of this Section 6.4, with respect to the extent that such person has been successful in
defense of such actionresulting or
proceeding,surviving corporation as he would if he had served the resulting or
in defense of any claim,
issue or matter raised in such litigation, (ii) may, in actions other
than actions by orsurviving corporation in the rightsame capacity.
For purposes of this Section 6.4, the following definitions shall apply
(i) The term "other enterprise" shall include employee
benefit plans.
(ii) The term "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan.
(iii) The term "serving at the request of the
corporation (suchCorporation" shall include any service as derivative actions), be indemnified for expenses, judgments, fines,
amounts paid in settlementa director or officer of the
Corporation which imposes duties on, or involves services by, such
litigation, even if he is not
successful on the merits, if hedirector or officer with respect to an employee benefit plan, its
participants, or beneficiaries.
(iv) A person who acted in good faith and in a manner he
reasonably believed to be in or notthe interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation".
Section 6.5. Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation,
(andpartnership, association or other organization in which one or more of its
directors or officers are directors or officers, or have a criminal proceeding, if
he did not have reasonable cause to believe his conduct was
unlawful), and (iii) mayfinancial interest,
shall be indemnified by the corporationvoid or voidable solely for expenses (but not judgmentsthis reason, or settlements) of any action by the
corporation or a derivative action (such as a suit by a stockholder
alleging a breach bysolely because the
director or officer of a duty owed tois present at or participates in the corporation), even if he is not successful, provided that he acted
in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the corporation, provided that no
indemnification is permitted without court approval if the director
has been adjudged liable to the corporation.
The Delaware Certificate takes full advantage of the permissive
Delaware indemnification laws, and both the Delaware Certificate
and Delaware Bylaws include provisions (the "Delaware
Indemnification Provisions") which provide that: (i) Butler-
Delaware is required to indemnify its officers and directors to the
full extent permitted by law, including those circumstances in
which indemnification would otherwise be discretionary; (ii)
Butler-Delaware may, by actionmeeting of the Board
of Directors provide indemnificationor committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such
purpose, if: (1) the material facts as to employeeshis relationship or interest and other agentsas
to the contract or transaction are disclosed or are known to the Board or
the committee, and the Board or committee in good faith authorizes the
contract or transaction by the affirmative votes of Butler-
Delaware with the same scope and effect as the foregoing
indemnification of officers and directors; and (iii) Butler-
Delaware may adopt bylaws or enter into one or more
agreements with any person which provide for indemnification
greater or different than that provided in the Delaware
Certificate. As noted above, the Delaware Bylaws provide for
indemnification unless the conducta majority of the
person in question is
knowingly fraudulent, deliberately dishonestdisinterested directors, even though the disinterested directors be less than
a quorum; or willful misconduct.
Minnesota Law provides for mandatory indemnification (as
opposed(2) the material facts as to optional indemnification under Delaware Law) in
generally the same circumstanceshis relationship or interest and as Delaware Law provided
certain criteria are met, and also provides that corporations are
permitted to limit the scope of indemnification through bylaw
provisions, agreements or other corporate action. However,
Minnesota Law (unlike Delaware Law) does not authorize a
corporation to provide indemnification greater than that specified
in Minnesota Law. Thus, on the whole, Minnesota Law offers
less indemnification protection than that which can be offered by
corporations to directors, officers and other key employees under
Delaware Law.
The Delaware Indemnification Provisions are intended to
indemnify Butler-Delaware's officers and directors
to the full
extent permitted under Delaware Lawcontract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and if the Boardcontract or transaction is
specifically approved in good faith by vote of Directors so determines,the stockholders; or (3) the
contract or transaction is fair as to provide indemnification protection to
employees and other agentsthe Corporation as of Butler-Delaware. In addition, the Delaware Indemnification Provisions will enable Butler-Delaware
in the future, iftime it is
authorized, approved or ratified, by the Board, a committee thereof or the
stockholders. Common or interested directors may be counted in
determining the presence of Directors,a quorum at a meeting of the Board or of a
committee which authorizes the contract or transaction.
Section 6.6. Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of,
punch cards, magnetic tape, photographs, microphotographs or any other
information storage device, provided that the records so kept can be
converted into clearly legible form within a reasonable time. The
Corporation shall so convert any records so kept upon the request of any
person entitled to enter into
indemnification agreements with its directors, officers, employeesinspect the same.
Section 6.7. Amendment of Bylaws. The Bylaws of the
Corporation may from time to time be repealed, amended or agents. As stated above,altered, or
new Bylaws may be adopted, in either of the Company does not currently
intendfollowing ways:
(i) By the vote of a majority of the stockholders entitled to
enter intovote at any such agreements. The shareholders
should note that sinceannual or special meeting thereof; and
(ii) By resolution adopted by a majority of the
members of the Board of Directors will
be beneficiariesthen in office; provided, however that
the power of the Delaware Indemnification Provisions,directors to suspend, repeal, amend or otherwise alter the
Board membersBylaws or any portion thereof may be vieweddenied as having a personal interest into any Bylaws or portion
thereof enacted by the approval of the Reincorporationstockholders if at the potential expensetime of such enactment the
shareholders.
Possible Consequencesstockholders shall so expressly provide.
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
(1) That I am the duly elected and acting Secretary of IndemnificationButler
National Corporation Kansas, a Kansas Corporation; and
Directors' Limited
Liability Generally
The Delaware Director Liability Provision and(2) That the Delaware
Indemnification Provisions could, under certain circumstances,
have an adverse impact on Butler-Delaware. Inforegoing Bylaws, comprising nine (9) pages,
constitute the event that
Butler-Delaware is injuredoriginal bylaws of said Corporation, as a result of a Director's breach of
fiduciary duties, including in connection with a takeover attempt,duly adopted at the
Delaware Director Liability Provision may prevent Butler-
Delaware from recovering compensation from the Director for
damage it has suffered. In addition, the Delaware
Indemnification Provision may require Butler-Delaware to pay
the costs of a legal defense and legal judgment arising out of
injuries to third parties caused by the acts of its directors, officers
or third parties acting on behalf of Butler-Delaware which Butler-
Delaware would not otherwise be obligated to pay.
Loans to Officers and Employees
Under Delaware Law, a corporation may make loans to, or
guarantee the obligations of, or otherwise assist, its officers and
other employees and those of its subsidiaries (including a director
who is an officer or employee of the corporation or its
subsidiaries) when such action, in the judgment of the
corporation's board of directors, may reasonably be expected to
benefit the corporation. Under Minnesota Law, a majority of
directors present must approve such transactions and such loans,
guarantees, sureties or other financial assistance must be in the
usual and regular course of the business of the corporation; with,
or for the benefit of, a related organization, an organization in
which the corporation has a financial interest, a business
relationship with, or to which the corporation has the power to
make donations; with, or for the benefit of, an officer or other
employee of the corporation or a subsidiary and must reasonably
be expected to benefit the corporation; or, such action must be
approved by two-thirds vote of disinterested shareholders or a
unanimous vote of all outstanding shares whether or not they are
entitled to vote.
Voting by Ballot
The Delaware Certificate provides that the election of directors
need not be by written ballot unless requested by the Chairmanfirst meeting of the Board of Directors or by a majority of the outstanding
shares entitled to vote in the election of directors that are present
or represented by proxy at a meeting at which directors are to be
elected. Minnesota Law has no comparable provision, but
expressly provides that the method of election may be imposed by
or in the manner provided in the articles of incorporation or
bylaws.
Inspection of Shareholder Lists
Minnesota Law grants an absolute right of inspection of the
corporate records and books, including all stocks subscribed,
transferred, cancelled, or retired. Delaware Law does not
provide any similar absolute right of inspection, but does grant
any stockholder of record of a corporation the right to inspect the
stockholder list of the corporation for any purpose reasonably
related to such person's interest as a stockholder and, for a ten-
day period preceding a stockholder meeting, for any purpose
germane to the meeting.
Special Shareholder Meetings
The holders of 10% or more of the voting power of the shares
entitled to vote generally have an absolute right to demand a
special meeting of shareholders under Minnesota Law.
Shareholders of Delaware corporations are not entitled to
demand special meetings unless so authorized by the
corporation's certificate of incorporation or bylaws. Under
Butler-Delaware's Bylaws, special meetings may not be called by
the shareholders but only by the officers or the Board of
Directors.
APPENDIX B
302A.471 RIGHTS OF DISSENTING SHAREHOLDERS. -
Subdivision 1. Actions creating rights. A shareholder of a
corporation may dissent from, and obtain payment for the fair
value of the shareholder's shares in the event of, any of the
following corporate actions:
(a) An amendment of the articles that materially and adversely
affects the rights or preferences of the shares of the dissenting
shareholder in that it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the
redemption of the shares, including a provision respecting a
sinking fund for the redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the
shares to acquire shares, securities other than shares, or rights to
purchase shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a
matter, or to cumulate votes, except as the right may be excluded
or limited through the authorization or issuance of securities of
an existing or new class or series with similar or different voting
rights; except that an amendment to the articles of an issuing
public corporation that provides that section 302A.671 does not
apply to a control share acquisition does not give rise to the right
to obtain payment under this section;
(b) A sale, lease, transfer, or other disposition of all or
substantially all of the property and assets of the corporation not
made in the usual or regular course of its business, but not
including a disposition in dissolution described in section
302A.725, subdivision 2, or a disposition pursuant to an order of
a court, or a disposition for cash on terms requiring that all or
substantially all of the net proceeds of disposition be distributed
to the shareholders in accordance with their respective interests
within one year after the date of disposition.
(c) A plan of merger to which the corporation is a party, except
as provided in subdivision 3;
(d) A plan of exchange to which the corporation is a party as the
corporation whose shares will be acquired by the acquiring
corporation, if the shares of the shareholder are entitled to be
votedthereof duly held on the plan; or
(e) Any other corporate action taken pursuant to a shareholder
vote with respect to which the articles, the bylaws, or a resolution
approved by the board directs that dissenting shareholders may
obtain payment for their shares.
Subd. 2. Beneficial owners. (a) A shareholder shall not assert
dissenters' rights as to less than all29th day
of the shares registered in the
name of the shareholder, unless the shareholder dissents with
respect to all the shares that are beneficially owned by another
person but registered in the name of the shareholder and
discloses theOctober, 2001.
IN TESTIMONY WHEREOF, I have hereunto subscribed my
name and addressaffixed the seal of each beneficial owner on
whose behalf the shareholder dissents. In that event, the rightssaid corporation this day 25th of the dissenter shall be determined as if the shares as to which the
shareholder has dissented and the other shares were registered in
the names of different shareholders.
(b) A beneficial owner of shares who is not the shareholder may
assert dissenters' rights with respect to shares held on behalf of
the beneficial owner, and shall be treated as a dissenting
shareholder under the terms of this section and section 302A.
473, if the beneficial owner submits to the corporation at the time
of or before the assertion of the rights a written consent of the
shareholder.
Subd. 3. Rights not to apply. The right to obtain payment under
this section does not apply to a shareholder of the surviving
corporation in a merger, if the shares of the shareholder are not
entitled to be voted on the merger.
Subd. 4. Other rights. The shareholders of a corporation who
have a right under this section to obtain payment for their shares
do not have a right at law or in equity to have a corporate action
described in subdivision 1 set aside or rescinded, except when the
corporate action is fraudulent with regard to the complaining
shareholder or the corporation.
302A.473 PROCEDURES FOR ASSERTING DISSENTERS'
RIGHTS. - Subdivision 1. Definitions. (a) For purposes of this
section, the terms defined in this subdivision have the meanings
given them.
(b) "Corporation" means the issuer of the shares held by a
dissenter before the corporate actions referred to in section
302A.471, subdivision 1 or the successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a
corporation immediately before the effective date of the
corporate action referred to in section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the
effective date of the corporate action referred to in section
302A.471, subdivision 1 up to and including the date of payment,
calculated at the rate provided in section 549.09 for interest on
verdicts and judgments.
Subd.2. Notice of action. If a corporation calls a shareholder
meeting at which any action described in section 302A.471,
subdivision 1 is to be voted upon, the notice of the meeting shall
inform each shareholder of the right to dissent and shall include
a copy of section 302A.471 and this section and a brief
description of the procedure to be followed under these sections.
Subd.3. Notice of dissent. If a proposed action must be
approved by the shareholders, a shareholder who wishes to
exercise dissenters' rights must file with the corporation before
the vote on the proposed action a written notice of intent to
demand the fair value of the shares owned by the shareholder
and must not vote the shares in favor of the proposed action.
Subd. 4. Notice of procedure; deposit of shares. (a) After the
proposed action has been approved by the board and, if
necessary, the shareholders, the corporation shall send to all
shareholders who have complied with subdivision 3 and to all
shareholders entitled to dissent if no shareholder vote was
required, a notice that contains:
(1) The address to which a demand for payment and certificates
of certificated shares must be sent in order to obtain payment
and the date by which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will
apply after the demand for payment is received;
(3) A form to be used to certify the date on which the
shareholder, or the beneficial owner on whose behalf the
shareholder dissents, acquired the shares or an interest in them
and to demand payment; and
(4) A copy of section 302A.471 and this section and a brief
description of the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting
shareholder must demand payment and deposit certificated shares
or comply with any restrictions on transfer of uncertificated
shares within 30 days after the notice was given, but the dissenter
retains all other rights of a shareholder until the proposed action
takes effect.
Subd. 5. Payment; return of shares. (a) After the corporate
action takes effect, or after the corporation receives a valid
demand for payment, whichever is later, the corporation shall
remit to each dissenting shareholder who has complied with
subdivisions 3 and 4 the amount the corporation estimates to be
the fair value of the shares, plus interest, accompanied by:
(1) The corporation's closing balance sheet and statement of
income for a fiscal year ending not more than 16 months before
the effective date of the corporate action, together with the latest
available interim financial statements;
(2) An estimate by the corporation of the fair value of the shares
and a brief description of the method used to reach the estimate;
and
(3) A copy of section 302A.471 and this section, and a brief
description of the procedure to be followed in demanding
supplemental payment.
(b) The corporation may withhold the remittance described in
paragraph (a) from a person who was not a shareholder on the
date the action dissented from was first announced to the public
or who is dissenting on behalf of a person who was not a
beneficial owner on that date. If the dissenter has complied with
subdivisions 3 and 4, the corporation shall forward to the
dissenter the materials described in paragraph (a), a statement of
the reasons for withholding the remittance, and an offer to pay to
the dissenter the amount listed in the materials if the dissenter
agrees to accept that amount in full satisfaction. The dissenter
may decline the offer and demand payment under subdivision 6.
Failure to do so entitles the dissenter only to the amount offered.
If the dissenter makes demand, subdivisions 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of
the deposit of certificates or the imposition of transfer restrictions
on uncertificated shares, it shall return all deposited certificates
and cancel all transfer restrictions. However, the corporation
may again give notice under subdivision 4 and require deposit or
restrict transfer at a later time.
Subd. 6. Supplemental payment; demand. If a dissenter believes
that the amount remitted under subdivision 5 is less than the fair
value of the shares plus interest the dissenter may give written
notice to the corporation of the dissenter's own estimate of the
fair value of the shares, plus interest within 30 days after the
corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is
entitled only to the amount remitted by the corporation.
Subd. 7. Petition; determination. If the corporation receives a
demand under subdivision 6, it shall, within 60 days after
receiving the demand, either pay to the dissenter the amount
demanded or agreed to by the dissenter after discussion with the
corporation or file in court a petition requesting that the court
determine the fair value of the shares, plus interest. The petition
shall be filed in the county in which the registered office of the
corporation is located, except that a surviving foreign corporation
that receives a demand relating to the shares of a constituent
domestic corporation shall file the petition in the county in this
state in which the last registered office of the constituent
corporation was located. The petition shall name as parties all
dissenters who have demanded payment under subdivision 6 and
who have not reached agreement with the corporation. The
jurisdiction of the court is plenary and exclusive. The court may
appoint appraisers, with powers and authorities the court deems
proper, to receive evidence on and recommend the amount of the
fair value of the shares. The court shall determine whether the
shareholder or shareholders in question have fully complied with
the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the
court finds relevant, computed by any method or combination of
methods that the court, in its discretion, sees fit to use, whether
or not used by the corporation or by a dissenter. The fair value
of the shares as determined by the court is binding on all
shareholders, wherever located. A dissenter is entitled to
judgment for the amount by which the fair value of the shares as
determined by the court, plus interest, exceeds the amount, if any,
remitted under subdivision 5, but shall not be liable to the
corporation for the amount, if any, by which the amount, if any,
remitted to the dissenter under subdivision 5 exceeds the fair
value of the shares as determined by the court, plus interest.
Subd. 8. Costs; fees; expenses. (a) The court shall determine
the costs and expenses of a proceeding under subdivision 7,
including the reasonable expenses and compensation of any
appraiser appointed by the court, and shall assess those costs and
expenses against the corporation, except that the
court may assess part or all of those costs and expenses against a
dissenter whose action in demanding payment under subdivision 6
is found to be arbitrary, vexatious, or not in good faith.
(b) If the court finds that the corporation has failed to comply
substantially with this section, the court may assess all fees and
expenses of any experts or attorneys as the court deems equitable.
These fees and expenses may also be assessed against a person
who has acted arbitrarily, vexatiously, or not in good faith in
bringing the proceeding, and may be awarded to a party injured
by those actions.
(c) The court may award, in its discretion, fees and expenses to
an attorney for the dissenters out of the amount awarded to the
dissenters, if any.
October, 2001.
_________________________ /S/ William A. Griffith
(SEAL) William A. Griffith,
Secretary