EXHIBIT 10.40
SECURED NON-RECOURSE PROMISSORY NOTE
January 28, 1998 $168,278.74
FOR VALUE RECEIVED, Hugh G. McBreen, an individual residing at 15 Kensington
Dr., N. Barrington, IL 60010 ("Payor"), hereby promises to pay to Butler
International, Inc., a Maryland corporation ("Payee" or the "Company"), or its
assigns, the principal amount of one hundred sixty-eight thousand two hundred
seventy-eight dollars and 74 cents ($168,278.74). Certain capitalized terms
used in this Secured Non-Recourse Promissory Note (the "Note") are defined in
Section 3 below.
This Note is being made by Payor in order to finance the Payor's purchase of
(i) 20,000 shares of common stock, par value $.001 per share, of the Company
(the "Common Stock") from the Company pursuant to a warrant agreement made
between the Payor and the Company on May 26, 1993; (ii) 10,000 shares of Common
Stock from the Company pursuant to the 1992 Stock Option Plan for Non-employee
Directors; and (iii) 8,333 shares of Common Stock from the Company pursuant to
the 1990 Directors Stock Option Plan.
This Note is secured by the Pledged Collateral under the terms of the Stock
Pledge Agreement and is entitled to the benefits thereof.
1. Payment of Note.
(a) Maturity Date. The entire unpaid principal balance of this Note (together
with interest accrued thereon) shall become due and payable on the seventh
anniversary of the date of this Note;
(b) Interest. No interest shall accrue on this Note; and
(c) Non-Recourse Obligations. Notwithstanding anything to the contrary stated
herein, Payee agrees that for payment of this Note it will look solely to
the Pledged Collateral or such other collateral, if any, it may now or
hereafter be given to secure the payment of this Note, and no other assets
of Payor shall be subject to levy, execution or other enforcement procedure
for the satisfaction of the remedies of Payee, or for any payment required
to be made under this Note.
2. Events of Default.
(a) Definition. For purposes of this Note, an Event of Default shall be deemed
to have occurred if:
(i) Payor fails to pay when due any amount (whether interest, principal or
other amount) then due or payable on this Note for a period of thirty (30)
days after the holder of this Note notifies Payor of such failure;
(ii) Payor fails to perform or observe any other provision contained in this
Note or the Stock Pledge Agreement and such failure continues unremedied
for a period of thirty (30) days after the holder of this Note notifies
Payor of such breach; or
(iii) Payor makes an assignment for the benefit of creditors or admits in
writing his inability to pay his debts generally as they become due; or an
order, judgment or decree is entered adjudicating Payor bankrupt or
insolvent; or any order for relief with respect to Payor is entered under
the Bankruptcy Code; or Payor petitions or applies to any tribunal for the
appointment of a custodian, trustee, receiver or liquidator, or commences
any proceeding relating to himself under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
law of any jurisdiction; or any such petition or application is filed, or
any such proceeding is commenced, against Payor and either (a) Payor in
writing indicates his approval thereof, consents thereto or acquiesces
therein or (b) such petition, application or proceeding is not dismissed
within ninety (90) days.
(b) Consequences of Events of Default.
(i) If any Event of Default (other than the type described in paragraph
2(a)(iii) hereof) has occurred, the holder of this Note may demand (by
written notice delivered to Payor) immediate payment of all or any portion
of the outstanding principal amount of this Note, which amount shall
become due and payable upon such demand. If an Event of Default of the
type described in paragraph 3(a) (iii) has occurred, then all of the
outstanding principal amount of this Note shall automatically be
immediately due and payable without any action on the part of the holder
of this Note.
(ii) Each holder of this Note shall also have any other rights which such
holder may have been afforded under this Note or the Stock Pledge
Agreement at any time and any other rights which such holder may have
pursuant to applicable law.
3. Certain Defined Terms. As used in this Note, the following terms shall have
the following meanings:
"Bankruptcy Code" means the Bankruptcy Code of 1978, as amended.
"Pledged Collateral" means the Common Stock pledged by Payor under the Stock
Pledge Agreement as security for Payor's performance of this obligations under
this Note.
"Stock Pledge Agreement" means the Stock Pledge Agreement dated the date hereof
between Payor and the Company.
4. Amendment and Waiver. Except as otherwise expressly provided herein, the
provisions of this Note may not be amended and Payor may not take any action
prohibited herein, or omit to perform any act required to be performed by him
herein, unless Payor has obtained the
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prior written consent of the holder of this Note.
5. Cancellation. After all obligations for the payment of money arising under
this Note have been paid in full, this Note will be surrendered to Payor for
cancellation.
6. Notices; Place of Payment. Any notice hereunder shall be in writing and
shall be delivered by recognized courier, facsimile or certified mail, return
receipt requested, and shall be conclusively deemed to have been received by a
party hereto and to be effective on the day on which delivered or facsimiled to
such party at its address set forth below (or at such other address as such
party shall specify in writing):
If to Payor: Hugh G. McBreen
15 Kensington Dr.
N. Barrington, IL 60010
If to Payee: Butler International, Inc.
110 Summit Avenue
Montvale, New Jersey 07645
Attn: Chief Financial Officer
All payments to be made under this Note are to be delivered to the holder at
such address or to the attention of such person as the holder may designate by
prior written notice to Payor. At the request of the holder of this Note, all
payments shall be made by wire transfer of immediately available funds to an
account which the holder may designate from time to time.
7. Waiver of Presentment, Demand, Dishonor.
(a) Payor hereby waives presentment for payment, protest, demand, notice of
protest, notice of nonpayment and diligence with respect to this Note, and
waives and renounces all rights to the benefits of any statute of
limitations or any moratorium, appraisement, exemption, or homestead now
provided or that hereafter may be provided or allowed under the Bankruptcy
Code, both as to himself and as to all of his property, whether real or
personal, against the enforcement and collection of the obligations
evidenced by this Note and any and all extensions, renewals and
modifications hereof.
(b) No failure on the part of any holder of this Note to exercise any right or
remedy hereunder with respect to Payor, whether before or after the
happening of an Event of Default, shall constitute waiver of any such Event
of Default or of any other Event of Default by such holder or on behalf of
any other holder. No failure to accelerate the debt of Payor evidenced
hereby by reason of an Event of Default or indulgence granted from time to
time shall be construed to be a waiver of the right to insist upon prompt
payment thereafter, or shall be deemed to be a novation of this Note or a
reinstatement of such debt evidenced hereby or a waiver of such right of
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acceleration or any other right, or be construed so as to preclude the
exercise of any right any holder of this Note may have, whether by the laws
of the state governing this Note, by agreement or otherwise, and Payor
hereby expressly waives the benefit of any statute or rule of law or equity
that would produce a result contrary to or in conflict with the foregoing.
8. Governing Law. The validity, construction and interpretation of this Note
shall be governed by and construed in accordance with the internal laws of the
State of New Jersey.
9. Transfer; Assignment. This Note may not be negotiated, assigned or
transferred by Payor at any time, except with Payee's prior written consent.
This Note may not be negotiated, assigned or transferred by Payee except in
connection with the sale of all or substantially all of Payee's assets.
10. Entire Agreement. This Secured Non-Recourse Promissory Note and the Stock
Pledge Agreement contain the entire agreement of the parties and supersedes all
other agreements, understandings and representations, oral or otherwise, between
the parties with respect to the matters contained herein. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors, assigns, heirs, administrators, fiduciaries, next of kin
and executors. Section headings used herein are for convenience only and shall
not affect the meaning or construction of any of the provisions hereof. This
Agreement may be executed in any number of counterparts with the same effect as
if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, Payor has executed and delivered this Secured Non-Recourse
Promissory Note on the date first written above.
/s/ Hugh G. McBreen
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Hugh G. McBreen
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