BUTLER NATIONAL CORPORATION
19920 W. 161st Street
Olathe, Kansas 66062
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 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, 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. To ratify the selection of Weaver & Martin, L.L.C. as auditors
for the fiscal year ending April 30, 2002.
3. To consider and vote upon a proposal to approve changing our
state incorporation from Delaware to Kansas by merging into a
wholly owned subsidiary of Butler National Corporation which
is a Kansas 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 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
November 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
19920 W. 161st Street
Olathe, Kansas 66062
PROXY STATEMENT
General
This Proxy Statement is furnished to our shareholders in
connection with the solicitation of proxies by our Board of Directors to
be voted at the Annual Meeting of Shareholders to be held on January
8, 2002, or any adjournment or adjournments thereof. The cost of this
solicitation will be borne by us, Butler National Corporation (the
"Company"). In addition to solicitation by mail, our officers, directors
and employees may solicit proxies by telephone, telegraph, or in
person. We may also request banks and brokers to solicit their
customers who have a beneficial interest in the our 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 commenced on or about November
20, 2001. Our corporate offices are located at 19920 W. 161st Street,
Olathe, Kansas 66062 and our telephone number is (913) 780-9595.
We have outstanding only one class of Common Stock, par value
$0.01 per share ("Common Stock"), of which 37,283,031 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 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
Our Charter Documents require that 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 our 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-
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 2002 Annual Meeting of Shareholders
is expected to be held on or about October 8, 2002, and proxy materials
in connection with that meeting are expected to be mailed on or about
September 1, 2002. Shareholder proposals prepared in accordance
with the proxy rules must be received by the Company on or before
June 5, 2002.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, with respect to our
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 our voting securities as of July 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 our
Common Stock (the only class of voting securities), (i) shares
beneficially owned by all directors and named executive officers of
Butler National Corporation, and (ii) total shares beneficially
owned by directors and officers as a group, as of April 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 our Board of Directors
has been fixed at five (5). A director holds office until the next
election of 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
were elected by the shareholders. 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 by the directors.
Name of Nominee and Director and Age
Clark D. Stewart
(61)
(n2)
Served Since
1989
Principal Occupation for Last Five Years and Other Directorships
President of our 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
(49)
(n2)
Served Since
1986
Principal Occupation for Last Five Years and Other Directorships
Chairman of the Board of Directors of our Company since August 30, 1989
and President of our 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 A. Griffith
(54)
(n1)(n2)
Served Since
1990
Principal Occupation for Last Five Years and Other Directorships.
Secretary of our 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
(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) 1994 to 2000. Field Engineer for King Radio
Corporation (avionics manufacturing) 1966 to 1974.
Name 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 and Age
(n1) Audit Committee
(n2) Compensation Committee
During the fiscal year ended April 30, 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 (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 2001, the Audit Committee consisted of
David Hayden, William E. Logan and William A. Griffith. Its
function is to assist the President in the review of our financial
performance and operations. The Audit Committee met four times during
the fiscal year ended April 30, 2001 and all members of the Audit
Committee attended the meeting.
During fiscal 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, 2001 and all members 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 Butler National Corporation.
Our executive officers 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 49 Chairman of the Board of Directors
Clark D. Stewart 61 President and Chief Executive Officer
Larry W. Franke 57 President of Avcon Industries, Inc.,
a wholly-owned subsidiary of
Butler National Corporation
Jon C. Fischrupp 61 President of Butler National Services,
Inc., a wholly-owned subsidiary of
Butler National Corporation
Angela Seba 37 Chief Financial Officer
William A. Griffith 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 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 Operations and Sales for Marketlink, an aircraft
marketing company. Mr. Franke joined our Company in July 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, Inc. and Vice President of 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 we
acquired LSI and he became President of LSI (now known as Butler
National Services, Inc.).
Angela Seba was the controller of A&M products, a subsidiary of First
Brands Corporation from 1995 to 1998. From 1998 to 2000 Ms. Seba was a
Senior 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 2000 to 2001. Ms. Seba joined us in October of 2001 as
Chief Financial 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 in 1992.
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 our
Chief Executive Officer and each of the other most highly
compensated executive officers of our Company whose salary and
bonus exceeded $100,000 (determined as of the end of the last fiscal
year) for the fiscal years ended April 30, 2001, 2000 and 1999:
SUMMARY COMPENSATION TABLE
Name and Principal Position
Clark D. Stewart, President and CEO, Director
Annual Compensation
Year Salary Bonus($) 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, EXERCISES AND HOLDINGS
The following table provides further information concerning grants of
stock options pursuant to the 1989 Nonqualified Stock Option Plan
during the fiscal 2001 year to the named executive officers:
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% ($)
0 10,000
(1) Except in the event of death or retirement for disability,
if Mr. Stewart ceases to be employed by us, his option shall
terminate. Upon death or retirement for disability, Mr. Stewart (or
his representative) shall have three months or one year, respectively,
following the date of death or retirement, as the case may be, in which to
exercise such options. All such options are immediately exercisable.
The following table provides information with respect to the named
executive officers concerning options exercised and unexercised
options held as of the end of our last fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Name
Clark D. Stewart, Chief Executive Officer
Shares Acquired on Exercise (no.)
0
Value Realized ($)
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, 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 our Company, and Mr. Griffith is the Secretary of
our Company.
During fiscal 2001, the consulting firm of Griffith &
Associates was paid for business consulting services rendered to the
Company in the approximate amount of $92,993. William A. Griffith,
who is one of our directors, is a principal at Griffith &
Associates. It is anticipated that Griffith & Associates will continue to
provide services for our Company.
During fiscal 2001, we did not pay consulting fees to Mr. Logan
for business consulting services. It is anticipated that Mr. Logan
may provide services for us. Mr. Logan was granted an option to
purchase 500,000 shares of common stock at an exercise price of
$0.50 per share on November 2, 1998. Mr. Logan exercised this
option by agreeing to provide consulting services to us
for an additional three years without receiving any further cash
payments other than for out of pocket expenses. The cost of the
consulting services are charged to various projects including
advances under the Indian consulting agreements.
During fiscal 2001, the consulting firm of Butler Financial
Corporation was paid for business consulting services rendered to us
in the approximate amount of $56,000. R. Warren Wagoner,
who is one of our directors, is a principal at Butler Financial
Corporation. It is anticipated that Butler Financial Corporation will
continue to provide services for us.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS, LITIGATION.
On April 30, 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 our Company 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.
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 our 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 our Company's compensation policy
as it related to the executive officers for fiscal 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 our 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.
2001 Compensation. To accomplish our 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 our 1989, 1993 and 1995 Plans. The
overall compensation policy, as implemented, endeavors to enhance our
profitability (and, thus, shareholder value) by tying the financial
interests of the management with 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. Franke (Vice
President-Aircraft Modifications), Mr. Wagoner (Vice President-
Avionics), and Mr. Fischrupp, (President-BNSI). For Mr.
Fischrupp we have in place a Performance Plan which couples the
executive's cash compensation with specific improvements in our
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 2001, Mr. Fischrupp and Mr. Franke 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 1989, 1993 and
1995 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
our stock price. Obviously, when shareholder value decreases, the
stock options granted to executives either decrease in value or have no
value.
In 2001, the Compensation Committee granted 2,835,000 options to
executive officers.
President and CEO Compensation. Clark D. Stewart, our
President and CEO, has an employment agreement with our Company
through August 31, 2006. The Compensation Committee granted to Mr.
Stewart 250,000 options subjectively based upon his performance.
Summary. The Compensation Committee believes that our
executive officers 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 2001 adequately reflect our 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
Our largest business segment is Aircraft Modifications. Therefore,
in order to provide a representative companion of our stock
performance, the following chart compares the cumulative stockholder
return on our Common Stock for the last five years with the cumulative
return on the OTCBB Stock Market The following chart assumes $100
invested May 1, 2000, in the above 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)
We have engaged Weaver & Martin, L.L.C. to audit our financial
statements for the year ended April 30, 1999, 2000, 2001, and 2002.
Weaver & Martin, L.L.C. was able to express an opinion on the
financial statements for the year ended April 30, 1999, 2000, and 2001.
Representatives of Weaver & 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.
We selected Weaver & Martin, L.L.C. to be the independent public
accountants for fiscal year 2002 which ends April 31, 2002, and
recommend that the appointment of the auditors be ratified by the
Shareholders. Although Shareholder approval is not required, it is the
policy of our 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 Weaver & Martin, L.L.C. as our independent public
accountant.
CHANGE OF DOMICILE
(Proposal No. 3)
Our Board of Directors has recommended, subject to the approval
of our stockholders and subject to the right of the Board of Directors to
determine not to proceed in certain circumstances, that we change our
corporate domicile (i.e. state of incorporation) from the State of
Delaware to the State of Kansas (the "Reincorporation") pursuant to the
Agreement and Plan of Merger (the "Merger Agreement") between our
Company and Butler National Corporation Kansas, a Kansas corporation
("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
DELAWARE AND KANSAS 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 Amended and Restated Articles
of Incorporation of Butler-Kansas (the "Kansas Articles"), a copy of
which is attached to this Proxy Statement as Exhibit B, and the Bylaws
of Butler-Kansas (the "Kansas Bylaws"), a copy of which is attached to
this Proxy Statement as Exhibit C. Copies of our Certificate of
Incorporation and Bylaws (the "Delaware Certificate" and the
"Delaware Bylaws," respectively) are available for inspection at our
principal executive office and copies will be sent to shareholders,
without charge, upon oral or written request directed to: William A.
Griffith, Secretary, Butler National Corporation, 19920 W. 161st
Street, Olathe, Kansas 66062, Telephone Number: (913) 780-9595.
In this discussion of the Reincorporation, the terms "Company" or
"Butler-Delaware" refer to our existing Delaware corporation and the
term "Butler-Kansas" refers to the new Kansas corporation which is
the proposed successor to 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 incorporated in
Delaware. 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 laws. The source of most of the Kansas corporation statutes is
Delaware law. The fees and expenses 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
we expect to be charged by the State of Kansas upon reincorporation
is $2,500.00. The State of Kansas does not have an annual filing fee
separate from the franchise fee. As one of the anticipated results of the
proposed Reincorporation, we may be able to save money by having our
corporate domicile relocated to Kansas. See "COMPARISON OF DELAWARE
AND KANSAS CORPORATE LAW" attached as Appendix A to this Proxy
Statement.
Additionally, we have no business operations in Delaware, and
consequently, do not retain counsel licensed to practice law in
Delaware. Thus, we have been and will be (absent the Reincorporation)
required to incur additional expenses to retain Delaware counsel in
most transactions involving Delaware,and to advise us when issues of
Delaware 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. Additionally, as a result
of the proposed Reincorporation, the rights of shareholders and the
authorized stock will change in some respects. For information
regarding those and other material differences between Delaware Law
and Kansas Law, see Appendix A attached to this Proxy Statement.
Our Board of Directors believes that the advantage of the
Reincorporation to Butler National Corporation and our shareholders
outweigh its possible disadvantages.
SHAREHOLDERS ARE URGED TO READ THE SUMMARY OF CERTAIN SIGNIFICANT
DIFFERENCES IN THE PROVISIONS OF DELAWARE AND KANSAS 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-Delaware with and into Butler-Kansas, which is
incorporated under Kansas Law as a wholly-owned subsidiary of
Butler-Delaware for purposes of the Merger. Butler-Kansas will be the
surviving corporation in the Merger and will continue under the name
"Butler National Corporation". Butler-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 our
outstanding shares of Common Stock is obtained, and the Merger
Agreement or an appropriate Certificate of Merger is filed with the
Secretary of State of the State of Kansas and Certificate of Merger with
the Secretary of State of the State of Delaware.
At the effective time of the Merger, we 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 and Bylaws is described below.
Upon completion of the Merger, each outstanding share of
Common Stock, par value $0.01 per share, of Butler-Delaware will be
converted into one share of Common Stock, $0.01 par value, of
Butler-Kansas. As a result, the existing shareholders of Butler-
Delaware will automatically become shareholders of Butler-Kansas,
Butler-Delaware will cease to exist and Butler-Kansas will continue to
operate our business under the name "Butler National Corporation."
Butler-Delaware stock certificates will be deemed to represent the same
number of Butler-Kansas shares as were represented by such Butler-
Delaware stock certificates prior to the Reincorporation. IT WILL
NOT BE NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR BUTLER-Delaware
STOCK CERTIFICATES FOR BUTLER-Kansas STOCK CERTIFICATES. Following the
Reincorporation, previously outstanding Butler-Delaware stock will
constitute "good delivery" in connection with sales through a broker, or
otherwise, of shares of Butler-Kansas. The Butler-Kansas Common
Stock is expected to be listed on the OTCBB Market as the Common
Stock of Butler-Delaware is presently listed. Upon completion of the
Reincorporation, the authorized capital stock of Butler-Kansas will
consist of 100,000,000 shares of Common Stock, $0.01 par value
and 50,000,000 shares of Preferred Stock $5.00 par value, which is
an increase in the authorized capital stock compared to Butler-
Delaware.
The Reincorporation will not result in any change to our daily
business operations or the present location of our principal executive
offices in Olathe, Kansas. The consolidated financial condition and
results of operations of Butler-Kansas immediately after the
consummation of the Reincorporation will be identical to that of Butler-
Delaware immediately prior to the consummation of the Reincorporation.
Additionally, at the effective time of the Merger, the Board of Directors
of Butler-Kansas will consist of those persons who currently are our
directors, all of whom are nominees for re-election at our Annual Meeting.
In addition, the individuals serving as executive officers of Butler-
Delaware immediately prior to the Merger will serve as executive
officers of Butler-Kansas upon the effectiveness of the Merger.
Pursuant to the Merger Agreement, each option or right to
purchase a share of Butler-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-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-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
Kansas Articles and the Kansas Bylaws. In addition, a vote for
approval and adoption of the Merger Agreement and Reincorporation
Proposal will constitute approval of the assumption by Butler-Kansas of
the Plans and agreements of Butler-Delaware, and the substitution of
shares of Butler-Kansas Common Stock for shares of Butler-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.
Rights of Appraisal
The holders of our Common Stock have the right to dissent from the
Reincorporation and receive from us payment in cash the value of the
shares. In general, to exercise dissenters' rights under Delaware Law, a
dissenting shareholder must file with our 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 Delaware
Law. After the proposed action has been approved by the shareholders
we 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
Delaware 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 us
of the notice that the proposed action has been approved by the required
vote of the shareholders. After the corporate action takes effect, we
must remit to each dissenting shareholder who has complied with the
requirements of law, the amount that 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 our Secretary of the dissenters' own estimate of the fair value
of the shares plus interest within 30 days after we 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 Delaware Law setting forth
the procedures for a holder of our 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 our shareholders; but no such amendment,
modification or supplement may be made if it would have a material
adverse effect upon the rights of our shareholders unless it has been
approved by the shareholders. The Merger Agreement also provides
that we 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 our best
interests and 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, our Board of Directors has
indicated that it will likely terminate the Reincorporation if we have
received notices of exercise of appraisal rights, with respect to, in
excess of 1% of the shares of the Common Stock of our outstanding.
Federal Income Tax Consequences of the Reincorporation
For 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-Delaware or Butler-Kansas. Each holder of
Common Stock will have the same basis in the Butler-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-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-Delaware will not recognize gain or loss for Federal income tax
purposes as a result of the Merger, and that Butler-Kansas will succeed
without adjustment to the tax attributes of Butler-Delaware. Butler-
Delaware is currently subject to state income taxation in Delaware. If
the Reincorporation is approved, Butler-Kansas will be obligated to pay
an annual franchise tax in Kansas and no longer be taxed in Delaware,
which we believe to be 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-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.
Our Annual Report for the fiscal year 2001 is enclosed. The 2001
Annual Report includes the Annual Report on Form 10-K containing our
financial statements for the fiscal year ended April 30, 2001.
A copy of Form 10-K and the Annual Report as we have filed
with the Securities and Exchange Commission, will be
furnished without charge to any shareholder who requests it in
writing to us 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 DELAWARE AND KANSAS CORPORATE LAW
PURPOSES 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 statutes 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, however, the exact wording of each states
corresponding code is not identical. Therefore, it is not practical to
summarize all of the 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 our
shareholders as a result of the Reincorporation.
Corporate Powers
Kansas Statutes Annotated "K.S.A." Section 17-6102 generally
tracks the language of Section 122 of the Delaware Code. However,
Section 122(17) expressly gives a corporation the power to renounce
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 K.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 split-up or a non-dividend
division of stock.
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 dividend 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 not expressly provide for that restriction.
However, the restriction may be implied.
Additionally, these sections of both the Kansas and Delaware
Codes 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 location for an annual meeting, the location will be at the
registered office. The analogous Delaware Code provision provides for
an annual meeting location as designated by the Board of Directors if
not otherwise specified. The Kansas Bylaws specifically provide for
the location of the annual 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
determination of validity of electronic submission of documents from
stockholders. Because Kansas does not have a provision for the
electronic submission of documents and ballots, there is no equivalent
Kansas Code provision.
Voting Trusts and Other Voting Agreements
Section K.S.A. 17-6508 of the Kansas Code limits the length of
time to ten (10) years for the term of an agreement that a stockholder
may transfer capital stock to another for the purpose of voting. Under
the Kansas provision, the voting trust agreement as originally fixed or
extended, maybe extended by one or more beneficiaries by written
agreement with consent of the trustees within the two years prior to
expiration of any voting trust agreement. Delaware Code, section 218
does not specify a time limit or renewal limitation.
List of Stockholders Entitled To Vote
Section 219 of the Delaware Code provides that lists of
stockholders entitled to vote may be provided on a reasonably
accessible electronic network (with instructions given related to
accessing the list at the time of notice of the meeting) or during
ordinary business hours at the principal place of business of the
Corporation. 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, if consent in writing, setting forth the action so
taken is signed by all of the holders of outstanding stock entitled to vote
on the action. Delaware Code, section 228 only requires the written
consent of the minimum 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 assets of
the corporation. 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
appraisal 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 (c) hereof that appraisal rights are
available for any or all 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 series 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 surviving or resulting corporation to which
the shares of such objecting stockholders would have been
converted had they assented to the 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 to assure compliance with laws and regulations. The
Board of Directors 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 the 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 be determined
from time to time by the Board. The members shall be designated
by the Board of Directors.
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 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 Company's Chief Financial Officer,
and the independent auditors. Unless circumstances dictate otherwise,
the meetings should occur quarterly in conjunction with a review of the
Company'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 be 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 vote of its shareholders. 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 but 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 Chairman 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 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 meeting 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 outstanding shares of all classes
of stock entitled to vote thereon present in person or by proxy at the
meeting, provided that (except as otherwise required by law or by the
Articles of Incorporation) the Board of Directors may require a larger vote
upon any election 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 meeting; 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 stockholder who is present.
Section 1.10. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Articles 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 the Kansas Statutes, if such
action had been voted upon by stockholders at a meeting thereof, the
certificate filed under such other 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. The Board of
Directors shall have the power to change the number of directors 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 Board of Directors or to
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 such resignation shall be
necessary to make it effective.
Section 2.3. Regular Meetings. Regular meetings of the Board
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 time determine,
and if so determined, notice thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Kansas whenever called by the Chairman of the Board, or by the Vice
Chairman of the Board, if any, by the Chief Executive Officer, President
or by any two directors. Reasonable notice thereof shall be given by the
person or persons calling the meeting.
Section 2.5. Telephonic Meetings Permitted. Unless otherwise
restricted by the Articles of Incorporation 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 participation 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 the Board of Directors a majority of the total number of directors shall
constitute a quorum for the transaction of business. The vote of a majority
of the directors present at a meeting at which a quorum is present shall be
the act of the Board unless the Articles of Incorporation or these Bylaws
shall require a vote of a greater number. In case at any meeting of the
Board 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 Chairmen 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 the writing or writings are filed with the minutes of
proceedings of the Board or committee.
ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors of
the Corporation. The Board 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 committee. In the absence or
disqualification of a member 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 place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise all the powers and
authority of the Board in the 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 committee shall have power
or authority in reference to amending the Articles of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange 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 seal
which shall have the name of the Corporation inscribed thereon and shall
be in such form as may be approved from time to time by the Board of
Directors. The corporate seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in any other manner reproduced.
Section 6.3. Waiver of 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 written 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 a 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 any written waiver of notice
unless so required by the Articles 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 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
director, 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 believe such action has been initiated
or threatened. With respect to any such action, suit or proceeding as to
which the director, officer, employee or agent notified, or is deemed to
have notified, the Corporation of the commencement 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 the director, officer, employee or
agent in the conduct of the defense 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 Corporation or as to
which the director, officer, employee or agent reasonably makes the
conclusion provided for in (B) above; and
(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 written consent. The
Corporation shall not settle any action or claim in any manner which
would impose any penalty or limitation on the director, 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 any proposed settlement.
(f) Not Exclusive. The indemnification and advancement of
expenses provided by this Section 6.4 shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement
of expenses may be entitled under the Articles of Incorporation, as
amended from time to time, or any agreement, vote of stockholders or
disinterested directors or 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 Corporation 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 Corporation 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 person's conduct which was finally adjudged to have been
knowingly fraudulent, deliberately dishonest or willful misconduct, or if
it is determined by a final judgment or other final adjudication by a court
of competent jurisdiction considering the question of indemnification that
such payment of indemnification is or would be in violation of applicable
law. The Corporation may enter into indemnification agreements with
each director and officer of the Corporation whom the Board of Directors
authorizes by vote of a majority of a quorum of disinterested directors.
(h) Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was 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, 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 required 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 such insurance policy, if such
payments 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 resulting or
surviving corporation as he would if he had served the resulting or
surviving corporation in the same 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" shall include any service as a director or officer of the
Corporation which imposes duties on, or involves services by, such
director 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 the 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,
partnership, association or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the
director or officer is present at or participates in the meeting of the Board
of Directors or 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 his relationship or interest and as
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 a majority of the
disinterested directors, even though the disinterested directors be less than
a quorum; or (2) the material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (3) the
contract or transaction is fair as to the Corporation as of the time 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 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 inspect the same.
Section 6.7. Amendment of Bylaws. The Bylaws of the
Corporation may from time to time be repealed, amended or altered, or
new Bylaws may be adopted, in either of the following ways:
(i) By the vote of a majority of the stockholders entitled to
vote at any annual or special meeting thereof; and
(ii) By resolution adopted by a majority of the
members of the Board of Directors then in office; provided, however that
the power of the directors to suspend, repeal, amend or otherwise alter the
Bylaws or any portion thereof may be denied as to any Bylaws or portion
thereof enacted by the stockholders if at the time of such enactment the
stockholders shall so expressly provide.
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
(1) That I am the duly elected and acting Secretary of Butler
National Corporation Kansas, a Kansas Corporation; and
(2) That the foregoing Bylaws, comprising nine (9) pages,
constitute the original bylaws of said Corporation, as duly adopted at the
first meeting of the Board of Directors thereof duly held on the 29th day
of October, 2001.
IN TESTIMONY WHEREOF, I have hereunto subscribed my
name and affixed the seal of said corporation this day 25th of October, 2001.
_________________________ /S/ William A. Griffith
(SEAL) William A. Griffith,
Secretary