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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Butler National Corp (QX) | USOTC:BUKS | OTCMarkets | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.0205 | 1.19% | 1.74 | 1.72 | 1.90 | 1.78 | 1.72 | 1.72 | 58,132 | 21:33:58 |
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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
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Item 9.01
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Financial Statements and Exhibits
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Exhibit No.
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Description
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10.1
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10.2
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10.3
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10.4
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104
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Cover Page Interactive Date File (embedded within the Inline XBRL document)
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BUTLER NATIONAL CORPORATION
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Date: January 8, 2025
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/s/Christopher J. Reedy
Christopher J. Reedy
Chief Executive Officer
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EXHIBIT 10.1
BUTLER NATIONAL CORPORATION 2025 ANNUAL CASH BONUS PLAN
1. Purpose. The purpose of the Butler National Corporation 2025 Annual Cash Bonus Plan is to enable the Company to attract and retain employees by providing a competitive cash bonus program that rewards outstanding performance.
2. Definitions. The following terms shall have the following meanings:
2.1 “Affiliate” means any corporation, limited liability company or other entity controlled by the Company.
2.2 “Award” means an award granted pursuant to the Plan, the payment of which shall be contingent on the attainment of Performance Goals with respect to a Performance Period, as determined by the Committee.
2.3 “Base Salary” means the Participant’s annualized rate of base salary on the last day of the Performance Period before (i) deductions for taxes or benefits and (ii) deferrals of compensation pursuant to any Company or Affiliate-sponsored plans.
2.4 “Board” means the Board of Directors of the Company, as constituted from time to time.
2.5 “Code” means the Internal Revenue Code of 1986, as amended from time to time, including any regulations or authoritative guidance promulgated thereunder and successor provisions thereto.
2.6 “Committee” means the Compensation Committee of the Board.
2.7 “Company” means Butler National Corporation and any successor thereto.
2.8 “Determination Date” means a date on which the outcome of the Performance Goals are substantially uncertain.
2.9 “Maximum Award” means as to any Participant for any Plan Year $2,000,000.
2.10 “Participant” means as to any Performance Period, any salaried employee of the Company or an Affiliate who is designated by the Committee to participate in the Plan for that Performance Period.
2.11 “Performance Criteria” means the performance criteria selected by the Committee and upon which the Performance Goals for a particular Performance Period are based, which may include, without limitation, any of the following: revenues or revenue growth, earnings per share; operating income; net income; operating profit (pre-allocation); non-financial key performance indicators and/or goals; return on invested capital, assets or equity; earnings before interest or taxes; earnings before interest, taxes, depreciation and amortization; market share; expense management; improvements in capital structure; profit margins; stock price; total stockholder return; free cash flow; working capital; capitalization; leverage ratio; liquidity; claims and claims management; quality; safety and productivity; talent recruitment and management. Such Performance Criteria may relate to the performance of the Company as a whole, a subsidiary, a business unit, division, department, individual or any combination of these and may be applied on an absolute basis and/or relative to one or more peer group companies or indices, or any combination thereof, as the Committee shall determine.
2.12 “Performance Goals” means the goals selected by the Committee, in its discretion, to be applicable for any Performance Period. Performance Goals shall be based upon one or more Performance Criteria. Performance Goals may include a threshold level of performance below which no Award will be paid and levels of performance at which specified percentages of the Target Award will be paid and may also include a maximum level of performance above which no additional Award amount will be paid.
2.13 “Performance Period” means the period for which performance is calculated, which unless otherwise indicated by the Committee, shall be the Plan Year.
2.14 “Plan” means the Butler National Corporation 2025 Annual Cash Bonus Plan, as may be amended.
2.15 “Plan Year” means the Company’s fiscal year.
2.16 “Pro-rated Award” means an amount equal to the Award otherwise payable to the Participant for a Performance Period in which the Participant was actively employed by the Company or an Affiliate for only a portion thereof, multiplied by a fraction, the numerator of which is the number of days the Participant worked during the Performance Period and the denominator of which is the number of days in the Performance Period.
2.17 “Target Award” means the target award payable under the Plan to a Participant for a particular Performance Period, which may be expressed as a percentage of the Participant’s Base Salary or such other measure as the Committee, in its sole discretion, may determine appropriate.
3. Administration.
3.1 Administration by the Committee. The Plan shall be administered by the Committee.
3.2 Authority of the Committee. Subject to the provisions of the Plan and applicable law, the Committee shall have the power, in addition to other express powers and authorizations conferred on the Committee by the Plan, to: (i) designate Participants; (ii) determine the terms and conditions of any Award; (iii) determine whether, to what extent, and under what circumstances Awards may be forfeited or suspended; (iv) interpret, administer, reconcile any inconsistency, correct any defect and/or supply any omission in the Plan or any instrument or agreement relating to, or Award granted under, the Plan; (v) establish, amend, suspend, or waive any rules for the administration, interpretation and application of the Plan; and (vi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.
3.3 Decisions Binding. All determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the Plan shall be final, conclusive and binding on all persons, and shall be given the maximum deference permitted by law.
3.4 Delegation By the Committee. The Committee, in its sole discretion, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company; provided, however, that any such delegation is in accordance with applicable laws.
3.5 Limitation of Liability. Members of the Committee and any officer or employee of the Company acting at the direction or on behalf of the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.
4. Eligibility and Participation.
4.1 Eligibility. All salaried employees of the Company and its Affiliates are eligible to participate in the Plan.
4.2 Participation. The Committee, in its discretion, shall select, no later than the Determination Date, the persons who shall be Participants for the Performance Period. Only eligible individuals who are designated by the Committee to participate in the Plan with respect to a particular Performance Period may participate in the Plan for that Performance Period. An individual who is designated as a Participant for a given Performance Period is not guaranteed or assured of being selected for participation in any subsequent Performance Period.
4.3 New Hires; Newly Eligible Participants. A newly hired or newly eligible Participant will be eligible to receive a Pro-rated Award reflecting participation for a portion of the Performance Period. For the avoidance of doubt, a newly hired or newly eligible individual must be designated by the Committee as a Participant eligible for an Award in order to receive any Award or portion thereof.
5. Terms of Awards.
5.1 Determination of Target Awards. Prior to, or reasonably promptly following the commencement of each Performance Period, but no later than the Determination Date, the Committee, in its sole discretion, shall establish the Target Award for each Participant, the payment of which shall be conditioned on the achievement of the Performance Goals for the Performance Period.
5.2 Determination of Performance Goals and Performance Formula. Prior to, or reasonably promptly following the commencement of, each Performance Period, but no later than the Determination Date, the Committee, in its sole discretion, shall establish in writing the Performance Goals for the Performance Period and shall prescribe a formula for determining the percentage of the Target Award which may be payable based upon the level of attainment of the Performance Goals for the Performance Period. The Performance Goals shall be based on one or more Performance Criteria, each of which may carry a different weight, and which may differ from Participant to Participant.
5.3 Adjustments. The Committee is authorized, in its sole discretion, to adjust or modify the calculation of a Performance Goal for a Performance Period in connection with any one or more of the following events: asset write-downs; significant litigation or claim judgments or settlements; the effect of changes in tax laws, accounting standards or principles, or other laws or regulatory rules affecting reporting results; any reorganization and restructuring programs; extraordinary nonrecurring items as described in accounting principles and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year or period; acquisitions or divestitures, including acquisitions or divestitures of aircraft or real estate; real estate gains or losses, one-time charges, integration charges, any other specific unusual or nonrecurring events or objectively determinable category thereof; foreign exchange gains or losses; and a change in the Company’s fiscal year.
6. Payment of Awards.
6.1 Determination of Awards; Certification.
(a) Following each Performance Period, the Committee shall determine the extent to which the Performance Goals have been achieved or exceeded. If the minimum Performance Goals established by the Committee are not achieved, no payment will be made.
(b) The Committee shall certify in writing the extent to which the Performance Goals have been achieved and shall then determine, in accordance with the prescribed formula, the amount of each Participant’s Award, if any.
(c) In determining the amount of each Award, the Committee may reduce or eliminate the amount of an Award if, in its sole discretion, such reduction or elimination is appropriate.
(d) The amount of an Award for any Plan Year shall not exceed the Maximum Award.
6.2 Form and Timing of Payment. Except as otherwise provided herein, as soon as practicable following the Committee’s certification for the applicable Performance Period, each Participant shall receive a cash lump sum payment of his or her Award, less required withholding. In no event shall such payment be made later than 2 1/2 months following the end of the Performance Period.
7. Termination of Employment. Except as set forth in a separate written agreement with a Participant, if a Participant’s employment terminates for any reason prior to the date that his or her Award is paid, all of the Participant’s rights to the Award shall be forfeited.
8. General Provisions.
8.1 Compliance with Legal Requirements. The Plan and Awards shall be subject to all applicable laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required.
8.2 Non-transferability. A person’s rights and interests under the Plan, including any Award or any amounts payable under the Plan may not be assigned, pledged, or transferred.
8.3 No Right to Employment. Nothing in the Plan or in any Award shall confer upon any person the right to continue in the employment of the Company or any Affiliate or affect the right of the Company or any Affiliate to terminate the employment of any Participant.
8.4 No Right to Award. A Participant shall not have any right to any Award under the Plan until such Award has been paid to such Participant, and participation in the Plan in one Performance Period does not connote any right to become a Participant in the Plan in any future Performance Period.
8.5 Withholding. The Company shall have the right to withhold from any Award, any federal, state or local income and/or payroll taxes required by law to be withheld and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to an Award.
8.6 Amendment or Termination of the Plan. The Board or the Committee may, at any time, amend, suspend or terminate the Plan in whole or in part. Notwithstanding the foregoing, no amendment shall adversely affect the rights of any Participant to Awards allocated prior to such amendment, suspension or termination.
8.7 Unfunded Status. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company and any Participant, beneficiary or legal representative or any other person. To the extent that a person acquires a right to receive payments under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA).
8.8 Governing Law. The Plan shall be construed, administered and enforced in accordance with the laws of Kansas without regard to conflicts of law.
8.9 Section 409A of the Code. It is intended that payments under the Plan qualify as short-term deferrals exempt from the requirements of Section 409A of the Code. In the event that any Award does not qualify for treatment as an exempt short-term deferral, it is intended that such amount will be paid in a manner that satisfies the requirements of Section 409A of the Code. The Plan shall be interpreted and construed accordingly.
8.10 Section Headings. The headings of the Plan have been inserted for convenience of reference only and in the event of any conflict, the text of the Plan, rather than such headings, shall control.
8.11 Severability. In the event that any provision of the Plan shall be considered illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, but shall be fully severable, and the Plan shall be construed and enforced as if such illegal or invalid provision had never been contained therein.
8.12 Notice. Any notice to be given to the Company or the Committee pursuant to the provisions of the Plan shall be in writing and directed to the Secretary of the Company.
8.13 Successors. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding upon any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the assets of the Company.
8.14 Clawback. All Awards may be subject to any clawback policy of the Company that may be in effect from time to time and, in accordance with such policy, may be subject to the requirement that the Awards be repaid to the Company after they have been distributed to the Participant. The action permitted to be taken by the Board under this Section is in addition to, and not in lieu of, any and all other rights of the Board and/or the Company under applicable law and shall apply notwithstanding anything to the contrary in the Plan.
8.15 Other Plans. Awards shall not be treated as compensation for purposes of any other compensation or benefit plan, program or arrangement of the Company or its Affiliates, unless (i) such other plan, program, or arrangement provides that compensation in the form of awards payable hereunder are to be considered as compensation thereunder, or (ii) the Committee so determines.
8.16 Effective Date. The Plan shall become effective on January 7, 2025, and continue until such time that it is terminated or suspended by the Committee or the Board.
EXHIBIT 10.2
RESTRICTED STOCK AGREEMENT
UNDER THE BUTLER NATIONAL CORPORATION
2016 EQUITY INCENTIVE PLAN
THIS AGREEMENT, made as of January 7, 2025, by and between Butler National Corporation, a Kansas corporation (hereinafter called the “Company”), and (hereinafter called the “Awardee”).
WITNESSETH:
WHEREAS, the Board of Directors of the Company (“Board”) has adopted, and stockholders of the Company approved at the 2016 annual meeting of stockholders, the Butler National Corporation 2016 Equity Inventive Plan (“Plan”) pursuant to which restricted stock of the Company may be granted to employees of the Company and its subsidiaries; and
WHEREAS, Awardee is now an employee of the Company or a subsidiary of the Company; and
WHEREAS, the Company desires to make a restricted stock award to the Awardee for ( ) shares of its common stock (“Award”) under the terms hereinafter set forth and the terms of the Plan.
NOW, THEREFORE, in consideration of the premises, and of the mutual agreements hereinafter set forth, it is covenanted and agreed as follows:
1. Award Subject to Plan. This Award is made under and is expressly subject to all the terms and provisions of the Plan, a copy of which Awardee acknowledges has been received, and which terms are incorporated herein by reference. Awardee agrees to be bound by all the terms and provisions of the Plan. Terms not defined herein shall have the meaning ascribed thereto in the Plan. The Committee referred to in Section 4 of the Plan (the “Committee”) has been appointed by the Board, and designated by it, as the Committee to make awards under the Plan.
2. Grant of Award. Pursuant to action of the Committee, which action was effective on January 7, 2025 (“Date of Award”), the Company awards to the Awardee for ( ) shares of the common stock of the Company, of the par value of $0.01 per share (“Common Stock”); provided, however, that the shares hereby awarded (“Restricted Stock”) are nontransferable by the Awardee unless and until vested as provided in this Agreement and are subject to the risk of forfeiture described herein. Unless and until vested, at the Company’s election, the shares awarded pursuant to the Restricted Stock Award will either be represented in book-entry form by the transfer agent for the Common Stock or by a certificate held by the Company or such transfer agent. Any certificate relating to such shares shall be registered in the name of the Awardee and shall bear an appropriate legend referring to the applicable terms, conditions and restrictions.
3. Time Vesting. If the Awardee is and has been continuously in the service of the Company or a subsidiary of the Company since the Date of the Award, then the Award shall vest in three installments with the first installment of ( ) shares vesting immediately upon the Date of Award, the second installment of ( ) shares vesting on the one year anniversary of the Date of Award and the third installment of ( ) shares vesting on the second year anniversary of the Date of Award after which such shares of Restricted Stock shall become immediately free of such restrictions.
4. Change in Control. Upon a Change in Control, all shares of Restricted Stock not then vested shall become immediately vested and free of the restrictions of Section 3.
5. Death of the Awardee; Total Disability; Retirement.
(a) In the event of the death of the Awardee or termination of employment of Awardee prior to the one year anniversary of the Date of Award, this Award shall terminate and all shares of unvested Restricted Stock shall thereupon automatically and without further action be cancelled and forfeited for no consideration. In the event of death of the Awardee or termination of employment of Awardee due to Total Disability or Retirement on or after the one year anniversary of the Date of Award, any shares of Restricted Stock that remain unvested at such time shall become immediately vested and free of the restriction of Section 2.
(b) In the event of Awardee’s termination of service with the Company and subsidiaries of the Company for any reason other than as specified in the second sentence of Section 5(a), any shares of Restricted Stock, to the extent not vested as of the termination date, shall thereupon automatically and without further action be cancelled and forfeited for no consideration.
(c) For purposes of this Agreement “Retirement” shall mean the voluntary termination of employment by Awardee by reason of retirement at or after age 65. The determination of whether a particular termination of employment qualifies as Retirement shall be made in the sole discretion of the Committee; provided, however, that if the Awardee is not an officer subject to Section 16 of the Securities Exchange Act of 1934 at the Date of Award or at the time of determination, the determination whether a particular termination of employment is a Retirement under this subsection (c) may be made by an officer or officers of the Company designated by the Committee in its sole discretion.
(d) For purposes of this Agreement “Total Disability” shall mean total disability as defined under the Company’s or applicable Awardee’s group insurance plan covering total disability or, in the absence of any such insurance plan, as determined by the Committee.
6. Dividends. Any cash or in-kind dividends paid with respect to the unvested shares of Restricted Stock shall be withheld by the Company and shall be paid to Awardee, without interest, only when, and if, such shares of Restricted Stock shall become fully vested, and in no event later than 2 ½ months after the close of the year in which such Restricted Stock vests.
7. Voting Rights. Prior to the vesting of the shares of Restricted Stock, the Awardee shall have no right to vote the shares and, except as expressly provided otherwise herein, no other rights as a holder of outstanding shares of Common Stock with respect to the Restricted Stock.
8. Payment and Taxes. As soon as practicable following the vesting of any shares of Restricted Stock, the Company shall deliver to Awardee shares of Common Stock then vested. Awardee shall pay, or make arrangements acceptable to the Company for the payment of, any and all federal, state, and local tax withholding that in the opinion of the Company is required by law. For the avoidance of doubt, the Awardee shall be entitled to satisfy any tax withholding obligations hereunder through an election to have shares of Common Stock of the Company withheld from any payments under this Agreement. Unless Awardee satisfies any such tax withholding obligation by paying the amount in cash, by check, stock withholding, or by other arrangements acceptable to the Company, the Company shall withhold a portion of the stock payable upon vesting equal to the tax withholding obligation. Any share withholding pursuant to this Section 8 is intended to be exempt from Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), pursuant to Rule 16b-3(e) under the Exchange Act. As a condition to the effectiveness of this Restricted Stock Award, Awardee shall not make any election to Section 83(b) of the Internal Revenue Code of 1986, as amended, to realize taxable income with respect to the Award as of the Date of Award without consent of the Committee.
9. Administration. This Award has been made pursuant to a determination made by the Committee, subject to the express terms of this Agreement, and the Committee shall have plenary authority to interpret any provision of this Agreement and to make any determinations necessary or advisable for the administration of this Agreement and may waive or amend any provisions hereof in any manner not adversely affecting the rights granted to the Awardee by the express terms hereof.
10. No Right to Continued Service. Nothing in this Agreement shall be deemed to create any limitation or restriction on such rights as the Company otherwise would have to terminate the service of the Awardee as an employee, as applicable.
11. Restrictive Covenants.
(a) Customer Confidences and Confidential Information.
(i) Customer Confidences. The customers of the Company expect that the Company will hold all business-related matters, including the fact that they are doing business with the Company and the specific matters on which they are doing business, in the strictest confidence (“Customer Confidences”). The term Customer Confidences will not, however, include information which (A) is or becomes publicly available, other than as a result of a breach by Awardee of this Agreement or any restrictive covenants (including confidentiality, non-competition and non-solicitation) relating to the Company, or (B) is or becomes available to Awardee on a non-confidential basis from a source other than the Company or the Company’s representatives and outside of the course of such Awardee’s employment with the Company.
(ii) Confidential Information. Awardee also acknowledges that, during the course of Awardee’s employment, Awardee will have access to data and information relating to the business of the Company (whether constituting a trade secret or not) which is or has been disclosed to the Awardee or of which the Awardee became aware as a consequence of or through Awardee’s relationship with the Company and which has value to the Company and is not generally known to the Company’s competitors (“Confidential Information”). Such Confidential Information includes both written information and information not reduced to writing, and by way of example only: (A) the identity of the Company’s customers and prospective customers, including names, addresses and phone numbers, the characteristics, preferences and strategies of those customers, the types of services provided to and ordered by those customers; (B) the Company’s internal corporate policies related to those services, price lists, pricing information, fee arrangements, profit factors, quality programs, annual budgets, long-term business plans, marketing plans and methods, contracts and bids, personnel and the terms of dealings with customers; (C) financial and sales information, including the Company’s financial condition and performance; (D) information relating to inventions, discoveries and formulas, records, research and development data, trade secrets, processes, other methods of doing business, forecasts and business and marketing plans of the Company; (E) stockholder information; and (F) all Company Intellectual Property (as hereinafter defined). Confidential Information shall not include any data or information, even if otherwise set forth above as an example, which has been voluntarily disclosed to the public by the Company (except where such disclosure has been made by Awardee without authorization) or that has been independently developed and disclosed by others, or otherwise entered the public domain through lawful means.
(iii) Restriction on Use of Customer Confidences and Confidential Information. Awardee agrees that, both during and after Awardee’s employment with the Company, Awardee will not directly or indirectly (A) use any Customer Confidences or Confidential Information, other than in furtherance of the business of the Company, or (B) disclose any Customer Confidences or Confidential Information, other than disclosure (1) to a director, officer, employee, attorney or agent of the Company who, in Awardee’s reasonable good faith judgment, has a need to know the Customer Confidences, Confidential Information or information derived therefrom or (2) as required by law, rule, regulation, court order, or any governmental, judicial or regulatory process, provided that in any event described in the preceding clause (2), (I) Awardee shall promptly notify the Company as is practicable and not prohibited by law, and consult with and reasonably assist the Company, at the Company’s sole expense, in seeking a protective order or request for another appropriate remedy, (II) in the event that such protective order or remedy is not obtained, or if the Company waives compliance with the terms of the preceding clause (I), Awardee shall disclose only that portion of the Customer Confidences or Confidential Information that, on the advice of Awardee’s legal counsel, is legally required to be disclosed and shall exercise reasonable efforts to assure that confidential treatment shall be accorded to such Customer Confidences or Confidential Information by the receiving person or entity and (III) to the extent practicable and permitted by applicable law, the Company shall be given an opportunity to review the Customer Confidences or Confidential Information prior to disclosure thereof.
(iv) Ownership of Customer Confidences and Confidential Information. Awardee acknowledges that any documents received or created by Awardee during the course of Awardee’s employment by the Company that contain or pertain to Customer Confidences or Confidential Information are and will remain the sole property of the Company. Such documents include, without limitation, files, memoranda, correspondence, reports, customer records, contact lists and compilations of information, however such information may be recorded and whether on hard copy or by electronic or computer means. Awardee agrees to return all such documents (including all copies) promptly upon the termination of Awardee’s employment and agrees that, during and after Awardee’s employment, Awardee will not, without the written consent of an officer of the Company, disclose those documents to anyone outside the Company organization or use those documents for any purpose other than as expressly provided herein.
(v) Notwithstanding the above or any provision of this Agreement or any other agreement executed by Awardee to the contrary, there shall be no restriction on Awardee’s ability to (i) report violations of any law or regulation, (ii) provide truthful testimony or information pursuant to subpoena, court order, or similar legal process, (iii) provide truthful information to government or regulatory agencies, or (iv) otherwise engage in whistleblower activity protected by the Securities Exchange Act of 1934, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or any rules or regulations issued thereunder, including, without limitation, Rule 21F-17. In addition, 18 U.S.C. §1833(b) provides, in part: “(1) An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. …. (2) An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.” Nothing in this Agreement, any other agreement executed by Awardee, or any Company policy is intended to conflict with this statutory protection.
(b) Intellectual Property.
(i) Awardee agrees to disclose promptly to the Company all ideas, inventions, discoveries, improvements, designs, formulae, processes, production methods and technological innovations (which, together with all intellectual property rights that might be available therein including, without limitation, patents, copyrights and trade secrets, shall hereinafter be referred to as “Intellectual Property”), whether or not patentable, which Awardee has conceived or made or may hereafter conceive or make, alone or with others, in connection with Awardee’s employment by the Company either prior to or after the date of this Agreement, whether or not during working hours, and which (A) relate specifically to the business of the Company; (B) are based on or derived from Awardee’s knowledge of the actual or planned business activities of the Company; or (C) are developed using existing Intellectual Property belonging to the Company (collectively, “Company Intellectual Property”).
(ii) Awardee agrees to assign, and does hereby assign, to the Company (and to bind Awardee’s heirs, executors and administrators, to assign to the Company) all Company Intellectual Property, regardless of when such Company Intellectual Property was created.
(iii) Without further compensation but at the Company’s expense, Awardee agrees to give all testimony and execute all patent applications, rights of priority, assignments and other documents, and in general do all lawful things reasonably requested of Awardee by the Company to enable the Company to obtain, maintain and enforce its rights to such Company Intellectual Property.
(iv) All of Awardee’s work product during Awardee’s employment by Company or during Awardee’s involvement or relationship with the Company and all parts thereof shall be “work made for hire” for the Company within the meaning of the United States Copyright Act of 1976, as amended from time to time, and for all other purposes, and Awardee hereby quitclaims and assigns to the Company any and all other rights Awardee may have or acquire therein. Accordingly, all right, title and interest in any and all materials, or other property, including, without limitation, trademarks, service marks and related rights, whether or not copyrightable, created, developed, adapted, formulated or improved by Awardee (whether alone or in conjunction with any other person or employee), constituting Company Intellectual Property shall be owned exclusively by the Company. Awardee will not have or claim to have under this Agreement, or otherwise, any right, title or interest of any kind or nature whatsoever in any Company Intellectual Property.
(c) Non-competition.
(i) Awardee agrees that, during the period commencing on the Date of Grant and for a period of one (1) year after the date the Awardee ceases to be employed by the Company (the “Covenant Period”), Awardee shall not within the Area, for a Protected Business (as defined below): (1) directly or indirectly, undertake to perform the duties and responsibilities substantially similar to those Awardee conducted, offered or provided for the Company during the last twenty-four (24) months of Awardee’s employment with the Company (or such shorter period of time Awardee may have been employed); (2) directly or indirectly, undertake to perform any duties or responsibilities with regard to the development or enhancement of a product, service or software application competitive with any product, service or software application of the Company about which Awardee obtained or created Confidential Information during the last twenty-four (24) months of Awardee’s employment with the Company (or such shorter period of time Awardee may have been employed); or (3) directly or indirectly, own an equity interest in a business engaged in any Protected Business; provided, however, that nothing herein shall prohibit Awardee from being an owner of not more than 4.9% of the outstanding equity interests in any entity which has equity securities listed on a national stock exchange or other public market.
(ii) At any time following the date the Awardee ceases to be employed by the Company and at least 90 days prior to the expiration of the Covenant Period, the Company may in its sole discretion extend such Covenant Period for one (1) additional year, which during such extended Covenant Period Awardee will receive severance payments equal to twelve (12) months of Awardee’s base salary in effect at the time Awardee ceased to be employed by the Company (the “Severance Payments”). Severance Payments, if elected by the Company, shall be payable in equal installments in accordance with the Company’s normal payroll practices. If the Company elects to extend the Covenant Period, then Awardee shall be entitled to Severance Payments only so long as Awardee has not breached any of the provisions of Section 11. Awardee shall not be entitled to any other salary, compensation or benefits after termination of employment, except as may be provided under any Severance Agreement between Awardee and the Company (if any), under any Change in Control Severance Agreement between Awardee and the Company (if any), or as required by law.
(iii) For purposes of this Agreement, a “Protected Business” is defined as: (1) any business that operates, manufactures or manages either (A) regional, and/or national, gaming and/or electronic gambling experiences, (B) regional, national or international aerospace or aviation modification services, or (C) national or international military hardware; and, (2) any other business in which the Company is engaged in during the last two (2) years of Awardee’s employment with the Company (or such shorter period of time Awardee may have been employed).
(iv) For purposes of this Agreement, “Area” means entire United States of America.
(d) Customer Non-Solicitation. Awardee agrees that, during the period commencing on the Date of Grant and for a period of two (2) years after the date the Awardee ceases to be employed by the Company (the “Non-Solicitation Period”), Awardee shall not, directly or indirectly, on behalf of any Protected Business, solicit or attempt to solicit any customer or actively sought prospective customer of the Company, with whom the Awardee had Material Contact during Awardee’s employment with the Company, for purposes of providing products or services that are competitive with those offered by the Company. For purposes of this Agreement, “Material Contact” means the contact between Awardee and each customer or potential customer: (a) with whom or which Awardee dealt on behalf of the Company; (b) whose dealings with the Company were coordinated or supervised by Awardee; (c) about whom Awardee obtained confidential information in the ordinary course of business as a result of Awardee’s association with the Company; or (d) who receives products or services authorized by the Company, the sale or provision of which results or resulted in compensation, commissions, or earnings for Awardee within two (2) years prior to the date of the Awardee’s termination.
(e) Awardee Non-Solicitation/Non-Hire. Awardee agrees that, during the Non-Solicitation Period, Awardee shall not, within the Area, directly or indirectly, (i) except in the good faith performance of Awardee’s duties to the Company, induce or attempt to induce any employee or independent contractor (related to the business of the Company) of the Company to leave the Company, or in any way interfere with the relationship between the Company, on the one hand, and any employee or independent contractor thereof, on the other hand, or (ii) hire any person who was an employee or independent contractor of the Company. The foregoing shall not prohibit general advertising not specifically targeted at employees or independent contractors of the Company, provided that the preceding clause shall not permit Awardee to take any action that would violate or conflict with the covenants and agreements set forth in this Agreement or any other agreement with the Company and shall in no way limit or affect Awardee’s obligations under such covenants and agreements.
12. Enforcement.
(a) Awardee understands that the execution of this Agreement is conditioned on Awardee’s acceptance of the restrictions contained in Section 11. Awardee acknowledges that the restrictions contained in Section 11 are fair, reasonable and necessary for the protection of the legitimate business interests of the Company and that the Company will suffer irreparable harm in the event of an actual or threatened breach of any such provision by Awardee.
(b) In the event of a breach of any of the covenants contained in Section 11, subject to the Company’s discretion to waive such enforcement provision:
(i) All of Awardee’s unvested Restricted Stock granted hereunder shall be cancelled and forfeited for no consideration; and
(ii) Awardee consents and agrees that the Company may seek the entry of a restraining order, preliminary injunction or other court order to enforce such provisions and expressly waives any bond or security that might otherwise be required in connection with such relief and that the Company, if successful, shall be entitled to the award of attorney’s fees and expenses incurred in enforcing any of Awardee’s obligations set forth in Section 11.
(c) Awardee also agrees that such remedies shall be in addition and without prejudice to any claim for monetary damages which the Company might elect to assert. Awardee agrees that the terms of Section 11 are in addition to, and not in limitation of, and in no way supersede or replace any other restrictive covenants agreed to by Awardee with respect to the Company. The provisions of this Agreement do not in any way limit or abridge any rights of the Company under the law of unfair competition, trade secret, copyright, patent, trademark or any other applicable law(s), all of which are in addition to and cumulative of the Company’s rights under this Agreement.
(d) For purposes of Sections 11-25, the term “Company” means and includes Butler National Corporation and its direct and indirect subsidiaries.
13. Non‑Transferability. Neither the Award hereby granted nor any rights thereunder or under this Agreement may be assigned, transferred or in any manner encumbered by Awardee except by will or the laws of descent and distribution, and any attempted assignment, transfer, mortgage, pledge or encumbrance except as herein authorized, shall be void and of no effect.
14. Severability. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by law. If the final judgment of a court of competent jurisdiction declares that any provision of this Agreement, including, without limitation, any provision of Section 11 hereof, is invalid or unenforceable, the parties hereto agree that the court making the determination of invalidity or unenforceability shall have the power, and is hereby directed, to modify or reduce the scope, duration or area of the provision, to delete specific words or phrases and to replace any invalid or unenforceable provision with a provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable provision, and this Agreement shall be enforced as so modified.
15. Non-Waiver of Rights. The Company’s failure to enforce at any time any of the provisions of this Agreement or to require at any time performance by Awardee of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement, or any part hereof, or the right of the Company thereafter to enforce each and every provision in accordance with the terms of this Agreement.
16. Amendments; Entire Agreement. Except as provided in the Plan and as otherwise expressly set forth herein, no modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing specifically referring hereto, and signed by the parties hereto. This Agreement, except as set forth in Section 11 and Section 12 above or as this Agreement may conflict with a Change in Control Agreement between Awardee and the Company (if any), supersedes all prior agreements and understandings between Awardee and the Company to the extent that any such agreements or understandings conflict with the terms of this Agreement.
17. Successors and Assigns. Subject to the limitations set forth in this Agreement and the Plan, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors and permitted assigns of the parties hereto, including, without limitation, any business entity that succeeds to the business of the Company. This Agreement may not be assigned by Awardee without the consent of the Committee.
18. Stock Ownership Guidelines. Awardee acknowledges that the Board has adopted Stock Ownership Guidelines applicable to certain officers of the Company and such Guidelines may be modified or amended in whole or in part at any time.
19. Survival. The provisions of Sections 11-25 as well as any other provision that must survive in order to give proper effect to its intent, shall survive indefinitely.
20. Forfeiture. Awardee acknowledges and agrees that (a) the Award granted hereunder may be subject to the terms of any compensation recovery policy that may be adopted by the Board in the future, (b) if Awardee is on the Date of Award or at any other time subject to the terms of any clawback policy that may be adopted by the Board in the future, the Award granted hereunder shall be subject to the terms of such clawback policy, and (c) the Award granted hereunder is subject to any additional obligations as may be required by law, including without limitation, Section 304 of the Sarbanes-Oxley Act of 2002. Awardee further acknowledges and agrees that the Board may amend or modify any such compensation recovery policy or clawback policy that may be adopted by the Board in the future at any time or may adopt a new policy or policies replacing or supplementing either such policies and that any such policy or policies, as so amended, modified, replaced or supplemented, shall be binding on Awardee and the Award granted hereunder.
21. Choice of Law; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in accordance with the laws of the State of Kansas without regard to the principles of conflicts of law which might otherwise apply. The parties hereto irrevocably submit to the jurisdiction of the state and federal courts sitting in Kansas with respect to any dispute arising out of or relating to this Agreement, and each party irrevocably agrees that all claims in respect of such dispute or proceeding shall be heard and determined in such courts. The parties hereto hereby irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the venue of any dispute arising out of or relating to this Agreement brought in such court or any defense of inconvenient forum for the maintenance of such dispute or proceeding.
(b) Each party hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent permitted by law, any right it may have to a trial by jury in respect of any litigation as between the parties directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto. Each of the parties hereto (i) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waivers and (ii) acknowledges that it and the other parties have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications contained in this Section 21.
22. No Defense. The existence of any claim, demand, action or cause of action of Awardee against the Company, whether or not based upon this Agreement, will not constitute a defense to the enforcement by the Company of any covenant or agreement of Awardee contained in Section 11 herein.
23. Savings Clause. For purposes of Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder, the right to a series of installment payments hereunder shall be treated as a right to a series of separate payments.
24. Notification of New Employer. In the event that Awardee is no longer an employee of the Company, Awardee consents to notification by the Company to Awardee’s new employer or its agents regarding Awardee’s rights and obligations under this Agreement.
25. Counterparts. This Agreement may be executed in any number of counterparts, any of which may be executed and transmitted by facsimile, and each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf, and the Awardee has signed this Agreement to evidence the Awardee’s acceptance of the terms hereof, all as of the date first above written.
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BUTLER NATIONAL CORPORATION |
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EXHIBIT 10.3
SEVERANCE AGREEMENT
THIS AGREEMENT, made as of [____________, 20__] (the “Effective Date”), by and between Butler National Corporation, a Kansas corporation (“Butler”), and [●] (“Employee”).
WITNESSETH:
WHEREAS, Butler has adopted the Butler National Corporation 2016 Equity Incentive Plan (the “Plan”) pursuant to which restricted stock, options for shares of the common stock of Butler and other stock-based awards may be granted to employees of Butler and its subsidiaries; and
WHEREAS, Butler, or an entity in which Butler, directly or indirectly, through one or more intermediaries owns 50% or more of the voting rights or profit interest of such entity (“Affiliates”) (collectively Butler and Affiliates are hereinafter called the “Company”) is the employer of Employee; and
WHEREAS, from time to time Butler may desire to grant to Employee certain restricted stock awards, which award or awards may contain certain restrictive covenants, including, among others, covenants related to non-competition, non-solicitation of the Company’s customers or employees, intellectual property and confidential information (the “Restrictive Covenants”).
NOW, THEREFORE, in consideration of the premises and of the mutual agreements hereinafter set forth, it is covenanted and agreed as follows:
1. Severance.
(a) Subject to the terms of this Agreement, if Employee’s employment is terminated by the Company without Cause (as defined below) during the Term (as defined below), Employee will be eligible to receive severance payments equal to twelve (12) months of Employee’s base salary in effect at the time Employee ceased to be employed by the Company (the “Severance Payments”), payable in accordance with Section 1. Employee shall be entitled to Severance Payments only (i) upon execution by Employee of a release (in a form satisfactory to Company) of all claims against the Company (other than claims relating to equity and long-term incentive plan compensation) (the “General Release”) and the General Release has become effective and is no longer subject to revocation no later than sixty (60) days following the termination of employment and (ii) so long as Employee has not breached the provisions of any other agreement with the Company, including without limitation, any Restrictive Covenants contained in any equity award agreement, and Employee has not applied for unemployment compensation chargeable to the Company. In the event of a breach by Employee of any agreement with the Company, including without limitation, any Restrictive Covenants, all Severance Payments shall cease and terminate and Employee shall repay to the Company the amount of Severance Payments paid to Employee prior to such breach within thirty (30) days following notice of such breach. Employee shall not be entitled to any other salary, compensation or benefits after termination of employment, except as may be provided under the Change in Control Agreement between Employee and Butler (if any) or as required by law.
(b) Except as noted below, the Severance Payments pursuant to this provision shall be paid in equal installments in accordance with the Company’s normal payroll practices. If Employee is party to a Change in Control Agreement, the Severance Payments pursuant to this provision shall be paid on the date and schedule specified with respect to benefits under such Change in Control Agreement.
(c) The Severance Payments pursuant to this provision shall not be paid or provided until the first scheduled payment date following the date that the General Release has become effective and no longer subject to revocation; provided, however, that if the Severance Payment constitutes nonqualified deferred compensation within the meaning of Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (“Section 409A”), the Severance Payment shall not be paid or provided until the sixtieth (60th) day following such termination to the extent necessary to avoid adverse tax consequences under Section 409A (e.g., if the 60 day period spans two calendar years); provided, further, that if Employee is a “specified employee” within the meaning of Section 409A, and the Severance Payment constitutes nonqualified deferred compensation within the meaning of Section 409A, the Severance Payment shall not be paid or provided until the date that is six months and one day following such termination to the extent necessary to avoid adverse tax consequences under Section 409A. For purposes of Section 409A, the right to a series of installment payments hereunder shall be treated as a right to a series of separate payments.
(d) For purposes of this Agreement, “Cause” shall mean with respect to the Employee (i) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company; (ii) conduct that results in or is reasonably likely to result in harm to the reputation or business of the Company; (iii) gross negligence or willful misconduct with respect to the Company; (iv) willful and repeated failure of Employee to carry out his or her material duties to the Company; (v) a willful violation of a material policy of the Company; or (vi) a violation of a state or federal securities law.
(e) Notwithstanding the foregoing, if Employee becomes entitled to severance compensation under both this Agreement and under a Change in Control Agreement, Employee shall be paid severance under such Change in Control Agreement and not this Agreement.
2. Expiration. This Agreement commences on the Effective Date and shall terminate automatically at 11:59:59 p.m. Central Time on April 30, 2025 (such period, the “Term”).
3. No Contract of Employment. Nothing contained in this Agreement shall be considered or construed as creating a contract of employment for any specified period of time.
4. Severability. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by law. If the final judgment of a court of competent jurisdiction declares that any provision of this Agreement is invalid or unenforceable, the parties hereto agree that the court making the determination of invalidity or unenforceability shall have the power, and is hereby directed, to modify or reduce the scope, duration or area of the provision, to delete specific words or phrases and to replace any invalid or unenforceable provision with a provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable provision, and this Agreement shall be enforced as so modified.
5. Non-Waiver of Rights. The Company’s failure to enforce at any time any of the provisions of this Agreement or to require at any time performance by Employee of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement, or any part hereof, or the right of the Company thereafter to enforce each and every provision in accordance with the terms of this Agreement.
6. Entire Agreement; Amendments. Except as otherwise expressly set forth herein, no modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing specifically referring hereto, and signed by the parties hereto. This Agreement, except as may conflict with the Change in Control Agreement between Employee and Butler (if any), supersedes all prior agreements and understandings between Employee and Butler to the extent that any such agreements or understandings conflict with the terms of this Agreement.
7. Assignment. This Agreement shall be freely assignable by Butler to and shall inure to the benefit of, and be binding upon, Butler, its successors and assigns and/or any other entity which shall succeed to the business presently being conducted by Butler. This Agreement may not be assigned by Employee.
8. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Kansas without regard to the principles of conflicts of law which might otherwise apply. The parties hereto irrevocably submit to the jurisdiction of the state and federal courts sitting in Kansas with respect to any dispute arising out of or relating to this Agreement, and each party irrevocably agrees that all claims in respect of such dispute or proceeding shall be heard and determined in such courts. The parties hereto hereby irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the venue of any dispute arising out of or relating to this Agreement brought in such court or any defense of inconvenient forum for the maintenance of such dispute or proceeding. Each party hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent permitted by law, any right it may have to a trial by jury in respect of any litigation as between the parties directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto. Each of the parties hereto (a) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waivers and (b) acknowledges that it and the other parties have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications contained in this Section 7.
9. Tax Withholding. All payments under this Agreement are stated in gross amounts and shall be subject to customary withholding and other amounts required by law to be withheld. The Company shall be entitled to deduct or withhold from any amounts owing from the Company to Employee any federal, state, local or foreign withholding taxes, excise tax, or employment tax (“Taxes”) imposed with respect to Employee’s compensation or other payments from the Company, or Employee’s ownership interest in the Company (including wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity). The Company makes no representations about the tax treatment of the compensation or benefits paid under this Agreement and the Employee shall be responsible for any taxes payable with respect to such compensation or benefits, other than the employer paid portion of any applicable employment taxes.
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IN WITNESS WHEREOF, Butler has caused this Agreement to be executed on its behalf by the undersigned officer pursuant to due authorization, and Employee has signed this Agreement to evidence his or her acceptance of the terms hereof, all as of the date hereof.
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BUTLER NATIONAL CORPORATION |
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Christopher J. Reedy Chief Executive Officer; Director and President |
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EXHIBIT 10.4
CHANGE IN CONTROL AGREEMENT
AGREEMENT between Butler National Corporation, a Kansas corporation (“Butler”), and [Name] (the “Executive”) dated as of January 7, 2025 (“Effective Date”).
WHEREAS, the Compensation Committee of the Board of Directors (the “Board”) of Butler has recommended, and the Board has approved, Butler entering into severance agreements with key executives of Butler and its Subsidiaries (hereinafter sometimes collectively referred to as the “Corporation”); and
WHEREAS, the Executive is a key executive of Butler or one of its Subsidiaries and has been selected by the Board as a key executive; and
WHEREAS, should Butler receive any proposal from a third person concerning a possible Business Combination with, or acquisition of equity securities of, Butler, the Board believes it important that the Corporation and the Board be able to rely upon the Executive to continue in his position, and that Butler have the benefit of the Executive performing his duties without his being distracted by the personal uncertainties and risks created by such a proposal.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
(a) “Affiliate” and “Associates” shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on the date hereof.
(b) “Beneficial Owner” of shares shall include any Voting Shares:
(i) which such person or any of its Affiliates or Associates beneficially own, directly or indirectly, or
(ii) which such person or any of its Affiliates or Associates has (1) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants, or options, or otherwise, or (2) the right to vote pursuant to any agreement, arrangement or understanding, or
(iii) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of Butler.
(c) “Business Combination” means:
(i) any merger or consolidation of Butler with or into (1) any Substantial Stockholder (as hereinafter defined) or (2) any other corporation (whether or not itself a Substantial Stockholder) which, after such merger or consolidation, would be an Affiliate of a Substantial Stockholder, or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with (1) any Substantial Stockholder or (2) an Affiliate of a Substantial Stockholder of any assets of Butler or any Subsidiary having an aggregate fair market value of $10,000,000 or more, or
(iii) the issuance or transfer by Butler (in one transaction or a series of related transactions) of any securities of the Corporation or any Subsidiary to (1) any Substantial Stockholder or (2) any other corporation (whether or not itself a Substantial Stockholder ) which, after such issuance or transfer, would be an Affiliate of a Substantial Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $10,000,000 or more, or
(iv) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of a Substantial Stockholder or an Affiliate of a Substantial Stockholder, or
(v) any reclassification of securities (including any reverse stock split), recapitalization, reorganization, merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving a Substantial Stockholder or an Affiliate of a Substantial Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Substantial Stockholder or by an Affiliate of a Substantial Stockholder.
(d) “Cause” means conviction of a felony involving moral turpitude by a court of competent jurisdiction, which is no longer subject to direct appeal, or an adjudication by a court of competent jurisdiction, which is no longer subject to direct appeal, that the Executive is mentally incompetent or that he is liable for willful misconduct in the performance of his duty to the Corporation which is demonstrably and materially injurious to the Corporation.
(e) “Change of Control,” for the purposes of this Agreement, shall be deemed to have taken place if: (i) a third person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, purchases or otherwise acquires shares of the Corporation after the date hereof and as a result thereof becomes the beneficial owner of shares of the Corporation having 50% or more of the total number of votes that may be cast for election of directors of Butler; or (ii) as the result of, or in connection with any cash tender or exchange offer, merger or other Business Combination, or contested election, or any combination of the foregoing transactions, the directors then serving on the Board of Directors of Butler shall cease to constitute a majority of the Board of Directors of Butler or any successor to Butler.
(f) “Corporation” means Butler and its Subsidiaries.
(g) “Normal Retirement Age” means the last day of the calendar month in which the Executive’s 65th birthday occurs.
(h) “Permanent Disability” means a physical or mental condition which permanently renders the Executive incapable of exercising the duties and responsibilities of the position he held immediately prior to any Change of Control.
(i) “Potential Change of Control” shall be deemed to have occurred if the event set forth in any one of the following shall have occurred: (i) Butler enters into an agreement, the consummation of which would result in the occurrence of a Change of Control; (ii) Butler or any person or “group” as defined in Section 3(d)(3) of the Securities Exchange Act of 1934, as amended, publicly announces an intention to take or consider taking actions which, if consummated would constitute a Change of Control; (iii) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change of Control has occurred.
(j) “Subsidiary” means any domestic or foreign corporation, limited liability company, or partnership, for which a majority of the shares or ownership interest of such entity is owned directly or indirectly by Butler or by other Subsidiaries.
(k) “Substantial Stockholder” means, in respect of any Business Combination, any person (other than Butler) who or which is on the record date for the determination of stockholders entitled to notice of and to vote on such Business Combination, or as of the time of the vote on such Business Combination, or immediately prior to the consummation of any such transaction,
(i) is the Beneficial Owner, directly or indirectly, of not less than 15% of the Voting Shares, or
(ii) is an Affiliate of Butler and at any time within five years prior thereto was the Beneficial Owner, directly or indirectly, of not less than 15% of the then outstanding Voting Shares, or
(iii) is an assignee of or has otherwise succeeded to any shares of capital stock of Butler which were at any time within five years prior thereto beneficially owned by any Substantial Stockholder, and such assignment or succession shall have occurred in the course of a transaction or a series of transactions not involving a public offering within the meaning of the Securities Act of 1933, as amended.
(m) “Voting Shares” means the outstanding shares of capital stock of Butler entitled to vote generally in the election of the directors.
2. Services During Certain Events. In the event a third person begins a tender or exchange offer or takes other steps seeking to effect a Change of Control, the Executive agrees that he will not voluntarily leave the employ of the Corporation without the consent of the Corporation, and will render the services contemplated in the recitals of this Agreement, until the third person has abandoned or terminated his or its efforts to effect a Change of Control or until 90 days after a Change of Control has occurred. In the event the Executive fails to comply with the provisions of this Paragraph, the Corporation will suffer damages which are difficult, if not impossible, to ascertain. Accordingly, should the Executive fail to comply with the provisions of this Paragraph, the Corporation shall retain the amounts which would otherwise be payable to the Executive hereunder as fixed, agreed and liquidated damages but shall have no other recourse against the Executive.
3. Termination After Change of Control. “Termination” shall include (a) termination by the Corporation of the employment of Executive with the Corporation within two years after a Change of Control for any reason other than death, Permanent Disability, retirement at or after his Normal Retirement Age, or Cause or (b) resignation of the Executive after the occurrence of any of the following events within two years after a Change of Control of Butler:
(a) An adverse change of the Executive’s title or a reduction or adverse change in the nature or scope of the Executive’s authority or duties from those being exercised and performed by the Executive immediately prior to the Change of Control.
(b) A transfer of the Executive to a location which is more than 30 miles away from the location where the Executive was employed immediately prior to the Change of Control.
(c) Any reduction in the rate of Executive’s annual salary below his rate of annual salary immediately prior to the Change of Control.
(d) Any reduction in the level of Executive’s fringe benefits or bonus below a level consistent with the Corporation’s practice prior to the Change of Control.
4. Termination Payment. In the event of a Termination, as defined in Paragraph 3, Butler shall provide the Executive the following benefits:
(a) Butler shall pay to the Executive on the first day of the seventh month immediately following the Executive’s last day of employment with the Corporation, as additional compensation for services rendered to the Corporation, a lump sum cash amount (subject to the minimum applicable federal, state or local lump sum withholding requirements, if any, unless the Executive requests that a greater amount be withheld) equal to two times the highest base salary and annual cash incentive bonuses paid or payable to the Executive by the Corporation with respect to any 12 consecutive month period during the three years ending with the date of the Executive’s Termination.
(b) During the two years following Executive’s Termination, the Executive shall be deemed to remain an employee of the Corporation for purposes of the applicable medical, life insurance and long-term disability plans and programs covering key executives of the Corporation and shall be entitled to receive the benefits available to key executives thereunder; provided, however, that in the event the Executive’s participation in any such benefit plan or program is barred, the Corporation shall arrange to provide the Executive with substantially similar benefits. Notwithstanding the preceding, to the extent required to comply with Section 409A of the Code, in the event medical coverage is provided under a self-insured medical expense reimbursement plan maintained by the Corporation, as defined in Section 105(h) of the Code, (a) the amount of medical expenses eligible for reimbursement or to be provided as an in-kind benefit hereunder during a calendar year may not affect the medical expenses eligible for reimbursement or to be provided as an in-kind benefit in any other calendar year (subject to any applicable limit on the amount of medical expenses that may be reimbursed over some or all of the period hereunder), (b) the reimbursement of eligible medical expenses shall be made on or before the last day of the calendar year following the calendar year in which the expenses were incurred, and (c) the right to reimbursement or in-kind benefits hereunder shall not be subject to liquidation or exchange for another benefit.
(c) The Corporation shall pay the Executive the Termination Payment set forth in this Paragraph due to termination of the Executive’s employment following a Potential Change of Control but before a Change of Control and during the term of this Agreement if: (i) the termination is initiated, caused or directed by any person or group which has initiated a transaction, the consummation of which would result in a Change of Control; and (ii) the termination would have been by the Executive for any of the reasons enumerated in Paragraph 3(a)-3(d) or by the Corporation without Cause if a Change of Control had occurred on the date of the Potential Change of Control.
(d) Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Corporation or its Affiliates to Executive or for Executive’s benefit pursuant to the terms of this Agreement or otherwise (“Covered Payments”) constitute parachute payments (“Parachute Payments”) within the meaning of Section 280G of the Code and would but for this Paragraph 4(d), be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be either (i) reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the “Reduced Amount”) or (ii) payable in full if the Executive’s receipt on an after-tax basis of the full amount of payments and benefits (after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax)) would result in the Executive receiving an amount greater than the Reduced Amount. The Covered Payments shall be reduced in a manner that maximizes the Executive’s economic position. In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code, and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero.
5. Stock Options. In the event of a Change of Control, the Executive’s non-qualified stock options and incentive stock options granted by the Corporation (if any), which are outstanding on the date of the Change of Control, shall immediately vest and Executive shall have 12 months from the date of the Change of Control to exercise said options (but not beyond the term of such options).
6. General.
(a) Indemnification. If arbitration occurs as provided for herein, the Corporation shall reimburse the Executive for his reasonable attorneys’ fees, costs and disbursements incurred in such arbitration and hereby agrees to pay interest on any money award obtained by the Executive from the date payment should have been made until the date payment is made, calculated at the prime interest rate of Bank of America, N.A., in effect from time to time, plus 2%, from the date that payment(s) to him should have been made under this Agreement. If the Executive enforces the arbitration award in court, the Corporation shall reimburse the Executive for his reasonable attorneys’ fees, costs and disbursements incurred in such enforcement.
(b) Payment Obligations Absolute. Butler’s obligation to pay the Executive the compensation and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, any setoff, counterclaim, recoupment, defense or other right which the Corporation may have against him or anyone else, except as provided in Paragraphs 2 and 4(d) hereof. All amounts payable by Butler hereunder shall be paid without notice or demand. Each and every payment made hereunder by Butler shall be final and Butler will not seek to recover all or any part of such payment from the Executive or from whosoever may be entitled thereto, for any reason whatsoever. The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and the obtaining of any such other employment shall in no event affect any reduction of Butler’s obligation to make the payments required to be made under this Agreement.
(c) Continuing Obligations. The Executive shall retain in confidence any confidential information known to him concerning the Corporation and its respective businesses until such information is publicly disclosed.
(d) Successors. This Agreement shall be binding upon and inure to the benefit of the Executive and his estate and the Corporation and any successor of the Corporation, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive.
(e) Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(f) Choice of Law; Waiver of Jury Trial.
i. This Agreement shall be governed by and construed in accordance with the laws of the State of Kansas without regard to the principles of conflicts of law which might otherwise apply. The parties hereto irrevocably submit to the jurisdiction of the state and federal courts sitting in Kansas with respect to any dispute arising out of or relating to this Agreement, and each party irrevocably agrees that all claims in respect of such dispute or proceeding shall be heard and determined in such courts. The parties hereto hereby irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the venue of any dispute arising out of or relating to this Agreement brought in such court or any defense of inconvenient forum for the maintenance of such dispute or proceeding.
ii. Each party hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent permitted by law, any right it may have to a trial by jury in respect of any litigation as between the parties directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby or disputes relating hereto. Each of the parties hereto (A) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waivers and (A) acknowledges that it and the other parties have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications contained in this Paragraph 6(f).
(g) Termination. This Agreement shall terminate (i) if a majority of the Board of Directors of Butler determines that the Executive is no longer a key executive and so notifies the Executive; except that such determination shall not be made, and if made shall have no effect, (A) within two years after the Change of Control in question or (B) during any period of time when Butler has knowledge that any third person has taken steps reasonably calculated to effect a Change of Control until, in the opinion of a majority of the Board of Directors of Butler the third person has abandoned or terminated his efforts to effect a Change of Control, or (ii) automatically at 11:59:59 Central Time on April 30, 2025, if no Change of Control has occurred by such date and time; except this Agreement shall not terminate if a Change of Control has occurred by such date and time.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.
|
EXECUTIVE:
By: |
BUTLER NATIONAL CORPORATION
By: |
| [Executive’s Name] | [Christopher J. Reedy] |
Document And Entity Information |
Jan. 07, 2025 |
|---|---|
| Document Information [Line Items] | |
| Entity, Registrant Name | BUTLER NATIONAL CORPORATION |
| Document, Type | 8-K |
| Document, Period End Date | Jan. 07, 2025 |
| Entity, Incorporation, State or Country Code | KS |
| Entity, File Number | 0-1678 |
| Entity, Tax Identification Number | 41-0834293 |
| Entity, Address, Address Line One | One Aero Plaza |
| Entity, Address, City or Town | New Century |
| Entity, Address, State or Province | KS |
| Entity, Address, Postal Zip Code | 66031 |
| City Area Code | 913 |
| Local Phone Number | 780-9595 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Entity, Emerging Growth Company | false |
| Amendment Flag | false |
| Entity, Central Index Key | 0000015847 |
1 Year Butler National (QX) Chart |
1 Month Butler National (QX) Chart |
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