SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 16, 1997
BUTLER NATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-1678 41-0834293
(State of incorporation)(Commission File No)(IRS Employer Identification No.)
1546 East Spruce Road, Olathe, Kansas 66061
(Address of Principal Executive Office)(Zip Code)
Registrant's telephone number, including area code: (913) 780-9595
Former Name, former address and former fiscal year if changed since last
report:
Not Applicable
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Item 9. Sales of Equity Securities Pursuant to Regulation S.
On December 16, 1997, the Company completed a private placement
which was executed in reliance upon the exemption from registration afforded
by Regulation S as promulgated by the Securities and Exchange Commission,
under the Securities Act of 1933, as amended. The Company issued Series B 6%
Convertible Preferred Stock in the amount of $1,500,000. The securities were
not publicly offered. The securities were sold to accredited investors. The
investors were not U.S. persons. Net proceeds of the offering were
$1,310,964, after deducting legal, accounting, wire transfer and consulting
expenses of the offering. The terms of conversion allow the holder, at its
option, at any time commencing 45 days after issue to convert the preferred
stock into shares of the Company's Common Stock, $0.01 par value per share, at
a conversion price for each share of common stock equal to 70% of the 5 day
average closing bid for the five days prior to closing. The shares are
subject to a mandatory, 24 month conversion feature at the end of which all
shares outstanding will be automatically converted.
Item 5. Other events.
On December 16, 1997, the Company completed the issue of Class AA
Warrants to purchase 150,000 shares of the Company's Common Stock, $.01 par
value per share, at a purchase price of $1.13 per share. The Warrants convert
into restricted Common Stock by the Securities Act of 1933 and will expire
December 5, 2000.
The Company entered into an agreement with a Financial Consulting
Company, whereby the Company agreed to issue 250,000 shares of Company common
stock for services to be rendered in the future. In addition the Company
agreed to grant 500,000 in stock options ranging in price from $1.00 to $1.75.
See exhibit 10.1.
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Signatures
Pursuant to the requirements of the Securities & Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
BUTLER NATIONAL CORPORATION
(Registrant)
December 16, 1997 /s/ Clark D. Stewart
(Date) Clark D. Stewart, President
and Chief Executive Officer
December 16, 1997 /s/ Edward J. Matukewicz
(Date) Edward J. Matukewicz, Treasurer
and Chief Financial Officer
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Exhibit 10.1
FINANCIAL CONSULTING AGREEMENT
THIS AGREEMENT is made and entered into as of this 28th day of October,
1997, and is made by and between Worldwide Corporate Finance, a California
corporation (hereinafter, "Consultant") and Butler National Corporation, a
Delaware corporation (hereinafter, the "Company").
WITNESSETH:
WHEREAS, the Company is desirous of obtaining financial advice and
business consulting services (hereinafter, the "Services");
WHEREAS, Consultant is experienced in providing financial advice and
business consulting services such as the Services desired by the Company;
WHEREAS, the Company desires to retain Consultant and Consultant desires
to be retained to provide the Services to the Company;
WHEREAS, Consultant will devote substantial time and incur substantial
expense in connection with the provision of the Services to the Company, under
and pursuant to the terms of this Agreement: and,
WHEREAS, in consideration for Consultant agreeing to devote the time and
incur the expense in performing the Services under and pursuant to the terms
of this Agreement, the Company agrees to pay Consultant the considerations
called for in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein set forth. the Company and Consultant hereby agree as
follows:
AGREEMENT
Section 1. CONSULTING SERVICES. Consultant shall provide to the
Company, when and as requested by the Company, from time to time and during
normal business hours, financial advice and business-consulting services
concerning, but not limited to:
(i) acting as the liaison for the Company with respect to any investment
bankers, institutional investors, selling agents and/or broker-dealers
utilized by the Company, including the coordination of all selling efforts of
the Company's securities and the creation of selling groups and/or of selling
syndicates;
(ii) engaging market makers for the Company's traded securities;
(iii) evaluating financing proposals the Company may receive;
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(iv) participating in the selection and supervision of legal counsel and
auditors for the Company which counsel and auditors must be deemed qualified
by Consultant to perform the services required of them;
(v) supervising shareholder and investor relations, including the hiring
of a financial public relations firm and participating in the preparation of
annual reports and other press or public releases of information;
(vi) providing long-term business, managerial and financial planning; and,
(vii) investigating and analyzing corporate reorganization and
expansion, with merger/acquisition opportunities.
Section 2. OTHER SERVICES. In connection with the Services
to be provided by Consultant, Consultant shall assist the Company in the
accumulation of any due diligence material and in the preparation of any and
all documents on behalf of the Company as deemed necessary and appropriate by
Consultant. Notwithstanding the foregoing, Consultant shall be under no
obligation to provide Services for any minimum number of hours per month
during the term hereof. Any other services requested by the Company, such as,
for example, rendering opinions on specific transactions, shall be the subject
of separate agreements between the Company and Consultant if not otherwise
covered hereunder.
Section 3. TERM OF AGREEMENT. This Agreement shall become effective
as of the date first written above and shall continue for a period of Two (2)
Years thereafter (hereinafter, the 'Term"), at which time this Agreement shall
automatically expire.
Section 4. SCOPE OF RETENTION. The Company hereby retains Consultant
as its non-exclusive financial advisor and business consultant during the Term
of this Agreement. In the event that the Company does not call upon Consultant
to perform Services during the Term of this Agreement, the Company shall
nonetheless remain liable to pay the fees as set forth in Sections 5 and 6
hereof.
Section 5. INITIAL COMPENSATION. As the initial
compensation for the Services, the Company shall pay Consultant upon execution
of this Agreement the sum of Two Hundred Twenty Five Thousand Dollars
($225,000), which sum shall be treated as a non-refundable retainer (the
"Retainer"). Consultant has elected to receive payment of the Retainer in a
non-cash transaction in which the fee set forth in this Section 5 shall be
considered paid in full by delivery to Consultant the amount of Two Hundred
Fifty Thousand (250,000) shares of the Company's common stock (hereinafter,
the '"Shares""), which Shares shall be included by the Company in a
registration statement on Form S-8 which the Company shall file, with counsel
selected and paid for by Consultant, with the Securities and Exchange
Commission (hereinafter, the '"SEC"") to register those Shares as soon as the
Company may lawfully do so.
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Section 6. ADDITIONAL COMPENSATION. In addition to the
Retainer payable pursuant to Section 5 hereof, Consultant shall be compensated
with options (collectively, the '"Options") as follows:
(i) One Hundred Thousand (I 00,000) options (hereinafter, the "First
Options") each of these First Options entitling Consultant to purchase One (1)
Share at the price per Share equal to One Dollar ($1.00);
(ii) One Hundred Thousand (100,000) additional First Options each of
these additional First Options entitling Consultant to purchase One (1) Share
at a price per Share equal to One Dollar Fifteen Cents ($1.15);
(iii) One Hundred Thousand (100,000) options (hereinafter, the
"Second Options") each of these Second Options entitling Consultant to
purchase One (1) Share at a price per Share equal to One Dollar Thirty Cents
($1.30);
(iv) One Hundred Thousand (100,000) additional Second Options each of
these additional Second Options entitling Consultant to purchase One (1) Share
at a price per Share equal to One Dollar Forty Five Cents ($1.45); and,
(v) One Hundred Thousand (100,000) additional Second Options each of
these additional Second Options entitling Consultant to purchase One (1) Share
at a price per Share equal to One Dollar Seventy Five Cents ($1.75).
The First Options shall be exercisable from the date first written above and
for a period of Ninety (90) Days thereafter. The Second Options shall be
exercisable from the date first written above and for a period of Two (2)
Years thereafter.
The Company shall undertake to file a registration statement on Form S-8, with
counsel selected and paid for by Consultant, to register with the SEC the
Shares underlying the First Options and the Second Options as soon as the
Company may lawfully do so.
Section 7. PAYMENT OF REASONABLE COSTS. Consultant shall
pay for all its out-of-pocket expenses, including its travel and
entertainment, incurred by Consultant in connection with the performance of
the Services pursuant hereunder. All fees and disbursements of counsel and of
auditors for engagements specific to the Services provided, if any, must be
approved in writing by the Company and shall be the subject of separate
agreements if not otherwise covered hereunder.
Section 8. NON-CIRCUMVENTION. This Agreement requires the services of
third parties such as market makers, broker-dealers or financial institutions
(hereinafter, collectively, the "Source") doing business with Consultant
pursuant hereunder. Prior to engaging any Source on behalf of' the Company
Consultant will identify such Source in writing to the Company, and the
Company shall have Five (5) Business Days to inform Consultant that such
Source is already known to the Company.
The Company warrants that it shall not and shall use reasonable efforts to
cause its partners, officers, employees, affiliates or associates to not,
during the Term and for a period of Two (2) Years following the termination or
expiration of this Agreement:
(i) disclose to any other party the identity of any such Source not
already known to the Company; and,
(ii) make any contact, or otherwise become involved in any
transaction, with any such Source not already known to the Company for or on
behalf of the Company.
The Company agrees that any such unauthorized disclosure and/or contact will
cause irreparable harm and significant financial injury to Consultant and
that, should legal action be required by Consultant to remedy any harm and/or
financial injury, the financial burden of costs and remedies shall be borne by
the Company.
Section 9. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 10. EXPERT TESTIMONY. Should Consultant or any of
its employees, contractors or affiliates be required to testify in the event
of any litigation relating to matters with respect to which Consultant has
expertise, such as, for example. matters similar to the Services pursuant
hereunder, the Company agrees to pay Consultant or its designee, the Per Diem
rate customary for experts providing such expert testimony in the jurisdiction
where such testimony is to be provided, plus reasonable out of pocket
expenses, for all the time required for such testimony.
Section 11. INDEMNIFICATION. The Company agrees to indemnify and
hold Consultant and all of its officers, directors, employees, affiliates and
agents harmless from and against any and all manner of actions, causes of
action, claims, demands, costs, damages, liabilities, losses, obligations and
expenses (including actual attorneys'' fees) arising or resulting from or
related
to Consultant's performance of the Services pursuant hereunder, unless they
are due to breach of this Agreement or gross negligence or willful misconduct
of Consultant.
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Section 12. INDEPENDENT CONTRACTOR. Consultant and the Company
hereby acknowledge and agree that Consultant is an independent contractor and
is not a licensed broker- dealer. Consultant shall not hold itself out as, nor
shall it take any action from which others might infer that it is a partner or
agent of, or a joint venturer with the Company. In addition, Consultant shall
take no action which binds, or purports to bind, the Company.
Section 13. LAW; FORUM AND JURISDICTION. This Agreement shall be
construed and interpreted in accordance with the laws of the State of
Delaware. The parties agree that any dispute arising under or with respect to
or in connection with this Agreement, whether during the Term of this
Agreement or at any subsequent time, shall be resolved fully and exclusively
by binding arbitration in accordance with the commercial rules then in force
of the American Arbitration Association and the proceedings taking place in
Los Angeles, California.
Section 14. NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered, or
sent by express mail or telegram, or transmitted by fax or e-mail, addressed
as set forth herein below.
If to Consultant:
Worldwide Corporate Finance
15760 Ventura Boulevard, Suite 1020
Encino, CA 91436
Phone: 1-818-783-0054
Fax: 1-818-783-1120
Attn: President
If to the Company:
Butler National Corporation
1546 East Spruce Road
Olathe, KS 66061
Phone: 1-913-780-9595
Fax: 1-913-780-5088
Attn: President
The parties may change their address to any other address as shall be
furnished by written notice from any party changing address to the other party
in the manner for giving notices as set forth in this Section 14. Any notice
or communication given pursuant hereunder shall be deemed to have been given
as of the date so delivered, sent, or transmitted.
Section 15. ATTORNEYS' FEES. In the event that any party institutes
any action to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the prevailing party shall be entitled to
reimbursement from the non-prevailing party for all costs, including reasonable
attorney's fees, incurred in connection therewith and in enforcing or
collecting any judgment rendered therein.
Section 16. CONFIDENTIALITY. Each party hereto agrees with the other
party hereto that, unless and until mutually agreed upon, they and their
representatives will hold in strict confidence all data and information
obtained with respect to the other party or any subsidiary thereof from any
representative, officer, director or employee, or from any books or records or
from personal inspection, of such other party, and shall not use such data or
information or disclose the same to others, except:
(i) to the extent such data or information are a matter of public
knowledge or are required by law to be published; and,
(ii) to the extent that such data or information must be used or
disclosed in order to consummate the transactions contemplated by this
Agreement.
Section 17. TERMINATION. This Agreement may be terminated by
Consultant during the Term hereof by notice to the Company in the event that
the Company shall have provided materially inaccurate or misleading
information, of any type or nature, to the Consultant, or failed or been
unable to comply in any material respect with any of the terms. conditions or
provisions of this Agreement on the part of the Company to be performed,
complied with or fulfilled within the respective times, if any. herein
provided for, unless compliance therewith or the performance or satisfaction
thereof shall have been expressly waived by Consultant in writing.
Any termination of this Agreement pursuant to this Section 1 7 shall be
without liability of any character (including. but not limited to, loss of
anticipated profits or consequential damages) on the part of the Company,
except that the Company shall remain obligated to pay the fees, other
compensation and costs otherwise to be paid, as set forth in Sections 5,
6 and 7 hereof.
This Agreement may be terminated by the Company for 'Cause" by notice to
Consultant in the event of:
(i) the failure by Consultant to perform its material duties
hereunder which failure continues for not less than Thirty (30) Days after
written notice from the Company is given to Consultant specifying such
failure.
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Upon termination of this Agreement by the Company for Cause, Consultant shall
return to the Company a number of Shares calculated by multiplying the number
Three Hundred Forty Two (342) by the number of' calendar days remaining
between the date of termination and the expiration of the Term: additionally,
all Options not exercised by Consultant as of the date of termination shall be
null and void.
Section 18. THIRD PARTY BENEFICIARIES. This Agreement is solely among
and between Consultant and the Company and, except as specifically provided
herein, no creditor, director, Officer, stockholder, employee, agent,
independent contractor or any other person or entity shall be deemed to be a
third party beneficiary of this Agreement.
Section 19. SURVIVAL; TERMINATION. The representations,
warranties and covenants of the respective parties shall survive the
consummation of the transactions herein contemplated.
Section 20. AMENDMENT OR WAIVER. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether
conferred herein, at law, or in equity, and may be enforced concurrently
herewith. and no waiver by any party of the performance of any obligation by
the other party shall be construed as a waiver of the same or any other
obligation or default then. theretofore, or thereafter occurring or existing.
At any time during the Term this Agreement may be amended by a written
amendment executed by the parties hereto. with respect to any of the terms
contained herein, and any term or condition of this Agreement may be waived or
the time for performance hereof may be extended by a written notice executed
by the waiving or extending party.
Section 21. INCORPORATION OF RECITALS. All of the recitals
hereof are incorporated by this reference and are made a part hereof as though
set forth at length herein.
Section 22. HEADINGS; CONTEXT. The headings of the sections and
paragraphs contained in this Agreement are for convenience of reference only,
do not form a part hereof, and in no way modify, interpret or construe the
meaning of this Agreement.
Section 23. BENEFIT. This Agreement shall be binding upon and shall
inure only to the benefit of the parties hereto, and their assigns permitted
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
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Section 24. SEVERABILITY. In the event that any particular
provision or provisions of' this Agreement shall for any reason hereafter be
determined to be unenforceable, or in violation of any law, governmental order
or regulation, such unenforceability or violation shall not affect the
remaining provisions of this Agreement, which shall continue in full force and
effect and be binding upon the respective parties hereto.
Section 25. NO STRICT CONSTRUCTION. The language of this
Agreement shall be construed as a whole, according to its fair meaning and
intent, and not strictly for or against either party hereto, regardless of who
drafted or was principally responsible for drafting the Agreement or the terms
or conditions hereof.
Section 26. EXECUTION KNOWING AND VOLUNTARY. In executing
this Agreement, the parties severally acknowledge and represent that each:
(i) has fully and carefully read and considered this Agreement;
(ii) has been or has had the opportunity to be fully apprised by its
attorneys of the legal effect and meaning of this Agreement and all terms and
conditions hereof;
(iii) has been afforded the opportunity to negotiate as to any and
all terms hereof; and,
(iv) is executing this Agreement voluntarily, free from any
influence, coercion or duress of any kind.
Section 27. - ENTIRE AGREEMENT. This Agreement represents the
entire agreement between the parties hereto relating to the subject matter
hereof. This Agreement alone fully and completely expresses the agreement of
the parties relating to the subject matter hereof and there are no other
courses of dealing, understandings, agreements, representations or warranties,
written or oral, except as set forth herein. This Agreement may not be amended
or modified, except by a written agreement signed by all parties hereto.
BALANCE OF PAGE LEFT BLANK INTENTIONALLY
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IN WITNESS WHEREOF the parties hereto have executed or caused this Agreement
to be
executed as of the date first written above.
"Consultant":
Worldwide Corporate Finance
/S/ Michael M. Markow
by: Michael M. Markow
its: President
"Company": -
Butler National Corporation
/S/ Clark D. Stewart
by: Clark D. Stewart
its: President and CEO
