<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14(A) INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] Filed by the Registrant
[_] Filed by a Party other than the Registrant
CHECK APPROPRIATE BOX:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
Soliciting Material Pursuant to (S) 240.14a-11c or (S) 240.14a-12
BUTLER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 06-1154321
-------------------- -------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 SUMMIT AVENUE, MONTVALE, NEW JERSEY 07645
----------------------------------------------
Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code: (201) 573-8000
--------------
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
_____________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________
5) Total fee paid:
_____________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or schedule and the date of its filing.
1) Amount Previously Paid:
_____________________________________________________________________
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
_____________________________________________________________________
4) Date Filed:
_____________________________________________________________________
<PAGE>
BUTLER INTERNATIONAL, INC.
110 SUMMIT AVENUE
MONTVALE, NEW JERSEY 07645
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 1995
The Annual Meeting of Stockholders of BUTLER INTERNATIONAL, INC. will be
held at its headquarters facility at 110 Summit Avenue, Montvale, New Jersey on
Tuesday, May 23, 1995 at 4:00 p.m. for the following purposes:
1. To elect one director to hold office for a term of five years.
2. To vote on a proposal to amend the 1992 Stock Option Plan, 1992
Incentive Stock Option Plan, and 1992 Stock Bonus Plan by increasing
the aggregate number of shares of the Company's common stock that may
be subject to options under all three plans from 570,000 to 800,000.
3. To vote on a proposal to amend the 1992 Stock Option Plan for Non-
Employee Directors by increasing the aggregate number of shares of the
Company's common stock that may be subject to option from 150,000 to
190,000.
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of record of the common stock and the 7% Series B cumulative
convertible preferred stock at the close of business on April 12, 1995 are
entitled to notice of, and to vote at, this meeting or any adjournment or
adjournments thereof.
By Order of the Board of Directors,
Warren F. Brecht
Secretary
Montvale, New Jersey
April 25, 1995
______________________________________________________________________
IF YOU CANNOT PERSONALLY ATTEND THE MEETING, IT IS EARNESTLY REQUESTED THAT
YOU PROMPTLY INDICATE YOUR VOTE ON THE ISSUES INCLUDED ON THE ENCLOSED
PROXY AND DATE, SIGN AND MAIL IT IN THE ENCLOSED SELF-ADDRESSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. DOING SO WILL
SAVE THE COMPANY THE EXPENSE OF FURTHER MAILINGS. IF YOU SIGN AND RETURN
YOUR PROXY CARD WITHOUT MARKING CHOICES, IT WILL BE UNDERSTOOD THAT YOU
WISH TO HAVE YOUR SHARES VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS.
_______________________________________________________________________
<PAGE>
BUTLER INTERNATIONAL, INC.
110 SUMMIT AVENUE
MONTVALE, NJ 07645
April 25, 1995
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Butler
International, Inc., a Maryland corporation (the "Company"). Unless instructed
to the contrary on the proxy, it is the intention of the persons named in the
proxy to vote the proxies FOR the election as a director of the nominee listed
below for a term expiring in 2000; FOR the proposal to amend the 1992 Stock
Option Plan, 1992 Incentive Stock Option Plan, and 1992 Stock Bonus Plan by
increasing the aggregate number of shares of the Company's common stock that may
be subject to option under all three plans from 570,000 to 800,000, and FOR the
proposal to amend the 1992 Stock Option Plan for non-employee directors by
increasing the aggregate number of shares of the Company's common stock that may
be subject to options thereunder from 150,000 to 190,000. In the event that a
nominee for director becomes unavailable to serve, which management does not
anticipate, the persons named in the proxy reserve full discretion to vote for
any other person who may be nominated. Any stockholder giving a proxy may revoke
the same at any time prior to the voting of such proxy. This Proxy Statement and
the accompanying proxy are being mailed on or about April 25, 1995.
Each stockholder of the Company will be entitled to one vote for each share
of common stock and each share of 7% Series B convertible preferred stock,
standing in his or her name on the books of the Company at the close of business
on April 12, 1995. On that date, the Company had outstanding and entitled to
vote 5,906,658 shares of common stock and 2,288,878 shares of 7% Series B
cumulative convertible preferred stock.
PROPOSAL 1: ELECTION OF DIRECTOR
Pursuant to the Company's Articles of Incorporation and By-Laws, as
amended, the Board of Directors currently consists of five classes of directors
having staggered terms of five years each (except for Nikhil S. Nagaswami who
was elected as a Fifth Class Director last year to hold office for four years).
One Director's term expires at each Annual Meeting. Currently the Board of
Directors has five members, of whom one is a First Class Director with a term
expiring at this year's Annual Meeting. Unless instructed to the contrary on the
proxy, the persons named in the proxy will vote for the election of Hugh G.
McBreen as a First Class Director, to hold office for five years. The nominee
has been a Director of the Company since 1986.
NOMINEE FOR DIRECTOR -- TERM EXPIRES IN 2000
HUGH G. MCBREEN
Mr. McBreen, age 40, is a partner of the Chicago law firm of McBreen,
McBreen & Kopko and has been associated with that firm since September, 1983. He
is also the Secretary of Peter J. McBreen and Associates, Inc., a risk
management and loss adjustment company. Mr. McBreen practices in the area of
aviation law. He received an A.B. degree from Dartmouth College and a J.D. from
Notre Dame Law School. Mr. McBreen is not a director of any publicly-owned
company other than the Company.
The election of the First Class Director requires the approval of a
majority of the votes cast by holders of the shares of the Company's common
stock and the Company's 7% Series B cumulative convertible preferred stock,
voting together as a single class. Any shares not voted, whether by broker non-
vote or otherwise, have no impact on the outcome of the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
MR. HUGH G. MCBREEN AS FIRST CLASS DIRECTOR.
DIRECTORS CONTINUING IN OFFICE
JOHN F. HEGARTY Director since 1985 -- Term
expires in 1996
Mr. Hegarty, age 68, is the Secretary and a Director of UAS Automation
Systems, Inc. ("UAS"), a manufacturer of tile removal equipment. He has been a
director and officer of UAS since June, 1983, serving as its Chairman until
1990. Mr. Hegarty was a co-founder, President, and Chief Executive Officer of
National Semiconductor Corporation (1959-1967) and a co-founder and director of
General Semiconductor Corporation (1968-1981), which was acquired by Square D
Company in 1984. Mr. Hegarty holds a Bachelor's degree in electrical
engineering from Manhattan College.
1
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EDWARD M. KOPKO Director since 1985 -- Term
expires in 1999
Mr. Edward M. Kopko, age 40, has been the President and the Chairman of the
Board of Directors of the Company since its inception in November, 1985. Mr.
Kopko has also been the Chairman, President and Chief Executive Officer of
Butler Service Group, Inc. since 1989, and the chairman of other Butler
subsidiaries, devoting his full time to the business of Butler and its
subsidiaries. Mr. Kopko is an officer and member of the Executive Committee of
the National Technical Services Association, the predominant trade association
for the contract technical services industry. Mr. Kopko also has been the
President and Chairman of the Board of Directors of North American Holding
Corporation ("NA Holding"), a financial services holding company, since its
inception in March, 1983, and of its subsidiaries, including North American
Investment Corp. ("NAIC"). A petition under federal bankruptcy laws was filed
against NA Holding in June, 1992 and against NAIC in July, 1992. From 1987
through 1991, Mr. Kopko served on the State of Connecticut Retirement Plans and
Trust Funds Investment Advisory Council, which administers $7 billion in state
pension funds. Mr. Kopko holds a B.A. degree in economics from the University
of Connecticut, an M.A. in economics from Columbia University, and he undertook
doctoral work in economics at Columbia.
FREDERICK H. KOPKO, JR. Director since 1985 -- Term
expires in 1997
Mr. Frederick H. Kopko, Jr., age 39, is a partner of the law firm of
McBreen, McBreen & Kopko, Chicago, Illinois, and has been associated with that
firm since January, 1990. Mr. Kopko practices in the area of corporate law.
Previously, he was a managing partner of the Chicago law firm of D'Ancona &
Pflaum and was associated with that firm from August, 1983 through December,
1989. He has been a director of Mercury Air Group, Inc. since November, 1992.
Mr. Kopko received a B.A. degree in economics from the University of Connecticut
and a J.D. from Notre Dame Law School. He is the brother of Edward M. Kopko.
NIKHIL S. NAGASWAMI Director since 1994 -- Term
expires in 1998
Mr. Nagaswami, age 38, is currently an independent management consultant.
From August 1992 until August 1994, he was associated with Scott Paper Company,
where he was Director-Corporate Planning and Analysis. From 1988 through 1990,
Mr. Nagaswami was a senior associate with Braxton Associates (the strategic
consulting division of Deloitte & Touche), specializing in the development of
corporate, business unit and product-line strategies. During 1990 through 1992,
when he served as an independent advisor to the Board of Directors of Butler, he
played a key role in developing Butler's long-term strategy, restructuring its
operations, and implementing management processes. Mr. Nagaswami received a
Bachelors of Technology degree in metallurgy from the Indian Institute of
Technology, a Masters of Applied Science degree in materials science and
metallurgy from the University of Delaware, and an M.B.A. degree from the
Wharton School, University of Pennsylvania in financial management, strategic
planning and control.
MEETINGS AND COMMITTEES OF DIRECTORS
The Board of Directors met five times during 1994. The Board of Directors
has two standing committees, the Audit Committee and the Executive Compensation
Committee. The Company does not have a nominating committee of the Board of
Directors.
The Audit Committee consists of Messrs. Frederick H. Kopko, Jr., Hegarty,
McBreen, and Nagaswami (appointed in January, 1995). The functions of the Audit
Committee are to review with the Company's independent public auditors the scope
and adequacy of the audit to be performed by such independent public auditors;
the accounting practices, procedures, and policies of the Company; and to review
all related party transactions. The Committee met one time in 1994.
The Executive Compensation Committee consists of Messrs. Frederick H.
Kopko, Jr., Hegarty, McBreen, and Nagaswami (appointed in January, 1995). The
Committee makes recommendations to the Board with respect to salaries of
employees and is responsible for determining the amount and allocation of any
incentive bonuses among the employees. In addition, the Committee is authorized
to grant stock options under the Company's Incentive Stock Option Plans and Non-
qualified Stock Option Plans, awards under the Company's Stock Bonus Plan, and
loans under the 1990 Employee Stock Purchase Plan to Company individuals who are
not members of the Board. The Committee met three times during 1994.
All members of the Board attended 100% of the appropriate meetings.
2
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DIRECTORS COMPENSATION
The directors of the Company, who are not also full-time employees of the
Company, receive a fee of $1,000 for attendance at a meeting of the Board of
Directors and $850 per Committee meeting attended. The cash compensation paid
to the four non-employee directors combined in 1994 was $30,200. Directors who
are not also employees have participated in Directors Stock Option Plans, the
Employee Stock Purchase Plan, and other option grants in prior years.
Under the provisions of the stockholder-approved 1992 Stock Option Plan for
Non-Employee Directors (the "Plan"), on the day following the 1992 Annual
Meeting at which the Plan was adopted, each non-employee director was granted an
initial option to purchase 10,000 shares of the Company's common stock at an
exercise price of $5.63, the fair market value on the date of grant. On the day
following the 1993 Annual Meeting, each non-employee director was granted an
option to purchase an additional 10,000 shares at an exercise price of $3.75,
the fair market value on the date of grant. Pursuant to an amendment approved
by the Company's stockholders at the 1993 Annual Meeting, each non-employee
director on the day following the 1994 Annual Meeting was granted an option to
purchase an additional 10,000 shares of the Company's common stock at an
exercise price of $4.88, the market price of the Company's common stock on the
date of grant. Also on the day following the 1994 Annual Meeting, an additional
option to purchase 10,000 shares of the Company's common stock was granted to
Nikhil S. Nagaswami, the newly elected non-employee Director. Pursuant to an
amendment approved by the Company's stockholders at the 1994 Annual Meeting,
each non-employee director on the day following the 1995 Annual Meeting will be
granted an additional option to purchase 10,000 shares of the Company's common
stock at an exercise price equal to the market price of the Company's common
stock on the date of grant.
EXECUTIVE OFFICERS OF THE COMPANY AND
CERTAIN EXECUTIVE OFFICERS OF THE COMPANY'S SUBSIDIARIES
<TABLE>
<CAPTION>
Positions and Offices
Currently Held With The Officer
Name and Age Company or Subsidiaries Since
- ------------ ----------------------- -----
<S> <C> <C>
Edward M. Kopko, 40 ................... President and Chairman of the Board of 1985
Directors of the Company
President and Chief Executive Officer of 1989
Butler Service Group, Inc.
Raymond J. Lacroix, 59 ................... Senior Vice President-Finance and 1992
Chief Financial Officer of the Company,
and of Butler Service Group, Inc. 1991
Warren F. Brecht, 62 ................... Vice President, Secretary and Treasurer 1985
of the Company
Senior Vice President-Administration and 1990
Investor Relations and Secretary of
Butler Service Group, Inc.
</TABLE>
The executive officers of the Company, who are appointed by the Board of
Directors, hold office for one-year terms or until their respective successors
have been duly elected and have qualified. The executive officers of the
Company's subsidiaries, who are appointed by such subsidiaries' Boards of
Directors, hold office for one-year terms or until their respective successors
have been duly elected and have qualified.
Mr. Lacroix has been Senior Vice President - Finance and Chief Financial
Officer of the Company since June, 1992 and of Butler Service Group, Inc. since
October, 1991. From 1987 to 1991, he was Senior Vice President and Chief
Financial Officer of Microband Companies, Inc., a private cable television
business. From 1984 to 1987, Mr. Lacroix was Senior Vice President and Chief
Financial Officer of GAF Corporation, a manufacturer of chemicals and building
materials, and was responsible for all treasury functions, including bank
financing and public debt offerings; corporate accounting, MIS, and internal
audit. Mr. Lacroix received a B.B.A. degree in accounting and an M.B.A. in
international business management from Pace University.
3
<PAGE>
Mr. Brecht has been the Secretary of the Company since its inception and
the Vice President and Treasurer of the Company since April, 1987. He
concurrently became Senior Vice President - Administration and Investor
Relations of Butler Service Group, Inc. in August, 1990 and Secretary in
January, 1993. He was also Senior Vice President of North American Holding
Corporation and its subsidiaries from November, 1985 until April, 1989. Mr.
Brecht was a vice-president of Northeast Utilities from June, 1977 through
October, 1985, where he directed the accounting, tax, internal audit and
management information systems departments. From 1972 to 1977, he was the
Assistant Secretary for Administration, United States Department of the
Treasury. Mr. Brecht received a B.A. in economics from DePauw University and an
M.B.A. degree from Harvard Business School.
PRINCIPAL STOCKHOLDERS
On April 12, 1995, the directors and executive officers of the Company, and
all directors and officers of the Company and its subsidiaries as a group,
beneficially owned the number of shares of the common stock and Series B
convertible preferred stock set forth below. Unless otherwise stated, all
shares are held directly with sole voting and investment power. The business
address of the named stockholders is the address of the Company, except as
otherwise noted. Except as disclosed in the chart below, the Company knows of
no other person or group owning 5% or more of any class of the Company's voting
securities.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Common Stock/ 1/ Series B Preferred Total Equivalent
Stock/ 2/ Voting Rights /3/
- -----------------------------------------------------------------------------------------------------------------------
# of Shares # of Shares
Beneficially % of Beneficially % of # of % of
Name Owned Class Owned Class Shares Total
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<S> <C> <C> <C> <C> <C> <C>
Edward M. Kopko 432,551/4/ 7.1% 506,072 22.1%/15/ 938,623 11.2%
Hugh G. McBreen 112,289/5/ 1.9% 481,847/6/ 21.1%/15/ 594,136 7.2%
Frederick H. Kopko, Jr. 140,867/7/ 2.3% 532,989/8/ 23.3%/15/ 673,856 8.1%
John F. Hegarty 50,833/9/ 0.9% 442,374 19.3%/15/ 493,207 6.0%
Nikhil S. Nagaswami 20,000/10/ 0.3% -- -- 20,000 0.2%
Raymond J. Lacroix 48,340/11/ 0.8% -- -- 48,340 0.6%
Warren F. Brecht 40,909/12/ 0.7% -- -- 40,909 0.5%
All directors and officers 1,387,134/14/ 20.7% 1,956,115 85.5% 3,343,249 37.2%
as a group (16 persons)/13/
==================================================================================================================
</TABLE>
/1/ Assumes exercises of options and warrants.
/2/ Series B Preferred Stock consists of 2,288,878 outstanding shares and has
one vote per share, convertible into shares of Common Stock at a rate of
.285 per share of Series B Preferred Stock.
/3/ Does not assume conversion of Series B Preferred Stock.
/4/ Includes 63 shares beneficially owned by Mr. Kopko's wife (as to which Mr.
Kopko disclaims beneficial ownership), 83,333 shares that may be purchased
upon exercise of options granted under the Butler's 1985 Incentive Stock
Option Plan, 22,500 shares that may be purchased upon exercise of options
granted under Butler's 1985 Non-Qualified Stock Option Plan, and 60,000
shares that may be purchased upon exercise of options granted under
Butler's 1992 Incentive Stock Option Plan. Also includes approximately
208,870 shares held of record by NAIC, as to which Mr. Kopko disclaims
beneficial ownership, of which Mr. Kopko may be deemed to be the beneficial
owner by reason of his being Chairman of the Board of Directors, the
President and a principal stockholder of NA Holding.
/5/ Includes 8,333 shares that may be purchased upon exercise of options
granted under the 1989 Directors Stock Option Plan, 30,000 shares that may
be purchased upon exercise of options granted under the 1992 Stock Option
Plan for Non-Employee Directors, and 60,000 shares that may be purchased
upon exercise of warrants granted related to the Montvale property
purchase.
/6/ Includes 38,019 shares owned by McBreen, McBreen & Kopko, as to which Mr.
McBreen shares voting and investment power.
4
<PAGE>
/7/ Includes 8,333 shares that may be purchased upon exercise of options
granted under the 1989 Directors Stock Option Plan, 30,000 shares that may
be purchased upon exercise of options granted under the 1992 Stock Option
Plan for Non-Employee Directors, and 90,000 shares that may be purchased by
Mr. Kopko's wife upon exercise of warrants granted related to the Montvale
property purchase.
/8/ Includes 38,019 shares owned by McBreen, McBreen & Kopko, as to which Mr.
Kopko shares voting and investment power.
/9/ Includes 8,333 shares that may be purchased upon exercise of options
granted under the 1989 Directors Stock Option Plan, and 30,000 shares that
may be purchased upon exercise of options granted under the 1992 Stock
Option Plan for Non-Employee Directors.
/10/ Includes 20,000 shares that may be purchased upon exercise of options
granted under the 1992 Stock Option Plan for Non-Employee Directors.
/11/ Includes 37,500 shares that may be purchased upon exercise of options
granted under the 1992 Incentive Stock Option Plan.
/12/ Includes 8,333 shares that may be purchased upon exercise of options
granted under the 1985 Incentive Stock Option Plan, 4,167 shares that may
be purchased upon exercise of options granted under the 1985 Non-Qualified
Stock Option Plan, and 7,500 shares that may be purchased upon exercise of
options granted under the 1992 Incentive Stock Option Plan.
/13/ Includes the officers of the Company and its principal subsidiaries.
/14/ Includes 530,999 shares that may be purchased upon exercise of options
granted under the Company's various plans and 269,529 shares that may be
purchased upon exercise of various warrants.
/15/ Messrs. Edward M. Kopko, Frederick H. Kopko, Jr., Hugh G. McBreen and John
F. Hegarty have filed a Schedule 13D with respect to their purchases of
Series B Preferred Stock. The reporting persons disclaim the existence of a
"group" under Section 13(d) of the Exchange Act.
EXECUTIVE COMPENSATION
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee (the "Committee") oversees the
executive compensation policies and programs of the Company, including executive
and certain non-executive officers. The Company's executive compensation
programs are intended to attract and retain qualified executives and to motivate
them to achieve goals that will lead to appreciation of stockholder value. A
significant portion of each executive's compensation is dependent upon the
Company's profitability and the appreciation in the market price of the
Company's common stock. Achievement of certain other corporate goals and
individual performance objectives also impact executive compensation.
The main components of executive compensation are: base salary, annual
incentive cash bonus, and longer term equity-based incentive compensation. The
Committee periodically reviews independent surveys, compensation trends, and
competitive factors in making judgments on the appropriate compensation package
for each executive employee. The Compensation Committee's decisions also
acknowledge that Butler's Retirement Program is modest compared with many other
companies.
EXECUTIVE EMPLOYMENT AGREEMENTS: In mid-1989, Edward M. Kopko assumed the
-------------------------------
dual responsibilities of Chairman of the Company and President and CEO of Butler
Service Group, Inc., and the position of Chief Operating Officer of Butler
Service Group was eliminated. An employment agreement was executed with Mr.
Kopko in December, 1991. Mr. Kopko's base salary and cash bonus were predicated
in part on the base salary and cash bonus formula of his predecessor as
President and CEO/COO of Butler Service Group, and partly on his broader
responsibilities as Chairman and CEO of the public company, Butler
International, Inc. The terms of Mr. Kopko's employment agreement are set forth
below under "Employment Agreements".
Raymond J. Lacroix, the Company's Senior Vice President-Finance and Chief
Financial Officer, joined the Company in October, 1991 after an extensive search
undertaken by the Board of Directors with the assistance of a prominent
executive search firm. Mr. Lacroix's compensation package was authorized by the
Executive Compensation Committee and the Board of Directors after negotiations
with Mr. Lacroix and upon the advice of the executive search firm. The terms of
Mr. Lacroix's employment agreement are set forth below under "Employment
Agreements".
5
<PAGE>
BASE SALARY: The salaries of the other executive and non-executive
-----------
officers within the purview of the Committee are based on a periodic review of
surveys of companies of comparable size and complexity. In certain cases, the
Company has hired executive talent from outside, and both base pay and other
compensation elements have been determined with the guidance of the executive
search firm used for that purpose. Except for certain equity adjustments or a
significant increase in responsibilities, annual salary increases are generally
limited to cost of living adjustments.
According to independent surveys, including particularly the Wyatt Data
Services Compensation Surveys - All Industries (Excluding Financial Services and
Non Profit Organizations), the combined base salaries of the Company's officers
as a group, including the named executive officers, are 5% above the median and
3% above the average for their positions and company size, based on total
revenues. Mr. Kopko's base salary individually is slightly above the median but
below the average for his position and company size. Excluding the salary of
one business unit head with the highest growth and profit margins, the combined
base salaries are approximately at the median and slightly below the average for
their positions and company size. The Wyatt Survey was used because it covers a
much larger number and variety of companies than in the Peer Group, including
nearly 100 companies in the Company's revenue range.
ANNUAL INCENTIVE CASH BONUS: Each executive officer and certain non-
---------------------------
executive officers are eligible to participate in an annual cash bonus plan. A
contractual agreement is reached early in the year, with each such officer to be
given the opportunity to earn a cash bonus in part based on the achievement of
profitability and in part on the accomplishment of two or three key individual,
department, or business unit objectives that are believed to be vital to the
Company's success. The financial objectives are generally based on operating
income of the Company as a whole, or of a business unit, division or region--
rather than on target thresholds. The mix between financial and non-financial
objectives depends upon the nature of each executive's responsibilities. An
officer with bottom line responsibility typically has a greater portion of
incentive bonus tied to the operating profit of his or her group. However, all
executive officers and non-executive officers have some portion of their bonus
dependent upon the successful completion of non-financial objectives such as
specific projects for their group and/or individually.
The bonuses awarded in 1994 to the officers (other than the CEO) reflect
the mix of corporate, department and individual performance achieved versus
plan. Mr. Kopko's bonus was based primarily on a formula which is a percentage
of operating income as defined in his employment agreement as amended
(approximately 79% of the total bonus), and the balance equal to 25% of base
salary based on the achievement of certain key objectives. These included the
reorganization of certain businesses to reduce costs, significant progress on
the Company's quality program, the expansion of new service offerings, and the
infusion of new capital for working capital and acquisitions.
LONGER-TERM EQUITY-BASED INCENTIVE COMPENSATION: The Company has several
-----------------------------------------------
longer-term, equity-based plans whose purpose is to promote the interests of the
Company and its stockholders by encouraging greater management ownership of the
Company's common stock. Such plans provide an incentive for the creation of
stockholder value over the long term, since the full benefit of the compensation
package cannot be realized unless an appreciation in the price of the Company's
common stock occurs. Additionally, these plans strengthen the Company's ability
to attract and retain experienced and knowledgeable employees over a longer
period and to furnish additional incentives to those employees upon whose
judgment, initiative and efforts the Company largely depends.
These plans include the 1990 Employee Stock Purchase Plan, the 1985 and
1992 Incentive Stock Option Plans, the 1985 and 1992 Non-Qualified Stock Option
Plans, and the 1992 Stock Bonus Plan.
The 1990 Employee Stock Purchase Plan previously made available $2.5
million for loans to officers, directors, and key employees to purchase Company
stock, the largest portion of which was purchased on the open market. The
Plan's primary purpose is to give such persons a greater stake in the Company
through increased stockholdings. The Plan was implemented immediately following
the adoption in August, 1990 of the Company's long-term strategic plan developed
with the guidance of Braxton Associates, the strategic planning affiliate of
Deloitte & Touche LLP. The Plan rewards officers, directors, and key employees
for achieving long-range corporate goals targeted in the Strategic Plan. The
most important of these goals is the achievement of targeted profitability
levels. Other goals include or have included the following: maximizing
shareholder value, increasing profit margins, implementing cost reduction/cost
containment to improve the Company's efficiency and competitive position,
raising additional capital for internal growth and acquisitions, developing new
growth objectives for each business unit based on analysis of market potential,
developing and achieving long-range sales growth, corporate reorganization and
restructuring, geographic reorganization at the field level, creating a
marketing department, international expansion, training and upgrading of the
salesforce and recruiters, and upgrading of systems and processes. Additional
goals are determined on an individual basis. The long-term goals established
for Mr. Kopko, as CEO, include increasing the market price of the Company's
stock, improving margins and profitability of all business units, achieving the
corporate reorganization and restructuring, improving sales mix and growth, and
introducing new service offerings. With the 1991-92 recession, emphasis shifted
to some degree with greater attention to cost containment and downsizing while
staying on course with the basic organizational changes, system improvements,
strengthened marketing and sales, and maintainance of a strong
6
<PAGE>
financial position. The goals actually achieved by Mr. Kopko included the
following: 1992: Securing a new bank facility and increased credit line,
completing a successful acquisition that added revenue with minimal overhead,
establishing a formal marketing department and implementing a marketing plan,
international expansion into Latin America and growth in the Pacific Rim,
resumption of sales growth, raising equity capital, and achieving progress
toward a formal Quality Improvement Program. 1993: Returning continuing
operations to profitability, closing unprofitable businesses (discontinued
operations), achieving record sales, increasing share price, increasing
recognition from the media and investment community, achieving Quality Program
milestones with all business units progressing toward ISO 9000 certification,
and introducing new service offerings. 1994: Increasing pre-tax profits from
continuing operations, increasing the Company's market value, securing a new
bank facility and increased credit lines, raising equity capital and
implementing certain management changes. The goals for other employees varied,
depending upon the employee's position. For example, the goals achieved by Mr.
Brecht included the following: 1992: Implementating the first flexible
benefits health plan in the Company; implementing cost savings and reducing
administrative staff. 1993: Managing flexible health care plan and additional
offerings within budget, improving the 401(k) Plan, improving and automating
human resource systems, and making administrative improvements in management and
space utilization. 1994: Obtaining a training grant for New Jersey-based
employees, introducing a supplemental executive retirement plan, and continuing
to manage medical health programs within budget.
With respect to the officers participating in the Plan, the Company may
reduce the amount due on each loan by 25% of the original principal balance on
successive anniversary dates of the loan. This reduction is subject to the
recommendation of the Committee, based on long-term performance of each officer
over the period that the officer was assigned responsibility for specific
objectives, and other factors that the Committee may determine at its
discretion, provided that the employee remains employed by the Company or one of
its subsidiaries on such anniversary dates, or has not terminated his employment
for other than a reason permitted by the Plan. The "Long Term Incentive Payout"
portion of executive compensation is the loan forgiveness. Although the Company
was profitable in 1994, the Company did not achieve the profit margins or the
level of profitability targeted by the Committee. Based on not attaining these
long-term goals for 1994, the 25% forgiveness was not available to participants.
Because most of the ESPP stock was purchased in late 1990 and early 1991 at
approximately the market price range during April, 1995, the significant value
to participants will come from the appreciation of share value. No new loans
were granted in 1994.
The number of stock options currently held by an executive officer is one
factor taken into consideration in making new awards. The Committee also
believes it is important that the CEO and other senior officers have a
significant number of stock options whose value can provide a powerful incentive
to driving the Company's bottom line and stock performance. Stock option awards
are also based on an officer's level of responsibilities and expected
contribution, rather than following the achievement of certain targets. In May,
1994, 25,000 incentive stock options were granted to the newly hired senior
officer of one of the business units as part of his total compensation
agreement. In February, 1995, a total of 67,000 incentive stock options were
awarded to five officers, none of whom is a listed executive officer. Some but
not all of the option grants made in earlier years have increased in value
depending on whether such options are exercisable at prices above or below the
market price range in April, 1995. The primary future value of all options will
depend on the Company's success in continuing to increase stockholder value.
Under the 1992 Stock Bonus Plan, the Committee may make awards of stock to
individuals who, in the Committee's judgment, have made significant
contributions to the Company or its subsidiaries. Such awards may be made on
the basis of pre-established goals, or to reward performance, or both. The Plan
will also serve to increase employee ownership in the Company and alignment with
stockholders, while conserving cash. No stock bonus awards were made in 1994.
The Executive Compensation Committee believes that the executive
compensation policies and programs serve the interests of the stockholders.
Such compensation is intended to be a function of the Company's increase in
profits and share price value over a longer term perspective.
EXECUTIVE COMPENSATION COMMITTEE
John F. Hegarty
Frederick H. Kopko, Jr.
Hugh G. McBreen
Nikhil S. Nagaswami
7
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term
Compensation
Awards/3/ Payouts
------------------------------------------
Name
and Securities Long-Term All Other
Principal Underlying Incentive Compensa-
Position Year Salary/1/($) Bonus ($) Other/2/($) Options (#) Payouts/4/($) tion/5/ ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward M. Kopko 1994 329,621 395,999 47,015 -- -- 228
President and
Chief Executive Officer 1993 313,982 324,953 62,251 60,000 247,659 800
1992 307,118 105,960 70,469 -- 213,306 968
Raymond J. Lacroix 1994 166,889 82,687 -- -- -- 6,120
Sr. VP-Finance and
Chief Financial Officer 1993 157,500 102,376/6/ -- 37,500 -- 6,120
1992 154,471 78,750 -- -- -- 3,359
Warren F. Brecht 1994 135,750 33,937 2,646 -- -- 7,933
VP, Secretary and
Treasurer; Sr. VP- 1993 135,750 33,937 4,824 7,500 31,249 7,876
Administration,
Butler Service Group 1992 134,073 -- 7,452 -- 31,249 6,795
=====================================================================================================================
</TABLE>
/1/ 1992 Salary reflects 53 pay periods, compared with 52 for the other two
years.
/2/ Consists of imputed interest on loans to buy common stock of the Company.
For Mr. Kopko, also includes tax gross-up on such imputed interest.
/3/ No options were repriced during the last fiscal year or at any time since
the Company's inception.
/4/ Consists of loan forgiveness under the Company's 1990 Employee Stock
Purchase Plan ("the ESPP"). Under the ESPP provisions, two non-interest
bearing loans were executed with Mr. Kopko: September, 1990 for $445,000 to
acquire 103,009 shares of common stock directly from the Company at $4.32
per share; and December, 1991 for $84,000 to acquire 33,333 shares of
common stock from the Company at $2.52 per share. The stock so obtained is
subject to a put option whereby Mr. Kopko may require the Company to
purchase the common stock at any time at its then fair market price. In
October, 1990, a non-interest bearing, non-recourse loan was executed with
Mr. Brecht in the amount of $124,997 to finance the purchase of the
Company's common stock on the open market.
Under the ESPP provisions, 25% of the original loan principal may be
forgiven each year, subject to the Committee's evaluation of each
executive's long-term performance. Mr. Kopko's achievements in each year
are described under "Report of the Executive Compensation Committee". No
loan amount was forgiven in 1994. In addition to the ESPP loan forgiveness
for Mr. Kopko in the amounts of $132,250 and $132,250 in 1993 and 1992,
respectively, Mr. Kopko also received a tax gross-up for the loan
forgiveness totaling $115,409 in 1993 and $81,056 in 1992. The Committee
recommended the 25% reduction for Mr. Brecht in 1992 and 1993 based on the
considerations that are described under "Report of the Executive
Compensation Committee." No loan amount was forgiven in 1994.
/5/ Consists of imputed cost of Company-paid term life insurance.
/6/ Includes $19,688 representing the fair market value of 5,000 shares of
common stock granted under the 1992 Stock Bonus Plan.
8
<PAGE>
EMPLOYMENT AGREEMENTS:
- ----------------------
In December, 1991, the Company entered into an employment agreement with
Edward M. Kopko, which continues in effect until three years after a notice of
termination is given by either party. Mr. Kopko is eligible for annual raises
of not less than 5% of the prior year's salary, and an annual bonus of 5% of the
Company's operating income of $3 million or less, plus 3% of operating income
above $3.0 million, plus an amount based on the successful completion of
management objectives and other factors (as such terms are defined in the
Employment Agreement). Mr. Kopko's annual bonus shall not exceed twice his base
salary for any year. Mr. Kopko is entitled to benefits, including stock options
and payment of taxes on his behalf based on imputed income due to forgiveness by
the Company of notes by him to pay for stock purchases. If the Company breaches
its duty under the employment agreement, if Mr. Kopko determines in good faith
that his status with the Company has been reduced, or if, after a change in
control of the Company, Mr. Kopko determines in good faith that the financial
prospects of the Company have significantly declined, Mr. Kopko may terminate
his employment and receive all salary and bonus owed to him at that time, pro
rated, plus three times the highest annual salary and bonus paid to him in the
three years immediately preceding the termination.
In October, 1991, the Company entered into an employment agreement with
Raymond J. Lacroix, Butler's Chief Financial Officer. Mr. Lacroix's employment
agreement is terminable by either party with six months prior notice. Mr.
Lacroix's is eligible for bonuses of up to 50% of his base salary, based on the
Company obtaining specified management objectives (as defined) and other
factors. If Mr. Lacroix's employment is terminated other than for cause, he is
entitled to severance of up to $60,000, based on certain factors. The agreement
provides that Mr. Lacroix will not compete with the Company for a period of one
year after termination of his employment.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1994/1/
AND 1994 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
# of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at 1994 Year-End at 1994 Year-End
-----------------------------------------------------------------------------
Shares
Name of Individual Acquired on Value Exercisable Unexercisable Exercisable Unexercisable
Exercise /1/ Realized
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward M. Kopko/ 2/ -- -- 117,833 48,000 $152,199 $76,800
Raymond J. Lacrox /3/ -- -- 37,500 -- $101,250 --
Warren F. Brecht /4/ -- -- 20,000 -- $ 28,299 --
===================================================================================================================================
</TABLE>
/1/ No shares were acquired upon exercise of options during Fiscal Year 1994;
and no additional options were granted in 1994.
/2/ Consists of 22,500 non-qualified stock options, all exercisable, granted in
1986 and 1987 at an option price of $10.02; 83,333 incentive stock options
granted in September, 1990 at an exercise price of $4.40, with one-fifth
exercisable immediately and the balance exercisable in equal installments
on each of the four successive anniversary dates; and an option to purchase
60,000 shares under the 1992 Incentive Stock Option Plan, granted on August
2, 1993, at an exercise price of $4.40, with one-fifth exercisable on
February 2, 1994 and the balance exercisable on four successive anniversary
dates.
/3/ Consists of options to purchase 30,000 shares granted on January 4, 1993
under the 1992 ISOP at an exercise price of $3.13, of which the options to
purchase 10,000 became exercisable on August 1, 1993, 10,000 became
exercisable on February 1, 1994 and 10,000 became exercisable on August 1,
1994; and an additional incentive stock option to purchase 7,500 shares
granted on August 2, 1993 and became exercisable on February 2, 1994 at an
exercise price of $4.00 per share.
/4/ Consists of non-qualified stock options for 4,167 shares, all of which are
currently exercisable, granted in 1988 at an exercise price of $10.02 per
share; incentive stock options for 8,333 shares granted in September, 1990
at an exercise price of $4.40 per share, of which 20%, or options for 1,666
shares, are exercisable immediately and the balance of which became
exercisable in equal installments on each of the four successive
anniversary dates; and an incentive stock option to purchase 7,500 shares
granted under the 1992 ISOP on August 2, 1993 which became exercisable on
February 2, 1994 at a price of $4.00 per share.
9
<PAGE>
RETIREMENT PLAN
Staff employees of the Company, including the executive officers referred
to in the Summary Compensation Table, are entitled to participate in the Butler
Service Group, Inc. Defined Benefit Plan (the "Plan"), which is a non-
contributory, defined benefit retirement plan. Retirement benefits are computed
on the basis of a specified percentage of the average monthly base compensation
(during any 60 consecutive months of an employee's final 120 months of
employment which results in the highest average) multiplied by the employee's
years of credited service. The Plan provides for several optional forms of
benefit payment including a straight life annuity, a 50% joint and survivor
annuity, a period certain annuity, and a lump sum. Retirement benefits are in
addition to benefits payable from Social Security. Normal retirement age is 65,
although benefits may begin as early as age 55 with ten years of service. A
pension benefit is vested after five years of service.
As of December 31, 1994, the following executive officers of the Company
had the following years of credited service for retirement compensation
purposes: Mr. Kopko--9, Mr. Lacroix--3, and Mr. Brecht--9. The following table
shows the estimated annual retirement benefits payable assuming that retirement
occurs at age 65, which for the officers listed above would occur with 34, 9,
and 11 years of credited service, respectively. The annual earnings used to
determine pension in the following table is shown in the Salary column of the
Summary Compensation Table.
<TABLE>
<CAPTION>
Average Annual Earnings for
the Highest Consecutive 60 Months PENSION PLAN TABLE
of Last 120 Months Prior to Years of Service
----------------------------------------------------
Normal Retirement 10 15 20 25 30 35**
- ----------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$100,000................ $11,532 $17,298 $23,064 $28,830 $34,596 $40,362
$150,000*............... $17,532 $26,298 $35,064 $43,830 $52,596 $61,362
</TABLE>
_______________
*Salary limited by terms of Plan and the law to $150,000 as of January 1, 1994.
For Mr. Kopko, the compensation used for service prior to 1994 is $235,840.
**Service limited by terms of Plan to 35 years.
The above pensions are offset by pension equivalents from two other plans:
(1) The Company sponsored Employee Stock Ownership Plan ("ESOP"); and (2)
Pensions purchased from Nationwide Insurance Company due to the termination of
the predecessor plan.
The ESOP has approximately 125,000 shares of the Company's stock. The
shares of stock were allocated to employees over seven years beginning in 1987
and ending in 1993. No allocation of stock was made in 1994.
10
<PAGE>
PERFORMANCE GRAPH
COMPARISON FIVE-YEAR CUMULATIVE TOTAL RETURN
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
- ------------------------------FISCAL YEAR ENDING------------------------
COMPANY 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
BUTLER INTERNATIONAL 100 127.27 86.37 75.76 109.09 145.45
PEER GROUP 100 51.49 46.24 47.12 67.73 107.86
BROAD MARKET 100 81.12 104.14 105.16 126.14 132.44
</TABLE>
THE BROAD MARKET INDEX CHOSEN WAS:
NASDAQ MARKET INDEX
THE PEER GROUP CHOSEN WAS:
Customer Selected Stock List
THE PEER GROUP IS MADE UP OF THE FOLLOWING SECURITIES:
CDI CP
DYCOM IND
JOULE INC
MASTEC INC
VOLT INFO SCIENCES INC
SOURCE: MEDIA GENERAL FINANCIAL SERVICES
P.O. BOX 85333
RICHMOND, VA 23293
PHONE: 1-(800) 446-7922
FAX: 1-(804) 649-6097
Assumes $100 invested on Jan. 1, 1989 and reinvestment of dividends.
Peer Group: CDI Corporation, Dycom Industries Inc., Joule, Inc., Mastec,
Inc. (formerly Burnup & Sims, Inc. until March, 1994), and Volt Information
Sciences, Inc., weighted by market capitalization.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Audit Committee and the Executive Compensation Committee of the Board
of Directors consist of the same members: Messrs. Frederick H. Kopko, Jr.,
Hegarty, and McBreen.
McBreen, McBreen & Kopko, of which Frederick H. Kopko, Jr. and Hugh G.
McBreen are partners, has been outside general counsel for the Company since
January, 1990. During 1994, the Company paid or accrued $654,000 in fees and
expenses to McBreen, McBreen & Kopko for legal services to the Company.
McBreen, McBreen & Kopko purchased 100,000 shares of the Company's Series B
Preferred Stock for $100,000 in the Company's March, 1993 private placement on
the same terms as the other purchasers in the offering.
The Company has in effect a number of stock-based incentive and benefit
programs designed to attract and retain qualified directors, executives and
management personnel. To accomplish these objectives, the Company had adopted a
1985 Non-Qualified Stock Option Plan ("1985 NQSOP"), a 1985 Incentive Stock
Option Plan, a 1989 Directors Stock Option Plan ("1989 DSOP"), a 1990 Employee
Stock Purchase Plan ("ESPP"), a 1992 Stock Option Plan for Non-Employee
Directors, a 1992 Incentive Stock Option Plan, a 1992 Non-Qualified Stock Option
Plan and a 1992 Employee Stock Bonus Plan. In addition, the Company has
encouraged its directors to subscribe for shares of Common Stock from time to
time at a price equal to the market price of the Common Stock at the time of
their subscription. To facilitate the stock purchases, the Board of Directors
of the Company has authorized loans to directors and officers, most of which are
non-interest bearing. Furthermore, under the ESPP, certain directors, officers
and key employees received non-interest bearing loans from the Company ("ESPP
Loans") to purchase Common Stock in the open market. All of the shares,
including those under the ESPP, are secured by a pledge of the acquired shares,
and all of the loans (except as noted below) are not personal liabilities or
obligations of the persons receiving the loans. Management believes that these
stock benefit plans and arrangements have had a positive impact on key
personnel. All of the stock benefit plans except for the 1989 DSOP have been
approved by the Company's stockholders.
11
<PAGE>
In furtherance of these objectives, the Company made the following loans:
1. On January 30, 1987, the Company loaned the sum of $201,600 to
Frederick H. Kopko, Jr. in connection with his purchase of 11,200 shares
of Common Stock in a private offering at a price of $18.00 per share. The
loan bears interest at the prime rate and is due upon demand, sale of his
shares or upon termination of his relationship as a director of the
Company. The highest outstanding balance of this advance during 1994, and
the outstanding balance as of December 31, 1994, was $94,527.
2. On September 19, 1990, the Company made non-interest bearing, non-
recourse ESPP Loans to each of Frederick H. Kopko, Jr., John F. Hegarty
and Hugh G. McBreen in the amount of approximately $185,000, in connection
with the purchase of 28,855, 29,117 and 28,883 shares of Common Stock,
respectively, on the open market at prices ranging from $5.25 to $7.12 per
share. The loans mature on November 1, 1997.
3. On January 16, 1991, the Company made the following non-interest
bearing, non-recourse loans evidenced by promissory notes of the borrowers
maturing January 16, 1998, as follows:
(a) a total of $342,450 to Frederick H. Kopko, Jr., in connection
with the purchase of a total of 51,666 shares of Common Stock pursuant
to a September 19, 1990 stock subscription agreement and the exercise
of options under the 1989 DSOP and the 1985 NQSOP at prices ranging
from $3.78 to $10.02 per share.
(b) a total of $342,450 to John F. Hegarty, in connection with
the purchase of a total of 51,666 shares of Common Stock pursuant to a
September 19, 1990 stock subscription agreement and the exercise of
options under the 1989 DSOP and the 1985 NQSOP, at prices ranging from
$3.78 to $10.02 per share.
(c) a total of $267,300 to Hugh G. McBreen, in connection with
the purchase of 44,166 shares of common stock pursuant to a September
19, 1990 stock subscription agreement and the exercise of options
under the 1989 DSOP and the 1985 NQSOP, at prices ranging from $3.78
to $10.02 per share.
4. On December 17, 1991, the Company also made non-interest bearing,
non-recourse loans to each of Messrs. Frederick H. Kopko, Jr., Hegarty and
McBreen in the amount of $42,000 in connection with the purchase of 16,666
shares of Common Stock from the Company at a price of $2.52 per share.
These loans are evidenced by promissory notes that mature on November 1,
1997.
The notes evidencing the September 19, 1990 and the January 16 and December
17, 1991 loans become due and payable on the maturity dates specified above or
earlier upon the borrower's voluntary resignation from the Company or voluntary
determination not to stand for re-election as a director. Under the notes, the
outstanding balance of the loan will be deemed to have been forgiven and
discharged upon the borrower's death, disability or a change in control of the
Company, or if the director has been nominated but is not re-elected as a
director of the Company. Except as noted, the full principal amount of each
loan is currently outstanding.
Commencing in July, 1992, the Company's directors sold shares of Common
Stock which had been pledged to the Company under the ESPP Loans and other loans
and used the proceeds to purchase, together with certain officers and related
parties, from the Company, shares of the Company's Series B Preferred Stock at a
price of $1.00 per share. The directors sold shares of Common Stock in the
following amounts: Edward M. Kopko-185,483 shares; Frederick H. Kopko, Jr.-
95,855 shares; John F. Hegarty-84,943 shares; and Hugh G. McBreen-122,908
shares. In addition, McBreen, McBreen & Kopko sold 8,316 shares of Common
Stock. The sale prices ranged from $3.75 to $4.25 per share, except for 48,000
shares, which were sold at prices ranging from $4.63 to $5.13 per share. The
purchasers of the Series B Preferred Stock were: Edward M. Kopko-440,312
shares; John F. Hegarty-384,081 shares; Frederick H. Kopko, Jr.-378,598 shares;
McBreen, McBreen & Kopko-132,210 shares; Hugh G. McBreen-342,810 shares; McBreen
& McBreen (a general partnership in which Mr. McBreen has a 50% interest)-
129,391 shares; and others-187,945 shares. The shares of Series B Preferred
Stock purchased by the directors have been pledged to the Company in accordance
with the terms of the stock pledge agreements as substitute collateral for the
shares of Common Stock sold. In accordance with the terms of the Series B
Preferred Stock, in December, 1992, June, 1993, December, 1993, June 1994, and
December 1994, the Company issued a total of 293,531 shares of Series B
Preferred Stock as dividends in kind in lieu of cash. The additional shares
issued as dividends to the directors have been pledged to the Company as
additional collateral. As a result of these purchases, management currently
controls approximately 38% of the voting power of the outstanding Common Stock
and Preferred Stock.
12
<PAGE>
In connection with the issuance of the Series B Preferred Stock, the
Company requested the investment banking firm of Emanuel and Company ("Emanuel")
to render an opinion on the fairness of the transaction. Emanuel acted as
financial advisor to the Company under the terms of a letter agreement dated
December 16, 1991, pursuant to which Emanuel agreed to provide advice,
recommendations and analysis regarding acquisition candidates and future
financing, assist in presentations to investors and provide advice on
shareholder relations. In connection with its agreement, the Company issued to
Emanuel warrants giving the holder the right to purchase for a period of three
years, 125,000 shares of Common Stock at an exercise price of $3.00 per share.
These warrants were exercised in January, 1994. The Company also agreed to pay
Emanuel $3,000 per month during the term of the agreement. In addition, the
Company was obligated to pay Emanuel a fee in connection with acquisitions of
businesses introduced to the Company by Emanuel. This fee was based on a
formula relating to the acquisition price. The agreement with Emanuel expired
on December 31, 1993. The shares issuable upon exercise of the warrant have
been included in a registration statement filed by the Company.
In arriving at its opinion, Emanuel reviewed, among other things, the
Articles Supplementary to the Articles of Incorporation relating to the Series B
Preferred Stock, the Registration Rights Agreement between the Company and
subscribers for the Series B Preferred Stock; the Company's Proxy Statement
dated June 4, 1992; the Company's Annual Reports to Stockholders and Annual
Reports on Form 10-K for the five years ended December 29, 1991; certain
quarterly reports on Form 10-Q, including Forms 10-Q for the periods ended March
29, 1992 and June 28, 1992; and certain internal financial analyses and
forecasts prepared by the Company's management. Emanuel also held discussions
with members of senior management regarding the past and current business
operations, financial condition and future prospects of the Company. In
addition, Emanuel reviewed the reported price and trading activity for the
Common Stock, compared certain financial and stock market information for the
Company with similar information for certain other companies the securities of
which were publicly traded, and performed such other studies and analyses as
they considered appropriate. Emanuel relied without independent verification
upon the accuracy and completeness of all of the financial and other information
reviewed by it for purposes of its opinion. Based on these analyses, Emanuel
rendered a written opinion to the Board of Directors of the Company that, as of
August 21, 1992, the sale price to be received by the Company upon the issuance
of its Series B Preferred Stock was fair to the Company.
Pursuant to an agreement dated May 26, 1993, among the Company, Butler of
New Jersey Realty Corp. ("BNJRC"), Frederick H. Kopko, Jr. and Hugh G. McBreen,
Messrs. Kopko and McBreen provided collateral to and executed personal
guarantees in order that a letter of credit be issued in favor of 110 Summit
Limited Partnership ("110 Summit"). The letter of credit was collateral for a
promissory note from BNJRC to 110 Summit in partial payment of the purchase
price for the Company's headquarters facilities in Montvale, New Jersey. The
note was fully paid in 1994 and the letter of credit was returned to the Company
in January, 1995. In consideration of their guarantees and collateralization of
the letter of credit under the agreement, warrants to purchase 90,000 shares of
Common Stock were granted to Mr. Kopko's wife, and warrants to purchase 60,000
shares of Common Stock were granted to Mr. McBreen. The warrants are
exercisable until June 1, 1998, at an exercise price of $3.62 per share, which
was the market price of the Common Stock on the date of the agreement. The
Company and BNJRC also indemnified Mr. Kopko, Mr. McBreen, and their respective
spouses against any losses suffered due to the provision of collateralization
and guarantees, which may be compensated by payment to these parties in shares
of the Company stock.
CERTAIN TRANSACTIONS
On September 19, 1990, the Company made a non-interest bearing, non-
recourse ESPP Loan in the amount of $445,000 to Edward M. Kopko to purchase
103,009 shares from the Company at a purchase price of $4.32 per share, the
market price of the Common Stock on that date. This loan matures on November 1,
1997. One-quarter of the loan may be forgiven on November 1 of each of 1991,
1992, 1993 and 1994, and will be forgiven in full upon Mr. Kopko's death,
disability or a change in control of the Company. The outstanding balance of
that loan on December 31, 1994 was $111,250; the largest principal amount
outstanding since January 1, 1994 was $111,250. On December 17, 1991, the
Company made another non-interest bearing ESPP Loan to Mr. Kopko in the amount
of $84,000 to purchase 33,333 shares of Common Stock from the Company pursuant
to the ESPP at a purchase price of $2.52 per share, the market price of the
Common Stock on that date. The outstanding balance of the loan as of December
31, 1994 was $42,000; the largest aggregate principal amount of the loan
outstanding since January 1, 1994 was $42,000. The obligation under the loans
are secured by a pledge of the shares acquired in accordance with the terms of a
stock pledge agreement with the Company, and the loan is not a personal
liability or obligation of Mr. Kopko.
On January 16, 1991, the Company made a non-interest bearing, non-recourse
loan in the amount of $155,000 to Edward M. Kopko to acquire 35,880 shares of
Common Stock at $4.32 per share, pursuant to a subscription agreement dated
September 19, 1990. The note becomes due and payable on January 16, 1998 or
earlier upon Mr. Kopko's voluntary resignation from the Company or voluntary
determination not to stand for re-election as a director. The full principal
amount of the loan is currently outstanding. Under the note, the outstanding
balance of the loan will be deemed to have been forgiven and discharged upon Mr.
Kopko's death, disability or a change in control of the Company, or if Mr. Kopko
has been nominated but is not re-elected as a director of the Company. The
obligations under the note are secured by a pledge of the shares acquired in
accordance with the terms of a stock pledge agreement with the Company, and the
loan is not a personal liability or obligation of Mr. Kopko.
13
<PAGE>
In 1994, pursuant to an agreement with the Trustee of the Bankruptcy Court
having jurisdiction over the property of NA Holding, the Company received, in
exchange for forgiveness of a promissory note dated August 3, 1988 from NA
Holding ("NA Note"), an option to purchase approximately six acres of land
adjacent to the Company's corporate office complex in Montvale, New Jersey for
$1. The carrying value of the NA Note was $350,000 as of December, 1993. The
land was appraised for a value in excess of $400,000.
In 1994, Nikhil S. Nagaswami received $37,000 from the Company for
consulting services rendered and for Butler Telecom Board meeting fees.
PROPOSAL 2: PROPOSAL TO AMEND THE 1992 STOCK OPTION PLAN,
1992 INCENTIVE STOCK OPTION PLAN, AND 1992 STOCK BONUS PLAN
TO INCREASE THE NUMBER OF SHARES AVAILABLE TO BE GRANTED
The Board of Directors recommends the adoption of a third amendment to the
Company's 1992 Stock Option Plan (the "Non-Qualified Plan"), 1992 Incentive
Stock Option Plan (the "ISOP"), and 1992 Stock Bonus Plan ("Stock Bonus Plan")
which were approved at the Company's June 4, 1992 Annual Meeting of Stockholders
and amended at the Company's June 10, 1993 and June 2, 1994 Annual Meetings.
The purpose of the Non-Qualified Plan, the ISOP and the Stock Bonus Plan is
to promote the interests of the Company and its stockholders by strengthening
the Company's ability to attract and retain experienced and knowledgeable
employees and to furnish additional incentives to those employees upon whose
judgment, initiative and efforts the Company largely depends. The aggregate
number of shares of the Company's common stock subject to options under all
three plans is currently 570,000. Since January 1, 1993, the Company has
granted options for 271,500 shares under these three plans, leaving a balance
available of 298,500. The Board of Directors recommends an increase in the
aggregate number of shares that may be subject to options under all three plans
from 570,000 to 800,000 shares. This will afford the Company the flexibility to
make awards deemed necessary during the coming year.
Copies of the proposed Non-Qualified Plan, the proposed ISOP, and the
proposed Stock Bonus Plan (collectively, "Employee Plans") are available upon
request to the Secretary of the Company. The following is a summary of the
Employee Plans.
DESCRIPTION OF THE NON-QUALIFIED PLAN
- -------------------------------------
The Non-Qualified Plan permits the Executive Compensation Committee (the
"Committee"), consisting of at least two members of the Board of Directors who
are not employees of the Company and who are appointed to the Committee from
time to time by the Board of Directors, to grant common stock options to
individuals who, in the judgment of the Committee, have made significant
contributions to the Company or any subsidiary thereof (including directors and
officers who are full or part-time employees of the Company, but excluding
directors who are not employees of the Company). Options granted under the Non-
Qualified Plan are not intended to qualify as "incentive stock options" under
the Code. The Non-Qualified Plan provides that the maximum term of an option
granted under the Non-Qualified Plan is ten years and that the exercise price of
options granted under the Non-qualified Plan will be not less than 100% of the
fair market value on the date of grant.
DESCRIPTION OF THE ISOP
- -----------------------
The ISOP permits the Committee to grant common stock options to individuals
who, in the judgment of the Committee, have made significant contributions to
the Company or any subsidiary thereof (including directors and officers who are
full or part-time employees of the Company, but excluding directors who are not
employees of the Company).
It is intended that all options granted under the ISOP will qualify as
"incentive stock options" under Section 422 of the Internal Revenue Code of 1986
(the "Code"). If any such options are issued, they may be exercised at a price
that is not less than the fair market value of the stock on the day the option
is granted; provided that, if on the date of any grant the recipient holds more
than 10% of the combined voting power of all classes of the Company's stock or
of any parent or subsidiary of the Company, the exercise price must be at least
110% of the fair market value of the stock on the day the option is granted.
The ISOP provides that the maximum term of an option granted under the ISOP is
ten years from the date of grant. The aggregate fair market value of the stock
with respect to which incentive stock options are exercisable for the first time
by an optionee during any calendar year may not exceed $100,000.
PROVISIONS COMMON TO THE NON-QUALIFIED PLAN AND THE ISOP
- --------------------------------------------------------
Payment of the option exercise price in either the Non-Qualified Plan or
the ISOP may be in cash, by check, or with the
14
<PAGE>
consent of the Committee, by a non-interest bearing promissory note up to the
limit permitted under the Federal Reserve Board Regulations, of term no greater
than seven years, which shall be secured by a pledge of the shares to be
acquired upon exercise of the option. In addition, payment for shares purchased
under an option may, with the consent of the Committee, be made, in whole or in
part by tendering shares of the Company's common stock, valued at the fair
market value, in lieu of cash.
No option granted under either of the plans will be valid if not granted
before January 1, 2003. There is no formula for determining the numbers of
options to be granted under either of the plans. Any grants of options will
reflect the Committee's judgment (in its sole discretion) of the relative value
of the contribution of the grantee in respect to such matters as revenue
production and expense control.
The Board of Directors may, insofar as permitted by law, from time to time,
with respect to any shares of stock at the time not subject to outstanding
options, suspend or discontinue either the Non-Qualified Plan or the ISOP or
revise or amend them in any respect whatsoever except that, without approval of
the holders of a majority of the Company's common stock, no such revision or
amendment shall change the number of shares of stock subject to such plan
(except as permitted under certain limited circumstances), change the
designation of the class of employees eligible to receive options, remove the
administration of such plan from the Committee, or render any member of the
Committee eligible to receive an option under such plan while serving thereon.
DESCRIPTION OF THE STOCK BONUS PLAN
- -----------------------------------
The Stock Bonus Plan provides that the Committee may make awards of stock
to individuals who, in the judgment of the Committee, have made significant
contributions to the Company or any subsidiary thereof (including directors and
officers who are full or part-time employees of the Company, but excluding
directors who are not employees of the Company). Awards may be made by the
Committee on the basis of pre-established goals, or to reward performance, or
both. For example, the Committee may identify persons who may become eligible
for a stock award under the Plan, and establish certain goals or targets which,
if met, will entitle the persons so selected to receive such stock. Similarly,
the Committee may identify those persons who have made significant contributions
to the Company and, therefore, are deserving of special awards for their
efforts. Members of the Committee may not receive awards under the Plan. The
Plan will also serve to increase employee ownership in the Company and alignment
with stockholders, while conserving cash.
Upon the receipt of a stock award, the participant must present his award
certificate within 30 days to the Company. If a participant's employment with
the Company is terminated for any reason, other than by death or disability,
prior to the issuance of the shares, the award is deemed to have lapsed and the
shares may become subject to future awards. If a participant dies or becomes
disabled prior to the issuance of the shares, then the award may be presented by
the participant or his personal or legal representative at any time within six
months after the date of the award. Except upon death, the award is not
transferable. Consistent with the interests of the Company in increasing
employee stock ownership, shares acquired under the Plan must be held for six
months following the date of receipt of the shares.
The Plan has a term of ten years, unless extended or earlier terminated by
the Board of Directors.
FEDERAL INCOME TAX CONSEQUENCES
- -------------------------------
With respect to options granted under the Non-Qualified Plan, the
difference between the option price and the fair market value of the stock on
the date the option is exercised will be taxable as ordinary income to the
optionee and will be deductible by the Company as compensation on such date
except as described in the next paragraph. Gain or loss on the subsequent sale
of such stock will be eligible for capital gain or loss treatment by the
optionee and will have no federal income tax consequences to the Company.
With respect to non-qualified options, the Internal Revenue Code (the
"Code") provides that so long as the sale of the stock at a profit could subject
a person to suit under Section 16(b) of the Securities Exchange Act of 1934, the
stock will be subject to a substantial risk of forfeiture. Accordingly, upon
grant of a non-qualified option by an officer or director or 10% stockholder of
the Company, no income will be recognized (assuming no exercise is made by the
optionee during the next six months), nor will the capital gain holding period
begin to run or the Company be allowed a deduction, until the six-month period
prescribed by Section 16(b) has lapsed. The income to the optionee and
deduction to the Company will be determined on the basis of the fair market
value of the stock on the date of exercise, unless there are other forfeiture
and/or transferability restrictions.
With respect to options granted under the ISOP, if the optionee does not
make a disqualifying disposition of stock acquired on exercise of such options,
no income for federal income tax purposes will result to such optionee upon the
granting or exercise of the option (except that the amount by which the fair
market value of the stock at the time of exercise exceeds the option price will
be a tax preference item under the alternative minimum tax), and in the event of
any sale thereafter, any amount realized in excess of his or her cost will be
taxed as long-term capital gain and any loss sustained will be long-term capital
loss. In such case, the
15
<PAGE>
Company will not be entitled to a deduction for federal income tax purposes in
connection with the issuance or exercise of the option. A disqualifying
disposition will occur if the optionee makes a disposition of such shares within
two years from the date of the granting of the option or within one year after
the transfer of such shares to him or her. If a disqualifying disposition is
made, the difference between the option price and the lesser of (i) the fair
market value of the stock at the time the option is exercised or (ii) the amount
realized upon disposition of the stock will be treated as ordinary income to the
optionee at the time of disposition and will be allowed as a deduction to the
Company.
With respect to the restricted stock bonus awards, the participant will
realize income in an amount equal to the fair market value of the shares on the
date of grant, and the Company will be allowed a tax deduction.
The described tax consequences are based on current laws, regulations and
interpretations thereof, all of which are subject to change. In addition, the
discussion is limited to federal income taxes and does not attempt to describe
state and local tax effects that may accrue to participants or the Company.
GENERAL
- -------
The Board of Directors believes that the granting of stock options and
stock bonuses is an effective way to allow the Company's officers and employees
to participate in the growth and profitability of the Company. The Board of
Directors further believes that it is important to increase the number of shares
available under the Non-Qualified Plan, the ISOP, and the Stock Bonus Plan in
order to maintain and improve the Company's ability to attract and retain key
personnel, and to serve as an incentive to such personnel to make extra efforts
to contribute to the success of the Company's operations. Because the award of
options and stock bonuses are completely within the discretion of the Committee,
it is not possible to determine at this time the awards that may be made to
officers or other employees.
The adoption of this amendment to the Non-Qualified Plan, the ISOP, and the
Stock Bonus Plan requires the approval of a majority of the votes cast by
holders of the shares of the Company's common stock and the Company's 7% Series
B cumulative convertible preferred stock, voting together as a single class.
Any shares not voted, whether by abstention, broker non-vote, or otherwise, have
no impact on the outcome of the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2
AMENDING THE 1992 NON-QUALIFIED STOCK OPTION PLAN, THE 1992 INCENTIVE STOCK
OPTION PLAN, AND THE 1992 STOCK BONUS PLAN.
16
<PAGE>
PROPOSAL 3: PROPOSAL TO AMEND THE
1992 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
TO INCREASE THE NUMBER OF SHARES SUBJECT TO OPTIONS
The Board of Directors recommends the adoption of a third amendment to the
Company's 1992 Stock Option Plan for Non-Employee Directors (the "Plan") which
was approved at the Company's June 4, 1992 Annual Meeting of Stockholders and
amended at the Company's June 10, 1993 and June 2, 1994 Annual Meetings.
The purpose of the Plan is to promote the interests of the Company and its
stockholders by strengthening the Company's ability to attract and retain
experienced and knowledgeable non-employee directors and to encourage them to
acquire an increased proprietary interest in the Company. The aggregate number
of shares of the Company's common stock subject to options under the Plan is
currently 110,000. The Plan is administered by the Board of Directors (the
"Board"). The Plan, as amended, provides for a grant to each non-employee
director on the day following the 1992 Annual Meeting of an initial option to
purchase 10,000 shares of Company common stock at an exercise price that was the
fair market value on the date of grant. The Plan further provides that on the
day following each of the 1993, 1994 and 1995 Annual Meetings, each non-employee
director will be granted an option to purchase an additional 10,000 shares of
Company stock at the fair market value on the date of grant.
With the expansion of the Board in June 1994, the Company recommends an
increase in the aggregate number of shares that may be subject to options under
the Plan from 150,000 to 190,000 shares. This amendment will allow all non-
employee directors to continue to participate fully in the Plan and will provide
for options to be granted following the 1996 Annual Meeting on the same terms as
options granted following the 1992, 1993, 1994 and 1995 Annual Meetings.
The text of the proposed Plan is available from the Secretary of the
Company. The following is a summary of the Plan, as amended.
Payment of the option exercise price may be in cash, by delivery of
previously owned Company stock having a fair market value equal to the option
price, by a combination of cash and stock, or by a non-interest bearing
promissory note, of term not greater than seven years, secured by a pledge of
the shares of common stock to be acquired upon exercise of the option.
All options granted under the Plan are non-statutory -- not intended to
qualify under Section 422 of the Internal Revenue Code of 1986, as amended. The
federal income tax consequences are similar to those described above with
respect to the Non-Qualified Plan.
If an optionee ceases to be a director before an option vests, the option
is forfeited. Each option expires ten years from the date of its grant.
Outstanding options will expire earlier if an optionee terminates service as a
director other than by reason of retirement, total disability or death. In
those events, the option will then expire one year from the date of death or
termination or on the stated grant expiration date, whichever is earlier.
Options are not assignable during the lifetime of the optionee. Options that
are forfeited or terminated will again be available for grant. Shares may be
authorized but unissued, currently held or reacquired shares.
The Board may amend, terminate or suspend the Plan at any time, provided
that no amendment regarding amount, price or timing of the grants may be made
more than once every six months other than to comport with changes in certain
Securities Exchange Act and Internal Revenue Code requirements. Amendments that
would materially increase the number of shares that may be issued, materially
modify the requirements as to eligibility for Plan participation, or materially
increase the benefits to Plan participants must be approved by stockholders.
The adoption of this amendment to the 1992 Stock Option Plan for Non-
Employee Directors requires the approval of a majority of the votes cast by
holders of the shares of the Company's common stock and the Company's 7% Series
B cumulative convertible preferred stock, voting together as a single class.
Any shares not voted, whether by abstention, broker non-vote, or otherwise, have
no impact on the outcome of the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 3,
AMENDING THE 1992 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS.
STOCKHOLDERS PROPOSALS
In order for a stockholder proposal to be considered for inclusion in the
Company's proxy statement and form of proxy relating to the 1996 Annual Meeting
of Stockholders, the proposal must be received by the Company no later than
December 26, 1995.
17
<PAGE>
OTHER MATTERS
The Board of Directors has appointed the firm of Deloitte & Touche LLP as
independent public auditors to audit the financial statements of the Company for
the year ending December 31, 1995. Deloitte & Touche LLP have been the auditors
for the Company and its subsidiaries since the Company's inception.
Representatives of the firm are expected to be present at the annual meeting to
respond to stockholders' questions and to have the opportunity to make any
statements they consider appropriate.
The Board of Directors has at this time no knowledge of any matters to be
brought before this year's Annual Meeting other than those referred to above.
However, if any other matters properly come before this year's Annual Meeting,
it is the intention of the persons named in the proxy to vote such proxy in
accordance with their judgment on such matters.
GENERAL
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1994 is being mailed, together with this Proxy Statement, to
each stockholder. Additional copies of such Annual Report and of the Notice of
Annual Meeting, this Proxy Statement and the accompanying proxy may be obtained
from Morrow & Co., Inc., 909 Third Avenue, New York, New York 10022-4799, or
from the Company. The Company has retained Morrow & Co., Inc. to assist in the
solicitation of proxies, primarily from brokers, banks and other nominees, for
an estimated fee of $4,500 plus expenses. The Company will, upon request,
reimburse brokers, banks and other nominees, for costs incurred by them in
forwarding proxy material and the Annual Report to beneficial owners of the
Company's common stock. In addition, directors, officers and regular employees
of the Company and its subsidiaries, at no additional compensation, may solicit
proxies by telephone, telegram or in person. All expenses in connection with
soliciting management proxies for this year's Annual Meeting, including the cost
of preparing, assembling and mailing the Notice of Annual Meeting, this Proxy
Statement and the accompanying proxy, are to be paid by the Company.
THE COMPANY WILL PROVIDE WITHOUT CHARGE (EXCEPT FOR EXHIBITS) TO ANY RECORD
OR BENEFICIAL OWNER OF ITS SECURITIES, ON WRITTEN REQUEST, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO. EXHIBITS TO SAID REPORT WILL BE PROVIDED UPON
PAYMENT OF FEES LIMITED TO THE COMPANY'S REASONABLE EXPENSES IN FURNISHING SUCH
EXHIBITS. WRITTEN REQUESTS SHOULD BE DIRECTED TO CATHY D. SHEA, ASSISTANT
SECRETARY OF THE COMPANY, 110 SUMMIT AVENUE, MONTVALE, NEW JERSEY, 07645.
IN ORDER TO ASSURE THE PRESENCE OF THE NECESSARY QUORUM AT THIS YEAR'S
ANNUAL MEETING, AND TO SAVE THE COMPANY THE EXPENSE OF FURTHER MAILINGS, PLEASE
DATE, SIGN AND MAIL THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. No
postage is required if mailed within the United States. The signing of a proxy
will not prevent a stockholder of record from voting in person at the meeting.
By Order of the Board of Directors,
Warren F. Brecht
Secretary
18
<PAGE>
PROXY BUTLER INTERNATIONAL, INC. PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1995
The undersigned stockholder of BUTLER INTERNATIONAL, INC. hereby
appoints JOHN F. HEGARTY, NIKHIL S. NAGASWAMI, AND WARREN F. BRECHT, each with
full power of substitution, as attorneys and proxies to vote all of the shares
of stock of said Company which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of said Company to be held on Tuesday, May 23, 1995 at
4:00 p.m. at its headquarters facility, 110 Summit Avenue, Montvale, New Jersey,
or at any and all adjournments thereof, with all powers the undersigned would
possess if personally present, as indicated below, and for the transaction of
such other business as may properly come before said meeting or any and all
adjournments thereof, all as set forth in the April 24, 1995 Proxy Statement for
said meeting:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
1. Election of Director.
___ FOR the nominee, __ WITHHOLD AUTHORITY to vote for the nominee,
Hugh G. McBreen Hugh G. McBreen
2. Proposal to amend the 1992 Stock Option Plan, 1992 Incentive Stock Option
Plan, and 1992 Stock Bonus Plan.
___ FOR __ AGAINST __ ABSTAIN
3. Proposal to amend the 1992 Stock Option Plan for Non-Employee Directors.
___ FOR __ AGAINST __ ABSTAIN
A majority of the members of said Proxy Committee who shall be present in
person or by substitute at said meeting, or in case but one shall be present
then that one, shall have and exercise all of the powers of said Proxy
Committee.
THIS PROXY WILL BE VOTED AS DIRECTED BUT IF NO DIRECTION IS INDICATED WILL
BE VOTED FOR THE ELECTION AS DIRECTOR OF THE NOMINEE LISTED HEREIN; AND FOR
PROPOSALS 2 AND 3 AS DESCRIBED HEREIN. ON OTHER MATTERS THAT MAY COME BEFORE
SAID MEETING, THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE ABOVE-NAMED
PROXY COMMITTEE.
___________________ ___________________
________________________________________
(Signature of Stockholder)
DATED: __________________________, 1995
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME OR
NAMES APPEAR TO THE LEFT. IF THE STOCK IS
REGISTERED IN THE NAME OF MORE THAN ONE
PERSON, THE PROXY SHOULD BE SIGNED BY ALL
NAMED HOLDERS. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE
NAME BY PRESIDENT OR OTHER AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
<PAGE>
BUTLER INTERNATIONAL, INC.
1992 STOCK OPTION PLAN
(AS PROPOSED TO BE AMENDED MAY 23, 1995)
I.
THE PLAN
The name of this Stock Option Plan shall be the Butler International, Inc.
1992 Stock Option Plan (referred to as the "Plan").
The purpose of this Plan is to promote the growth and general prosperity of
Butler International, Inc. (the "Company") by permitting it to grant options to
purchase shares of its common stock in order to attract and retain the best
available personnel for positions of substantial responsibility. It is further
intended as an incentive for and to encourage stock ownership by certain
individuals so that they may acquire or increase their proprietary interest in
the success of the Company, and to encourage them to remain associated with and
contribute to the success of the Company.
The Plan shall be governed by the laws of the State of Maryland; if any
provision hereof is held by any court of competent jurisdiction to be invalid or
unenforceable, that provision shall be severed and the remaining provision shall
continue to be fully effective.
This plan shall become effective as of January 1, 1993. No grant of any
option shall be valid unless granted prior to January 1, 2003.
II.
ADMINISTRATION AND AMENDMENT OF THE PLAN
The Plan shall be administered by the Executive Compensation Committee (the
"Committee") which shall consist of at least two members of the Board of
Directors who are not employees of the Company and who are appointed to the
Committee from time to time by the Board of Directors. If any member of the
Committee becomes an employee of the Company, his membership on the Committee
shall automatically terminate. A majority of the Committee shall constitute a
quorum and acts of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by all members of the Committee,
shall be deemed to be valid acts of the Committee. No member of the Committee
shall be eligible to receive an option under the Plan.
The Company shall effect the grant of options to such employees and in such
amounts as the Committee directs. The Committee from time to time may adopt
rules and regulations for carrying out the Plan. The determination or the
interpretations and constructions of any provision of the Plan by the Committee,
shall be final and conclusive unless otherwise determined by the Board. The
determinations or the interpretations and constructions of any provision of the
Plan by the Board shall be final and conclusive. The Board of Directors may,
insofar as permitted by law, from time to time, with respect to any shares of
stock at the time not subject to outstanding options, suspend or discontinue the
Plan or revise or amend it in any respect whatsoever except that, without
approval of the holders of a majority of the stock of the Company, no such
revision or amendment shall change the number of shares of stock subject to the
Plan (except as may occur as a result of an occurrence described in Section V),
change the designation of the class of employees eligible to receive options,
remove the administration of the Plan from the Committee, or render any member
of the Committee eligible to receive an option under the Plan while serving
thereon.
III.
ELIGIBILITY
Options may be granted only to those individuals who in the discretion of
the Committee have made significant contributions to the Company or any
subsidiary thereof, including officers and directors who are full or part-time
employees of the Company, but excluding directors who are not employees of the
Company. The Plan does not and will not confer upon any right to employment
with the Company, nor will the Plan have any effect upon his right, or upon the
right of the Company, to terminate the association at any time.
<PAGE>
IV.
OPTION TERMS
Stock Options granted pursuant to this Plan shall be evidenced by a stock
option agreement executed by the Company and by the optionee to whom such option
is granted, which options shall contain or be subject to the following terms and
conditions:
A. Each agreement shall state the number of shares subject to the option
granted.
B. The purchase price of each share under the option shall be established
by the Committee at the time at which such option is granted, provided
that no such purchase price shall be less than 100% of the fair market
value of the Stock at the time of grant.
C. The period of the option shall be that which is established by the
Committee at the time at which the option is granted, provided that no
option granted shall be exercisable after the expiration of ten years
from the date of grant.
D. The option may be exercised only if the optionee has been continuously
associated with the Company since the date of the grant. Except as
otherwise specifically provided herein, the optionee must hold the
option for at least six (6) months prior to exercise. If an optionee
shall cease to be associated with the Company for any reason other
than death, he may, but only within two weeks of such cessation,
exercise his option to the extent he was entitled to exercise it as of
the date of such cessation.
In the event of death of an optionee while associated with the
Company, the option shall be exercisable only within three months of
the date of the optionee's death and then only by a person who
acquired the right to exercise such option by bequest or inheritance
or by reason of the death of the optionee and shall be exercisable
only to the extent that the optionee was entitled to exercise the
option at the date of his death.
If an optionee is terminated without cause, his options may, but only
at the express discretion of the Board, continue to be exercised
throughout their term, as defined in this Section.
E. The option price shall be paid in cash, by check, or, with the consent
of the Committee, by a non-interest bearing promissory note up to the
limit permitted under the Federal Reserve Board regulations, of term
no greater than seven years, payable to the Company, which shall be
secured by a pledge of the shares to be acquired upon exercise of the
Option. In addition, payment for shares purchased under an option
may, with the consent of the Committee, be made, in whole or in part,
by tendering shares of the Company's common stock, valued at fair
market value, in lieu of cash.
F. Options granted under the Plan may not be sold, pledged, assigned or
transferred in any manner otherwise than by will or the laws of the
descent or distribution, and may be exercised during the lifetime of
the optionee only by that optionee.
G. The number of shares and exercise price of any option granted
hereunder shall be adjusted to take into account any stock dividends,
stock splits, stock exchanges, mergers, consolidation or other capital
changes, excluding payment of cash dividends, occurring between the
date of grant and the date of exercise.
H. The option agreements authorized under this Plan shall contain such
other provisions or restrictions as the Committee or the Board of
Directors shall deem advisable.
<PAGE>
V.
UNDERLYING SHARES
The Company shall set aside 800,000 shares of its common stock (after
taking account of the 1 for 6 reverse stock split effective June 29, 1992) to be
made available for stock options granted pursuant to this Plan, the Butler
International, Inc. 1992 Incentive Stock Option Plan, and the Butler
International, Inc. 1992 Stock Bonus Plan. The number of shares available shall
be adjusted to take into account any future stock dividends, stock splits, stock
exchanges, mergers, consolidations or other capital changes.
Exercise of any options granted hereunder shall be further subject to
compliance with all state and federal laws relating to the offer and sale of
securities. In the event shares of stock subject to such options are not
covered by a registration statement, such options may be exercised only upon the
optionee making certain representations in writing to the Company that, at the
time of such exercise, the optionee intends to acquire such shares for
investment and not for distribution or resale and certain other representations
relating to the optionee's intent as in the opinion of counsel to the Company
may be necessary to qualify the offer and sale of such shares for such
exemptions, if any, from the registration requirements of state and federal
securities laws as may be deemed to be available. If any law or regulation of
the Securities and Exchange Commission, or of any other commission or agency
having jurisdiction or regulatory authority over the issuance of such shares
shall require the Company or the exercising optionee to take any action with
respect to the shares of stock acquired by the exercise of the option, then the
date upon which the Company shall deliver or cause to be delivered the stock
certificate or certificates for the shares of stock shall be postponed until
full compliance has been made with all such requirements. Although not bound by
anything herein to do so, the Company may file a registration statement with the
appropriate state and federal regulatory authorities as to the shares of stock
subject to such options. In the event the Company does file such a registration
statement, the Company may, but is not obligated to, maintain the effectiveness
of such registration statement by filing amended and supplemental prospectuses
with the appropriate regulatory authorities.
<PAGE>
BUTLER INTERNATIONAL, INC.
1992 INCENTIVE STOCK OPTION PLAN
(AS PROPOSED TO BE AMENDED MAY 23, 1995)
The purpose of the Butler International, Inc. 1992 Incentive Stock Option
Plan (the "Plan") is to advance the interests of Butler International, Inc.
(hereinafter called the "Company") and its stockholders by strengthening the
Company's ability to attract and retain employees of experience and ability and
to furnish additional incentives to those employees upon whose judgment,
initiative, and efforts the successful conduct and development of the business
of the Company largely depends. This Plan is intended to be an incentive stock
option plan within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code"). Options granted in accordance with the terms
hereof and as provided in Section 422A of the Code are to be incentive stock
options. Options granted and not so qualifying under the Code are called non-
qualified stock options. The Plan will be effective as of January 1, 1993.
Options granted and not so qualifying under the Code are called non-qualified
stock options. The Plan will be effective as of January 1, 1993.
1. Administration and Amendment of the Plan. The Plan shall be
----------------------------------------
administered by the Executive Compensation Committee (the "Committee") which
shall consist of at least two members of the Board of Directors who are not
employees of the Company and who are appointed to the Committee from time to
time by the Board of Directors. If any member of the Committee becomes an
employee of the Company, his membership on the Committee shall automatically
terminate. A majority of the Committee shall constitute a quorum and acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by all members of the Committee, shall be deemed to be
valid acts of the Committee. No member of the Committee shall be eligible to
receive an option under the Plan.
The Company shall effect the grant of options to such employees and in such
amounts as the Committee directs. The Committee, from time to time, may adopt
rules and regulations for carrying out the Plan. The determination or the
interpretations and constructions of any provision of the Plan by the Committee,
shall be final and conclusive unless otherwise determined by the Board. The
determinations or the interpretations and constructions of any provision of the
Plan by the Board, shall be final and conclusive. The Board of Directors may,
insofar as permitted by law, from time to time, with respect to any shaers of
Stock (as denied below) at the time not subject to outstanding options, suspend
or discontinue the Plan or revise or amend it in any respect whatsoever except
that, without approval of the holders of a majority of the Stock of the Company,
no such revision or amendment shall change the number of shares of Stock subject
to the Plan (except as may occur as a result of an occurrence described in
Section (6), change the designation of the class of employees eligible to
receive options, remove the administration of the Plan from the Committee, or
render any member of the Committee eligible to receive an option under the Plan
while serving thereon.
2. Shares of Stock Subject to the Plan. A total of 800,000 shares of the
-----------------------------------
authorized common stock of the Company, par value $0.001 per share ("Stock"),
(after taking account of the 1 for 6 reverse stock split effective June 29,
1992) shall be reserved for issuance under the Plan, the Butler International,
Inc. 1992 Stock Option Plan and the Butler International, Inc. 1992 Stock Bonus
Plan. Such shares subject under the Plan to an option which, for any reason,
expires or is terminated unexercised may again be subject to an option under the
Plan.
3. Eligibility. Options may be granted only to those individuals who in
-----------
the discretion of the Committee have made significant contributions to the
Company or any subsidiary thereof, including officers and directors who are full
or part-time employees of the Company, but excluding directors that are not
employees of the Company. The Plan does not and will not confer upon any right
to employment with the Company, nor will the Plan have any effect upon his
right, or upon the right of the Company, to terminate the association at any
time.
4. Price. The exercise price shall be not less than the fair market value
-----
of the Stock on the day the option is granted; provided however that if the
employee to whom the option is granted, on the date of grant, possesses more
than 10 percent of the total combined voting power of all classes of stock of
the Company or of any parent or subsidiary of the Company, then the exercise
price shall be at least 110 percent of the fair market value of the shares of
Stock subject to the option on the day the option is granted. In the event that
the Company's Stock is traded on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") then the fair market value of the Stock
will be the average between the closing bid and asked price as reported by
NASDAQ or such other similar and/or replacement quotation system on the day the
option is granted.
<PAGE>
5. Other Terms and Conditions. Each option granted shall be evidenced by
--------------------------
a stock option agreement which shall be executed by the Company and by the
employee to whom such option is granted (the "optionee") and shall contain, or
be subject to, the following terms and conditions:
(a) The option, by its terms, shall not be exercisable after the
period of time established by the Committee provided that no option granted
shall be exercisable after the expiration of ten years from the date of
grant; provided further that no option granted to an employee who, on the
date of grant, possesses more than ten percent of the total combined voting
power of all classes of stock of the Company or of any parent or subsidiary
of the Company shall be exercisable after the expiration of five years from
the date of grant. Except as otherwise specifically provided herein, no
option granted hereunder shall be exercisable until six months after the
grant thereof.
(b) The option can be exercised only if the optionee has been
continuously employed by the Company since the date of its grant. Absence
on leave approved by the Company shall not be considered an interruption of
employment. If an optionee shall cease to be employed by the Company for
any reason other than death, retirement or disability (within the meaning
of Section 105 (d)(4) of the Code), he or she may, but only within three
months of such cessation (but in no event more than ten years from the date
of grant), exercise his or her options to the extent that he or she was
entitled to exercise it as of the date of the cessation. The Plan does not
and will not confer upon any optionee any right with respect to continuance
of employment by the Company, nor will it interfere in any way with his or
her right, or the Company's right, to terminate his or her employment at
any time. In the event of the disability or retirement of an optionee
while in the employ of the Compamy, the option shall be exercisable only
within two weeks of the date of the optionee's disability or retirement
(but in no event more than ten years from the date of grant) and shall be
exercisable only to the extent that the optionee was entitled to exercise
the option at the date of his or her disability or retirement. Upon the
death of any optionee, while in active employment or within the two week
period referred to above, the person or persons to whom such optionee's
rights under the option are transferred by will or the laws of descent and
distribution may within three months (but in no event more than ten years
from the date of grant), of the date of such optionee's death, purchase all
of any part of the shares with respect to which the optionee was entitled
to exercise at the date of his or her death. If an optionee is terminated
without cause, his options may, but only at the express discretion of the
Board, continue to be exercised throughout their term, as defined in this
Section.
(c) The option shall be valid only if granted prior to January 1,
2003.
(d) Exercise of any options granted hereunder shall be further
subject to compliance with all state and federal laws relating to the offer
and sale of securities. In the event shares of Stock subject to such
options are not covered by a registration statement, such options may be
exercised only upon the optionee making certain representations in writing
to the Company at the time of such exercise to the effect that the optionee
intends to acquire such shares for investment and not for distribution or
resale and such other representations relating to the optionee's intent as
in the opinion of counsel to the Company may be necessary to quailfy the
offer and sales of such shares for such exemptions if any, from the
registration requirements of state and federal securities laws as may be
deemed to be available.
(e) The option price shall be paid in cash, by check, or, with the
consent of the consent of the Committee, by a non-interest bearing
promissory note up to the limmit permitted under the Federal Reserve Board
regulations, of term no greater than seven years, payable to the Company,
which shall be secured by a pledge of the shares to be acquired upon
exercise of the option. In addition, payment for shares purchased under an
option may, with the consent of the Committee, be made, in whole or in
part, by tendering shares of the Company's common stock, valued at fair
market value, in lieu of cash.
(f) The option shall be nontransferable except by will or by the laws
of descent and distribution, and during the lifetime of the optionee the
option shall be exercisable only by the optionee. No optionee or person
who acquired the right to exercise such option by will or by the laws of
descent and distribution, as the case may be, will be deemed to be a holder
of any shares subject to an option unless and until certificates for such
shares are issued to him or her or such person.
(g) The aggregate value of stock options which may become initially
exercisable in any calendar year shall not exceed $100,000. If the options
initially exercisable in any calendar year do exceed $100,000, the excess
over $100,000 shall be treated as non-qualified stock options.
<PAGE>
(h) If provided for in the Incentive Stock Option Agreement, Optionee
may, at any time while this Plan remains in effect, pursuant to paragraphs
(1) through (3) below, sell any Stock acquired pursuant to the Plan back to
the Company.
(1) In order to sell Stock back to the Company, Optionee must
give written notice to the Company which states the number of shares
he wishes to sell to the Company.
(2) Within 30 calendar days after the Company's receipt of the
notice described in paragraph (1), the Company will purchase all of
the shares covered by Optionee's notice. Optionee may, by written
notice, at any time, either withdraw his request to have his shares
purchased or have the Company delay purchases of his shares pursuant
to any purchase schedule Optionee may request.
(3) All purchases under this Section will be made at the fair
market value of the Stock on the date such shares are tendered.
6. Dilution or other adjustments. In the discretion of the Board of
-----------------------------
Directors, the 800,000 shares of Stock reserved hereunder and under the Butler
International, Inc. 1992 Stock Option Plan and the Butler International, Inc.
1992 Stock Bonus Plan, and the number of shares subject to, and the exercise
price of, any options granted and outstanding hereunder shall be adjusted to
take into account any future stock dividends, stock splits, stock exchanges,
mergers, consolidations, reorganizations, recapitalizations, or other changes in
the corporate structure affecting the Company's Stock.
<PAGE>
BUTLER INTERNATIONAL, INC.
1992 STOCK BONUS PLAN
(AS PROPOSED TO BE AMENDED MAY 23, 1995)
1. Purpose. This 1992 Stock Bonus Plan (the "Plan") of Butler
-------
International, Inc. (the "Company") is hereby adopted for the purpose of
furthering the interests of the Company by providing incentives for officers and
key employees of the Company who may be designated for participation in the Plan
and to provide additional means of attracting and retaining competent personnel.
2. Administration. The Plan shall be administered by the Executive
--------------
Compensation Committee (referred to herein as the "Committee"). The Committee
shall at all times consist of at least two directors of the Company. All
members of the Committee shall be "disinterested directors", as defined in Rule
16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as
amended. Accordingly, no member of the Committee shall have received, for a
period of at least one year prior to his or her serving as a member of the
Committee, any grant or award of any equity securities of the Company pursuant
to the Plan or any other plan of the Company except under any formula plan,
ongoing securities acquisition plan, or pursuant to an election to receive an
annual retainer in cash or securities, as described in Rule 16b-3. Committee
members may not receive awards under the Plan.
3. Interpretation. Subject to the provisions of the Plan and applicable
--------------
law, the Committee is authorized to interpret the Plan and to prescribe, amend
and rescind rules and regulations relating to the Plan and to any awards made
thereunder, and to make all other determinations necessary or advisable for the
administration of the Plan.
4. Participants. The Committee shall determine and designate from time to
------------
time to those individuals who in the discretion of the Committee have made
significant contributions to the Company or any subsidiary thereof, including
officers and directors who are full or part-time employees of the Company, but
excluding directors who are not employees of the Company. The Plan does not and
will not confer upon any right to employment with the Company, nor will the Plan
have any effect upon his right, or upon the right of the Company, to terminate
the association at any time.
The Committee may make awards pursuant to this Plan ("Awards") to such
participants of shares of the common stock, par value $.001 per share, of the
Company ("Shares") in such amounts as the Committee shall from time to time
determine. No member of the Committee shall have any right to participate in
the Plan or to vote or decide upon any matter relating solely to a member of his
immediate family or solely to any rights or benefits of a member of his
immediate family under the Plan. Participation in the Plan shall not confer any
right of continuation of service as a director, officer or employee of the
Company.
5. Criteria for Award. The Committee may make Awards under the Plan based
------------------
on either of the following bases:
(a) The Committee may determine those officers or employees of the
Company who may become eligible to become participants, and establish certain
goals or minimum targets which, if met or achieved, will enable each of the
participants to receive an Award under the Plan; or
(b) The Committee may identify those officers and employees who have
made contributions to the Company and who are deserving of special awards for
their efforts, and make an Award to each of them; or
(c) A combination of (a) and (b) above.
6. Shares Subject to the Plan. The Company shall reserve and keep
--------------------------
available 800,000 Shares (after taking account of the 1 for 6 reverse stock
split effective June 29, 1992) of the authorized and unissued Shares of the
Company for issuance to participants under the Plan, the Butler International,
Inc. 1992 Stock Option Plan and the Butler International, Inc. 1992 Incentive
Stock Option Plan. If any Awards made under the Plan are forfeited, in whole or
in part, the Shares so released from the Award may be made the subject of other
Awards under the Plan.
7. Share Restructure. In the event there is any change in the Company's
-----------------
Shares, as by stock splits, reverse stock splits, stock dividends,
reclassifications or recapitalization, the number and type of Shares available
for Awards under the Plan shall be appropriately adjusted by the Committee.
<PAGE>
8. Effect of Award. The granting of an Award shall take place only when
---------------
an Award Certificate is executed by or on behalf of the Committee and delivered
to the participant, and all conditions for the effectiveness of the Award have
been satisfied. The issuance of an Award Certificate to a participant shall
entitle such participant to receive the number of Shares specified in the Award
Certificate as a bonus under this Plan, without any monetary consideration for
such Shares.
9. Presentment of Award Certificates. To receive Shares upon the grant of
---------------------------------
an Award, a participant (or his successor) shall present and surrender the Award
Certificate to the Secretary of the Company at the Company's principal executive
offices within 30 days after the date of the Award. Certificates representing
the shares will generally be issued to the participant within 15 days after
proper presentment of the Award Certificate. If the Award Certificate is
presented by the successor of a participant following his death, proof shall be
submitted, satisfactory to the Committee, of the right of the successor to
receive such Shares. If the Award Certificate is not presented within the
proper time, the Award shall be deemed to have lapsed, unless the Committee
extends the time for presentment, and the Shares issuable thereunder shall
thereafter become available for future Awards.
10. Transfer of Awards. No Award or Award Certificate shall be
------------------
transferable otherwise than by will or the laws of descent and distribution, and
may be presented for issuance of Shares during his lifetime only by the
participant and only in the manner set forth herein.
11. Termination and Forfeiture of Awards. An Award will terminate, be
------------------------------------
forfeited and lapse immediately if such participant's employment or relationship
with the Company terminates for any reason other than the death or disability of
the participant. If participant's employment or relationship with the Company
is terminated for disability or death, the participant or his personal
representative, estate or heirs, as the case may be, subject to any restrictions
in effect or imposed by the Committee at the time the Award is made, may present
the Award and receive the Shares during a period of six months after such date.
12. Rights as Stockholder. A participant shall have no rights as a
---------------------
stockholder until the date of the issuance to him of a certificate representing
such Shares; provided, however, that in the absence of any extraordinary events,
certificates representing Shares in respect of which an Award has been presented
shall be issued on or before the tenth day after proper presentment. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such Award is properly presented in the
manner set forth herein.
13. Holding Period. A participant shall hold, and not sell or otherwise
--------------
dispose of, Shares received under the Plan for a period of six months after the
date of receipt of the Shares.
14. Amendments and Termination. The Board of Directors may, insofar as
--------------------------
permitted by law, from time to time, with respect to any shares of stock at the
time not subject to outstanding Awards, suspend or discontinue the Plan or
revise or amend it in any respect whatsoever except that, without approval of
the holders of a majority of the stock of the Company, no such revision or
amendment shall change the number of shares of stock subject to the Plan (except
as may occur as a result of an occurrence described in Section 7), change the
designation of the class of employees eligible to receive awards, remove the
administration of the Plan from the Committee, or render any member of the
Committee eligible to receive an award under the Plan while serving thereon.
15. Period of Plan. The Plan shall become effective on January 1, 1993;
--------------
unless extended or earlier terminated by the Board of Directors, the Plan shall
continue in effect until, and shall terminate on, the tenth anniversary of the
effective date of the Plan.
<PAGE>
BUTLER INTERNATIONAL, INC.
1992 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(AS PROPOSED TO BE AMENDED MAY 23, 1995)
1. PURPOSE
The purpose of the Butler International, Inc. 1992 Stock Option Plan for
Non-employee Directors (the "Plan") is to promote the interests of Butler
International, Inc. (the "Company") and its stockholders by strengthening the
Company's ability to attract and retain the services of experienced and
knowledgeable nonemployee directors and by encouraging such directors to acquire
an increased proprietary interest in the Company.
2. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Article 7, the total number of shares
of common stock (the "Common Stock") of the Company for which options may be
granted under the Plan in each fiscal year during any part of which the Plan is
effective (the "Shares") shall be 40,000; the total number of shares reserved
for this Plan is 190,000 (all references to number of shares herein shall mean
such number of shares after taking account of the 1 for 6 reverse stock split
effective June 29, 1992). The Shares shall be shares currently authorized but
unissued or currently held on subsequently acquired by the Company as treasury
shares, including shares purchased in the open market or in private
transactions. If any option granted under the Plan expires or terminates for
any reason without having been exercised in full, the Shares subject to, but not
delivered under, such option may become available for the grant of other options
under the Plan. No shares deliverable to the Company in full or partial payment
of an option purchase price payable pursuant to Paragraph 6.3 shall become
available for the grant of other options under the Plan.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors (the "Board").
Subject to the terms of the Plan, the Board shall have the power to construe the
provisions of the Plan, to determine all questions arising thereunder, and to
adopt and amend such rules and regulations for administering the Plan as the
Board deems desirable.
4. PARTICIPATION IN THE PLAN
Each member of the Company's Board of Directors (a "Director") who is not
otherwise an employee of the Company or any subsidiary of the Company (an
"Eligible Director") shall be eligible to participate in the Plan.
5. NONSTATUTORY STOCK OPTIONS
All options granted under the Plan shall be nonstatutory options not
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended.
6. OPTION TERMS
Each option granted to an Eligible Director under the Plan and the issuance
of Shares thereunder shall be subject to the following terms:
6.1 OPTION AGREEMENTS
Each option granted under the Plan shall be evidenced by an option
agreement (an "Agreement") duly executed on behalf of the Company and the
Eligible Director to whom such option is granted and dated as of the applicable
date of grant. Each Agreement shall be signed on behalf of the Company by an
officer or officers delegated such authority by the Board. Each Agreement shall
comply with and be subject to the terms and conditions of the Plan. Any
Agreement may contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Board.
<PAGE>
6.2 OPTION GRANT SIZE AND GRANT DATES
6.2.1 FIRST GRANTS. An option to purchase 10,000 Shares (as adjusted
pursuant to Article 7) shall be granted to each Director who is an Eligible
Director immediately following the Annual Meeting (as described in the
Company's By-Laws) at which the Plan is approved by the stockholders of the
Company.
6.2.2 SECOND, THIRD, FOURTH AND FIFTH GRANTS. An option to purchase
10,000 Shares (as adjusted pursuant to Article 7) shall be granted to each
director who is an Eligible Director immediately following the Annual
Meeting held during the first, second, third and fourth fiscal years
immediately following the Annual Meeting at which the Plan is approved by
the stockholders of the Company.
6.3 OPTION EXERCISE PRICE
The option exercise price per share shall be the Fair Market Value (as
hereinafter defined) on the date of grant. For purposes of the Plan, "Fair
Market Value" equals the mean of the closing bid and asked prices for the Common
Stock as reported in The Wall Street Journal.
-----------------------
6.4 VESTING; EXERCISABILITY
An option shall vest, become nonforfeitable and exercisable when, and only
if, the optionee continues to serve as a Director until the Annual Meeting
following the year in which the option was granted.
6.5 TIME AND MANNER OF OPTION EXERCISE
Any vested and exercisable option is exercisable in whole or in part at any
time or from time to time during the option period by giving written notice,
signed by the person exercising the option, to the Company stating the number of
Shares with respect to which the option is being exercised, accompanied by
payment in full of the option exercise price for the number of Shares to be
purchased. The date both such notice and payment are received by the office of
the Secretary of the Company shall be the date of exercise of the stock option
as to such number of Shares. No option may at any time be exercised with
respect to a fractional share.
6.6 PAYMENT OF EXERCISE PRICE
Payment of the option exercise price may be in cash or by bank-certified,
cashier's, or personal check, or payment may be in whole or in part by
a. transfer to the Company of shares of the Common Stock having a Fair
Market Value equal to the option exercise price at the time of such
exercise,
b. delivery of instruction to the Company to withhold from the option
shares that would otherwise be issued on the exercise that number of option
shares having a Fair Market Value equal to the option exercise price at the
time of such exercise, or
c. delivery of a non-interest bearing promissory note up to the limit
permitted under Federal Reserve Board regulations, of term no greater than
seven years, payable to the Company, which shall be secured by a pledge of
the Shares of Common Stock to be acquired upon exercise of the option.
If the Fair Market Value of the number of whole shares transferred or the
number of whole option shares surrendered is less than the total exercise price
of the options, the shortfall must be made up in cash.
<PAGE>
6.7 TERM OF OPTIONS
Each option shall expire ten years from its date of grant, but shall be
subject to earlier termination as follows:
a. In the event of the termination of an optionee's service as a Director,
other than by reason of retirement, total and permanent disability, or
death, the then-outstanding option of such optionee shall automatically
expire on the effective date of such termination. For purposes of the
Plan, the term "by reason of retirement" means (i) mandatory retirement
pursuant to Board policy or (ii) termination of service at a time when the
optionee would be entitled to a retirement benefit under the Company's
Employee Retirement Plan, as then in effect, if the Eligible Director were
an employee of the Company.
b. In the event of the termination of an optionee's service as Director by
reason of retirement or total and permanent disability, or in the event of
the death of an optionee while the optionee is a Director, the then-
outstanding options of such optionee shall expire one year after the date
of such termination or death, or on the stated grant expiration date,
whichever is earlier.
Exercise of a decreased optionee's options that are still exercisable shall
be by the estate of such optionee or by a person or persons whom the optionee
has designated in writing filed with the Company, or, if no such designation has
been made, by the person or persons to whom the optionee's rights have passed by
will or the laws of descent and distribution.
6.8 TRANSFERABILITY
The right of any optionee to exercise an option granted under the Plan
shall, during the lifetime of such optionee, be exercisable only by such
optionee and shall not be assignable or transferrable by such optionee other
than by will or the laws of descent and distribution.
6.9 LIMITATION OF RIGHTS
6.9.1 LIMITATION AS TO SHARES. Neither the recipient of an option under
the Plan nor an optionee's successor or successors in interest shall have any
rights as a stockholder of the Company with respect to any shares subject to an
option granted to such person until the date of issuance of a stock certificate
for such Shares.
6.9.2 LIMITATION AS TO DIRECTORSHIP. Neither the Plan, nor the granting
of an option, nor any other action taken pursuant to the Plan shall constitute
or be evidence of any agreement or understanding, express or implied, that an
Eligible Director has a right to continue as a Director for any period of time
or at any particular rate of compensation.
6.10 REGULATORY APPROVAL AND COMPLIANCE
The Company shall not be required to issue any certificate or certificates
for Shares upon the exercise of an option granted under the Plan or to record as
a holder of record of Shares the name of the individual exercising an option
under the Plan, without obtaining, to the complete satisfaction of the Company,
the approval of all regulatory bodies deemed necessary by the Company and
without complying, to the Company's complete satisfaction, with all rules and
regulations under federal, state, or local law deemed applicable by the Board.
7. CAPITAL ADJUSTMENTS
The aggregate number and class of Shares subject to and authorized by the
Plan, the number and class of Shares with respect to which an option may be
granted to an Eligible Director under the Plan as provided in Article 6, the
number and class of Shares subject to each outstanding option, and the exercise
price per share specified in each such option shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common stock
resulting from a split-up or consolidation of shares or any like capital
adjustment or the payment of any stock dividend, or other increase or decrease
in the number of such shares effected without receipt of consideration by the
Company.
<PAGE>
8. EXPENSES OF THE PLAN
All costs and expenses of the adoption and administration of the Plan shall
be borne by the Company, and none of such expenses shall be charged to any
optionee.
9. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective immediately following approval by the Company's
stockholders.
10. TERMINATION AND AMENDMENT OF THE PLAN
The Board may amend, terminate or suspend the Plan at any time in its sole
and absolute discretion; provided, however, that if required to qualify the Plan
under Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of
1934, as amended, no amendment shall be made more than once every six months
that would change the amount, price or timing of the Grants, other than to
comport with changes in the Internal Revenue Code of 1986, as amended, or the
rules and regulations promulgated thereunder; and provided further, that if
required to qualify the Plan under Rule 16b-3, no amendment that would
a. materially increase the number of Shares that may be issued under the
Plan,
b. materially modify the requirements as to eligibility for participation
in the Plan, or
c. otherwise materially increase the benefits accruing to participants
under the Plan,
shall be made without the approval of the Company's Stockholders.
