8-K - BUKS - Equibles

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549

FORM 8-K

CURRENT REPORTPURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) October 18, 2021

BUTLER NATIONAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Kansas

(State or Other Jurisdiction of Incorporation)

0-1678<br> (Commission File Number)	41-0834293<br> (IRS Employer Identification No.)
19920 W. 161^st^ Street , Olathe, Kansas<br> (Address of Principal Executive Offices)	66062<br> (Zip Code)

913-780-9595

(Registrant's Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01	Entry into a Material Definitive Agreement.<br><br> <br><br><br> <br>On October 18, 2021, Butler National Service Corporation (“BNSC”), a wholly-owned subsidiary of Butler National Corporation (“Company”), acquired 2,000 Class A Preferred Membership Units of BHCMC, L.L.C. (“BHCMC”) from BHC Investment Company L.C. (“Seller”) for approximately $16.4 million paid at closing (the “Transaction”). BHCMC is the manager of the Boot Hill Casino & Resort located in Dodge City, Kansas. As a result of this Transaction, BNSC has acquired the remaining BHCMC equity and the Company now indirectly owns 100% of BHCMC.<br><br> <br><br><br> <br>The closing was effected pursuant to a Sale and Purchase Agreement for Preferred Member Interest Units between Seller and BNSC (“Purchase Agreement”). BNSC and Seller agreed to utilize an effective date for the Transaction of August 1, 2021. The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.<br><br> <br><br><br> <br>The Transaction purchase price was paid by a combination of available cash and an $8.0 million borrowing on a commercial loan with Academy Bank, N.A. (“Academy Bank”). BHCMC executed a Loan Modification Agreement with Academy, dated October 18, 2021 (“Manager Loan”) and BNSC executed a guaranty of the obligations thereunder. The Manager Loan amended and restated the original $7.0 million loan executed December 22, 2020 with Academy to acquire the casino land and buildings. The other $35 million loan executed in connection with the casino land acquisition in 2020 was unchanged by the Transaction. As a result, approximately $13.9 million is outstanding under the Manager Loan and it remains collateralized by real estate in Dodge City with an interest rate of 5.75% fully amortizing over five years. The Manager Loan will now mature on October 18, 2026. The foregoing description of the Manager Loan does not purport to be complete and is qualified in its entirety by reference to the full text of the Manager Loan, which is attached as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.01	Completion of Acquisition or Disposition of Assets.<br><br> <br><br><br> <br>The information provided in response to Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.
Item 2.03	Creation of Direct Financial Obligation.<br><br> <br><br><br> <br>The information provided in response to Item 1.01 of this Current Report on Form 8-K, including that information related to the additional $8.0 million of indebtedness incurred under the Manager Loan, is incorporated by reference into this Item 2.03.
Item 9.01	Financial Statements and Exhibits.
Exhibit<br><br> <br>10.1<br><br> <br>10.2<br><br> <br>99.1<br> 99.2<br><br> <br>104	Sale and Purchase Agreement for Preferred Membership Interest Unity in BHCMC, L.L.C., dated September 13, 2021<br><br> <br>Loan Modification Agreement dated October 18, 2021 between BCHMC, L.L.C. and Academy Bank, N.A.<br><br> <br>Press Release<br><br> <br>Pro Forma Financial Statements<br><br> <br>Cover Page Interactive Data File (formatted as Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BUTLER NATIONAL CORPORATION<br> (Registrant)
October 20, 2021<br> Date	/S/ Clark D. Stewart<br> Clark D. Stewart<br> (President and Chief Executive Officer)
October 20, 2021<br> Date	/S/ Tad M. McMahon<br> Tad M. McMahon<br> (Chief Financial Officer)

ex_293233.htm

Exhibit 10.1

SALE AND PURCHASE AGREEMENT FOR PREFERRED MEMBERSHIP INTEREST UNITS IN BHCMC, L.L.C.

THIS SALE AND PURCHASE AGREEMENT FOR PREFERRED MEMBERSHIP INTEREST UNITS IN BHCMC L.L.C. (this "Agreement") is made as of September 13, 2021, by and between BHC Investment Company, L.C., a Kansas limited liability company ("BHC INV" or "Seller"), and Butler National Service Corporation, a Kansas corporation ("BNSC" or "Purchaser"). BHC INV and BNSC may be collectively referred to as the "Parties" herein.

WHEREAS, BNSC is a Member of BHCMC, L.L.C. ("BHCMC" or "Company") and owns 8,000 Class A Common Membership Interest Units in BHCMC, which constitutes 100% of all Class A Common Interest Units authorized and issued by the Company; and

WHEREAS, BHC INV is a Preferred Member of the Company and owns 2,000 Class A Preferred Membership Interest Units in BHCMC, which constitutes 100% of all Preferred Membership Interest Units authorized and issued by the Company; and

WHEREAS, BNSC and BHC INV are the only members of BHCMC and no other person or entity has any membership or ownership interest in the Company; and

WHEREAS, BHC INV desires to sell and transfer all of its Preferred Membership Interest Units in the Company to BNSC on the terms and conditions set forth in this Agreement; and

WHEREAS, BNSC desires to buy and acquire from BHC INV all of BHC INV's Preferred Membership Interest Units in BHCMC on the terms and conditions set forth in this Agreement; and

WHEREAS, pursuant to the provisions of Article 9, Section 9.2 and Article 2 of the Amended and Restated Limited Liability Company Operating Agreement of BHCMC, L.L.C., effective as of April 30, 2009 ("BHCMC Operating Agreement"), this Agreement is a "Permitted Transfer" not subject to the transfer restrictions set forth in such BHCMC Operating Agreement.

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the Parties, intending to be legally bound hereto, here understand and agree as follows:

SALE AND PURCHASE OF PREFERRED MEMBERSHIP INTEREST UNITS IN BHCMC, L.L.C.

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ARTICLE 1

SALE AND PURCHASE OF PREFERRED UNITS; PURCHASE PRICE

1.1Sale and Purchase of Preferred Membership Interest Units. In reliance upon and subject to the representations, warranties, covenants, promises, and terms and conditions in this Agreement, at the Closing (as later defined in this Agreement), BHC INV hereby sells, assigns, transfers and conveys all of its right, title and interest in and to 2,000 Preferred Membership Interest Units in BHCMC ("Preferred Units") to BNSC, free and clear of any and all liens and encumbrances of any kind, and BNSC hereby purchases the Preferred Membership Interests from BHC INV.

1.2Purchase Price. BNSC shall pay to BHC INV the amount of Fifteen Million Dollars ($15,000,000) ("Purchase Price") at and as a condition of Closing.

ARTICLE 2

CLOSING

2.1Closing. The consummation of the transactions contemplated hereby shall take place at a closing (the "Closing") to be held at 11:00 a.m., Central Daylight Time, no later than four days after the last of the conditions to Closing set forth herein have been satisfied or waived (other than conditions which, by their nature, must be satisfied on or before the Closing Date) and such Closing shall be conducted remotely through the exchange of documents and signatures (or their electronic counterparts); provided, however, that the Parties shall make reasonable efforts to close by October 31, 2021. If BNSC is unable to close by October 31, 2021 but desires to consummate the transactions contemplated herein, BNSC agrees to pay to BHC INV an extension fee of $100,000 per month, with the first payment of $100,000 to be paid to BHC INV on November 1, 2021 and if Closing has not occurred, a second payment of $100,000 on December 1, 2021. If Closing occurs in either November or December, 2021. BHC INV will return the unused pro-rated amount at Closing. The date on which the Closing takes place shall be referred to as the "Closing Date." If Closing does not occur by 11:59:59 p.m. on December 31, 2021, this Agreement shall be cancelled, all terms and conditions herein shall be null and void, the Parties shall bear their respective costs and expenses and none of the Parties shall incur any liability to any other party due to, arising out of or in connection with such failure to close or cancellation of this Agreement.

2.2Conditions to Closing by All Parties. The obligation of each of the Parties to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

a) No governmental authority shall have enacted, issued, promulgated, enforced or entered any order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof; and

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b) No legal action shall have been commenced against BNSC, BHC INV, and/or BHCMC that would prevent the Closing. No injunction or restraining order shall have been issued by any governmental authority, and be in effect, which restrains or prohibits any transaction contemplated hereby; and

c) The Parties have executed the Mutual Release and Indemnification Agreement ("MRI Agreement") attached hereto as Exhibit A, which shall be effective upon Closing.

d) The Parties mutually agree the allocation of the Purchase Price among the assets of BHCMC are classified at net book value as reported in the Cochran Head Vick & Co. Independent Auditor's Report (Audit). The Parties agree the Audit classifications are consistent with the requirements of Federal Tax Form 8594, and if required, will file tax returns in all respects and for all purposes consistent with the Audit allocations.

2.3Conditions to BHC INV's Obligation to Close. The obligation of BHC INV to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or BHC INV's waiver, at or prior to the Closing, of each of the following conditions:

a) The representations and warranties of BNSC contained in this Agreement, and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).

b) BNSC shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement to be performed or complied with by it on or before the Closing Date.

c) BNSC shall have delivered to BHC INV such other documents or instruments as BHC INV reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement, including the following:

(1)	A cross-receipt, executed by an officer of BNSC dated as of the Closing Date in form and substance reasonably satisfactory to BHC INV acknowledging receipt of the Preferred Units; and
(2)	Payment of the Purchase Price.
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2.4Conditions to BNSC's Obligation to Close. The obligations of BNSC to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or BNSC's waiver, at or prior to the Closing, of each of the following conditions:

a) The representations and warranties of BHC INV contained in this Agreement, and any certificate or other writing executed and delivered pursuant to and in furtherance of this Agreement, shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).

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b) BHC INV shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement to be performed or complied with by BHC INV.

c) BNSC shall have received any regulatory approvals and/or consents that are required to consummate the transactions under this Agreement.

d) BNSC shall have received approval of financing from Academy Bank to consummate acquisition of the Preferred Units in the amount of $15,000,000 U.S. Dollars and received funding or authorization for the transfer from Academy Bank to close the financed amount and remit $15,000,000 to BHC INV and on such terms and conditions as may be acceptable to BNSC.

e) BHC INV shall have delivered to BNSC such other documents or instruments as BNSC reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement, including the following:

(1)	A fully executed and authorized Bill of Sale and Assignment of all BHC INV's Preferred Units to BNSC, free and clear of all liens and encumbrances of any kind, together with all corresponding membership rights, powers and obligations, and such other instruments reasonably acceptable to BNSC as may be necessary to effectuate and evidence the sale, assignment, transfer and conveyance of BHC INV's entire right, title and interest in and to the Preferred Units to BNSC; and
(2)	A declaration from BHC INV that the third BHC INV seat on BHCMC's Board of Managers is vacant and will never be filled by BHC INV; and
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(3)	The written resignation of Bruce Christenson and James L. Walker from BHCMC's Board of Managers and the Board of Managers of BHCRRE, LLC, a Kansas limited liability company, with each resignation to be effective as of the Closing Date;
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(4)	A certificate from BHC INV, executed by its Manager, which shall (i) certify the resolutions of its board of managers, members or other body authorizing the execution, performance and consummation of this Agreement and the transactions contemplated herein, (ii) identify by name and title and bear the signatures of the officers authorized to sign the this Agreement and any documents in connection herewith, and (iii) attach a certificate of good standing from its jurisdiction of organization, the charter, articles or certificate of organization certified by the relevant authority of the jurisdiction of organization and a true and correct copy of its operating agreement and any amendments thereto;
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(5)	A Resolution from BHC INV authorizing the transfer of the Interest and the transactions contemplated herein;
(6)	A unanimous consent in lieu of a joint meeting of the BHCMC's Board of Managers executed by each member of the Company's Board of Managers authorizing the transfer of the Preferred Units and the transactions contemplated herein; and
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2.5. Effective Date of Transfer and Acquisition of Preferred Units. The Parties mutually agree that if the Closing occurs, BHC INV's transfer and BNSC's acquisition of the Preferred Units in BHCMC, including the accounting cut-off time for the transfer and acquisition of such Preferred Units, shall be effective August 1, 2021 at 5:01 a.m. Central Daylight Time ("CDT") and this cut-off date shall be effective for a short tax year and the issuance of a K-1 to BHCINV.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES BY BHC INV

In connection with the sale of the Preferred Units, the BHC INV makes the following representations and warranties to BNSC, each of which shall survive the Closing and each of which shall also be deemed to be true and correct on the Closing Date with respect to the sale of the Preferred Units:

3.1Ownership of Preferred Units. BHC INV is the record and beneficial owner of the Preferred Units and has good and marketable title thereto. No other person owns or can otherwise claim any ownership interest in the Preferred Units.

3.2Interest in Preferred Units. BHC INV owns the Preferred Units free and clear of all liens, encumbrances, pledges, claims and other security interests and without any applicable restriction on transferability as of the Closing Date and, at the Closing, the Preferred Units will be transferred and delivered to BNSC free and clear of all liens and encumbrances and without any condition or restriction on transferability except as may be set forth in BHCMC's Operating Agreement. None of the Preferred Units are subject to any outstanding options, preemptive or other rights, subscriptions, warrants, calls, voting trusts, proxies, commitments, demands or other agreements which requires the holder thereof to vote in any particular manner or which restricts or affects the transferability to BSNC of such Preferred Units. At the Closing, BNSC will acquire title to the Preferred Units free and clear of all liens, encumbrances, pledges, claims, security interests, voting trusts, proxies or such other agreement other than those created by BNSC.

3.3 Enforceability. BHC INV has full and necessary power and authority to execute, perform and consummate the transactions contemplated by this Agreement in accordance with its terms and to sell the Preferred Units to BNSC, and BHC INV has taken all actions necessary to secure all approvals required in connection therewith. This Agreement is a valid and binding obligation of BHC INV and enforceable against BHC INV in accordance with its terms.

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3.4Conflicting Obligations; Consents. The execution and performance of this Agreement does not, and the consummation of the transactions contemplated by this Agreement will not, conflict with or violate any obligations of BHC INV under any contract, agreement, instrument, document, lease, license, permit, indenture, or obligation, or any law, statute, ordinance, rule, regulation, code, guideline, order, arbitration, award, judgment or decree, to which BHC INV is subject or to which BHC INV is a party.

3.5Access to Information and Reliance. BHC INV is well-informed about BHCMC's business and its future prospects and has had a full and fair opportunity to acquire all information regarding BHCMC which BHC INV deems pertinent to the terms and conditions of this Agreement. In addition, BHC INV has relied to the extent BHC INV deems advisable upon BHC INV's own legal counsel and tax and financial advisors with respect to the terms and conditions of this Agreement.

3.6Membership on BHCMC's Board of Managers. Bruce Christenson and James Walker are the only members of BHCMC's and BHCRRE's Board of Managers currently holding office through appointment, designation or election by BHC INV.

3.7No Known Violations. BHC INV knows ofno violation of any regulation, statute or law related to BHCMC at the time of Closing unless otherwise placed in writing to BNSC prior to Closing.

3.8No Further Interest. Following the Closing, neither BHC INV nor any of its members or investors will have any direct or indirect membership, ownership or equitable interest in BHCMC or BHCMC's business, including the Boot Hill Casino and Resort (the "Casino") other than BHCMC's obligation to promptly provide BHC INV with K-ls for all applicable tax periods. At Closing, BNSC shall pay to BHC INV the separate amount of $572,459.55 in full satisfaction of any claim of entitlement by BHC INV to receive from BHCMC, and any obligation of BHCMC to provide to BHC INV, any allocations and/or cash distributions regarding Profits For Tax Purposes for (a) the tax year ending April 30, 2021 and (b) the short tax year ending August 1, 2021. Notwithstanding the prior sentence, if BHC INV's taxable income due to any allocation of profits or losses from BHCMC for the tax periods identified in subsections (a) and (b) above is an amount: (1) greater than $1,635,599, BNSC shall pay to BHC INV an additional sum equal to thirty-five percent (35%) of the amount in excess of $1,635,599 and such additional sum shall be paid within 30 days from the date that BNSC is notified of such difference; or (2) less than $1,635,599, BHC INV shall pay to BNSC a sum equal to thirty-five percent (35%) of the difference between $1,635,599 and such lesser amount, which shall be paid within 30 days from the date that BHC INV is notified of such difference; provided, however, in no event shall the difference under subsection (2) be less than zero and BHC INV shall not be required to repay to BNSC more than $572,459.55 due to any adjustments in the allocation of profits. The Parties mutually agree that payment of the amount in this Section is hereby considered to fully satisfy any tax allocation, payment or reimbursement to BHC INV under BHCMC's Operating Agreement, and amendments thereto, including Article 4 and Schedule B - Tax Reimbursement Schedule thereof.

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES BY BNSC

In connection with the purchase of the Preferred Units, BNSC makes the following representations and warranties to BHC INV, each of which shall be deemed to be true and correct on the Closing Date.

4.1Enforceability. BNSC has all necessary power and authority to enter into and consummate the transactions contemplated by this Agreement in accordance with its terms and to purchase the Preferred Units from BHC INV. This Agreement is a valid and binding obligation of BNSC and enforceable against BNSC in accordance with its terms.

4.2Conflicting Obligations; Consents. The execution and performance of this Agreement does not, and the consummation of the transactions contemplated in this Agreement will not, conflict with or violate any provisions of the articles of incorporation or bylaws of BNSC or any provisions of any obligations under any contract, agreement, instrument, document, lease, license, permit, indenture, or obligation, or any law, statute, ordinance, rule, regulation, code, guideline, order, arbitration, award, judgment or decree, to which BNSC is subject or to which BNSC is a party.

ARTICLE 5

COVENANTS

5.1Notification. BHC INV shall promptly notify BNSC in writing if BHC INV becomes aware after the Closing Date of any fact or condition (except as expressly contemplated by this Agreement) that causes or constitutes a breach of or inaccuracy in any of BHC INV's representations and warranties made as of the Closing Date. BNSC shall promptly notify BHC INV in writing if BNSC becomes aware after the Closing Date of any fact or condition (except as expressly contemplated by this Agreement) that causes or constitutes a breach of or inaccuracy in any of BNSC's representations and warranties made as of the Closing Date. This obligation shall expire twelve months from the date of Closing.

5.2Closing Conditions. From the date hereof until the Closing, the Parties shall individually and collectively use their reasonable best efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article 2 hereof.

5.3Public Announcements. Unless otherwise required by applicable law or for filing by Butler National Corporation in compliance with the Securities and Exchange Commission rules or regulations (based upon the reasonable advice of counsel) and except with respect to any public documents filed with, and presentations made during any public meeting of, any regulatory authority that must approve or consent to the execution, performance or consummation of this Agreement, none of the Parties shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other party (which consent shall not be unreasonably withheld, conditioned or delayed), and the parties shall cooperate as to the timing and contents of any such announcement.

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5.4Further Assurances. Following the Closing, each of the Parties hereto shall, and shall cause their respective affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

ARTICLE 6

INDEMNIFICATION

The MRI Agreement, and all rights and obligations set forth therein, shall be effective upon Closing and shall survive the Closing without any time limitation except as may be prescribed in any applicable statute of limitation.

ARTICLE 7

TERMINATION

7.1 Termination. This Agreement may be terminated at any time prior to the Closing:

a)	by the mutual written consent ofBHC INV and BNSC;
b)	by BNSC by written notice to BHC INV if:
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(i)	BNSC is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by BHC INV pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article 2 and such breach, inaccuracy or failure has not been cured by BHC INV (as applicable) within ten days of receipt of written notice of such breach from BNSC; or
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(ii)	any of the conditions set forth in Section 2.2 or Section 2.3 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by December 31, 2021, unless such failure shall be due to the failure of BNSC to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;
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(c)	by BHC INV by written notice to BNSC if:
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(i)	BHC INV is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by BNSC pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article 2 and such breach, inaccuracy or failure has not been cured by BNSC within ten days ofBNSC's receipt of written notice of such breach; or
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(ii)	any of the conditions set forth in Section 2.2 or Section 2.4 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by December 31, 2021, unless such failure shall be due to the failure of BHC INV to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; or
(d)	by BNSC or BHC INV in the event:
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(i)	that there shall be any law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited; or
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(ii)	any governmental authority shall have issued an order restraining or enjoining the transactions contemplated by this Agreement, and such order shall have become final and non-appealable.
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7.2Effect of Termination. In the event of the termination of this Agreement in accordance with this Article, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:

a) as set forth in Article 8 herein; and

b) nothing herein shall relieve any party hereto from liability for any willful breach of any provision hereof.

ARTICLES

MISCELLANEOUS

8.1Entire Agreement. This Agreement and any other documents contemplated hereunder constitute the complete agreement and understanding between the Parties and supersedes any prior agreements or representations among the Parties, written or oral, which may have related to the subject matter hereof in any way; provided, however, that nothing herein shall be deemed a waiver by any party of any right or remedy such party may have at law or in equity based on the fraudulent acts or omissions, fraudulent inducement, intentional misrepresentation or willful misconduct, in each case of the other party or parties hereto. This Agreement may not be amended except by an instrument in writing signed by BNSC and BHC INV.

8.2Expenses. Except as otherwise set forth herein, BHC INV shall pay, without right of reimbursement from BNSC, the costs incurred by BHC INV, and BNSC shall pay, without right of reimbursement from BHC INV, the costs incurred by BNSC, incident to the preparation and execution of this Agreement and performance of their respective obligations hereunder, including, without limitation, the fees and disbursements of legal counsel, accountants and consultants employed by the respective parties in connection with the transactions contemplated by this Agreement.

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8.3Notices. Any notice, request, consent or communication under this Agreement shall be effective only if it is in writing and (i) personally delivered (with signed confirmation), (ii) sent by certified mail, return receipt requested, postage prepaid, (iii) sent by a nationally recognized overnight delivery service, with delivery confirmed, or (iv) by electronic mail, addressed as follows:

If to BHC INV:

BHC Investment Company, L.C.

3501 SW Fairlawn Road, Suite 200

Topeka, Kansas

66614 Email: bc@gulfcoastcg.com

With a copy to:

Dawda, Mann, Mulcahy & Sadler, PLC

c/o Daniel H. Halprin, Esq.

39533 Woodward Avenue, Suite 200

Bloomfield Hills, MI 48304

Email: dhalprin@dmms.com

If to BNSC:

Butler National Service Corporation

Attn: Chief Executive Officer

19920 West 161st Street,

Olathe, Kansas 66062

Email: cdstewart@butlernational.com

With a copy to:

Bryan Cave Leighton Paisner LLP

Attn: Paul M. William

1200 Main Street, Suite 3800

Kansas City, Missouri 64105

Email: paul.william@bclplaw.com

or such other persons and/or addresses as shall be furnished in writing by BNSC or BHC INV to the other party, and shall be deemed to have been given as of the date when so personally delivered or upon confirmed receipt of electronic mail, three (3) days after when so deposited with the United States mail properly addressed, or the next day when delivered during business hours to such overnight delivery service properly addressed, as the case may be. However, electronic mail alone is not effective as notice under this Agreement.

8.4 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement, and shall be reformed and enforced to the maximum extent permitted under applicable law.

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8.5Further Assurances. Subject to the terms and conditions of this Agreement, each of the Parties agrees to use its, his or her reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by this Agreement. If at any time before or after the date of this Agreement any further action is reasonably necessary, proper or advisable to carry out the purposes of this Agreement, as soon as reasonably practicable, each of the Parties to this Agreement shall at the expense of the requesting party, take all such reasonably necessary, proper or advisable action to effectuate such purposes.

8.6Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Kansas, without regard to its conflict of laws rules or principals. Each party agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT THEY MAY HAVE TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION, OR IN ANY LEGAL PROCEEDING, DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF THIS AGREEMENT.

8.7Headings. The headings in this Agreement are intended solely for convenience and shall be given no effect in the construction or interpretation of this Agreement.

8.8Waiver. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.

8.9Enforcement. The Parties understand, stipulate, and agree that the remedy at law for any breach of this Agreement is inadequate and that should any dispute arise concerning the sale of the Preferred Units or any other matter hereunder, this Agreement shall be enforceable in a court of equity by an injunction or a decree of specific performance. Such remedies shall be cumulative, nonexclusive and in addition to any other remedies which the Parties may have.

8.10Counterparts. This Agreement may be executed simultaneously in one or more, counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

SALE AND PURCHASE OF PREFERRED MEMBERSHIP INTEREST UNITS IN BHCMC, L.L.C.

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8.11Binding Effect; Assignment; No Third-Party Beneficiaries. This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns provided neither this Agreement nor any of the rights, interests, or obligations hereunder may be assigned by any party; provided, however, that BNSC shall be entitled to assign its rights under this Agreement to any of its affiliates. Except as provided herein, nothing in this Agreement is intended to or shall confer upon any person other than the Parties, and their successors and permitted assigns, any rights, benefits, or remedies of any nature whatsoever under or by reason of this Agreement.

8.12Construction. The Parties have each participated in the drafting of this Agreement, which shall be construed without regard to any rules of construction regarding the party responsible for the drafting of this Agreement.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed all as of the date and year first above written.

BNSC:<br><br> <br><br><br> <br>BUTLER NATIONAL SERVICE CORPORATION
BHC INV:<br><br> <br><br><br> <br>BHC INVESTMENT COMPANY, L.C.

SALE AND PURCHASE OF PREFERRED MEMBERSHIP INTEREST UNITS IN BHCMC, L.L.C.

Page 12 of 12

ex_293234.htm

Exhibit 10.2

LOAN MODIFICATION AGREEMENT

THIS LOAN MODIFICATION AGREEMENT (“Agreement”), dated October 18, 2021 (the “Effective Date”), is executed by:

BHCRRE LLC, a Kansas limited liability company (individually, “Fee Owner”), and BHCMC, L.L.C., a Kansas limited liability company (individually, “Manager”, and collectively with Fee Owner, “Borrowers”),

Butler National Service Corporation, a Kansas corporation (“Guarantor”) (hereafter, Borrowers and Guarantor shall sometimes collectively be referred to as “Borrower Parties”); and

Academy Bank, N.A., a national banking association **** (together with its successors and assigns, "Lender").

RECITALS:

A.	Pursuant to a certain Loan Agreement dated December 17, 2020 (“Loan Agreement”), i) Lender made a $35,000,000 loan made to Fee Owner (individually, the “Fee Loan”) as evidenced by a certain $35,000,000 Promissory Note executed by Fee Owner on or about the date of the Loan Agreement, as amended and restated by a certain $35,000,000 Amended and Restated Promissory Note dated January 15, 2021 (individually, the “Fee Note”); and ii) Lender made a $7,000,000 loan made to Manager (individually, the “Manager Loan”, and collectively with the Fee Loan, the “Loans”) as evidenced by a certain $7,000,000 Promissory Note executed by Manager on or about the date of the Loan Agreement, as amended and restated by a certain $7,000,000 Amended and Restated Promissory Note dated January 15, 2021 (individually, the “Manager Note”, and collectively with the Fee Note, the “Original Notes”). All capitalized terms not expressly defined in this Agreement shall have the same meanings provided for such terms as defined in the Loan Agreement.
B.	All Borrowers’ obligations under the Loans and Original Notes have been guaranteed by Borrower, Fee Owner and Manager pursuant to certain Continuing Unlimited Guaranty instruments executed by such entities on or about December 17, 2020 (collectively, the “Guaranties”).
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C.	Borrower Parties have requested that Lender modify and amend the Original Notes and all other “Loan Documents” (as defined in the Loan Agreement) as necessary to advance additional principal under the Manager Loan to Manager and to modify certain covenants, terms and conditions contained in the Loan Agreement and other Loan Documents.
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D.	Lender is willing to modify and amend the Original Notes and other Loan Documents as requested by Borrower Parties subject to, and conditioned upon, the terms and conditions of this Agreement.
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MODIFICATIONS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES:

Now therefore, in consideration of the foregoing Recitals, the covenants and agreements set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows, intending to be legally bound:

1. RECITALS.

The Recitals contained above form a material and integral part of this Agreement, are fully binding upon the parties hereto, and are incorporated herein by reference.

2. DEFINITIONS.

All capitalized terms not expressly defined in this Agreement shall have the same meanings provided for such terms as defined in the Loan Agreement.

3. CURRENT LOAN BALANCES.

Borrower Parties acknowledge and agree that as of the Effective Date, and prior to any advance of additional principal under the Loans to be made by Lender pursuant to this Agreement, a) the total unpaid principal balance under the Fee Note is $33,541,670.00, and b) the total unpaid principal balance under the Manager Note is $5,949,997.00. Borrower Parties acknowledge **** the accuracy of such principal balances after accounting for all advances made by Lender under the Original Notes and all Loan-related payments received by Lender prior to the Effective Date.

4. CONDITIONS PRECEDENT TO MODIFICATION OF LOANS.

The effectiveness of this Agreement and its enforceability against Lender are expressly subject to, and conditioned upon, satisfaction of all the following terms and conditions (“Conditions Precedent”):

4.1 Receipt and Application of October, 2021 Monthly Payments. a ) On October 13, 2021, Lender shall have received payment in full of the monthly payment of principal and interest under the Fee Note that is due October 17, 2021, with such payment to be applied by Lender as required according to the terms of the Fee Note. b) On October 15, 2021, Lender shall have received payment in full of all accrued and unpaid interest under the Manager Note as of such date, with such payment to be applied by Lender as required according to the terms of the Manager Note.

4.2 Execution and Delivery of Modification Documents. Lender shall have received, in form and content acceptable to Lender, a) this Agreement, duly executed by all Borrower Parties; b) a Second Amended and Restated Promissory Note in the amount of $13,949,997.00 duly executed by BHCMC (individually, the “2 ^nd^ A&R Manager Note”), which instrument shall amend and restate in its entirety the Manager Note; c) a Second Amended and Restated Promissory Note in the amount of $33,541,670.00 duly executed by BHCRRE (individually, the “2 ^nd^ A&R Fee Note” and collectively with the 2^nd^ A&R Note, the “2 ^nd^ A&R Notes”), which instrument shall amend and restate in its entirety the Fee Note; and d) a Modification of Mortgages and Assignment of Leases duly executed by BHCRRE and BHCMC (“Mortgage Modification”). The 2 ^nd^ A&R Notes shall constitute amendments and restatements of, and not novations of, the Original Notes.

4.3 Delivery of Agreement and Good Standing Certificates. Borrower shall deliver to Lender a) this Agreement, duly executed by all Borrower Parties; b) resolution or consent instruments, in form and content reasonably acceptable to Lender, that confirm the due authorization and execution of this Agreement by each Borrower Party; and c) current certificates issued by the State of Kansas that confirm each Borrower Party is in good standing the applicable laws of such State.

4.4 No Default**.** Lender shall have confirmed to its reasonable satisfaction that as of the Effective Date, there is no Event of Default or any fact or circumstance which, with the passage of time, would constitute an Event of Default.

4.5 Payment of Expenses. Lender shall have received from Borrower Parties payment of all costs and expenses incurred by Lender in this transaction, including but not limited to attorneys’ fees, title insurance endorsement premiums and closing costs.

4.6 Title Policy Endorsements**.** Lender shall have received Modification Endorsements to its title insurance policies a) insuring the Mortgage and Leasehold Mortgage as modified in accordance with this Agreement without any exceptions to coverage not appearing in the original title insurance policies, and b) increasing the face amount of the original title policy insuring the Mortgage to include an additional advance of principal in the amount of $8,000,000 under the 2^nd^ A&R Manager Note (the “Additional Advance”).

4.7 KRGC Approval Letter. Lender shall have received, in form and content reasonably acceptable to Lender, a letter or other writing duly executed by the Kansas Racing and Gaming Commission that approves a) the Additional Advance, b) this Loan Modification Agreement, including the related notes and mortgages to be executed by Borrower pursuant hereto, and c) Butler National Service Corporation’s purchase and acquisition from BHC Investment Company, L.C. (“BHC”) of BHC’s entire membership and equity interest in BHCMC (the “Buyout Transaction”) for a total purchase price of $15,000,000 (“Buyout Price”) as described in Manager’s Summary of Sale and Purchase Agreement for Preferred Membership Units in BHCMC L.L.C. submitted to the KRGC on September 9, 2021.

4.8 Participation Documents and Funds. Lender’s receipt of documentation confirming that all other lenders owning participation interests in the Loans have approved the modification of the Loans in accordance with this Agreement and have funded to Lender their respective pro rata portions of the Additional Advance.

4.9 Buyout Closing Documentation. **** Lender shall have received, in form and content reasonably acceptable to Lender, a) copies of membership conveyance documents, officer and director resignations and such other documentation executed by Guarantor and BHC that confirm closing of the Buyout Transaction with Guarantor being the sole remaining member of BHCMC; and b) a settlement statement and such other documentation reasonably required by Lender to confirm i) the Buyout Price has been funded by Guarantor through a $13,000,000 book-entry loan made by BHCMC to Guarantor and a $2,000,000 book-entry loan made by Butler National Corporation to Guarantor; and ii) payment in full of the Buyout Price and all costs and expenses incurred in connection with the Buyout Transaction and the modification of the Loans pursuant to this Agreement.

4.10 Additional Advance Fee. Lender shall have received from Borrowers payment in full of a $56,000 fee (“Additional Advance Fee”). The Additional Advance Fee shall be paid solely as independent consideration for Lender making the Additional Advance in accordance with this Agreement and proceeds from such fee shall not be applied to principal or interest under either Loan.

5. ADDITIONAL ADVANCE AND LOAN MODIFICATIONS.

Upon satisfaction of all Conditions Precedent as reasonably determined by Lender, a) Lender shall make the Additional Advance under the 2^nd^ A&R Manager Note, the purpose of which is to partially finance the aforementioned $13,000,000 book-entry loan made by BHCMC to Guarantor; and b) the following terms and conditions of this Agreement shall control, and the Original Notes, Loan Agreement and all other Loan Documents shall be deemed modified and amended as necessary to give full force and effect to the following terms and conditions, with all such modifications and amendments to be in full force and effect as of the Effective Date unless otherwise provided below:

5.1 2 ^nd^ A&R Fee Note. All indebtedness under the Fee Loan shall be evidenced by the 2^nd^ A&R Fee Note in the full place and stead of the Fee Note. Any and all references to the Fee Note contained in the Loan Agreement, Mortgage, Leasehold Mortgage, Assignment of Leases, Guaranties, and all other Loan Documents are hereby modified and amended as necessary to refer to the 2^nd^ A&R Fee Note.

5.2 2 ^nd^ A&R Manager Note. All indebtedness under the Manager Loan shall be evidenced by the 2^nd^ A&R Manager Note in the full place and stead of the Manager Note. Any and all references to the Manager Note contained in the Loan Agreement, Mortgage, Leasehold Mortgage, Assignment of Leases, Guaranties, and all other Loan Documents are hereby modified and amended as necessary to refer to the 2^nd^ A&R Manager Note.

5.3 Loan Documents. Any and all references to the term “Loan Documents” contained in the Loan Agreement, Mortgage, Leasehold Mortgage, Assignment of Leases, Guaranties and all other Loan Documents shall include a) this Agreement, b) the A&R Fee Note and A&R Manager Note in the full place and stead of the Fee Note and Manager Note, respectively, and c) the Mortgage Modification.

5.4 Security. The Loan Agreement, Mortgage, Leasehold Mortgage, Assignment of Leases, Guaranties and all other Loan Documents that secure the Loans are hereby modified and amended as necessary to secure i) all Borrower’s obligations under this Agreement; and ii) all Borrower’s obligations under the 2^nd^ A&R Notes, including but not limited to Borrower’s obligation to repay the Additional Advance. Nothing contained in the A&R Notes, Mortgage Modification or this Agreement is intended alter, modify or adversely affect in any way the perfection or priority of any lien, security interest, assignment or pledge originally granted as security for the Original Notes, and all such liens, security interests, assignments and pledges shall continue to secure the Loans as hereafter evidenced by the 2^nd^ A&R Notes.

5.5 Combined DSCR Covenant. The first sentence contained in Article VI.6.a) of the Loan Agreement is struck in its entirety and replaced with the following:

“Borrowers shall achieve a minimum Combined DSCR (as hereafter defined) of 1.30:1.00 on a trailing twelve (12) month basis.”

5.6 Liquidity Covenant. Article VI.6.c) of the Loan Agreement is struck in its entirety and replaced with the following:

“c) Liquidity Covenant. **** On a combined basis, Borrowers shall maintain at all times i) a minimum aggregate sum of $1,500,000.00 of unrestricted cash equity on deposit in the Fee Owner’s Academy Account and the Manager’s Academy Account through and including December 31, 2022, and ii) commencing January 1, 2023, and continuing thereafter, Borrowers shall maintain at all times a minimum aggregate sum of $2,000,000.00 of unrestricted cash equity on deposit in the Fee Owner’s Academy Account and the Manager’s Academy Account (the “Combined Liquidity Level”). If Borrowers fail to maintain the minimum Combined Liquidity Level at any time, Borrowers shall cause an unrestricted cash equity contribution to be made into one or both of the Fee Owner’s Academy Account and the Manager’s Academy Account in an aggregate sum that will satisfy the Combined Liquidity Level (“Liquidity Cure Contribution”). Liquidity Cure Contributions shall be made not later than 4:30 PM on the tenth (10^th^) day following the date of Lender’s notice to Borrowers that Borrowers failed to maintain the minimum Combined Liquidity Level (“Liquidity Cure Date”). Borrowers’ obligation to maintain the minimum Combined Liquidity Level and to obtain Liquidity Cure Contributions when and as required herein is hereafter referred to as the “Liquidity Covenant”.”

5.7 Distribution Covenant. Article VI.6.d) of the Loan Agreement is struck in its entirety and replaced with the following:

“d) Distribution Covenant. Until the Loans have been repaid in full, Borrowers shall not make any payment, transfer any asset, nor grant any other consideration to any of their members, owners or other equity interest-holders that represents or constitutes a distribution, dividend, return on equity, return of equity, or other payment of equity or profit (any such payment, asset or other consideration being hereafter referred to as a “Distribution”). Notwithstanding the foregoing, nothing contained herein shall prevent Borrowers from making i) payments to BNSC in accordance with the Management Services Agreement and Management Subordination; ii) a one-time Distribution in order to consummate the acquisition by Butler National Service Corporation, a Kansas corporation, of the membership interest in Manager held by BHC Investment Company, L.C., a Kansas limited liability company; and iii) quarterly Distributions to their members solely for the purpose of such members making quarterly estimated tax payments as provided in Section 4.1(b)(ii) of the Amended and Restated Limited Liability Company Operating Agreement of BHCMC, LLC, provided the amount of such tax-related Distributions are approximately equal to the bona fide estimated tax liability for income earned from the Business for such quarterly periods. Borrowers’ obligation to refrain from making Distributions as required herein is hereafter referred to as the “Distribution Covenant”.”

5.8 Agency Fee. Commencing on the first (1^st^) anniversary of the Loan Agreement and continuing thereafter, the annual Agency Fee payable under the Loan Agreement shall be $48,000.00.

6. FURTHER DOCUMENTS. Borrower Parties shall execute any and all other documents and do all other acts and things reasonably required by Lender to: a) give effect to the provisions of this Agreement and all other Loan Documents, as modified or restated by this Agreement; b) provide record no‐tice of the modifications to the Loan Documents provided for herein; and/or c) create, perfect, and/or modify the liens and security interests granted to Lender under this Agreement and the other Loan Documents.

7. RATIFICATION BY BORROWER. Borrowers hereby: a) confirm that this Agreement and the Loan Documents have been duly authorized, executed, and delivered to Lender and are valid, binding, and enforceable in accordance with their terms (as modified by this Agreement); b) reaffirm, ratify, and incorporate herein by reference all terms and conditions of i) the Original Notes, as amended and restated by the A&R Notes; and ii) the Loan Agreement and all other Loan Documents, as modified by this Agreement; c) renew all warranties, representations, and agreements set forth in the Loan Documents; and d) confirm Borrowers’ continued liability under the Loan Documents without defense or offset.

8. CONSENT OF GUARANTORS. Borrower Parties, in their capacities as guarantors of the Loans, hereby consent to all terms and conditions of this Agreement. The modification and restatement of the Original Notes and other Loan Documents as provided herein shall not constitute any defense to Borrower Parties or otherwise adversely affect in any way any of Lender’s rights and remedies under the Guaranties or any other Loan Document binding upon Borrower Parties, as modified hereby. Borrower Parties confirm and agree that they are each liable for all Borrowers’ obligations under the Loans pursuant to their respective Guaranties, including but not limited to Borrowers’ obligation to repay the Loans, and all other obligations presently and hereafter incurred under the A&R Notes and any other Loan Document, as modified herein. All terms and conditions of the Guaranties are hereby reaffirmed, ratified, and incorporated herein by reference.

9. MODIFICATION OF TERMS; CONTINUED EFFECT. The Loan Agreement and all Loan Documents other than the Notes are hereby modified in all respects necessary to give full force and effect to the provisions of this Agreement. In all other respects, the Loan Agreement and all Loan Documents other than the Notes shall remain in full force and effect as originally written or pre‐viously modified. All of Lender's liens, security interests, priorities, rights, and remedies under the Loan Documents shall continue in full force and effect as security for the Loans following the modification and increase thereof by this Agreement and the A&R Notes. If any terms of the Loan Documents conflict with the terms of this Agreement, this Agreement shall control. All references in any Loan Document to any other Loan Document shall hereafter be construed to refer to such other Loan Document as modified by this Agreement.

10. REPRESENTATIONS, WARRANTIES AND COVENANTS.

Borrower Parties represent, warrant and covenant to Lender as follows: a) The individuals executing this Agreement have full right, title and authority to execute this Agreement and to bind Borrower Parties to all their respective obligations. b) Borrower Parties’ execution and performance of this Agreement will not conflict with, nor result in a breach or violation of, any other agreement, law or order binding upon them. c) All necessary consents, votes, and other approvals required to make this Agreement binding and enforceable against Borrower Parties have been obtained. d) This Agreement represents a valid and binding contract of Borrower Parties, enforceable in accordance with its terms. e) Each Borrower Party is in good standing in the State of Kansas. f) There has been no change in the articles of organization or operating agreements of either Borrower since copies of such documents were provided to Lender on or about the date of closing of the Loans. g) There has been no change in the articles of incorporation or bylaws of Guarantor since copies of such documents were provided to Lender on or about the date of closing of the Loans. h) As of the date of this Agreement, each Borrower Party is solvent and able to pay its debts when and as they become due in the ordinary course of business. i) the full and timely fulfillment of the obligations being undertaken by the Borrower Parties under this Agreement, including but not limited to repayment of the Additional Advance, will not render any Borrower Party insolvent or unable to pay its debts when and as they become due in the ordinary course of business. j) Borrower Parties waive, to the fullest extent permitted by applicable law, any and all rights any of them may have, either directly as a debtor in possession or through a trustee in bankruptcy, to set aside all or any portion of this Agreement or any other Loan Document as a fraudulent conveyance or fraudulent transfer under any bankruptcy, federal or state law, including but not limited 11 U.S.C § 548.

11. NO CLAIMS OR DEFENSE AGAINST LENDER.

Borrower Parties represent and warrant that, after due investigation, they have no claims against Lender as of the date of this Agreement, and they know of no defense, setoff, or counterclaim of any kind or nature whatsoever against Lender pertaining directly or indirectly to the Loans, this Agreement, or any other document relating to this Agreement. For the sole consideration of the modification of the Loans as requested by Borrower Parties, the sufficiency of which is hereby acknowledged, Borrower Parties hereby release and forever discharge Lender, and its past and present shareholders, directors, officers, employees, agents, counsel, and assigns (collectively, the “Released Parties”), and waive all claims and defenses arising from and against, all rights, claims, and causes of action, known or unknown, now existing, whether discovered hereafter or not, including but not limited to those related to the Loans which arise from any action or inaction by Lender that occurred on or before the date of this Agreement. Borrower Parties further warrant and represent that Lender has no obligation to further extend or modify the Loans or to loan any additional funds to Borrower except as may be expressly provided otherwise in this Agreement. Borrower Parties acknowledge and agree that Lender is specifically relying upon the representations, warranties, waivers and releases contained in this section, and that these representations, warranties, waivers and releases constitute a material part of the consideration to Lender without which Lender would not increase and modify the Loans as provided herein.

11. MISCELLANEOUS.

a) This Agreement shall be binding on, and inure to the benefit of, the parties successors and assigns. b) Headings are inserted into this Agreement for convenience only and shall not be considered in construing any provision. c) This Agreement may not be amended, nor any of its provisions waived, without the written consent of Borrower Parties and Lender. d) Time shall be of the essence of this Agreement. e) The provisions of this Agreement are separable. If any judgment is hereafter entered holding any provision of this Agreement to be invalid or unenforceable, then the remainder of this Agreement shall not be affected by such judgment, and the remaining terms of this Agreement shall be carried out as nearly as possible according to its original terms. f) The term “person” includes but is not limited to, natural persons, corporations, partnerships, trusts, limited liability companies, joint ventures, and/or other legal entities. g) No inference in favor of, or against, any person shall be drawn from the fact that such person has drafted all or any part of this Agreement or any other Loan Document. h) The term “modified” means amended, changed, extended, renewed, altered, terminated, or canceled. i) This Agreement may be executed in counterparts, with such counterparts comprising one agreement upon execution of one or more counterparts by each party hereto.

12. NO ORAL AGREEMENTS.

This Agreement and all the Loan Documents collectively constitute the written credit agreement which is the final expression of the credit agreement among Borrower Parties and Lender.

This Agreement and all the Loan Documents may not be contradicted by evidence of any prior oral credit agreement or of a contemporaneous oral credit agreement among Borrower Parties and Lender.

The following space (which Borrower Parties and Lender agree is sufficient space) is provided for the placement of nonstandard terms, if any:

__________________________________________________ ****

____________________[None]________________________

Borrower Parties and Lender affirm that there is no unwritten oral credit agreement among Borrower Parties and Lender with respect to the subject matter of this Agreement and the other Loan Documents.

As used in this section, the term "this writing" is deemed to include this Agreement and all Loan Documents.

13. CHOICE OF LAW; VENUE.

This Agreement shall be deemed to have been executed and shall be performed in the State of Kansas and shall be governed by its laws. Borrower Parties and Lender hereby irrevocably agree that Lender may bring any suit, action, or other legal proceedings arising out of this Agreement in courts having jurisdiction in Shawnee County, Kansas, Ford County, Kansas, or the County and State in which any portion of the Premises or Collateral is located, whether local, state, or federal. Borrowers and Lender hereby consent to the jurisdiction of such courts and waive any rights to request a change of venue or a removal to another court.

14. WAIVERS OF JURY TRIAL.

Borrower Parties and all endorsers, sureties, or guarantors hereby irrevocably and severally: a) waive the right to a trial by jury in any action or proceeding brought by any party in connection with this Agreement, any Loan Document, or any modification thereof; b) have made this waiver knowingly, intentionally, and voluntarily; c) acknowledge no reliance upon any oral or written statements made by Lender or on Lender's behalf, other than those contained herein, either to induce this waiver of trial by jury or to modify or nullify its effect; d) acknowledge reading and understanding the meaning and ramifications of this waiver provision; and e) agree to take all such actions as may be required by applicable law to allow this waiver to be enforceable. By executing this Agreement, Lender waives the right to a trial by jury in any action or proceeding brought by any party in connection with this Agreement.

[Remainder of page intentionally left blank.]

In witness whereof, the undersigned have executed this Agreement, intending it to be fully binding and effective as of the Effective Date.

BORROWER PARTIES: Fee Owner: BHCRRE LLC, a Kansas limited liability company By: /s/ Clark D. Stewart Print Name: Clark D. Stewart Title: CEO Manager: BHCMC, L.L.C., a Kansas limited liability company By: /s/ Clark D. Stewart Print Name: Clark D. Stewart Title: CEO Guarantor: Butler National Service Corporation, a Kansas corporation By: /s/ Clark D. Stewart Print Name: Clark D. Stewart Title: CEO LENDER: Academy Bank, N.A. By: /s/ Josh Walter Print Name: Josh Walter Title: Portfolio Manager

ex_293158.htm

Exhibit 99.1

PRESS RELEASE<br> FOR IMMEDIATE RELEASE	October 20, 2021
BUTLER NATIONAL ACQUIRES ALL EQUITY INTEREST OF BOOT HLL CASINO MANAGER<br><br> <br><br><br> <br>Butler National subsidiary Butler National Service Corporation acquired all interest in Boot Hill Casino Manager, BHCMC, LLC

OLATHE, KANSAS, October 20, 2021, - Butler National Corporation (OTCQB: BUKS) a recognized provider of professional management services in the gaming industry, announces its subsidiary, Butler National Service Corporation (BNSC) closed on the purchase of the minority equity ownership interest in BHCMC, LLC, (BHCMC) that results in BNSC being the sole owner of BHCMC, manager of the Boot Hill Casino & Resort.

BNSC purchased the 2,000 Class A Preferred Membership Units from BHC Investment Company, LC for approximately $16.4 million including an allocation for taxes. The Sale and Purchase of the Preferred Units in BHCMC, LLC makes BNSC the sole owner/member of BHCMC.

The purchase of the BHC Investment Company, LC interest was funded from company funds and $8.0 million of commercial bank debt. The purchase transaction was approved by Kansas Racing and Gaming Commission on October 15, 2021, with an effective date for the ownership transfer of August 1, 2021 and a closing date of October 18, 2021.

The ownership of 100% of the equity combined with the December 2020 Building and Land purchase provide significant long-term benefits for BHCMC and BNSC. These strategic transactions allow BHCMC to continue to grow with future development opportunities. This equity purchase provides a clear path forward to achieve the mutual goals of BHCMC, BNSC, and the State of Kansas and ultimately benefit the shareholders of Butler National Corporation.

Clark Stewart, President and CEO of Butler National said, “We have worked diligently to reach our goal of owning all the equity of the Boot Hill Casino manager, BHCMC. The sole Butler ownership of BHCMC achieves a significant milestone for all Butler National shareholders. We appreciate the advice, assistance and participation of our business partner, BHC Investment Company, LC. They were essential in the development of the Boot Hill Casino and casino gaming in Kansas.”

Our Business:

Butler National Corporation operates in the Aerospace and Services business segments. The Aerospace Products segment includes the manufacture, sale and service of electronic equipment and systems and technologies to enhance and support products related to aircraft. Additionally, we also operate several Federal Aviation Administration (the "FAA") Repair Stations. Companies in Aerospace Products concentrate on Learjets, Beechcraft King Air, Cessna turbine engine, Cessna multi-engine piston and Dassault Falcon 20 aircraft. Specifically, the design, distribution and support for products for older aircraft, or “Classic” aircraft are areas of focus for companies in Aerospace Products. Services include temporary employee services, gaming services and administrative management services.

Forward-Looking Information:

Statements made in this report, other reports and proxy statements filed with the Securities and Exchange Commission, communications to stockholders, press releases, and oral statements made by representatives of the Company that are not historical in nature, or that state the Company or management intentions, hopes, beliefs, expectations or predictions of the future, may constitute "forward-looking statements" within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements can often be identified by the use of forward-looking terminology, such as "could," "should," "will," "intended," "continue," "believe," "may," "expect," "hope," "anticipate," "goal," "forecast," "plan," "guidance" or "estimate" or the negative of these words, variations thereof or similar expressions. Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties, and assumptions. It is important to note that any such performance and actual results, financial condition or business, could differ materially from those expressed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Item 1A of the Company’s Annual Report on Form 10-K, incorporated herein by reference. Risk Factors and elsewhere herein or in other reports filed with the SEC. Other unforeseen factors not identified herein could also have such an effect. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial condition or business over time.

FOR MORE INFORMATION, CONTACT:
David Drewitz, Public Relations<br> david@creativeoptionscommunications.com<br><br> <br>www.creativeoptionscommunications.com<br> <br> <br>Butler National Corporation Investor Relations	Ph (972) 814-5723<br><br> <br>Ph (913) 780-9595

THE WORLDWIDE WEB:

Please review www.butlernational.com for pictures of our products and details about Butler National Corporation and its subsidiaries.

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Exhibit 99.2

BUTLER NATIONAL CORPORATION

PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed consolidated financial statements give effect to the acquisition of the noncontrolling interest in BHCMC, LLC (BHCMC) by Butler National Corporation ("Butler" and the "Company") and are based on estimates and assumptions set forth herein and in the notes to such pro forma statements.

On October 18, 2021, Butler National Service Corporation (“BNSC”), a wholly-owned subsidiary of Butler National Corporation (“Company”), acquired 2,000 Class A Preferred Membership Units of BHCMC, L.L.C. (“BHCMC”) from BHC Investment Company, L.C. (“Seller”) for approximately $16.4 million paid at closing (the “Transaction”). BHCMC is the manager of the Boot Hill Casino & Resort located in Dodge City, Kansas. As a result of this Transaction, BNSC has acquired the remaining BHCMC equity and the Company now indirectly owns 100% of BHCMC.

The closing was effected pursuant to a Sale and Purchase Agreement for Preferred Member Interest Units between Seller and BNSC (“Purchase Agreement”). BNSC and Seller agreed to utilize an effective date for the Transaction of August 1, 2021. The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

The Transaction purchase price was paid by a combination of available cash and an $8.0 million borrowing on a commercial loan with Academy Bank, N.A. (“Academy Bank”). BHCMC executed a Loan Modification Agreement with Academy, dated October 18, 2021 (“Manager Loan”) and BNSC executed a guaranty of the obligations thereunder. The Manager Loan amended and restated the original $7.0 million loan executed December 22, 2020 with Academy to acquire the casino land and buildings. The other $35 million loan executed in connection with the casino land acquisition in 2020 was unchanged by the Transaction. As a result, approximately $13.9 million is outstanding under the Manager Loan and it remains collateralized by real estate in Dodge City with an interest rate of 5.75% fully amortizing over five years. The Manager Loan will now mature on October 18, 2026. The foregoing description of the Manager Loan does not purport to be complete and is qualified in its entirety by reference to the full text of the Manager Loan, which is attached as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.

This transaction is being accounted for as an asset acquisition.

The unaudited pro forma condensed consolidated balance sheet at July 31, 2021 assumes the effects of the above as if this transaction had occurred as of July 31, 2021.

The unaudited pro forma condensed consolidated statements of operations for the year ended April 30, 2021 and the three months ended July 31, 2021 gives effect to the above as if the transaction had occurred at the beginning of the period.

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

As of July 31, 2021

(in thousands except per share data)

					****			****
					****	Pro Forma
					****	Amount
					****	Butler National
					****	Corporation
			Adjustments			July 31, 2021

ASSETS
CURRENT ASSETS:
Cash	20,585		$	(7,658	)	$	12,927
Accounts receivable, net of allowance for doubtful accounts	2,957			-			2,957
Inventories
Parts and raw materials	4,817			-			4,817
Work in process	3,570			-			3,570
Finished goods	68			-			68
Total inventory, net of allowance	8,455			-			8,455
Contract asset	578			-			578
Prepaid expenses and other current assets	1,521			-			1,521
Total current assets	34,096			(7,658	)		26,438
PROPERTY, PLANT AND EQUIPMENT:
Lease right-to-use assets	3,099			-			3,099
Construction in progress	1,484			-			1,484
Land	4,751			-			4,751
Building and improvements	39,762			-			39,762
Aircraft	9,138			-			9,138
Machinery and equipment	4,670			-			4,670
Office furniture and fixtures	11,074			-			11,074
Leasehold improvements	4,032			-			4,032
	78,010			-			78,010
Accumulated depreciation	(21,344	)		-			(21,344	)
Total property, plant and equipment	56,666			-			56,666
SUPPLEMENTAL TYPE CERTIFICATES (net of accumulated amortization of 8,356 at July 31, 2021)	8,011			-			8,011
OTHER ASSETS:
Other assets (net of accumulated amortization of 11,060 at July 31, 2021)	2,730			(780	)		1,950
Deferred tax asset, net	-			1,944			1,944
Total other assets	2,730			1,164			3,894
Total assets	101,503		$	(6,494	)	$	95,009
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	3,976		$	1,405		$	5,381
Current maturities of lease liability	100			-			100
Accounts payable	2,316			-			2,316
Contract liability	2,804			-			2,804
Gaming facility mandated payment	1,231			-			1,231
Compensation and compensated absences	1,628			-			1,628
Income taxes payable	843			-			843
Other current liabilities	345			-			345
Total current liabilities	13,243			1,405			14,648
LONG-TERM LIABILITIES
Long-term debt, net of current maturities	38,823			6,509			45,332
Lease liability, net of current maturities	2,732			-			2,732
Deferred tax liability, net	400			(400	)		-
Total long-term liabilities	41,955			6,109			48,064
Total liabilities	55,198			7,514			62,712
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Butler National Corporation's stockholders' equity
Preferred stock, par value 5: Authorized 50,000,000 shares, all classes; Designated Classes A and B 200,000 shares; 100 Class A, 9.8%, cumulative if earned liquidation and redemption value; 100, no shares issued and outstanding	-			-			-
1,000 Class B, 6%, convertible cumulative, liquidation and redemption value 1,000, no shares issued and outstanding	-			-			-
Common stock, par value .01: authorized 100,000,000 shares issued 79,070,382 shares, and outstanding 75,366,749 shares at July 31, 2021	790			-			790
Capital contributed in excess of par	17,048			(6,118	)		10,930
Treasury stock at cost, 3,703,633 shares at July 31, 2021	(1,909	)		-			(1,909	)
Retained earnings	22,486			-			22,486
Total Butler National Corporation's stockholders' equity	38,415			(6,118	)		32,297
Noncontrolling interest in BHCMC, LLC	7,890			(7,890	)		-
Total stockholders' equity	46,305			(14,008	)		32,297
Total liabilities and stockholders' equity	101,503		$	(6,494	)	$	95,009

All values are in US Dollars.

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES ****

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED APRIL 30, 2021

(in thousands except per share data)

	Amount			****	****	****	****	****	****
	Reported on			****	****	****	Pro Forma
	Butler National			****	****	****	Amount
	Corporation			****	****	****	Butler National
	10-K					****	Corporation
	Year			****	****	****	Year
	Ended			****	****	****	Ended
	April 30, 2021			Adjustments			April 30, 2021
REVENUES:	****	****	****	****	****	****	****	****	****
Professional services	$	30,205		$	-		$	30,205
Aerospace products		31,275			-			31,275
Total revenues		61,480			-			61,480
COSTS AND EXPENSES:	****	****	****	****	****	****	****	****	****
Cost of professional services		14,214			-			14,214
Cost of aerospace products		23,293			-			23,293
Marketing and advertising		3,752			-			3,752
Employee benefits		2,571			-			2,571
Depreciation and amortization		3,542			-			3,542
General, administrative and other		8,208			(300	)		7,908
Total costs and expenses		55,580			(300	)		55,280
OPERATING INCOME		5,900			300			6,200
OTHER INCOME (EXPENSE):	****	****	****	****	****	****	****	****	****
Interest expense		(3,138	)		(440	)		(3,578	)
Other		7			-			7
Total other income (expense)		(3,131	)		(440	)		(3,571	)
INCOME BEFORE INCOME TAXES		2,769			(140	)		2,629
PROVISION (BENEFIT) FOR INCOME TAXES	****	****	****	****	****	****	****	****	****
Provision for income taxes		536			239			775
Deferred income tax (benefit)		(225	)		-			(225	)
NET INCOME		2,458			(379	)		2,079
Net (income) loss attributable to noncontrolling interest in BHCMC, LLC		(1,025	)		1,025			-
NET INCOME ATTRIBUTABLE TO BUTLER NATIONAL CORPORATION	$	1,433		$	646		$	2,079
BASIC EARNINGS PER COMMON SHARE ATTRIBUTABLE TO BUTLER NATIONAL CORPORATION	$	.02		$	.01		$	.03
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION		74,144,957			-			74,144,957
DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO BUTLER NATIONAL CORPORATION	$	.02		$	.01		$	.03
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION		74,144,957			-			74,144,957

BUTLER NATIONAL CORPORATION AND SUBSIDIARIES ****

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED JULY 31, 2021

(in thousands except per share data)

	Amount					****			****
	Reported on					****	Pro Forma
	Butler National					****	Amount
	Corporation					****	Butler National
	10-Q					****	Corporation
	Three Months					****	Three Months
	Ended					****	Ended
	July 31, 2021			Adjustments			July 31, 2021
REVENUE:
Professional Services	$	9,726		$	-		$	9,726
Aerospace Products		8,419			-			8,419
Total revenue		18,145			-			18,145
COSTS AND EXPENSES:
Cost of Professional Services		3,701			-			3,701
Cost of Aerospace Products		6,012			-			6,012
Marketing and advertising		1,204			-			1,204
Employee benefits		575			-			575
Depreciation and amortization		702			-			702
General, administrative and other		1,929			(75	)		1,854
Total costs and expenses		14,123			(75	)		14,048
OPERATING INCOME		4,022			75			4,097
OTHER INCOME (EXPENSE):
Interest expense		(614	)		(118	)		(732	)
Forgiveness of debt		2,001			-			2,001
Total other income (expense)		1,387			(118	)		1,269
INCOME (LOSS) BEFORE INCOME TAXES		5,409			(43	)		5,366
PROVISION (BENEFIT) FOR INCOME TAXES
Provision (benefit) for income taxes		631			494			1,125
NET INCOME (LOSS)		4,778			(537	)		4,241
Net (income) loss attributable to noncontrolling interest in BHCMC, LLC		(1,872	)		1,872			0
NET INCOME (LOSS) ATTRIBUTABLE TO BUTLER NATIONAL CORPORATION	$	2,906		$	1,335		$	4,241
BASIC EARNINGS PER COMMON SHARE	$	0.04		$	0.02		$	0.06
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION		75,366,749			-			75,366,749
DILUTED EARNINGS PER COMMON SHARE	$	0.04		$	0.02		$	0.06
WEIGHTED AVERAGE SHARES USED IN PER SHARE CALCULATION		75,366,749			-			75,366,749

ADJUSTMENTS TO PRO FORMA INFORMATION:

(in thousands except per share data)

	Amount Reported on Butler National Corporation 10-K			Amount Reported on Butler National Corporation 10-Q			April 30, 2021			July 31, 2021			Adjustment		Pro Forma Amount Butler National Corporation			Pro Forma Amount Butler National Corporation
Account Description	April 30, 2021			July 31, 2021			Adjustment			Adjustment			Reference		April 30, 2021			July 31, 2021
Cash		N/A		$	20,585			-		$	(7,658	)		1		N/A		$	12,927
Other Assets		N/A		$	2,730			-		$	(780	)		1		N/A		$	1,950
Deferred tax assets, net		N/A		$	-			-		$	1,944			2		N/A		$	1,944
Current maturities of long-term debt		N/A		$	3,976			-		$	1,405			1		N/A		$	5,381
Long-term debt, net of current maturities		N/A		$	38,823			-		$	6,509			1		N/A		$	45,332
Deferred tax liability, net		N/A		$	400			-		$	(400	)		2		N/A		$	-
Capital contributed in excess of par		N/A		$	17,048			-		$	(6,118	)		1, 2		N/A		$	10,930
Noncontrolling interest in BHCMC, LLC		N/A		$	7,890			-		$	(7,890	)		1		N/A		$	-
General, administrative and other	$	8,208		$	1,929		$	(300	)	$	(75	)		4	$	7,908		$	1,854
Interest expense	$	(3,138	)	$	(614	)	$	(440	)	$	(118	)		3	$	(3,578	)	$	(732	)
Provision for income taxes	$	536		$	631		$	239		$	494			5	$	775		$	1,125
Net (income) loss attributable to noncontrolling interest in BHCMC, LLC	$	(1,025	)	$	(1,872	)	$	1,025		$	1,872				$	-		$	-

DESCRIPTION OF ADJUSTMENTS:

(in thousands except per share data)

		Credit
Adjustment #1
Non-controlling interest	7,890
Capital contributed in excess of par	8,462
Cash		$	7,658
Current maturities of long-term debt		$	1,405
Long-term debt, net of current maturities		$	6,509
Notes receivable from noncontrolling interest		$	780
The Company purchased the noncontrolling interest for 16.4 million. The Company paid 7.7 million in cash, and incurred 8.0 million in new debt with 86 in origination fees.
In addition, the Company forgave a notes receivable from the noncontrolling interest of 780.
Adjustment #2
Deferred tax assets, net	1,944
Deferred tax liability, net	400
Capital contributed in excess of par		$	2,344
The Company's deferred tax assets relating to the purchase increased by 2.3 million.
Adjustment #3
Interest expense for the year ended April 30, 2021 increased 440, with the increased debt.
Interest expense for the three months ended July 31, 2021 increased 118, with the increased debt.
Adjustment #4
Management fees paid to BHC Investment Company, L.C. for the year ended April 30, 2021 will no longer need to be paid and decreased 300.
Management fees paid to BHC Investment Company, L.C. for the three months ended July 31, 2021 will no longer need to be paid and decreased 75.
Adjustment #5
Provision for income taxes for the year ended April 30, 2021 increased 239 due to an increase in net income.
Provision for income taxes for the three months ended July 31, 2021 increased 494 due to an increase in net income.

All values are in US Dollars.