applicant response 2008 00-02

Butler National Service Corporation


o KAW VALLEY BANKJuly 21, 2008

Dear Mr. Stewart:

Still old-fashioned where it

You have requested our bank provide a commitment on the financing for your proposedproject in Dodge City, Kansas associated with your application to be the Manager forthe Southwest Zone Lottery Gaming Facility. We understand that you are planning oninitially developing an interim gaming facility until certain water treatment and sewercapacity constraints are addressed before developing your permanent casino andresort. Based on our review of your proposed development costs and equityinvestment commitments from yourself and other parties, your debt financing needs forthe interim facility are in the range of $15.0 to $20.0 million and the incremental debtneeds for the permanent facility are in the range of $50.0 to 60.0 million.

We are prepared to issue a formal commitment letter to provide up to $20,000,000 forthe Interim Gaming Facility development based on our most recent indicative term sheetthat we have provided to you subject only to Butler National Service Corporation beingselected as the Manager for the Southwest Gaming Zone. Further, we are highlyconfident in our ability to issue a formal commitment letter for the Permanent GamingFacility development subject to the successful syndication of the requested loanamount. The specific terms for this financing would need to be developed at a time thatis closer to the expected closing date for the permanent financing.

This letter is confidential and is being delivered to you with the understanding that nodisclosure of, or reference to, this letter may be made to any person or entity other than(a) the directors and officers of Butler National Service Corporation and its subsidiarieswho are directly involved in the project, or (b) the Kansas Lottery Commission or otherappropriate governmental or regulatory authorities, provided, however, you maydisclose this letter to your respective financial and legal advisors on a confidential basis.

We look forward to working with you on this unique opportunity in Dodge City, Kansas.

?1 -Ken J SchwerdtSenior Vice-PresidentKaw Valley Bank6831 SW 29 th St, Ste 100Topeka, KS [email protected] phone785-478-4876 fax

IlION. KANSAS AVE.

TOPEKA, KS. 66608

1-888-232-5872

WWW.KAWVALLEYBANK.COM

PHONE 785-232-6062

FAX 785-232-6513

“formal commitment letter to provide up to $20,000,000 for the Interim Gaming Facility development based on our most recent indicative term sheet that we have provided to you subject only to Butler National Service Corporation being selected as the Manager for the Southwest Gaming Zone”

“Highly confident in our ability to issue a formal commitment letter for the Permanent Gaming Facility development subject to the successful syndication of the requested loan Amount” (“in the range of $50.0 to 60.0 million”)


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Proposed Casino Locations for the SW Gaming Zone

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IIMay 30, 2008

Clark D. Stewart, President and Chief Executive Officer

Butler National Corporation19920 West 161" Street

Olathe, Kansas 66062

Dear Clark,

Gaming DivisionMAC 54649-027

5340 Kietzke lane, Suite 201

Reno, NV 89511

77S 689-6003

775689-6026 Fax

I am in receipt of the email from Doug Smith sent May 27, 2008, concerning Mr. Brad Peterson's (EVP,

Wells Fargo Las Vegas Gaming Division) letter dated December 20,2007 to Dodge City Resort and

Gaming Company, LLC ("Dodge City LLC"). You have informed us that a portion ofMr. Peterson's letter

was recently presented in the Dodge City LLC gaming license application.

This letter will provide a brief chronology of events so you can understand the context in which the

December 20, 2007 letter to Dodge City LLC was written and to inform you ofWells Fargo's position with

respect to Dodge City LLC's submission of a portion of that letter to the Kansas Lottery Commission.

On December 6, 2007, Mr. Greg Rossiter, Vice President, Wells Fargo's Reno Gaming Division (RenoGaming) provided Butler a Letter ofInterest for its potential Casino/Hotel in Dodge City, Kansas (the

Project). On December 20, 2007, Mr. Peterson provided a similar letter of interest to Dodge City LLC for

its potential casino site to be located in Dodge City. Neither of these letters represented commitments by

Wells Fargo and Were subject to significant due diligence.

In Janullry 2008, Reno Gaming continued its discussions with Butler and visited the site of the planned

Project. During this period, Reno Gaming, Wells Fargo Syndications and BalTington Associates provided

discussion material which outlined potential capital structures for the Project.

In February 2008, Reno Gaming and Wells Fargo Syndication provided to Butler an Indicative Term Sheet

which outlined terms and conditions for a potential $45,000,000 financing for the Project. The IndicativeTerm Sheet was not intended to be a commitment to lend or as an attempt to establish all of the terms and

conditions relating to any ultimate financing.

During this period, Steve Erickson, Financial Advisor for Butler, indicated that Las Vegas Gaming had

discussions with Dodge City LLC and noted that Butler preferred that Wells Fargo not support both parties

prior to an award of the license. Wells Fargo then indicated to Butler that it would exclusively support

Butler's application during the bid process in the event that Butler engaged Wells Fargo to an-ange

financing.

In March of2008, Butler requested Wells Fargo to provide a Mandate Letter that would formally mandate

Wells Fargo to move forward with its due diligence process, including engaging outside counsel and other

appropriate parties to complete this process, and to seek credit and other internal approvals after the Kansas

Lottery Commission awards to Butler the contract to build and manage the Project. The Mandate Letter,

like the Indicative Term Sheet, was not intended as a Commitment to provide financing, but further

outlined the terms and conditions under which such commitment would be provided, including that Butler

would not directly or indirectly enter into any credit facilities or bank financing with any other party. Wells

Fargo submitted multiple drafts of the Mandate Letter to Butler and never concluded negotiations on fees,

expenses and our requirement that Butler not seek financing from someone other than Wells Fargo.

However, under the belief this document would be executed, Wells Fargo decided to work solely with

Butler. With this intent Las Vegas Gaming verbally informed Dodge City LLC that Wells Fargo would

have no further discussions on their proposed project prior to the Kansas Lottery Commission award of the

gaming license for the Dodge City location. With the exception that will be detailed below, no one fromWells Fargo Gaming has had any communication with Dodge City LLC concerning potential financing

OHS West:260447470,2

since they were informed of our decision to continue discussions solely with Butler until Kansas Lottery

awarded the license. Furthermore, at no time did or would Wells Fargo share, or divulge any confidential

information regarding your Project to another party. Wells Fargo takes our customers privacy very

seriously.

Please be aware that we are writing to Dodge City LLC to remind them that the December 20, 2007 letter

did not constitute an offer, obligation or commitment on the part ofWells Fargo to provide financing for

their proposed project in Dodge City. We are also reminding Dodge City LLC that, based upon our

discussions with Butler, we would not support Dodge City LLC's application to the Kansas Lottery

Commission and would have no further communications with Dodge City LLC conceming that application

prior to the award of a license. We are asking Dodge City LLC to communicate to the Kansas Lottery

Commission the entirety of our December 20, 2007 letter and our subsequent conversation concerning our

decision not to support Dodge City LLC's application prior to any award.

We trust that this letter allays any concerns you may have concerning Wells Fargo's discussions with

Dodge City LLC. [fyou would like to discuss this matter further, please contact me at your convenience.

Sue Fuller

Senior Vice President

OHS West:260447470.2

“Please be aware that we are writing to Dodge City LLC to remind them that the December 20, 2007 letter did not constitute an offer, obligation or commitment on the part of Wells Fargo to provide financing for their proposed project in Dodge City. We are also reminding Dodge City LLC that, based upon our discussions with Butler, we would not support Dodge City LLC's application to the Kansas Lottery Commission and would have no further communications with Dodge City LLC concerning that application prior to the award of a license. We are asking Dodge City LLC to communicate to the Kansas Lottery Commission the entirety of our December 20, 2007 letter and our subsequent conversation concerning our decision not to support Dodge City LLC's application prior to any award.”

applicant response 2008 00-02

Business