SETTLEMENT AGREEMENT AND RELEASE

Marvin J. Eisenbath ("Marvin"), Donna Eisenbath, MJE, Inc. ("MJE") 
and Eisenbath Properties (collectively, Marvin, Donna, Eisenbath Properties
and MJE are referred to herein as "Eisenbath") and Butler National
Corporation
("Butler") and RF, Inc. ("RFI") enter into this Settlement Agreement and
Release ("Agreement") as of April 30, 1997 under the terms and conditions
recited below:

   I.Recitations

   A.On or about April 21, 1994, Eisenbath and Butler entered into a Stock
Purchase Agreement (the "Purchase Agreement") whereby Eisenbath agreed to
transfer stock owned by Marvin in RFI to Butler in exchange for 650,000
shares
of Butler Common Stock (the "Stock").

   B.On or about April 21, 1994, Marvin and RFI entered into an Employment
Agreement (the "Employment Agreement").
     
   C.On February 22, 1997 Marvin filed a petition in the United 
States District Court, Eastern District of Missouri styled Marvin J.
Eisenbath
v. Butler National Corporation, and bearing Case No. 97-CV-00279 GFG (the
"Action").

   D.Because the parties hereto desire to avoid the uncertainties
and expense of further continued litigation including the incurring of 
additional attorneys' fees, they have agreed to resolve this matter on the
terms and conditions recited below.

  II.Terms of the Settlement

   A.Butler and RFI agree to do the following:

   1.Release and discharge Eisenbath, as is more fully set forth in
paragraph
IV below.

   2.Execute a stipulation for the dismissal of the Action against all
plaintiffs with prejudice, with each party to bear its own costs, with
statutory attorneys' fees specifically waived.

   3.Keep the terms of this settlement confidential, except Butler may
make
such disclosures as required by law.

   4.Release without any conditions or contingencies the Persons on the
list
attached hereto as Exhibit A from any non-competition agreements they have
with RFI upon employment by, and only for so long as they are employed by,
Fair Market, Inc.

   5.Deposit for delivery by a recognized carrier to Marvin, the desk
chair
that previously was located in Marvin's office in the Wentzville facility.

   6.Will not make any disparaging or negative comments or statements of
any
type or nature (especially to customers, vendors or employees) regarding
Eisenbath or any of their affiliates or any officers, Directors, employees
or
agents of any of them.

   B.Eisenbath agrees to do the following:
     
   1.Release and discharge Butler and RFI and their present 
and former directors, officers, agents, successors, assigns, other
employees
and attorneys of Butler and RFI, as is more fully set forth in paragraph IV
below.

   2.Execute a stipulation for the dismissal of the Action, 
with prejudice, with each party to bear its own costs with statutory 
attorneys' fees specifically waived.

   3.Eisenbath agrees to keep the terms of this settlement confidential.

   4.Any and all leases for the facility at 1325 Mexico Road, Wentzville,
Missouri 63385 are hereby terminated and canceled.

   5.Eisenbath hereby transfers free and clear of all liens, claims and
encumbrances all shares of Butler stock owned by Eisenbath (which is at
least
600,000 shares) and hereby delivers the certificate evidencing said shares
duly endorsed for transfer to Butler with signature guaranteed.

   6.Marvin agrees to pay to Butler $311,533 payable $61,333 by wire
transfer
on or before June 25, 1997 and delivering with this 
Agreement the Note attached hereto as Exhibit A duly executed by Marvin and
Fair Market, Inc..  The Note will be secured by a pledge of all of the
shares
of MJE, Fair Market, Inc. and any substitute, additional or successor
corporations or other entity formed by Marvin in the future to engage in
the
same business as MJE and Fair Market, Inc.  Upon formation of any such
entity,
Marvin will promptly pledge such stock to Butler and deliver the
certificates
representing the shares of said corporation(s) to the 

   7.Will not make any disparaging or negative comments or 
statements of any type or nature (especially to customers, vendors or 
employees) regarding Butler, RFI or their affiliates or any officers, 
directors, employees or agents of any of them.

   8.Execute the letter attached hereto as Exhibit B to 
Pilgrim's Pride, Edward's Pies, Remington Foods and "To Whom It May
Concern".

   9.Until October 31, 1997, take any and all actions reasonably requested
by
RFI to assist RFI in collecting RFI's accounts 
receivable including without limitation, making a reasonable number of
phone
calls to customers.

  10.Will not solicit or otherwise induce any employees who 
are employed by Butler or RFI to leave such employment.

  11.Upon the request of RFI, Marvin will use his best efforts to sell any
inventory now owned by RFI.  RFI will bill Fair Market, Inc. upon pickup of
any inventory so sold.  RFI will not bill any such 
purchaser.  Terms of sale between RFI and Fair Market, Inc. will be COD.

  12.Upon request of Butler, RFI or Valu Foods, Marvin or Fair Market,
Inc.
will use reasonable efforts to arrange for purchase of products through
Fair
Market, Inc.  The purchase price for product sold by 
Fair Market, Inc. or Marvin to Butler, RFI or Valu Foods will be the cost
of
the product to Fair Market, Inc. or Marvin, as the case may be, plus a
mark-up
of 5% of the cost of the product.

 III.Acknowledgments and Agreements

   1.Eisenbath specifically acknowledges that by entering 
into this Agreement, Butler and RFI are not admitting any liability as to
any
claim which they have or might have against Butler and RFI or their present
and former directors, officers, employees, agents and parties affiliated or
related to them, specifically including the matters raised in the Action,
and
further acknowledges that Butler denies that any cause for liability has
arisen.

   2.The parties acknowledge that this Agreement represents a negotiation
of
the parties hereto and that all disputes which arise out of the enforcement
of
this Agreement shall be governed by the laws of the State of Missouri.

   3.Marvin and Donna agree that for a period of ten (10) years from and
after the date hereof neither Marvin nor Donna will directly or 
indirectly purchase any stock or other securities of Butler.

  IV.Release

   A.In consideration of the recitations and agreements listed 
above but except for claims, liabilities and obligations arising hereunder,
Eisenbath, jointly and severally forever releases and discharges Butler,
RFI,
and their affiliated and related companies, and present and former
directors,
officers, employees, agents, representatives, successors, assigns and
attorneys from any and all claims, liabilities and obligations, known or
unknown, liquidated or otherwise that they or any of them may have against
any
and all of them including, but not limited to, any claim o

   1.All claims made under or with respect to the Stock Purchase Agreement
or
the Employment Agreement, including any bonuses which may be due and owing;

   2.All claims made with respect to the purchase and sale of the Stock,
including federal and state law violations and common law fraud;

   3.Any and all claims of any type which Marvin or Donna may have by
virtue
of their employment with RFI, or Butler or the termination of that
employment
including without limitation, any claims for wrongful 
termination, salaries, bonuses, vacation or other amounts due and owing and
any type of discrimination or harassment;
     
   4.All amounts payable from RFI to MJE.

   B.In consideration of the recitations and agreements listed 
above but except for claims, liabilities and obligations arising hereunder,
Butler and RFI and their affiliated and related companies, present and
former
officers, directors, agents, successors and assigns forever release and
discharge Eisenbath and their affiliated and related companies and present
and
former directors, officers, employees, agents, representatives, successors
and
assigns and attorneys from any and all claims, liabilities and obligations,
known or unknown, liquidated or otherwise they may h

   V.Miscellaneous
     
   A.Marvin and Butler will mutually agree to any press releases and
notices
describing this transaction provided however, any requested consent will
not
be unreasonably withheld or delayed especially in connection with any
releases
which Butler deems necessary to comply with any governmental regulations.

   B.This Agreement cancels, merges and supersedes all prior and
contemporaneous understandings and agreements relating to the subject
matter
of this Agreement, written or oral, between parties hereto and contains the
entire agreement of the parties hereto, and the parties hereto have no
agreements, representations or warranties relating to the subject matter of
this Agreement which are not set forth herein and therein.  Specifically,
neither Butler nor RFI are making any representations or warranties regardi
stock rise in value.  The Agreement shall not be amended, modified or 
supplemented in any manner whatsoever except as otherwise provide herein or
in
writing signed by each of the parties hereto and may not be assigned by a
party without the written consent of the other parties.

   C.The provisions of this Agreement were negotiated by the parties
hereto
and said agreement shall be deemed to have been drafted by all 
the parties hereto, notwithstanding any presumptions at law to the
contrary.

   D.This Agreement may be executed in any number of counterparts 
each of which shall be an original and taken together shall constitute one
and
the same instrument.

   E.This Agreement and all rights and obligations of the parties 
shall be governed, construed and interpreted under and pursuant to the laws
of
the State of Missouri applicable to agreements made and to be performed
entirely within such State.

   F.Any and all notices or other writings that are required or permitted
under any of the provisions of this Agreement will be in writing and will
be
deemed sufficiently given if delivered personally, sent by documented
overnight delivery service, mailed by certified mail, or to the extent that
receipt is confirmed, telecopy, telefax or other electronic transmission
service, addressed to the party concerned as follows:

If addressed to Eisenbath:
Fair Market, Inc.                   
1325 Mexico Road                    
Wentzville, MO 63385                
Attention:    Marvin J. Eisenbath   
Telecopier:                         
With a copy to:
Donald Mehan, Jr., Esq.
Moline and Shostak, L.L.C.
8015 Forsyth Boulevard
St. Louis, Missouri 63105
Telecopier: (314) 725-3275

If addressed to Butler or RFI:

Butler National Corporation
1546 East Spruce Road
Olathe, Kansas 66061
Attention: President
Telecopier: (913) 780-5088
With a copy to:
James P. Pryde, Esq.
Bryan Cave LLP
3500 One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105
Telecopier: (816) 374-3300

or any other addresses of which either party will notify the other in
writing
as provided herein
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