LOAN REPAYMENT AGREEMENT

    This Loan Repayment Agreement ("Agreement") is made and entered into this 29^th day of December, 2000, by and among Ballantyne of Omaha, Inc. ("the Borrower"), Design and Manufacturing, Inc., Xenotech Strong, Inc., Strong Westrex, Inc., and Xenotech Rental Corp. (collectively "the Guarantors") and Wells Fargo Bank Nebraska, National Association, ("the Bank").

RECITALS

    A.  The Borrower is indebted to the Bank as evidenced by a Commercial Note dated August 1, 1999, in the maximum principal amount of $20,000,000.00 ("Revolving Note"). The principal balance outstanding on December 14, 2000, under the Revolving Note was $8,953,000; accrued and unpaid interest to that date was $26,167.12.

    B.  Payment of the Revolving Note is secured by, without limitation, all of the Borrower's inventory, equipment, accounts and other rights to payment, and general intangibles as more specifically described in the Security Agreement dated August 30, 1995 ("Security Agreement").

    C.  Payment of the Revolving Note is also secured by, without limitation, a Deed of Trust dated August 30, 1995, and filed for record with the Douglas County Register of Deeds on August 31, 1995, as Document No. 13536, encumbering certain real property as more specifically described therein ("Deed of Trust").

    D.  Payment of the Revolving Note is also secured by, without limitation, an Assignment of Leases and Rent dated August 30, 1995, and filed for record with the Douglas County Register of Deeds on August 31, 1995, as Document No.9508, encumbering certain real property as more specifically described therein ("Assignment").

    E.  Payment of the Revolving Note is guaranteed by Design and Manufacturing, Inc., Xenotech Strong, Inc., Strong Westrex, Inc., and Xenotech Rental Corp. by their corporate guaranties dated December 1, 1998 (collectively "the Guaranties"). The Guaranties are secured by each respective Guarantor's accounts, inventory, equipment, and general intangibles as more specifically described in their security agreements dated August 30, 1995 and December 1, 1998.

    F.  The Borrower executed a Loan Agreement dated August 30, 1995, as modified by Amendment No. 1 dated November 24, 1995, Amendment No. 2 dated August 27, 1997, Amendment No. 3 dated December 1, 1998, and Amendment No. 4 dated August 10, 1999, which sets forth additional terms and conditions with regard to the Indebtedness (as amended "the Loan Agreement").

    G.  The Borrower is in default pursuant to the terms of the Loan Agreement for failing to maintain an appropriate leverage ratio and failing to achieve an appropriate interest coverage ratio.

    H.  The Borrower has requested that the Bank waive the existing defaults and extend the Revolving Note which the Bank has agreed to do pursuant to the terms and conditions of this Agreement.

    NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

    1.  ACKNOWLEDGMENT.  The Borrower and the Guarantors acknowledge and agree that the recitals herein are true and correct and that the indebtedness under the Revolving Note is due and owing to the Bank without offset, defense or counterclaims and further acknowledge that the Security Agreement, Deed of Trust, Assignment and other documents evidencing the security for the Revolving Note are valid, binding and fully enforceable according to their terms; and further acknowledge that the Guaranties and security agreements therefor are valid and binding and fully enforceable according to their terms.

    2.  RESTRUCTURE OF REVOLVING NOTE.  Subject to the other terms and conditions of this Agreement, the indebtedness evidenced by the Revolving Note shall be restructured as follows:

    2.1. The Borrower shall execute and deliver to the Bank a new promissory note in form and substance acceptable to the Bank as a renewal of the Revolving Note and not as payment thereof ("the New Revolving Note"). Interest on the New Revolving Note shall be calculated at the annual rate equal to the "Base" or "Prime" rate of interest as announced by Wells Fargo Bank Nebraska, National Association, at its principal office in Omaha, Nebraska, as in effect from time to time ("the Base Rate") on the basis of actual number of days elapsed in a year of 360 days.

    2.2. The Bank shall lend to the Borrower from time to time until January 31, 2001, sums in the aggregate principal amount at any one time outstanding not to exceed the lesser of the Borrowing Base (as defined herein) or $9,500,000.00 ("the Credit Limit"). Within such limits and subject to the terms and conditions hereof, the Borrower may borrow, repay and reborrow pursuant to this Section 2. The "Borrowing Base" shall, at any time, equal the sum of the Acceptable Accounts Receiveable plus $5,000,000.00. "Acceptable Accounts Receiveable" shall mean: (i) all domestic accounts, plus (ii) accounts receivable from foreign entities, which foreign accounts receivable shall not exceed a total amount of $2,500,000.00; the sum of (i) and (ii) which are:


 

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