EXTENSION AGREEMENT

    This Extension Agreement ("Extension") is made and entered into this 31st day of January, 2001, 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 Revolving Note dated January 5, 2001, in the maximum principal amount of $9,500,000.00 ("Revolving Note"). The principal balance outstanding on January 29, 2001, under the Revolving Note was $7,190,000.00; accrued and unpaid interest to that date was $46,568.00.

    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, in Book 4580, at Page 239 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, in Book 1155, at Page 288 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 and Guarantors executed a Loan Repayment Agreement dated December 29, 2000, which sets forth additional terms and conditions with regard to the above described indebtedness ("the Agreement").

    G.  The Revolving Note matured January 31, 2001, and the Borrower and Guarantors have requested that the Bank extend the Revolving Note, which the Bank has agreed to do pursuant to the terms and conditions of this Extension.

    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.  EXTENSION OF REVOLVING NOTE.  Subject to the other terms and conditions of this Extension, and subject to all terms and conditions of the Agreement, the indebtedness evidenced by the Revolving Note shall be extended to March 15, 2001, and the Borrower shall execute herewith an appropriate Note Modification document reflecting the extended maturity date.

    3.  COLLATERAL SECURITY AND GUARANTIES.  Payment of the Revolving Note and performance of the Borrower's obligations as set forth in this Extension and in the Agreement shall continue to be secured by the Security Agreement, Deed of Trust and Assignment. The Guarantors also reaffirm their guaranties of the Revolving Note and acknowledge and agree that their guaranties apply to the Revolving Note as extended and all other obligations of the Borrower to the Bank.

    4.  CONDITIONS PRECEDENT.  The Bank's performance hereunder is subject to delivery of each of the following as conditions precedent:

    4.1. Duly executed U.C.C.1 Financing Statements for filing by the Bank in California, Florida and Illinois to perfect the Bank's security interest on the Borrower's or Guarantors' assets located in those States;


 

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