EXHIBIT 10.3 FIRST AMENDED AND RESTATED EXTENSION AGREEMENT

                                                                    EXHIBIT 10.3

                 FIRST AMENDED AND RESTATED EXTENSION AGREEMENT

            THIS FIRST  AMENDED AND  RESTATED  EXTENSION  AGREEMENT  is made and

entered  into  as  of  October  6,  2005,  by  and  among  LYNCH  SYSTEMS,  INC.

("Borrower"),  a  South  Dakota  corporation;   LYNCH  CORPORATION,  an  Indiana

corporation  ("Guarantor");  and SUNTRUST  BANK  ("Lender"),  a Georgia  banking

corporation.

                                    RECITALS:

            Lender and  Borrower  entered  into a certain  Amended and  Restated

Credit  Agreement  dated  June 10,  2002 (as at any time  amended,  the  "Credit

Agreement"),  pursuant  to which  Lender made  available a revolving  credit and

letter of credit  facility to  Borrower,  which  revolving  credit and letter of

credit  facility  is  secured  by  security  interests  in and liens upon all or

substantially  all of the assets of Borrower and are guaranteed  unconditionally

by Guarantor.

            Lender made a term loan (the "Term  Loan") to Borrower as  evidenced

by a certain  Term Loan  Promissory  Note,  dated August 4, 2003 in the original

principal amount of $498,000 (as at any time amended, the "Term Note"),  payment

of which is secured by, among other  things,  a lien upon and security  title to

certain real  property of Borrower  pursuant to the terms of a certain  Security

Deed and Agreement made as of March 30, 2001, between Borrower and Lender (as at

any time amended, the "Security Deed"; together with the Term Note and all other

agreements  and  instruments  executed in connection  therewith,  the "Term Loan

Documents").

            Events of Default  under (and as  defined  in) the Credit  Agreement

exist  and are  continuing,  in  consequence  of which  Lender  is  entitled  to

terminate  further advances to Borrower,  to declare the entire balance owing to

it from  Borrower to be  immediately  due and payable,  to enforce its liens and

security interests in the collateral  securing its claims against Borrower,  and

to enforce its claims against Guarantor.

            All of the liabilities and  obligations  under the Credit  Agreement

and the Term Note became due and payable on May 31, 2005.

            Borrower,  Guarantor and Lender entered into an Extension  Agreement

dated as of June 24, 2005, and a First Amendment to Extension Agreement dated as

of  August  25,  2005  (collectively,  and as at any time  amended,  the  "Prior

Agreement"). Borrower and Guarantor desire that Lender accept partial payment of

the  obligations  owed to Lender in exchange  for a partial  release of Lender's

security  interests  and  extend  the due date for  repayment  of the  remaining

Obligations to the Termination Date (as hereinafter defined).  Lender is willing

to extend  the due date for  repayment  of the  Obligations  under the terms and

conditions of this Agreement.

            NOW,  THEREFORE,  for  TEN  DOLLARS  ($10.00)  in hand  paid  and in

consideration  of the premises and the mutual covenants  herein  contained,  the

parties hereto, intending to be legally bound hereby, agree to amend and restate

the  Prior  Agreement  so that as so  amended  and  restated,  it shall  read as

follows:

            1. DEFINITIONS; RULES OF CONSTRUCTION.

               (a) Capitalized  terms used in this Agreement,  unless  otherwise

defined,  shall have the meaning ascribed to such terms in the Credit Agreement.

In  addition,  as used  herein,  the  following  terms  shall have the  meanings

ascribed to them:

               "ACCEPTABLE  COMMITMENT  LETTER"  shall mean a commitment  letter

            that is issued by a bank or other financial  institution  acceptable

            to Lender, provides for Take-Out Financing on or before the last day

            of the Extension Period and has no due diligence, credit approval or

            other   conditions   precedent  to  funding  other  than   customary

            conditions relating to documentation and closing.

               "AGREEMENT" shall mean this First Amended and Restated  Extension

            Agreement, as at any time amended.

               "APPLICABLE  LAW"  shall  mean all laws,  rules  and  regulations

            applicable  to the Person,  conduct,  transaction,  covenant or Loan

            Document  in  question,  including  all  applicable  common  law and

            equitable  principles;  all  provisions  of  all  applicable  state,

            federal and foreign constitutions,  statutes, rules, regulations and

            orders of governmental bodies; and all orders, judgments and decrees

            of all courts and arbitrators.

               "BB&T" shall mean Branch Banking and Trust Company.

               "COLLECTIONS" shall mean all proceeds received from a sale, lease

            or other disposition of any of the Collateral, including payments by

            Borrower's  customers and any proceeds of insurance  relating to any

            of the Collateral.

               "EXPENSE REIMBURSEMENT" shall mean $2,305, to be paid by Borrower

            to  Lender  by wire  transfer,  which  shall  be used by  Lender  to

            reimburse  it for  legal  fees and  expenses  incurred  by Lender in

            August,  September, and October (through the date of this Agreement)

            of 2005. The amount of the Expense  Reimbursement as provided herein

            is only an estimate,  and Lender  reserves the right to recover from

            Obligors and the Collateral  all costs,  fees and expenses for which

            Borrower  has  agreed  to  indemnify  Lender  pursuant  to the  Loan

            Documents.

               "EXTENSION  CONDITIONS"  shall mean the  conditions  to  Lender's

            extension of the due date of the  Obligations set forth in Section 4

            of this Agreement.

               "EXTENSION  PERIOD" shall mean the period  commencing on the date

            of this  Agreement  and ending at 5:00  o'clock p.m. on the close of

            business on December 31, 2005.

               "INSOLVENCY PROCEEDING" shall mean any action, case or proceeding

            commenced by or against a Person,  or any  agreement of such Person,

            for (a) the entry of an order for  relief  under any  chapter of the

            Bankruptcy Code or other  insolvency or debt adjustment law (whether

            state,  federal or  foreign);  (b) the  appointment  of a  receiver,

            trustee,  liquidator or other  custodial for such Person or any part

            of its property; (c) an assignment or trust mortgage for the benefit

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            of creditors of such Person; or (d) the liquidation,  dissolution or

            winding up of the affairs of such Person.

               "LOAN  DOCUMENTS"  shall mean the Credit  Documents  and the Term

            Loan Documents.

               "NEW LC" shall mean an original  executed  Irrevocable  Letter of

            Credit,  together with a form of Sight Draft, issued by BB&T for the

            benefit of Lender, in the form of or under the terms provided in the

            document attached hereto as EXHIBIT A.

               "OBLIGATIONS"  shall  mean  all  liabilities,   indebtedness  and

            obligations at any time owing by Borrower to Lender,  whether direct

            or indirect,  absolute or contingent,  due or to become due, secured

            or unsecured or  liquidated  or  unliquidated,  including all of the

            Revolver Obligations and all of the Term Loan Obligations.

               "OBLIGORS" shall mean Borrower and Guarantor.

               "PAID IN FULL" shall mean, with reference to the Obligations, the

            full,  final  and  indefeasible  payment  in  full  of all  of  such

            Obligations,  the  termination  of all  commitments  and  any  other

            obligations  that Lender may have under any of the Credit  Documents

            to  extend  or renew  credit,  and the  depositing  with  Lender  by

            Borrower of cash in an amount equal to 102% of the aggregate undrawn

            amount of all Letters of Credit outstanding and all other contingent

            obligations at the time due and owing Lender.

               "PARTIAL PAYMENT" shall mean a payment by wire transfer from BB&T

            to Lender, for the benefit of (and as an advance to) Borrower, in an

            amount not less than $760,752.17.

               "PARTIAL  RELEASE"  shall  mean a  UCC-3  Amendment  in the  form

            attached hereto as EXHIBIT B.

               "REVOLVER  OBLIGATIONS" shall mean all of the "Obligations" under

            (and as defined in) the Credit Agreement.

               "STIPULATED DEFAULTS" shall mean the Events of Default referenced

            in Section 2(c) of this Agreement.

               "TAKE-OUT  FINANCING"  shall mean financing  procured by Borrower

            from a third-party financing source in an amount sufficient to cause

            all of the  Obligations  to be Paid in Full at or before  the end of

            the Extension Period.

               "TERMINATION  DATE"  shall  mean the  sooner to occur of (a) 5:01

            o'clock p.m. on the last day of the Extension Period or (b) the date

            on which the Extension Period terminates as provided in Section 5 of

            this Agreement.

               "TERM LOAN OBLIGATIONS" shall mean all indebtedness,  liabilities

            and  obligations at any time owed by Borrower to Lender under any of

            the Term Loan Documents.

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              (b) The terms  "herein,"  "hereof" and "hereunder" and other words

of similar  import refer to this  Agreement as a whole and not to any particular

section, paragraph or subdivision. Any pronoun used shall be deemed to cover all

genders.  All references to statutes and related  regulations  shall include any

amendments of same and any  successor  statutes and  regulations;  to any of the

Loan Documents shall include any and all  modifications  thereto and any and all

restatements,  extensions  or  renewals  thereof;