FIRST AMENDMENT TO EXTENSION AGREEMENT

                     
FIRST AMENDMENT TO EXTENSION AGREEMENT

            
THIS FIRST AMENDMENT TO EXTENSION
  
AGREEMENT ("First
  
Amendment") is

made and entered into as of August 25, 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,
  
Borrower and Guarantor
  
entered into an Extension
  
Agreement dated

June 24, 2005 (the "EXTENSION AGREEMENT") pursuant to which, among
other things,

the
  
maturity
  
date
  
for
  
repayment
  
of the
  
obligations
  
owed by
  
Borrower
  
and

Guarantor to Lender was extended
  
under the terms and
  
conditions
  
stated in the

Extension Agreement.
  
Capitalized terms used herein, to the extent not otherwise

defined,
  
shall
  
have the
  
meanings
  
ascribed
  
to such
  
terms
  
in the
  
Extension

Agreement.

     
Borrower has delivered to Lender a letter from Branch
  
Banking & Trust Co.,

dated August 18, 2005 (the "BB&T LETTER"), that Borrower
contends constitutes an

Acceptable
  
Commitment
  
Letter that results in extension of the Extension Period

through and including
  
September
  
19, 2005. In addition,
  
Borrower has requested

that the Extension
  
Period be extended
  
through
  
September 30, 2005, in order to

afford Borrower the opportunity to repay the Obligations in full
using financing

described in the BB&T Letter.
  
Without necessarily agreeing that the BB&T Letter

constitutes
  
an Acceptable
  
Commitment
  
Letter,
  
Lender is willing to extend the

Extension Period as provided herein.

     
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 as follows:

     
1.
   
DEFINITIONS.
  
All
  
capitalized
  
terms
  
used in this
  
First
  
Amendment,

unless otherwise defined,
  
shall have the meanings ascribed to such terms in the

Extension Agreement.

     
2.
   
AMENDMENT TO EXTENSION
  
AGREEMENT.
  
The Extension
  
Agreement is hereby

amended as follows:

          
(a)
  
In SECTION 1, by deleting the
  
definition of
  
"Extension
  
Period"

and by substituting in lieu thereof the following definition:

               
"EXTENSION
  
PERIOD" shall mean the period
  
commencing on June 24,

2005, and ending at 5:00 o'clock p.m. on September 30, 2005.

     
3.
   
REPRESENTATIONS,
  
ACKNOWLEDGMENTS AND WARRANTIES.
  
Each Obligor hereby

acknowledges,
  
stipulates and warrants to Lender that (i) the Loan Documents and

the Extension Agreement are legal, valid and binding obligations of
such Obligor

and are
  
enforceable
  
against such Obligor in accordance with the terms thereof;

(ii) all of the
  
Obligations are owing and payable
  
without
  
defense,
  
offset or

counterclaim
  
(and to the
  
extent
  
there
  
exists
  
any such
  
defense,
  
offset
  
or

counterclaim
  
on the date hereof,
  
the same is hereby
  
waived by such
  
Obligor);

(iii) the security
  
interests
  
and liens
  
granted by Borrower in favor of Lender

are duly perfected,
  
first priority security interests and liens; (iv) as of the

opening of business on August 25, 2005, the aggregate principal
balance of Loans

outstanding
  
totaled